The Board of Directors of the Company (the Board) has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will have the continued
services of the Executive, despite the possibility or occurrence of a Change in Control of the
Company. The Board believes that this objective may be achieved by giving key management employees
assurances of financial security in case of a pending or threatened Change in Control, so that they
will not be distracted by personal risks and will continue to devote their full time and best
efforts to the performance of their duties. The Company and the Executive enter into this Agreement
to induce the Executive to remain an employee of the Company and to continue to devote Executives
full energy to the Companys affairs. This Agreement is not intended to provide the Executive with
any right to continued employment with the Company, except in the event of a Change in Control of
the Company and subject to the provisions of this Agreement. The effect of this Agreement on other
agreements and other rights of the Executive is explained in Article IX below.
When used in this Agreement, the terms specified below shall have the following meanings:
2.1 Affiliate means any corporation or other entity that is directly or indirectly through
one or more intermediaries, controlled by the Company.
2.2 Annual Base Salary has the meaning set forth in Section 3.2(a).
2.3 Annual Cash Incentive Plan means the cash bonus plan as administered by the compensation
committee of the Companys board of directors which establishes the criteria for and amount of
annual cash bonus payments for key executives.
2.4 Auditor has the meaning set forth in Section 6.1.
2.5 Benefit Continuation Period means the period beginning on the Termination Date and
ending on the second anniversary of the Termination Date.
2.6 Benefit Restoration Plan means the Commercial Metals Companies Benefit Restoration Plan
effective September 1, 1995, as amended.
2.7 Capped Amount has the meaning set forth in Section 6.1.
2.8 Cash Bonus Opportunity has the meaning set forth in Section 3.2(b).
2.9 Cause has the meaning set forth in Section 4.3.
2.10 Change in Control means any of the following events:
(a) any Person becomes the beneficial owner (as defined in Rule 13d-3 or Rule 13d-5
under the Exchange Act), directly or indirectly, of 25% or more of the combined voting power
of the Companys then outstanding voting securities;
(b) the Incumbent Board ceases for any reason to constitute at least the majority of the
Board; provided, however, that any person becoming a director subsequent to the Agreement Date
whose election, or nomination for election by the Companys shareholders was approved by a
vote of at least 75% of the directors comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person is named as a
nominee for director, without objection to such nomination) shall be, for purposes of this
subsection (b), considered as though such person were a member of the Incumbent Board;
(c) all or substantially all of the assets of the Company are sold, transferred or
conveyed and the transferee of such assets is not controlled by the Company (control meaning
the ownership of more than 50% of the combined voting power of such entitys then outstanding
voting securities); or
(d) the Company is reorganized, merged or consolidated, and the shareholders of the
Company immediately prior to such reorganization, merger or consolidation own in the aggregate
50% or less of the outstanding voting securities of the surviving or resulting corporation or
entity from such reorganization, merger or consolidation.
Notwithstanding anything in the foregoing to the contrary, no Change in Control shall be deemed to
have occurred for purposes of this Agreement by virtue of any transaction (i) which results in the
Executive or a group of Persons, which includes the Executive, acquiring, directly or indirectly,
25% or more of the combined voting power of the Companys then outstanding voting securities; or
(ii) which results in the Company, any Affiliate or any profit-sharing plan, employee stock
ownership plan or employee benefit plan of the Company or any Affiliates (or any trustee of or
fiduciary with respect to any such plan acting in such capacity) acquiring, directly or indirectly,
15% or more of the combined voting power of the Companys then outstanding voting securities. For
purposes of this section, the term Incumbent Board means the individuals who as of the
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Agreement Date constitute the Board, and the term Person means any natural person, firm,
corporation, government, governmental agency, association, trust or partnership.
2.11 Change in Control Arrangements has the meaning set forth in Section 6.1.
2.12 Change in Control Payment has the meaning set forth in Section 6.1.
2.13 Change in Control Date means the date on which a Change in Control occurs.
2.14 Code means the Internal Revenue Code of 1986, as amended.
2.15 Constructive Termination has the meaning set forth in Section 4.4.
2.16 Disabled or Disability means that the Executive:
(a) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or
(b) is, by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less than 3 months
under an accident and health plan covering employees of the Company or an Affiliate.
2.17 Disability Effective Date has the meaning set forth in Section 4.1.
2.18 Employment Period means the period commencing on the Change in Control Date and ending
on the second anniversary of the Change in Control Date.
2.19 Equity Incentive Plans means the Companys 1996 Long-Term Stock Incentive Plan, the
General Employee Stock Purchase Plan and any other equity incentive plan approved by the Company
following the date of this Agreement which is intended to provide a financial incentive to
employees of the Company based on the value of or utilizing the Companys stock whether by means of
grants or awards of incentive stock options, non-qualified stock options, stock appreciation
rights, restricted stock, performance share awards or any other equity based incentives.
2.20 Excess Change in Control Payment means the dollar amount of excise tax which the
Executive would become obligated to pay pursuant to Code Section 4999 as a result of receipt of any
payment from the Company in excess of the Capped Amount.
2.21 Exchange Act means the Securities Exchange Act of 1934, as amended.
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2.22 Highest Annual Base Salary means highest annual base salary paid by the Company or an
Affiliate to the Executive for any calendar year during the sixty (60) consecutive month period
immediately preceding the Termination Date. For purposes of this determination, annual base salary
shall be annualized for any period of less that one complete calendar year.
2.23 Long-Term Performance Plan means a cash incentive plan administered by the
compensation committee of the Companys board of directors which provides for cash payments to key
employees contingent upon the attainment of multi-year performance goals.
2.24 Make-Whole Payment has the meaning set forth in Section 6.4.
2.25 Payment Date means the 30th day following the Executives Termination Date.
2.26 Performance Period has the meaning set forth in Section 3.2(b).
2.27 Plans has the meaning set forth in Section 3.2(c).
2.29 Short Fall Amount has the meaning set forth in Section 6.4.
2.30 Qualifying Termination means a Constructive Termination of the Executives employment
pursuant to Section 4.4.
2.31 Termination Date means the date of termination of the Executives employment; provided,
however, that if the Executives employment is terminated by reason of Disability, then the
Termination Date shall be the Disability Effective Date (as defined in Section 4.1).
2.32 Welfare Continuance Benefit has the meaning set forth in Section 5.1(d).
2.33 Welfare Plans has the meaning set forth in Section 3.2(d).
EMPLOYMENT AFTER A CHANGE IN CONTROL
3.1 Employment. The Company hereby agrees to continue the Executive in its employ
during the Employment Period and, unless the Executive provides an express written consent
otherwise, the Executive will have duties and such other powers that are substantially equivalent
to the duties and powers which the Executive had prior to the Change in Control. Subject to Article
IV of this Agreement, the Executive agrees to remain in the employ of the Company subject to the
terms and conditions hereof and (i)
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will devote his knowledge, skill and best efforts on a full-time basis to performing his
duties and obligations to the Company (with the exception of absences on account of illness or
vacation in accordance with the Companys policies, and civic and charitable commitments not
involving a conflict with the Companys business), (ii) will comply with the directions and orders
of the Board with respect to the performance of his duties, and (iii) will comply with the
provisions of Article X.
3.2 Compensation and Benefits.
(a) Base Salary. During the Employment Period, the Executive shall receive an
annual base salary (Annual Base Salary), which shall be paid at a monthly rate at least
equal to the highest monthly base salary paid or payable to the Executive by the Company
(including any base salary which has been earned but deferred by the Executive) in respect of
the twelve-month period immediately preceding the month in which the Change in Control Date
occurs. During the Employment Period, the Annual Base Salary shall be increased from time to
time as substantially consistent with increases in base salary awarded to other peer
executives of the Company. Annual Base Salary shall not be reduced after any such increase,
and the term Annual Base Salary as used in this Agreement shall refer to Annual Base Salary as
(b) Cash Bonus Opportunity. In addition to the Annual Base Salary, during the
Employment Period the Company shall grant or cause to be granted to the Executive cash bonus
opportunities (each a Cash Bonus Opportunity) for each Performance Period which ends or
begins during the Employment Period. Performance Period means each period of time designated
in accordance with any cash incentive arrangement which is based upon performance, including
the Annual Cash Incentive Plan and the Long-Term Performance Plan. The Executives target and
maximum Cash Bonus Opportunity with respect to any Performance Period shall not be less than
the largest target and maximum established for the Executive under any Company cash incentive
arrangement, including the Annual Cash Incentive Plan and the Long-Term Performance Plan, as
in effect for a Performance Period immediately preceding the Change in Control Date.
(c) Incentive, Savings and Retirement Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, savings, deferred compensation
and retirement plans, practices, policies and programs (Plans) applicable generally to other
peer executives of the Company, but in no event shall such Plans provide the Executive with
incentives or savings and retirement benefits which, in each case, are less favorable in the
aggregate than the greater of (i) those provided by the Company for the Executive under such
Plans as in effect at any time during the 90-day period immediately preceding the Change in
Control Date, or (ii) those provided generally at any time after the Change in Control Date to
other peer executives of the Company. The Plans shall include both tax-qualified retirement
plans and nonqualified retirement plans, and any equity or cash-based incentive plans.
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(d) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executives family, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and programs that
provide benefits including, but not limited to, medical, prescription, dental, disability,
group life, accidental death and travel accident insurance benefits (Welfare Plans), but in
no event shall such Welfare Plans provide the Executive with benefits which are less
favorable, in the aggregate than the greater of (i) those provided by the Company for the
Executive under such Welfare Plans as in effect at any time during the 90-day period
immediately preceding the Change in Control Date, or (ii) those provided generally at any time
after the Change in Control Date to other peer executives of the Company.
(e) Other Employee Benefits. During the Employment Period, the Executive shall be
entitled to other employee benefits and perquisites in accordance with the most favorable
plans, practices, programs and policies of the Company, as in effect with respect to the
Executive at any time during the 90-day period immediately preceding the Change in Control
Date, or if more favorable, as in effect generally with respect to other peer executives of
the Company. These other employee benefits and perquisites include, but are not limited to,
vacation and use of a Company car.
3.3 Affiliates. If immediately prior to the Change in Control Date, the Executive was
on the payroll of and participated in the Plans of an Affiliate of the Company, the references to
the Company contained in Sections 3.1, 3.2 and the other sections of this Agreement shall be read
to refer to the Company and to such Affiliate, as applicable.
3.4 Termination Prior to a Change in Control. Notwithstanding anything in this
Agreement to the contrary, if a Change in Control occurs and the Executives employment with the
Company or an Affiliate was terminated by the Company or an Affiliate prior to the Change in
Control Date other than for Cause or Disability, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control, or (ii) otherwise arose in connection
with or in anticipation of a Change in Control, then for all purposes of this Agreement the
Executives termination of employment shall be treated as an involuntary termination of the
Executives employment occurring immediately after the Change in Control Date, and the Executive
shall be entitled to receive the amounts described in Section 5.1 of this Agreement. In addition,
if the Executives employment is terminated by the Company other than for Cause or Disability
within 90 days prior to a Change in Control, such termination shall conclusively be deemed to have
occurred following a Change in Control.
TERMINATION OF EMPLOYMENT
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4.1 Disability. During the Employment Term, the Company may terminate the Executives
employment if the Executive becomes Disabled. The Executives employment shall terminate effective
on the 30th day after the Executives receipt of written notice of termination from the Company
(the Disability Effective Date).
4.2 Death. The Executives employment shall terminate automatically upon the
Executives death during the Employment Term.
4.3 Cause. The Company may terminate the Executives employment during the Employment
Period for Cause. For purposes of this Agreement, Cause means (a) material misappropriation with
respect to the business or assets of the Company, (b) persistent refusal or willful failure
constituting gross dereliction by the Executive to substantially perform the Executives duties and
responsibilities to the Company, which continues after the Executive receives written notice from
the Company of such refusal or failure and which is not remedied by the Executive within thirty
(30) days following receipt of the Companys written notice, (c) conviction of a felony or crime
involving fraud, dishonesty or moral turpitude, or (d) the use of drugs or alcohol that interferes
materially with the Executives performance of his duties.
4.4 Constructive Termination. The Executive may terminate the Executives employment
for Constructive Termination at any time during the Employment Period. Constructive Termination
means any material breach of this Agreement by the Company during the Employment Period, including:
(a) the failure to maintain the Executive in the office or position, or in a
substantially equivalent office or position, held by the Executive immediately prior to the
Change in Control Date;
(b) a material adverse change in the nature or scope of the Executives position, duties,
powers, functions or responsibilities as compared to the nature or scope of such office,
position, duties, powers, functions or responsibilities immediately prior to the Change in
Control Date; provided, however, that a diminution of the Executives duties, functions or
responsibilities attributable solely to the Company ceasing to be a public company on or after
the Change in Control Date shall not alone constitute a material adverse change;
(c) any failure by the Company to provide the Executive with the compensation and
benefits described in Section 3.2, including any reduction of the Executives Annual Base
Salary in violation of Section 3.2(a);
(d) the failure of any successor to the Company to assume this Agreement; or
(e) any requirement by the Company that the Executive relocate more than 50 miles from
(i) the Executives workplace, or (ii) the principal offices of the Company (if such offices
are the Executives workplace), in each case without the
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consent of the Executive. Constructive Termination shall be deemed to have occurred on
the date the Company communicates such requirement, either in writing or otherwise.
Notwithstanding the foregoing, an act or omission shall not constitute Constructive Termination
unless (1) the Executive gives written notice to the Company indicating that the Executive intends
to terminate employment under this Section 4.4; (2) the Executives voluntary termination occurs
within sixty (60) days after the Executive knows or reasonably should know of an event described
above, or within sixty (60) days after the last in a series of such events, and (3) the Company has
failed to remedy the event described above, as the case may be, within thirty (30) days after
receiving the Executives written notice. If the Company remedies the event described above, as the
case may be, within thirty (30) days after receiving the Executives written notice, the Executive
may not terminate employment under this Section 4.4 on account of the event specified in the
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for a Qualifying Termination or by the Company Other Than for
Cause or Disability. If, during the Employment Period, the Company shall terminate the
Executives employment other than for Cause or Disability, or if the Executive shall terminate
employment for a Qualifying Termination, the Companys obligations to the Executive shall be as
(a) The Company shall pay to the Executive by no later than the Payment Date a lump sum
cash payment equal to the sum of the following amounts:
(i) the Annual Base Salary and all earned but not used paid vacation time through
the Termination Date;
(ii) all amounts previously deferred by the Executive under any nonqualified
deferred compensation plan sponsored by the Company or its Affiliates (together with any
accrued earnings thereon) which have not yet been paid and which otherwise would be
payable under the terms of such nonqualified deferred compensation plan on account of
the Executives termination of employment, unless payment of such amounts would
constitute an invalid acceleration of the time or schedule of a payment under Code
Section 409A; and
(iii) all amounts payable to the Executive under the terms of the Annual Cash
Incentive Plan and Long-Term Performance Plan to the extent that such amounts have not
yet been paid, unless payment of such amounts would constitute an invalid acceleration
of the time or schedule of a payment under Code Section 409A.
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(b) The Company shall pay to the Executive by no later than the Payment Date a lump sum
cash payment equal to [insert either three or four] times the Executives Highest Annual Base
(c) On the Termination Date, the Executive shall become fully vested in any and all stock
incentive awards granted to the Executive pursuant to any Plan or otherwise which have not
become exercisable as of the Termination Date. On the Termination Date, all stock options
(including options vested as of the Change in Control Date) shall remain exercisable until the
last date on which the option was scheduled to expire, without regard to whether termination
of the Executives employment would have provided for a shorter exercise period following such
termination of employment; provided, however, that the exercise period of an option shall be
extended only to the latest date on which it may be exercised without subjecting such option
to the provisions of Code Section 409A or resulting in treatment of the option as a new grant
on the date of extension. All forfeiture conditions that as of the Termination Date are
applicable to any restricted stock, restricted stock units, stock appreciation rights,
performance grants or other incentive awards granted to the Executive by the Company pursuant
to any Plan or otherwise shall lapse immediately.
(d) During the Benefit Continuation Period, the Executive and his dependents will
continue to be covered by all Welfare Plans in which he or his dependents were participating
immediately prior to the Termination Date (the Welfare Continuance Benefit). The Company
shall pay all the COBRA premium cost otherwise due from Executive for continued participation
of the Executive and dependents in the Companys medical welfare benefit plan. The Company
shall pay all or that portion of the premium costs of the Welfare Continuance Benefit for the
Executive and dependents under Welfare Plans other than the Companys medical welfare benefit
plan on the same basis as applicable under such Welfare Plans immediately preceding the
Termination Date, and the Executive will pay additional premium costs (if any) as applicable
immediately preceding the Termination Date. In determining the level of benefits to which the
Executive is entitled under any of the Welfare Plans, the Executive shall be deemed to be paid
during the Benefit Continuation Period annual compensation no less than the Annual Base Salary
in effect prior to the Termination Date. If participation or continued participation under any
one or more of the Welfare Plans included in the Welfare Continuance Benefit is not possible
under the terms of the Welfare Plan or any provision of law or if such participation or
continued participation would create an adverse tax consequence for the Executive or the
Company due to such participation, the Company will provide substantially identical benefits
directly or through one or more insurance arrangements. The Welfare Continuance Benefit as to
a Welfare Plan will cease if and when the Executive has obtained coverage under one or more
welfare benefit plans of a subsequent employer and such plan provides coverage to the
Executive and his dependents of the same type as provided under such Welfare Plan.
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(e) To the extent that the Executive would not otherwise be entitled to receive an
allocation of Employer Contribution under the Profit Sharing Plan or Benefit Restoration Plan
for the Plan Year in which the Termination Date occurs and for the Plan Years including all or
a portion of the Benefit Continuation Period, the Company shall pay to the Executive on the
Payment Date a lump sum cash payment equal to the equivalent of the Employer Contribution that
the Company would have allocated to the Executives account in each of the Profit Sharing Plan
and Benefit Restoration Plan as if the Executive had satisfied all requirements under the
Profit Sharing Plan and Benefit Restoration Plan to be eligible to receive an allocation of
the Employer Contribution for the Plan Year in which the Termination Date occurs, and each
Plan Year or pro-rata portion thereof during the Benefit Continuation Period. For purposes of
calculating this payment:
(i) the eligible compensation of the Executive shall be deemed to be an amount
equal to the greatest of (i) twice the Executives Highest Annual Base Salary, (ii) the
eligible compensation used to calculate the Employer Contribution to the Executives
account for the last Plan Year prior to the Plan Year in which the Termination Date
occurs or (iii) the eligible compensation earned by the Executive during the Plan Year
to the Termination Date including the amounts described in Section 5.1 (a) (b) and (c);
(ii) the Executive shall be deemed to have deferred the maximum amount of
compensation permitted by law or terms of the plan which would result in a credit to the
Executives account of the maximum amount of Employer Contribution in both the Profit
Sharing Plan and Benefit Restoration Plan of the maximum Employer Contribution; and
(iii) the Employer Contribution calculated as a percentage of the eligible
compensation shall be deemed to be the greater of the Employer Contribution for the
last Plan Year prior to the Plan Year in which the Termination Date occurs or the
average of the Employer Contribution for the last five Plan Years.
Capitalized terms contained in this subsection which are not otherwise defined in this
Agreement shall have the meaning assigned to such terms under the Profit Sharing Plan or
Benefit Restoration Plan.
5.2 If by the Company for Cause, Disability or Death or if by the Executive for Other than
for a Qualifying Termination. If, during the Employment Period, the Company terminates the
Executives employment for Cause, Disability or the death of the Executive or, in the event the
Executive terminates employment for any reason other than for a Qualifying Termination, this
Agreement shall terminate without further obligation by the Company to the Executive, other than:
(a) the obligation to immediately pay the Executive the amounts described in Section
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(b) the obligation, to the extent required by law or regulation or pursuant to the terms
of the Plans, to provide benefits under the terms of any of the Plans, Welfare Plans and other
employee benefit programs in which the Executive was participating immediately prior to the
Termination Date, pursuant to Sections 3.2(c) through (e).
6.1 Excise Tax Determination. If any benefit, payment or distribution by the Company
or an Affiliate to or for the benefit of the Executive or his legal representatives and dependents,
whether payable or distributable pursuant to the terms of this Agreement or pursuant to any other
plan, agreement, program or arrangement including, but not limited to, the Annual Cash Incentive
Plan, Long Term Performance Plan, Benefit Restoration Plan, or Equity Incentive Plans
(collectively Change in Control Arrangements) would be subject to the excise tax imposed on the
Executive under Code Section 4999 on excess parachute payments (all of such benefits, payments or
distributions, whether or not subject to the excise tax, in aggregate, the Change in Control
Payment), the Company shall, within twenty (20) days of the Termination Date, provide the
Executive with a written notice and explanation of such determination. The notice shall include
(i) a calculation computing the amount of the excise tax to be owed by the Executive upon receipt
of the Change in Control Payment, detailing (a) the total amount of cash to be paid and the amount
of such cash subject to the excise tax, (b) the amount of and assumptions used to determine the
value of all non-cash benefits to be provided and such non-cash benefits subject to the excise tax, (c) the Executives base amount of total taxable compensation used in the calculation, and (d)
the total amount subject to the excise tax, (ii) a calculation of the maximum amount of the Change
in Control Payment that could be paid by the Company to the Executive without the imposition of the
excise tax (the Capped Amount), and (iii) calculations showing whether the Executive would
receive a larger amount, on an after-tax basis (assuming, for United States taxpayers, payment by
the Executive of the Code Section 4999 excise tax and on the portion in excess of the Capped Amount
payment of taxes based on the following: (A) the highest marginal federal personal income tax rate,
(B) the highest marginal state and local income tax rates for the state in which the Executive is
domiciled, and (C) the hospital insurance tax rate under Code Section 311 (b)), if the Company were
to pay the Executive (a) the Capped Amount or (b) the Change in Control Payment. The Company
shall pay to the Executive on the Payment Date the Capped Amount or the Change in Control Payment,
whichever is determined to result in the larger amount as calculated pursuant to clause (iii) of
the preceding sentence.
The computations and explanation required under this subsection will be made by the accounting
firm which was serving as the Companys independent auditor as of the Termination Date, or if that
firm is not available to perform the computation, the computation shall be performed by a tax
counsel or nationally recognized accounting firm selected by mutual consent of the Company and the
Executive (the Auditor). The fees and expenses of the Auditor will be paid solely by the Company.
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and valuations required under this section will be performed in a manner consistent with the
requirements of Code Sections 280G and 4999, as in effect at the time the computations and
valuations are performed.
6.2 Funding for Certain Payments. Without affecting its obligations to or the rights
of the Executive under this Agreement, the Company shall, as soon as possible following the Change
in Control but in no event later than thirty (30) days following the Change in Control Date,
establish an irrevocable grantor trust within the meaning of Code Sections 671 through 679 for
amounts payable under this Agreement (if such a trust has not previously been established), and
shall irrevocably deposit funds with the trustee of such trust of an amount equal to the total cash
payments to which the Executive would be entitled under Article V of the Agreement if the Executive
had a Qualifying Termination on the Change in Control Date, without regard to whether the Executive
actually had a Qualifying Termination on that date. The funds deposited with the trustee of such
trust and the earnings thereon will be dedicated to the payment of the cash amounts payable under
the Agreement, but shall remain subject to the claims of the general creditors of the Company. The
expenses of establishing and maintaining such trust shall be paid solely by the Company. When the
Executive or the Executives survivors become eligible for payments under this Agreement, such
payments will be paid out of the trust fund. If the amounts credited to the trust fund for the
benefit of the Executive are not sufficient to satisfy the total amounts payable to the Executive
or the Executives survivors under this Agreement, the additional amounts necessary to satisfy such
payments shall be paid directly by the Company from its general assets. In lieu of establishing an
irrevocable grantor trust as described above, the Company may establish an alternative funding
arrangement mutually acceptable to the Company and the Executive to fund the amounts payable under
this Agreement. Once the total cash payments to which the Executive would be entitled under Article
V of this Agreement have been paid from the trust, any remaining funds shall be returned to the
6.3 Compliance with Tax Rules for Nonqualified Deferred Compensation Plans.
Notwithstanding any provision of this Agreement to the contrary, and to the extent required by Code
Section 409A, payments or provision of benefits to the Executive under this Agreement shall be
delayed for six (6) months following the Termination Date. To the extent permitted under Code
Section 409A, if the Executive shall be entitled to a payment pursuant to this Agreement prior to
the date at which a payment is permitted under Code Section 409A to be made to the Executive solely
because of the Code Section 409A six (6) month delay in payment rule for key employees, the
Executive shall be entitled to payment by the Company of the applicable employee portion of the
applicable withholding taxes due on such payment, if any. Such a payment by the Company of
withholding taxes shall reduce the amount otherwise payable to the Executive under this Agreement.
To the extent permitted under Code section 409A, if benefits otherwise to be provided to the
Executive, such as for example, certain of the benefits provided for in Section 5.1(d), are delayed
because of the Code Section 409A six (6) month delay in payment rule for key employees, in order
for the Company to provide those benefits during such six-month period, the Executive shall pay the
full cost of those benefits for such six-month period. On the first day of the seventh month
following the Termination
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Date, in addition to the Company commencing the provision of those benefits in accordance with
the terms of this Agreement, the Company shall pay to the Executive, in a lump sum, the total
amount the Executive paid for those benefits during such first six-month period.
6.4 Company Obligation to Executive With Regard to Tax Information. If the
computations and valuations required to be provided by the Company to the Executive pursuant to
Section 6.01 are on audit challenged by the Internal Revenue Service as having been performed in a
manner inconsistent with the requirements of Code Sections 280G and 4999 or if Code Section 409A is
determined to apply to all or any part of the payments to which the Executive or his survivors may
be entitled under this Agreement and as a result of such audit or determination, (i) the amount of
cash and the benefits provided for in Section 6.1 remaining to the Executive after completion of
such audit or determination is less than (ii) the amount of cash and the benefits which were paid
or provided to the Executive on the basis of the calculations provided for in Section 6.1 (the
difference between (i) and (ii) plus any legal or accounting fees or expenses incurred by the
Executive arising from the audit being referred to as the Short Fall Amount), then the Executive
shall be entitled to receive an additional payment (a Make-Whole Payment) in an amount such that
after payment by the Executive of all taxes (including additional excise taxes under said Code
Section 4999 and any interest, and penalties imposed with respect to any taxes) imposed upon the
Make-Whole Payment, the Executive retains an amount of the Make-Whole Payment equal to the Short
Fall Amount. The Company shall pay the Make-Whole Payment to the Executive in a lump sum cash
payment within ten (10) days of the completion of such audit or determination.
EXPENSES AND INTEREST
7.1 Legal Fees and Other Expenses. The Company agrees to pay promptly as incurred, to
the full extent permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any action or proceeding by the Company, the Executive or others concerning
the validity or enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any action or proceeding by the
Executive concerning the amount of any payment pursuant to this Agreement). The Company shall be
obligated to pay such legal fees and expenses regardless of the outcome of the action or
proceeding, unless a court of competent jurisdiction determines that the Executive acted in bad
faith in initiating the action or proceeding.
7.2 Interest. If the Company does not pay any amount due to the Executive under this
Agreement within three days after such amount became due and owing, including but not limited to
any legal fees or expenses, interest shall accrue on such amount from the date it became due and
owing until the date of payment at an annual rate equal to 200 basis points above the prime
commercial lending rate published in The Wall Street Journal in effect from time to time during the
period of such nonpayment.
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NO SET-OFF OR MITIGATION
8.1 No Set-off by Company. The Executives right to receive when due the payments and
other benefits provided for under this Agreement is absolute, unconditional and subject to no
set-off, counterclaim or legal or equitable defense. Any claim which the Company may have against
the Executive, whether for a breach of this Agreement or otherwise, shall be brought in a separate
action or proceeding and not as part of any action or proceeding brought by the Executive to
enforce any rights against the Company under this Agreement.
8.2 No Mitigation. The Executive shall not have any duty to mitigate the amounts
payable by the Company under this Agreement by seeking new employment following termination. Except
as specifically provided in this Agreement, all amounts payable pursuant to this Agreement shall be
paid without reduction regardless of any amounts of salary, compensation or other amounts which may
be paid or payable to the Executive as the result of the Executives employment with another
NON-EXCLUSIVITY OF RIGHTS
9.1 Waiver of Other Severance Rights. To the extent that payments are made to the
Executive pursuant to Section 5.1 of this Agreement, the Executive hereby waives the right to
receive severance benefits under any plan or agreement (including an offer of employment or
employment contract) of the Company or its Affiliates which provides for severance benefits.
However, no waiver of severance benefits under another plan or agreement shall take effect pursuant
to this Agreement until the Change in Control Date.
9.2 Other Rights. This Agreement shall not prevent or limit the Executives continuing
or future participation in any Plans, Welfare Plans, or other benefit, bonus, incentive or other
plans provided by the Company or any of its Affiliates and for which the Executive may qualify, nor
shall this Agreement limit or otherwise affect such rights as the Executive may have under any
other agreements with the Company or any of its Affiliates. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under the terms of any plan or program of the
Company or any of its Affiliates and any other payment or benefit required by law at or after the
Termination Date shall be payable in accordance with such plan, program or applicable law except as
expressly modified by this Agreement.
OBLIGATIONS OF THE EXECUTIVE
10.1 Confidentiality. The Company has provided and will provide the Executive with
secret or confidential information, knowledge or data relating to the Company or any of its
Affiliates and their respective businesses. The Executive will hold in a
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fiduciary capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its Affiliates and their respective businesses,
which will have been obtained by the Executive during the Executives employment by the Company or
any Affiliate and which will not be or become public knowledge (other than by acts by the Executive
or representatives of the Executive in violation of this Agreement). After termination of the
Executives employment with the Company, the Executive will not, without the prior written consent
of the Company or except as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company and those
designated by it.
10.2 Non-Competition and Non-Solicitation. The Executive agrees that for a period of
one (1) year after the Termination Date, the Executive (i) will not directly or indirectly compete
with the business as conducted by the Company or any of its Affiliates on the Termination Date
within one hundred (100) miles of any office or facility of the Company or any of its Affiliates,
(ii) will not hire or otherwise employ or retain, or knowingly permit (to the extent reasonably
within the Executives control) any other entity or business which employs the Executive or in
which the Executive has any ownership interest or is otherwise involved to hire or otherwise employ
or retain, any person who was employed by the Company or any of its Affiliates as of the
Termination Date, and (iii) will not solicit or in any manner attempt to influence or induce any
customer of the Company or any of its Affiliates to transact any business with any Person that
competes with the business as conducted by the Company or any of its Affiliates as of the
10.3 Enforcement. In the event of a breach or threatened breach of this Article X, the
Executive agrees that the Company will be entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, and the Executive acknowledges that
damages would be inadequate and insufficient. If the Company obtains a judicial determination that
the Executive has breached the terms of this Article X, all rights of the Executive under this
Agreement will terminate.
10.4 Reformation. If any court holds that any of the covenants contained in this
Article X shall be effective in any particular area or jurisdiction only if such covenant
is modified to limit its duration or scope or in any other manner, the court shall have such
authority to so reform the covenant, and the parties hereto shall consider such covenant to be
modified with respect to that particular area or jurisdiction so as to comply with the order of
such court and, as to all other jurisdictions, the covenants contained herein shall remain in full
force and effect as originally written. If any court holds that any of the covenants contained in
this Article X is void or otherwise unenforceable in any particular area or jurisdiction, the
Company may consider such covenant to be amended and modified so as to eliminate therefrom the
particular area or jurisdiction as to which such covenant is so held void or otherwise
unenforceable, and, as to all other areas and jurisdictions covered hereunder, the covenants
contained herein shall remain in full force and effect as originally written.
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11.1 No Assignment of Benefit. No interest of the Executive or any beneficiary under
this Agreement, or any right to receive any payment or distribution hereunder, will be subject in
any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or
encumbrance of any kind, nor may such interest or right to receive a payment or distribution be
taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other
claims against, the Executive or Beneficiary, including claims for alimony, support, separate
maintenance, and claims in bankruptcy proceedings.
11.2 Rights Under the Agreement. The right to receive benefits under the Agreement
will not give the Executive any proprietary interest in the Company, its Affiliates or any of the
assets of the Company or its Affiliates. Except to the extent otherwise provided in Section 6.2 of
this Agreement or under the terms of the Plans or Welfare Plans, amounts payable under the
Agreement will be paid from the general assets of the Company. The Executive will for purposes of
this Agreement be a general creditor of the Company.
11.3 Applicable Law
. This Agreement will be construed and interpreted pursuant to the
laws of the State of Texas
, without reference to its conflict of laws rules.
11.4 No Employment Contract. Nothing contained in this Agreement will be construed to
be an employment contract between the Executive and the Company prior to a Change in Control Date.
11.5 Severability. In the event any provision of this Agreement is held illegal or
invalid, the remaining provisions of this Agreement will not be affected thereby.
11.6 Successors. The Agreement will be binding upon and inure to the benefit of the
Company, the Executive and their respective heirs, representatives and successors. The Company will
require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this Agreement, the term
Company means the Company as hereinbefore defined and any successor to its business and/or assets
which assumes and agrees to perform this Agreement by operation of law, or otherwise.
11.7 Amendment; Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and the writing is
signed by the Executive and the Company. A waiver of any breach of or compliance with any provision
or condition of this Agreement is not a waiver of similar or dissimilar provisions or conditions.
This Agreement may be executed
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in one or more counterparts, all of which will be considered one and the same agreement.
Notwithstanding any other provisions of this Agreement to the contrary, the parties agree that they
will in good faith amend this Agreement in any manner reasonably necessary to comply with Code
Section 409A, and the parties further agree that any provisions of this Agreement that shall
violate the requirements of Code Section 409A shall be of no force and effect after such amendment.
11.8 Notices. All notices and other communications hereunder will be in writing and
will be given by hand delivery acknowledged in writing by the recipient personally, or given by
first-class mail, registered or certified, with return receipt requested, postage prepaid, and
shall be deemed to have been duly given three days after mailing or immediately upon duly
acknowledged hand delivery, as applicable, to the respective persons named below:
or to such other address as either party will have furnished to the other in writing in accordance
11.9 Tax Withholding. The Company shall withhold from any amounts payable under this
Agreement any federal, state or local taxes that are required to be withheld pursuant to any
applicable law or regulation.
IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement as of the date first
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