RETIREMENT AND CONSULTING
AGREEMENT
This
Retirement and Consulting Agreement (“Agreement”) is
entered into by and between Commercial Metals Company a Delaware
corporation with principal offices at 6565 N. MacArthur Blvd,
Irving, Texas 75039 (the “Company”) and David M.
Sudbury with a residence at 6015 Woodland Dr., Dallas, Texas, 75225
(the “Executive”).
WHEREAS,
the Company has employed Executive as its Senior Vice President,
Secretary, & General Counsel for a period of many years and
Executive has faithfully performed his responsibilities both as an
officer and legal counsel to the Company; and
WHEREAS,
Executive has decided to retire from employment by the Company and
resign his position as Senior Vice President, Secretary, &
General Counsel; and
WHEREAS,
the Company desires to maintain a business relationship with
Executive for a period of time following his retirement to assure a
smooth transition on matters in which the Executive has special
knowledge and expertise given his long service to the Company ;
and
WHEREAS,
the parties now desire to enter into this Agreement to set forth
the terms and conditions relating to the termination by Executive
of his employment and the terms and conditions under which
Executive will provide consulting services to the
Company;
NOW,
THEREFORE, in consideration of the mutual promises and covenants
set forth below, the Parties agree as follows:
1. Executive
has informed the Company of his intent to resign as an officer and
employee effective at close of business August 31, 2009 (the
“Effective Date”). The Company shall continue to employ
Executive in his current capacity until the Effective Date. All
salary, benefits, terms and conditions of Executive’s
employment will remain unchanged until the Effective Date. The
Company agrees to accept Executive’s resignation on the
Effective Date.
2. In partial
consideration for Executive’s agreement to remain available
to the Company on a consulting basis, to facilitate a smooth
transition to a new chief legal officer of the Company, and for
Executive’s release and waiver of claims (except as excluded
in Paragraphs 9 and 10 below) the Company shall pay Executive the
gross amount of one million dollars ($1,000,000.00) on or before
the Effective Date. This payment shall be subject to applicable
payroll tax withholding obligations of the Company as required by
federal law and will be paid to Executive in accordance with
standard payroll practice at the Company.
3. As
additional consideration, Executive shall receive the
following:
(a) The
Executive intends to continue his participation (with coverage of
dependents) in the Company’s medical and dental benefit plans
(the “Health Plans”) in accordance with terms of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of
1986. The Company shall make Executive whole (as set forth below in
this paragraph) for the full amount of monthly premiums paid by
Executive for continuation of the Health Plans. Following
expiration of the COBRA period (February 28, 2011), and only in the
event that at that time neither Executive nor his spouse are
eligible to participate in another employer sponsored medical
benefit plan, the Company shall reimburse Executive for premiums
(not to exceed $2,500.00/month) for
insurance
providing benefits reasonably comparable to benefits provided by
the Company’s Health Plans. If, at the time of expiration of
the COBRA period, the Executive has been unable to obtain insurance
with benefits reasonably comparable to the Health Plans due to
pre-existing conditions, illness, or other similar reasons, the
Company shall reimburse Executive for the actual expenses incurred
by Executive which would have been covered under the Health Plans
up to a maximum aggregate expense paid by the Executive of
$30,000.00. In order to make Executive whole on a after tax basis,
the amount of reimbursement to Executive for all COBRA payments
during the COBRA period and insurance premiums or actual expenses
incurred by the Executive after the COBRA period for comparable
Health Plan benefits prior to March 1, 2012, shall be
increased on a tax adjusted basis assuming a federal income tax
rate of 36.45% so that Executive shall receive, net of taxes at the
assumed rate, the actual cost of such expenses. The Company’s
obligation to reimburse Executive for such premiums or expenses
shall cease March 1, 2012, twelve months after expiration of
the COBRA period.
(b) On or
before the first regular payday following the Effective Date,
Company will pay Executive for all accrued but unused vacation.
Executive may, but is not required, to use any previously earned
vacation time (including vacation time earned as of April 26,
2008 but not taken and previously approved to be carried over into
2009) before the Effective Date in order to be compensated for that
time. The Company and Executive agree that as of the date of this
Agreement the aggregate vacation earned and to which Executive is
entitled is 35 work days (seven weeks).
(c) The
Company will cause title to the leased automobile currently
furnished by the Company to Executive to be transferred to
Executive on or as soon as practicable after the Effective Date at
no expense to the Executive other than the federal income tax
incurred by Executive attributable to the fair market value of the
automobile at the time of transfer.
(d) During
the Consulting Period, the Company will provide, at its sole
expense, a computer, printer/scanner and PDA comparable to that
utilized by Executive when employed by the Company along with
technical support in Executive’s home or office as required
to facilitate Executive’s performance of consulting services.
This equipment will be returned to the Company by Executive at the
end of the Consulting Period (as defined in Paragraph 4
below).
4. Executive
shall provide consulting services as a non-employee consultant to
the Company from September 1, 2009 through August 31,
2011 (the Consulting Period). As a consultant, Executive shall
perform such consulting services as are reasonably requested of him
by the Chief Executive Officer of the Company and shall use his
reasonable efforts to assist in the orderly transition of his
former duties and responsibilities. The Parties do not contemplate
that the Executive will be requested to provide more than 10 hours
per week, on average, of consulting services. The Parties
understand and agree that the actual number of hours may fluctuate
from week to week depending on the extent of the requests from the
Company’s Chief Executive Officer and the Executive’s
availability. The Company agrees that Executive’s obligation
to provide consulting services shall be subject to reasonable
accommodations that will avoid or minimize disruption of his
personal or professional obligations including not requiring
Executive to return to his Dallas residence or the Company’s
Irving offices to provide services during such times as Executive
may be temporarily visiting his Taos, New Mexico or Coryell County
Texas residences or otherwise traveling on vacation or business
outside the immediate Dallas area. The Company is not required to
request services from Executive during the Consulting
Period.
5. During the
Consulting Period, the Company shall pay Executive a consulting fee
of $600,000 to be paid quarterly in eight equal installments of
Seventy Five Thousand Dollars ($75,000.00) each commencing on or
before September 10, 2009 and continuing every three months
thereafter with the final payment due on or before June 10,
2011. In addition to the consulting fee, the Executive shall be
reimbursed for all reasonable out-of-pocket expenses incurred in
the course of providing consulting services requested by the
Company including reasonable travel and living expenses should the
Executive be asked to provide consulting services at a location
other than at his residence in Dallas or the Company’s
offices in Irving, Texas. The Company shall promptly reimburse
Executive for such expenses upon receipt of documentation from
Executive consistent with the Company’s practices for
reimbursement of expenses to other consultants utilized by the
Company.
6. During the
Consulting Period and thereafter, Executive shall have no actual or
implied authority to act on behalf of the Company or enter into
agreements for the Company except as may be specifically approved
by the Chief Executive Officer of the Company. The Executive may
inform anyone who inquires that he was employed for over
33 years with the Company, that he retired from the Company
and, during the Consulting Period, that he is an independent
contractor providing consulting services to the Company. No
representation may be made, however, that the Executive is employed
by the Company following the Effective Date.
7. Executive
agrees that he is resigning from the Company of his own free will,
and that the terms of his various restrictive covenants, as set
forth in Paragraph 8 below, are valid and enforceable. The
Company shall have the right to discontinue all consulting fees to
be paid under this Agreement and to obtain injunctive relief should
Executive breach any of the restrictive covenants referenced in
Paragraph 8.
8. Executive
acknowledges that as Senior Vice President, Secretary, &
General Counsel of the Company, he has had access to confidential
information, including but not limited to information regarding the
Company’s business plans, goals, strategies, pricing, trade
secrets, and privileged legal communications and information.
Executive may continue to receive confidential business information
and privileged communications in his capacity as a consultant.
Should he become employed by or affiliated with a competitor of the
Company, Executive could disclose or use the Company’s
confid
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