Exhibit 10.1

CHANGE OF CONTROL
 AND NON-COMPETITION AGREEMENT

AGREEMENT by and between Vulcan Materials Company, a New Jersey corporation (the
“Company”) and John R. McPherson (the “Executive”), dated as of the 7th day of
October, 2011.
 
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 dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company, and to ensure that in the event of the Executive’s termination of
employment under circumstances entitling the Executive to the payments and
benefits under Section 6(a) of this Agreement, the Executive is prohibited from
competing with the Company.  The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control and to encourage
the Executive’s full attention and dedication to the Company currently and in
the event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations.  Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
 
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
 
1.           Certain Definitions.
 
(a)           The “Effective Date” shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control (as
defined in Section 2) occurs.  Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive’s employment
with the Company is terminated prior to the date on which the Change of Control
occurs, 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 of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the “Effective Date” shall mean the date immediately
prior to the date of such termination of employment.
 
(b)           The “Change of Control Period” shall mean the period commencing on
the date hereof and ending on the third anniversary of the date hereof;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the “Renewal Date”),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.
 
 
Page 1 of 17

--------------------------------------------------------------------------------

 
 
2.           Change of Control.  For the purpose of this Agreement, a “Change of
Control” shall mean:

(a)           The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control:  (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
 
(b)           Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
 
(c)           Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

 
Page 2 of 17

--------------------------------------------------------------------------------

 

(d)          Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
 
3.           Employment Period.  The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second anniversary of
such date (the “Employment Period”).
 
4.           Terms of Employment.
 
(a)          Position and Duties.
 
(i)           During the Employment Period, (A) the Executive’s position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the Effective Date and (B)
the Executive’s services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office or location
less than 35 miles from such location.
 
(ii)          During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive’s
reasonable best efforts to perform faithfully and efficiently such
responsibilities.  During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement.  It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Company.
 
(b)          Compensation.
 
(i)           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 twelve times the highest monthly base salary
paid or payable, including any base salary which has been earned but deferred,
to the Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date
occurs.  During the Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase awarded to the Executive
prior to the Effective Date and thereafter at least annually.  Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement.  Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased.  As used in this
Agreement, the term “affiliated companies” shall include any company controlled
by, controlling or under common control with the Company.

 
Page 3 of 17

--------------------------------------------------------------------------------

 

(ii)          Annual Bonus.  In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the “Annual Bonus”) in cash at least equal to the greater of (A)
the average of the Executive’s bonuses under the Company’s Management Incentive
Plan, or any comparable bonus under any predecessor or successor plan (the
“Bonus Plan”) for the last three full fiscal years prior to the Effective Date
and (B) the Executive’s annual bonus under the Bonus Plan, determined based on
the target annual bonus percentage and the Annual Base Salary in effect with
respect to the Executive immediately prior to the Effective Date for the fiscal
year in which the Effective Date occurs (and, in all cases, annualized in the
event that the Executive was not employed by the Company for the whole of any
such fiscal year) (the “Recent Annual Bonus”).  Each such Annual Bonus shall be
paid between January 1 and March 15 (inclusive) of the year following the end of
the fiscal year for which the Annual Bonus is awarded.
 
(iii)         Long-Term Incentives.  During the Employment Period, the Executive
shall be entitled to participate in all long-term incentive plans, practices,
policies and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is applicable), less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
 
(iv)        Savings and Retirement Plans.  During the Employment Period, the
Executive shall be entitled to participate in all savings and retirement plans,
practices, policies and programs applicable generally to other peer executives
of the Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with savings
opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.

 
Page 4 of 17

--------------------------------------------------------------------------------

 

(v)         Welfare Benefit Plans.  During the Employment Period, the Executive
and/or the Executive’s 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 provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
 
(vi)         Expenses.  During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.  Any reimbursement includable in the Executive’s gross
income for federal income tax purposes shall be paid, if at all, by the last day
of the Executive’s taxable year next following the Executive’s taxable year in
which the related expense is incurred.
 
(vii)        Fringe Benefits.  During the Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
 
(viii)      Office and Support Staff.  During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
 
(ix)         Vacation.  During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.

 
Page 5 of 17

--------------------------------------------------------------------------------

 

5.           Termination of Employment.
 
(a)          Death or Disability.  The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period.  If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its intention to terminate the Executive’s
employment.  In such event, the Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties.  For purposes of this Agreement,
“Disability” shall mean the absence of the Executive from the Executive’s duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness or injury which is
determined to be total and permanent by a physician selected by the Company or
its insurers and acceptable to the Executive or the Executive’s legal
representative.
 
(b)          Cause.  The Company may terminate the Executive’s employment during
the Employment Period for Cause.  For purposes of this Agreement, “Cause” shall
mean:
 
(i)           the willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive’s
duties, or
 
(ii)          the willful engaging by the Executive in illegal conduct which is
materially and demonstrably injurious to the Company.
 
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company.  Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.  The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
 
(c)          Good Reason.  The Executive’s employment may be terminated by the
Executive for Good Reason.  For purposes of this Agreement, “Good Reason” shall
mean:
 
(i)           A material diminution in the Executive’s Annual Base Salary;

 
Page 6 of 17

--------------------------------------------------------------------------------

 

(ii)          A material diminution in the Executive’s authority, duties, or
responsibilities or a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Executive is required to report;
 
(iii)         A material change in the geographic location at which the
Executive must perform services, provided that a change in office or location
permitted under Section 4(a)(i)(B) shall not be considered material for this
purpose;
 
(iv)         A material diminution in the budget over which the Executive
retains authority; or
 
(v)          Any other action or inaction that constitutes a material breach by
the Company of this Agreement.
 
(d)          Notice of Termination.  Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement.  For purposes of this Agreement, a “Notice of Termination” means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive’s employment under the provision so indicated (including, in the
case of a termination for Good Reason, the condition constituting Good Reason)
and (iii) if the date on which the termination will become effective is other
than the date of receipt of such notice, specifies the termination date (which
date shall be not more than thirty days after the giving of such notice, except
in the case of a termination for Good Reason, notice shall be not more than 90
days before the termination date).  The Executive’s employment shall be
terminated for Good Reason only if the Executive provides a Notice of
Termination to the Company within 90 days of the initial existence of the
condition constituting Good Reason and the Company fails to remedy the condition
within 30 days of receipt of the Notice of Termination.  Except as provided in
the preceding sentence with respect to termination for Good Reason, the failure
by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company, respectively,
hereunder or preclude the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive’s or the Company’s rights
hereunder.
 
(e)          Date of Termination.  “Date of Termination” means the date on which
the Executive incurs a separation from service with the Company within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”).
 
6.           Obligations of the Company upon Termination.
 
(a)          Good Reason; Other Than for Cause, Death or Disability.  If, during
the Employment Period, the Company shall terminate the Executive’s employment
other than for Cause or Disability or the Executive shall terminate employment
for Good Reason:
 
(i)           the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:

 
Page 7 of 17

--------------------------------------------------------------------------------

 

A.           the sum of (1) the Executive’s Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (2) the product of (x) the
higher of (I) the Annual Bonus for the full fiscal year in which the Date of
Termination occurs, determined based on actual individual and corporate
performance through the Date of Termination, and (II) the Recent Annual Bonus
(provided that this clause (II) shall not apply if a Change in Control does not
occur before the payment date for the lump sum payment described in this Section
6(a)(i)) and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of
which is 365, to the extent not theretofore paid and (3) any accrued vacation
pay, in each case to the extent not theretofore paid (the sum of the amounts
described in clauses (1), (2), and (3) shall be hereinafter referred to as the
“Accrued Obligations”); and
 
B.           the amount equal to the product of (1) three and (2) the sum of (x)
the Executive’s Annual Base Salary, (y) the higher of (I) the Annual Bonus for
the full fiscal year in which the Date of Termination occurs, determined based
on actual individual and corporate performance through the Date of Termination
and (II) the Recent Annual Bonus; and
 
C.           an amount equal to the additional Company matching and profit
sharing contributions that would have been made on the Executive’s behalf in the
Company’s 401(k) and Profit Sharing Retirement Plan or any successor plan (the “
Retirement Plan”) (assuming continued participation on the same basis as
immediately prior to the Effective Date), plus the additional amount of any
benefit the Executive would have accrued under any other excess or supplemental
retirement plan in which the Executive participates (together, the “SERP”) as a
result of contribution limitations in the Retirement Plan, which the Executive
would receive if the Executive’s employment continued for three years after the
Date of Termination, assuming for this purpose that the Executive’s compensation
in each of the three years is that required by Section 4(b)(i) and Section
4(b)(ii) and that the Company’s matching and profit sharing contributions are
determined pursuant to the applicable provisions of the Retirement Plan and the
SERP, as in effect during the 12-month period immediately prior to the Effective
Date, and that the profit sharing contributions are not less than the
contribution percentage in effect for the completed fiscal year immediately
prior to the Effective Date.
 
(ii)          for three years after the Executive’s Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to the Executive and/or
the Executive’s family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 4(b)(v) of this Agreement if the Executive’s employment had not been
terminated or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, subject to the payment requirements of
paragraph (viii), below; provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.  For purposes of
determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed until
three years after the Date of Termination and to have retired on the last day of
such period; and

 
Page 8 of 17

--------------------------------------------------------------------------------

 

(iii)         for three years after the Executive’s Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue to provide to the Executive
and/or the Executive’s family fringe benefits at least equal to those which
would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(vii) of this Agreement if the
Executive’s employment had not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their families,
subject to the payment requirements of paragraph (viii), below; and
 
(iv)        upon the Date of Termination, the Executive shall have the right and
option to purchase the automobile which the Company was providing to the
Executive immediately prior to the Date of Termination in accordance with the
Company’s practice for retiring employees as in effect immediately prior to the
Effective Date (provided that, to the extent such option results in a benefit
that is includable in the Executive’s gross income for federal income tax
purposes, such purchase must occur no later than the 15th day of the third month
following the end of the Executive’s taxable year in which the Date of
Termination occurs); and
 
(v)         the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion, provided that the aggregate
cost of such services shall not exceed $50,000, and provided that (A) such
expense shall not be incurred later than the last day of the second taxable year
of the Executive following the Date of Termination, (B) any reimbursement for
such expenses shall not be paid to the Executive later than the last day of the
third taxable year of the Executive following the Date of Termination, and (C)
the amount of such expenses shall not exceed the amount of “reasonable
outplacement expenses,” as determined under Treas. Reg. § 1.409A-1(b)(9)(v)(A);
and
 
(vi)        amounts credited to the Executive’s account under the Executive
Deferred Compensation Plan shall be paid in the manner and at the time specified
under that plan; and
 
(vii)       to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company and
its affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the “Other Benefits”), subject to the payment requirements of
paragraph (viii), below; and

 
Page 9 of 17

--------------------------------------------------------------------------------

 

(viii)       to the extent that any coverage, payments, reimbursements or
in-kind benefits provided under paragraph (ii), (iii), or (vii) this Section
6(a) would be includable in the Executive’s gross income for federal income tax
purposes (such benefits, together, shall be hereinafter referred to as
“Specified Benefits”), the following rules shall apply:
 
A.          any Specified Benefit that would otherwise be paid in the first six
months following the Date of Termination shall instead be paid in the seventh
month following the Date of Termination, except as provided below;
 
B.           the six-month delay in A., above, shall not apply to any Specified
Benefit that is required to be paid no later than the 15th day of the third
month following the end of the Executive’s taxable year in which the Date of
Termination occurs, and, for purposes of Section 409A of the Code, any Specified
Benefits required to be paid no later than the 15th day of the third month
following the end of the Executive’s taxable year in which the Date of
Termination occurs are considered to be separate payments from all other
Specified Benefits;
 
C.           the six-month delay in A., above, shall not apply to any Specified
Benefits that are (1) reimbursements or in-kind benefits that the Executive
could otherwise deduct as business expenses under Sections 162 or 167 of the
Code (disregarding limitations based on adjusted gross income) or (2)
reimbursements of medical expenses that meet the following requirements: (x) the
expenses are incurred and paid by the Executive (or incurred by the Executive
and paid by the Company directly to the service provider on the Executive’s
behalf); (y) the expenses would be allowable as a deduction to the Executive
under Section 213 of the Code (disregarding the requirement that the deduction
under that section apply only to expenses that exceed 7.5% of adjusted gross
income); and (z) the expenses are not reimbursed from a source other than the
Company; and
 
D.           the six-month delay in A. above, shall not apply to the extent that
any Specified Benefit that (1) is due only upon an involuntary termination (as
defined in Treas. Reg. § 1.409A-1(n)), that (2) would otherwise be subject to
the delay (after taking into account B and C, above), and that (3) when combined
with all other such payments, falls below the amount specified in Treas. Reg. §
1.409A-1(b)(9)(iii)(A) (generally the lesser of two times the Executive’s
average pay or two times the compensation limit in Section 401(a)(17) of the
Code).
 
(b)          Death.  If the Executive’s employment is terminated by reason of
the Executive’s death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive’s legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits.  Accrued Obligations shall be
paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination.  With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this Section 6(b)
shall include, without limitation, and the Executive’s estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death
with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.

 
Page 10 of 17

--------------------------------------------------------------------------------

 

(c)          Disability.  If the Executive’s employment is terminated by reason
of the Executive’s Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive under this Agreement,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits (subject to the six-month delay as described in
subsection 6(a)(viii)).  Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.  With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section
6(c) shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive and/or the Executive’s family, as in effect at
any time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
 
(d)          Cause; Other than for Good Reason.  If the Executive’s employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) any amount of any compensation previously deferred by the
Executive under the Executive Deferred Compensation Plan (“EDCP”) (which shall
be paid in accordance with the terms of the EDCP), and (z) Other Benefits
(subject to the six-month delay as described in subsection 6(a)(viii)), in each
case to the extent theretofore unpaid.  If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive under this Agreement, other than for Accrued Obligations and the
timely payment or provision of Other Benefits.  In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
 
7.           Non-exclusivity of Rights.  Nothing in this Agreement shall prevent
or limit the Executive’s continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

 
Page 11 of 17

--------------------------------------------------------------------------------

 

8.           Full Settlement.  Except as provided in Section 10(c), in the event
of the Executive’s breach of the covenants set forth in Sections 10(a) and
10(b), the Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others.  In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.  The Company agrees to
pay 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 contest
(regardless of the outcome thereof) by the Company, the Executive or others of
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
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.  Any
reimbursement of legal fees paid to the Executive pursuant to this Section 8
shall be paid no later than the end of the Executive’s taxable year next
following the Executive’s taxable year of the Executive in which the related
expense is incurred, and, if paid on account of a separation from service, no
earlier than the seventh month following the Executive’s separation from
service.
 
9.           Limitation on Payments Under Certain Circumstances.
 
(a)          Anything in this Agreement to the contrary notwithstanding, in the
event the Accounting Firm (as defined below) shall determine that receipt of all
Payments (as defined below) would subject the Executive to the excise tax under
Section 4999 of the Code, the Accounting Firm shall determine whether to reduce
any of the Payments paid or payable pursuant to this Agreement (the “Agreement
Payments”) so that the Parachute Value (as defined below) of all Payments, in
the aggregate, equals the Safe Harbor Amount (as defined below).  The Agreement
Payments shall be so reduced only if the Accounting Firm determines that the
Executive would have a greater Net After-Tax Receipt (as defined below) of
aggregate Payments if the Agreement Payments were so reduced.  If the Accounting
Firm determines that the Executive would not have a greater Net After-Tax
Receipt (as defined below) of aggregate Payments if the Agreement Payments were
so reduced, the Executive shall receive all Agreement Payments to which the
Executive is entitled hereunder.
 
(b)          If the Accounting Firm determines that aggregate Agreement Payments
should be reduced so that the Parachute Value of all Payments, in the aggregate,
equals the Safe Harbor Amount, the Company shall promptly give the Executive
notice to that effect and a copy of the detailed calculation thereof.  All
determinations made by the Accounting Firm under this Section 9 shall be binding
upon the Company and the Executive and shall be made as soon as reasonably
practicable and in no event later than 15 days following the Date of
Termination.  For purposes of reducing the Agreement Payments so that the
Parachute Value of all Payments, in the aggregate, equals the Safe Harbor
Amount, only amounts payable under this Agreement (and no other Payments) shall
be reduced.  The reduction of the amounts payable hereunder, if applicable,
shall be made by reducing the payments and benefits under the following sections
in the following order:  (i) cash payments that do not constitute deferred
compensation within the meaning of Section 409A of the Code, (ii) welfare or
in-kind benefits and (iii) cash payments that do constitute deferred
compensation, in each case, beginning with payments or benefits that are to be
paid the farthest in time from the Accounting Firm’s determination.   All fees
and expenses of the Accounting Firm shall be borne solely by the Company.

 
Page 12 of 17

--------------------------------------------------------------------------------

 

(c)          As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or distributed by the
Company to or for the benefit of the Executive pursuant to this Agreement which
should not have been so paid or distributed (“Overpayment”) or that additional
amounts which will have not been paid or distributed by the Company to or for
the benefit of the Executive pursuant to this Agreement could have been so paid
or distributed (“Underpayment”), in each case, consistent with the calculation
of the Safe Harbor Amount hereunder.  In the event that the Accounting Firm,
based upon the assertion of a deficiency by the Internal Revenue Service against
either the Company or the Executive which the Accounting Firm believes has a
high probability of success, determines that an Overpayment has been made, the
Executive shall pay promptly (and in no event later than 60 days following the
date on which the Overpayment is determined) any such Overpayment to the Company
together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no amount shall be payable by
the Executive to the Company if and to the extent such payment would not either
reduce the amount on which the Executive is subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such taxes.  In the event that
the Accounting Firm, based upon controlling precedent or substantial authority,
determines that an Underpayment has occurred, any such Underpayment shall be
paid promptly (and in no event later than 60 days following the date on which
the Underpayment is determined) by the Company to or for the benefit of the
Executive together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code.
 
(d)          To the extent requested by the Executive, the Company shall
cooperate with the Executive in good faith in valuing, and the Accounting Firm
shall take into account the value of, services provided or to be provided by the
Executive (including without limitation, the Executive’s agreeing to refrain
from performing services pursuant to a covenant not to compete or similar
covenant, including that set forth in Section 10 of this Agreement before, on or
after the date of a change in ownership or control of the Company (within the
meaning of Q&A-2(b) of the final regulations under Section 280G of the Code),
such that payments in respect of such services may be considered reasonable
compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final
regulations under Section 280G of the Code and/or exempt from the definition of
the term “parachute payment” within the meaning of Q&A-2(a) of the final
regulations under Section 280G of the Code in accordance with Q&A-5(a) of the
final regulations under Section 280G of the Code.
 
(e)          Definitions.  The following terms shall have the following meanings
for purposes of this Section 9.
 
(i)           “Accounting Firm” shall mean a nationally recognized certified
public accounting firm that is selected by the Company for purposes of making
the applicable determinations hereunder and is reasonably acceptable to the
Executive, which firm shall not, without the Executive’s consent, be a firm
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control.
 
(ii)          “Net After-Tax Receipt” shall mean the present value (as
determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the
Code) of a Payment net of all taxes imposed on the Executive with respect
thereto under Sections 1 and 4999 of the Code and under applicable state and
local laws, determined by applying the highest marginal rate under Section 1 of
the Code and under state and local laws which applied to the Executive’s taxable
income for the immediately preceding taxable year, or such other rate(s) as the
Accounting Firm determined to be likely to apply to the Executive in the
relevant tax year(s).

 
Page 13 of 17

--------------------------------------------------------------------------------

 

(iii)         “Parachute Value” of a Payment shall mean the present value as of
the date of the change of control for purposes of Section 280G of the Code of
the portion of such Payment that constitutes a “parachute payment” under Section
280G(b)(2) of the Code, as determined by the Accounting Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such
Payment.
 
(iv)         “Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of the Executive, whether paid or payable pursuant to this Agreement
or otherwise.
 
(v)          “Safe Harbor Amount” shall mean 2.99 times the Executive’s “base
amount,” within the meaning of Section 280G(b)(3) of the Code.
 
10.         Restrictive Covenants.
 
(a)          Confidential Information.  The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive’s employment by the Company or any of its affiliated
companies and which shall 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 Executive’s employment with the Company,
the Executive shall not, without the prior written consent of the Company or 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.
 
(b)          Noncompetition.  The Executive agrees that, during the three year
period following his Date of Termination under circumstances entitling the
Executive to the payments and benefits under Section 6(a) of this Agreement (the
“Restricted Period”), he will not engage in Competition (as defined below).  The
Executive shall be deemed to be engaging in “Competition” if he, directly or
indirectly, anywhere in the continental United States, Mexico, the Bahamas or
any other location in which the Company is engaged in business or has taken
substantial steps toward the development of business at the time of the
Executive’s termination, owns, manages, operates, controls or participates in
the ownership, management, operation or control of or is connected as an
officer, employee, partner, director, consultant or otherwise with, or has any
financial interest in, any business (whether through a corporation or other
entity) engaged in the construction materials businesses, including the
production of aggregates, sand and gravel, ready-mix concrete, asphalt, and
other construction material related items manufactured by the
Company.  Ownership for personal investment purposes only of less than 2% of the
voting stock of any publicly held corporation shall not constitute a violation
hereof.

 
Page 14 of 17

--------------------------------------------------------------------------------

 

(c)          Remedies.  The Executive acknowledges that the Company would be
irreparably injured by a violation of Section 10(a) or (b), and he agrees that
the Company, in addition to any other remedies available to it for such breach
or threatened breach, on meeting the standards required by law, shall be
entitled to a preliminary injunction, temporary restraining order, or other
equivalent relief, restraining the Executive from any actual or threatened
breach of Section 10(a) or (b).  If a bond is required to be posted in order for
the Company to secure an injunction or other equitable remedy, the parties agree
that said bond need not be more than a nominal sum.  In addition, the Executive
acknowledges that his rights to the protections and payments and benefits under
this Agreement are conditioned upon the Executive’s agreement to the
restrictions set forth in the Section 10 and continued compliance therewith, and
in the event the Executive breaches the terms of Section 10(a) or (b) of this
Agreement, in addition to all other available remedies, all payments and
benefits provided under Section 6 (a) (other than the Accrued Obligations and
the Other Benefits) shall, to the extent paid, be subject to a right of
reclamation by the Company or, to the extent unpaid, forfeiture by the
Executive.
 
(d)          Governing Law; Severability; Blue Pencil.  The validity and
enforcement of the covenants set forth in this Section 10 shall be governed by
the laws of the State of New Jersey without reference to principles of conflict
of laws. The Executive acknowledges and agrees that he has had the opportunity
to seek advice of counsel in connection with the Agreement and the restrictive
covenants contained herein are reasonable in geographical scope, temporal
duration, and in all other respects.  If it is determined that any provision of
this Section 10 is invalid or unenforceable, the remainder of the provisions of
this Section 10 shall not thereby be affected and shall be given full effect,
without regard to the invalid portions.  If any court or other decision-maker of
competent jurisdiction determines that any of the covenants in this Section 10
is unenforceable because of the duration or geographic scope of such provision,
then after such determination becomes final and unappealable, the duration or
scope of such provision, as the case may be, shall be reduced so that such
provision becomes enforceable, and in its reduced form, such provision shall be
enforced.
 
11.         Successors.
 
(a)          This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution.  This Agreement
shall inure to the benefit of and be enforceable by the Executive’s legal
representatives.
 
(b)          This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
 
(c)          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, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
 
12.         Miscellaneous.
 
(a)          Except as provided in Section 10(d), this Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
without reference to principles of conflict of laws.  The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect.  This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.

 
Page 15 of 17

--------------------------------------------------------------------------------

 

(b)          All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
 
If to the Executive:
 
The most recent address on file at the Company

If to the Company:
 
Vulcan Materials Company
P.O. Box 385014
Birmingham, Alabama  35238-5014
Attention:  General Counsel
 
or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice and communications shall be effective
when actually received by the addressee.
 
(c)          The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
 
(d)          The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
 
(e)          The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i) (v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
 
(f)           The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is “at will”
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive’s employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement; provided, that
this Agreement may not be terminated by the Company if it is reasonably
demonstrated by the Executive that such termination (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change of
Control or (ii) otherwise arose in connection with or anticipation of a Change
of Control.  From and after the Effective Date this Agreement shall supersede
any other agreement between the parties with respect to the subject matter
hereof.

 
Page 16 of 17

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

 

 
 /s/ John R. McPherson
     
VULCAN MATERIALS COMPANY
     
By:
/s/ Donald M. James
   
Title:  Chairman and Chief Executive Officer

 
 
Page 17 of 17

--------------------------------------------------------------------------------