EXHIBIT 10.1
Execution Copy
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
     This Amended and Restated Management Agreement (this “Agreement”) effective
as of January 1, 2006, by and among Lafarge North America Inc., a Maryland
corporation (“LNA”), Lafarge S.A., a corporation organized and existing under
the laws of France (“Lafarge”), and Blue Circle North America, an Alabama
corporation and an indirect subsidiary of Lafarge (“BCNA”).
RECITALS
     A. By means of its acquisition of Blue Circle Industries PLC (“BCI”),
Lafarge acquired BCI’s North American businesses (certain assets of which were
subsequently disposed of by Lafarge) and has acquired certain other related
businesses and assets for which (other than assets disposed of by Lafarge) LNA
has provided ongoing management services, including all the cement production,
distribution, sales and marketing operations of BCNA located in the U.S. and
Canada and all of the concrete and aggregates production, distribution, sales
and marketing operations of BCNA located in the U.S. and Canada including the
assets comprising the PreCon business in Ontario, Canada (such assets being
herein collectively referred to as the “Assets” and the business conducted by
BCNA with the Assets being referred to as the “Business”).
     B. Lafarge desires that LNA continue to provide certain ongoing management
services to BCNA with respect to the Assets and the Business, and LNA is willing
to provide such services upon the terms and conditions contained herein.
     C. The parties desire to amend and restate, effective as of January 1,
2006, that certain Management Agreement dated as of July 11, 2001 by and among
LNA, Lafarge and BCNA (the “Old Management Agreement”), it being understood and
agreed that the Old Management Agreement shall be in full force and effect until
the effective date of the Agreement.
     NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, and for all other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree to amend and restate the Old Management Agreement,
effective as of January 1, 2006, as follows:
ARTICLE I
Management
     Section 1.1. Engagement. Subject to the terms and conditions hereof, BCNA
hereby engages LNA as the manager of the Assets and the Business, to manage to
the extent permitted by law the operations of the Business in their ordinary
course, and LNA agrees to be so engaged by BCNA. In addition, the parties may
agree by separate agreement from time to time during the Term (as defined in
Article V) for LNA to undertake certain managerial responsibilities outside of
the ordinary course of business with respect to the Business and/or the Assets.
BCNA agrees to appoint the chief executive officer of LNA as the chief executive
officer of BCNA for the
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Term, with such authority as is customary for such position and with the
appropriate executive officers of BCNA reporting to the chief executive officer
or his designees.
     Section 1.2. Delegation of Rights, Power and Authority.
     (a) Subject to terms and conditions hereof (including the limitation
contained in this subsection (a) and in subsection (b) below), BCNA hereby
delegates to LNA all power and authority to manage the Assets and the Business
in the ordinary course, including without limitation the power and authority, in
the name and on behalf of BCNA:
     (i) to manage the Assets and operate the Business on a day-to-day basis and
make all operational decisions with respect thereto including, without
limitation, decisions relating to pricing, customer collections, personnel
hirings, terminations and compensation matters, corporate and regional
reorganizations and restructurings, plant operations, and short and long-term
contractual arrangements;
     (ii) to authorize individual capital expenditures and/or capital lease
projects of up to $10 million, provided such projects are within the overall
BCNA budget approved by the BCNA Board of Directors;
     (iii) to acquire assets, in any single transaction or series of related
transactions, for up to $10 million, provided such acquisitions are within the
overall BCNA budget for acquisitions and development approved by the BCNA Board
of Directors;
     (iv) to sell or divest Assets, in any single transaction or series of
related transactions, for up to $10 million;
     (v) to manage all BCNA cash management, debt management and treasury
functions;
     (vi) to manage all human resource and personnel matters;
     (vii) to prepare and present annual capital and operating budgets to the
Board of Directors of BCNA for approval and to use its best efforts to operate
within such budgets;
     (viii) to employ from time to time third parties to render services to
BCNA, including, but not limited to, attorneys, independent certified public
accountants, consultants, brokers, agents and advisors (including attorneys,
accountants, consultants, brokers, agents and advisors who also may act as
attorneys, accountants, consultants, brokers, agents and advisors for LNA), to
the extent that the service to be rendered to BCNA by any such third party is
generally related to the business purpose or the day-to-day operations of BCNA;
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     (ix) to procure and maintain in force such insurance as LNA shall deem
prudent to serve as protection against liability for loss and damage which may
be occasioned by the activities to be engaged in by BCNA;
     (x) to control any matters affecting the rights and obligations of BCNA,
including the conduct of any litigation or arbitration proceedings and the
incurring of legal expenses and the settlement of claims and litigation, to the
extent that any such matter is generally related to the business purpose or the
day-to-day operations of BCNA;
     (xi) to open, maintain and close bank accounts and custodial accounts and
to execute and deliver checks, drafts, endorsements and other orders for the
payment of BCNA funds;
     (xii) to appear and to represent BCNA before any governmental authority or
regulatory agency and to make all necessary or appropriate filings before such
authority or agency, to the extent that any such appearance, representation or
filing is generally related to the business purpose or the day-to-day operations
of BCNA; and
     (xiii) to take such other action, execute and deliver such other documents
and perform such other acts as may be deemed by LNA to be necessary or advisable
to carry out the business and affairs of BCNA.
     (b) Notwithstanding any other provisions of this Agreement to the contrary,
LNA shall not have the right, power or authority to, and shall not, do, perform
or authorize any of the following by or on behalf of BCNA without having
received the prior consent of the Board of Directors of BCNA:
     (i) adopt annual capital or operating budgets;
     (ii) authorize individual capital expenditures and/or capital lease
projects, divestitures or acquisitions in excess of $10 million;
     (iii) authorize financial borrowings or lines of credit;
     (iv) authorize any single corporate guarantee for the payment of money or
the performance of any contract or other obligation of any customer for an
amount in excess of $10 million or any guarantee that would result in the total
of all outstanding BCNA guarantees exceeding $25 million; or
     (v) approve the hiring, termination or compensation arrangements of any
BCNA employee who reports directly to the CEO or who has been designated as a
key employee by the BCNA Board of Directors.
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ARTICLE II
Management Fee; Reimbursement
     Section 2.1. Management Fee.
     (a) During the Term, BCNA shall pay to LNA, in consideration of the
services performed under this Agreement, an annual fee (the “Fee”) equal to
(i) the Estimated Incremental Costs (as defined below), plus (ii) $12 million
(as it may be increased for inflation, the “Fixed Annual Fee”), plus (iii) the
Incentive Fee (as defined below). Beginning with the calendar year 2006 and
annually thereafter, the Fixed Annual Fee shall be subject to an increase equal
to the percentage increase in the December Producers Price Index for Finished
Goods (the “Finished Goods PPI”) with respect to the immediately preceding
December and the Finished Goods PPI with respect to the previous December, as
published by United States Department of Labor, Bureau of Labor. “Incentive Fee”
shall mean a fee equal to 10% of the increase, if any, in the current year’s
Operating Income (as defined below) over the prior year’s Operating Income;
provided that such fee shall only be payable with respect to years in which the
current year’s Operating Income exceeds the greater of (i) U.S. $105 million or
(ii) the highest Operating Income for any prior year commencing with the
calendar year 2005. The Incentive Fee for any given year shall be capped at 50%
of that year’s Fixed Annual Fee. “Operating Income” shall mean BCNA’s pre-tax
earnings before interest income and expense, before charges associated with the
cost allocations from Lafarge and before charges associated with the Fee as
described on Exhibit A. The fixed portion of the Fee (contemplated by clauses
(i) and (ii) above) will be paid in arrears in four equal quarterly payments,
and the Incentive Fee will be paid on an annual basis following finalization of
BCNA’s annual results of operations and in any event, no later than the March 31
of the year following the year for which the Incentive Fee is being calculated.
The Fee shall be prorated as of the date of termination or expiration of this
Agreement.
     The Incentive Fee formula shall be equitably modified based on material
changes to BCNA’s capital base (above U.S. $100,000,000) that would maintain the
parties’ respective economics without disadvantaging any party.
     In the event an agreement is entered into with respect to a direct or
indirect sale of all or substantially all of BCNA or the Assets to any person,
entity or group other than LNA during the Term of this Agreement (in one or more
related transactions), as it may be extended from time to time, Lafarge will pay
to LNA a supplemental payment upon consummation of any such sale (or, if such
sale occurs prior to the date that BCNA’s annual results of operations for the
calendar year 2007 have been prepared, promptly upon preparation of such annual
results, and in any event, no later than March 31, 2008), whether or not the
consummation of such sale occurs during the Term, equal to the difference
between the Incentive Fee that would have been payable under the terms of this
Agreement with respect to calendar years 2006 and 2007 calculated using a rate
of 25% (without giving effect to any cap on Incentive Fees) and the Incentive
Fee paid or payable with respect to such years calculated using a rate of 10%
(giving effect to the cap). If a substantial portion (but less than
substantially all) of BCNA or its assets is sold, directly or indirectly, to a
person, entity or group other than LNA (in one or more
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related transactions), then the supplemental payment shall be based on a
proportionate share of BCNA’s Operating Income attributable to the assets sold.
For purposes of this Section 2.1(a), “substantial portion” means assets
generating 25% of BCNA’s Operating Income for the most recently completed
calendar year.
     For purposes of this Section 2.1(a), “Estimated Incremental Costs” shall
equal $2,149,000 per year, representing the agreed upon estimated annual
incremental costs that will be borne by LNA in connection with the performance
of its obligations under this Agreement.
     (b) In the event Lafarge engages LNA to perform services beyond the
ordinary course of business contemplated by this Agreement, and LNA accepts such
engagement, LNA will receive such additional fees as the parties may agree upon
in advance of such engagement.
     Section 2.2. Reimbursement of Expenses. BCNA shall reimburse LNA for any
costs or expenses incurred by LNA in connection with the performance and/or
termination of this Agreement, to the extent such costs or expenses are not
included in the compensation arrangements contemplated by the Fee, including
without limitation, operating expenditures such as restructuring charges,
relocation costs, and termination expenses. LNA shall submit to BCNA monthly
statements of any such expense, and promptly provide such further documentation
of expenses as BCNA shall reasonably request. BCNA shall reimburse LNA for such
expenses within thirty (30) days of receipt of a statement. In addition, in the
event of the termination of this Agreement, BCNA shall reimburse LNA for any
cost, expense or financial consequence arising from the structural separation of
LNA and BCNA and their respective businesses, including without limitation any
cost or expense borne by LNA in reducing its management structure to manage only
its operations.
ARTICLE III
Liability and Indemnification;
Corporate Opportunity
     Section 3.1. Liability.
     (a) Neither LNA, its affiliates, officers, directors, employees or agents,
shall be liable, responsible, or accountable in damages or otherwise to Lafarge
or BCNA for any action taken or failure to act in connection with the
operations, business and affairs of BCNA, the management of the Business and the
Assets or the performance by LNA of its duties and obligations hereunder, unless
such act or failure to act was the result of willful misconduct or gross
negligence.
     (b) LNA may consult with and be entitled to rely upon the advice of such
legal counsel, accountants, appraisers, investment bankers, and other
consultants and advisers as it deems necessary or appropriate.
     Section 3.2. Indemnification.
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     (a) Lafarge shall indemnify and hold harmless LNA, its affiliates,
officers, directors, employees and agents (in this Section sometimes
individually called an “Indemnitee”) from all claims, causes of action,
judgments, liabilities, damages, charges, fees (including, without limitation,
attorney’s fees) and expenses of any kind arising from the Business, the Assets,
the operations, business and affairs of BCNA or the performance by LNA of its
duties and obligations hereunder; provided, however, that no Indemnitee shall be
indemnified by Lafarge for any acts or omissions by the Indemnitee that
constitute willful misconduct or gross negligence.
     (b) Without limiting subsection (a) above, Lafarge shall pay or reimburse
expenses incurred by an Indemnitee in connection with the Indemnitee’s
appearance as a witness or other participation in a proceeding involving or
affecting BCNA at a time when the Indemnitee is not a named defendant or
respondent in the proceeding.
     (c) The indemnification provided by this Section shall be in addition to
any other rights to which each Indemnitee may be entitled, as a matter of law or
otherwise, both as to action in the Indemnitee’s capacity as the manager of the
Business and/or the Assets or an officer, director, employee or agent of LNA or
an affiliate thereof or as a person serving at the request of LNA as set forth
above and to action in another capacity, and shall continue as to an Indemnitee
who has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns, administrators and personal representatives of the
Indemnitees.
     Section 3.3. Corporate Opportunity. Any corporate opportunities regarding
acquisitions in North America presented by third parties to BCNA (or Lafarge,
with respect to BCNA) and/or LNA during the Term will be first offered to or
retained by LNA, which will have the right to pursue such opportunity to the
exclusion of BCNA if so determined by any committee of directors of LNA who are
independent of Lafarge formed to consider, among other things, issues related to
this Agreement (the “Special Committee”). Lafarge and BCNA agree to notify LNA
in writing promptly of any such opportunity and LNA agrees to notify Lafarge and
BCNA within thirty (30) days after receipt of such notice as to whether it
intends to pursue such opportunity.
ARTICLE IV
Dispute Resolution Process
     Section 4.1. Dispute Resolution Process. The parties agree to utilize the
following dispute resolution process during the Term:
     (a) The parties subscribe to the principle that the actions taken under
this Agreement should maximize the benefits to both LNA and BCNA and that, to
the extent that a certain action benefits one party to the detriment of the
other, compensatory arrangements should be agreed upon by the parties. The
parties agree that this principle is to be judged in its totality and not on an
item-by-item basis.
     (b) Any conflict between benefits to LNA and BCNA that arises and involves
matters exceeding $2.5 million that cannot be resolved by the parties within ten
(10)
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business days would be submitted immediately to a resolution committee (the
“Resolution Committee”) consisting of two members of the Special Committee of
LNA and two representatives of Lafarge.
     (c) In the event a conflict cannot be resolved by the Resolution Committee
within ten (10) business days after submission (i.e., a proposed action would be
clearly beneficial to either LNA or BCNA and detrimental to the other, and no
adequate compensating actions would be taken to satisfy the maximization
principle referenced in (a) above), then the parties agree either to refrain
from taking the proposed action or resolve the issue as soon as practicable by
mediation or arbitration at the offices of LNA in Herndon, Virginia, with one
arbitrator or mediator appointed by the parties.
     Section 4.2. Reports. Twice per year, LNA will prepare and submit to the
Resolution Committee a report describing all matters occurring during the prior
two quarters that could involve a potential conflict and stating whether the
potential conflict has or has not been resolved by the parties and whether the
potential conflict requires the attention of the Resolution Committee. The
parties agree that during the Term, the Board of Directors of LNA shall receive
reports twice per year concerning the performance of the Assets containing the
same level of detail that they now receive concerning the business of LNA
ARTICLE V
Term
     The term of this Agreement (the “Term”) shall commence on January 1, 2006
and terminate on December 31, 2007 (the “Initial Term”). After the expiration of
the Initial Term, this Agreement will automatically extend for one-year periods;
provided that at any time on or after December 31, 2006, BCNA or LNA may give
notice of termination of this Agreement by delivering notice to the other party
that this Agreement will terminate one year after such delivery. In no event may
a termination notice be given prior to December 31, 2006. If notice is not
delivered on a month-end date, the termination of this Agreement shall be
effective on the first anniversary of the last day of the month during which
such notice was delivered. In the event this Agreement is not renewed, LNA will
provide such assistance during the one-year period prior to expiration of this
Agreement as Lafarge may reasonably request in implementing alternative
management arrangements for the Business.
ARTICLE VI
Relationship of the Parties
     Notwithstanding anything in this Agreement to the contrary, (a) the
relationship of LNA to BCNA and Lafarge shall be and remain that of an
independent contractor; (b) neither LNA nor any officer, director, employee or
agent thereof shall be deemed to be an employee of BCNA or Lafarge by virtue of
this Agreement; (c) nothing contained herein shall be deemed or construed to
create a partnership between BCNA or Lafarge on the one hand, and LNA, on the
other hand, or to cause any party hereto to be responsible in any way for the
debts or obligations of any other party hereto.
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ARTICLE VII
Representations and Warranties
     Section 7.1. Representations and Warranties of LNA LNA represents, warrants
and covenants to BCNA and Lafarge as follows:
     (a) LNA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland.
     (b) LNA has the requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
     (c) The execution, delivery and performance by LNA of this Agreement have
been duly and validly authorized, and no other action is required to be taken to
authorize such execution, delivery and performance. The execution, delivery and
performance by LNA of this Agreement are within the powers of LNA and will not
be in contravention of or result in any breach or constitute a default under any
applicable law, rule or regulation or any loan, note or other agreement or
instrument to which LNA is a party or by which it or any of its properties are
bound.
     (d) No consent, approval, authorization or order of any court or
governmental agency or authority or of any third party which has not been
obtained is required in connection with the execution, delivery and performance
by LNA of this Agreement.
     Section 7.2. Representations and Warranties of BCNA and Lafarge. Each of
BCNA and Lafarge severally represent, warrant and covenant to LNA as follows:
     (a) It is an entity duly organized, validly existing and in good standing
under the laws of the county or state of its formation.
     (b) It has the requisite power and authority to execute and deliver this
Agreement and to perform its respective obligations hereunder.
     (c) The execution, delivery and performance by it of this Agreement have
been duly and validly authorized, and no other action is required to be taken to
authorize such execution, delivery and performance. The execution, delivery and
performance by it of this Agreement are within its powers and will not be in
contravention of or result in any breach or constitute a default under any
applicable law, rule or regulation or any loan, note or other agreement or
instrument to which it is a party or by which it or any of is properties are
bound.
     (d) No consent, approval, authorization or order of any court or
governmental agency or authority or of any third party which has not been
obtained is required in connection with the execution, delivery and performance
by it of this Agreement.
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ARTICLE VIII
Miscellaneous
     Section 8.1. Notice. All notices, demands, requests or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be given either (a) by hand delivery, (b) by United States mail, certified
or registered, return receipt requested, postage prepaid, (c) by electronic
facsimile or (d) by overnight courier service (charges prepaid) with proof of
delivery at the following addresses:

         
 
  To LNA:   12950 Worldgate Drive, Suite 500
 
      Herndon, Virginia 20170
 
      Attention: President and Chief Executive Officer
 
      Fax: 703-796-2218
 
       
 
  To BCNA or Lafarge:   61, rue des Belles Feuilles
 
      75116 Paris
 
      Attention: Vice Chairman and Chief Operating Officer
 
      Fax: 011 33-1-44-34-12-22

     Section 8.2. Expense of Enforcement. If either party brings an action at
law or in equity to enforce or interpret this Agreement, the prevailing party in
such action shall be entitled to recover reasonable attorneys’ fees and
disbursements incurred in connection with such proceeding, including but not
limited to arbitration or appellate proceedings, in addition to any other remedy
granted.
     Section 8.3. Entire Agreement; Acknowledgment. This Agreement constitutes
the full and complete agreement of the parties hereto with respect to the
subject matter hereof. This Agreement may be amended only by subsequent written
agreement among the parties hereto. Lafarge hereby acknowledges and approves the
covenants and agreements made by BCNA under this Agreement and agrees to cause
the BCNA Board of Directors to take any and all necessary action to carry out
the intent and purposes of this Agreement.
     Section 8.4. Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by applicable law.
     Section 8.5. No Waiver. The failure of any party to insist upon strict
performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, shall not be a waiver of
such party’s right to demand strict compliance in the future. No consent or
waiver, express or implied, to or of any breach or default in the performance of
any obligation hereunder shall constitute a consent or waiver to or of any other
breach or default in the performance of the same or any other obligation
hereunder.
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     Section 8.6. Survival of Representations and Warranties. All
representations, warranties and covenants made by the parties hereto in this
Agreement or any other document contemplated hereby shall be considered to have
been relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement, or such other document, regardless of any
investigation made by or on behalf of any such party.
     Section 8.7. Governing Law. This Agreement shall be construed in accordance
with and governed by the internal substantive law of New York. Each party hereto
agrees that the United States District Court for the Southern District of New
York shall have non-exclusive jurisdiction to settle any dispute which may arise
in connection with this Agreement and is not resolved pursuant to the dispute
resolution process contemplated by Article IV.
     Section 8.8. Captions, General, Number and Language of Inclusion. The
captions are inserted in this Agreement only for convenience of reference and do
not define, limit, or describe the scope or intent of any provisions of this
Agreement. Unless the context clearly requires otherwise, the singular includes
the plural, and vice versa, and the masculine, feminine, and neuter adjectives
include one another. As used in this Agreement, the word “including” shall mean
“including, but not limited to”. All references to “$” or dollar amounts will be
to lawful currency of the United States of America.
     Section 8.9. Further Assurances. From and after the date hereof, the
parties hereto shall execute and deliver, as appropriate, any instruments or
documents and take or do, as appropriate, any other actions and things
reasonably necessary to enable LNA to perform fully its obligations under this
Agreement and to otherwise carry out the intention of this Agreement.
     Section 8.10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns; provided, however, that no party hereto
may assign, transfer or otherwise dispose of all or any part of its rights,
duties or obligations hereunder without the written consent of the other
parties.
     Section 8.11. No Third Party Beneficiaries. Nothing in this Agreement,
either express or implied, is intended to or shall confer upon any person other
than the parties hereto, and their respective successors and permitted assigns,
any rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement.
     Section 8.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute but one and the same document.
     Section 8.13. Supplemental Agreement Regarding Employees and Employee
Benefits.. The Supplemental Agreement Regarding Employees and Employee Benefits,
dated as of December 21, 2001 (the “Supplemental Agreement”), which supplemented
the Old Management Agreement, shall be deemed to supplement and to be a part of
this Agreement; provided, that (i) the definition of “Termination Date” in
Section 1.2 of the Supplemental Agreement shall be deemed the date of
termination of this Agreement and (ii) all references in the Supplemental
Agreement to LNA’s exercise of the Option (as defined therein) shall be deemed
to be references to LNA’s purchase of the Assets (as defined herein).
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     IN WITNESS WHEREOF, the parties have executed this Agreement, effective as
of January 1, 2006, as of the day and year specified below.

              LAFARGE NORTH AMERICA INC.
 
       
 
  By:   /s/ Philippe R. Rollier
 
       
 
      Philippe R. Rollier
 
      Chief Executive Officer
 
      Date: September 29, 2005
 
            LAFARGE S.A.
 
       
 
  By:   /s/ Jean-Jacques Gauthier
 
       
 
      Jean-Jacques Gauthier
 
      Chief Financial Officer
 
      Date: September 29, 2005
 
            BLUE CIRCLE NORTH AMERICA
 
       
 
  By:   /s/ Eric C. Olsen
 
       
 
      Eric C. Olsen
 
      Chief Financial Officer
 
      Date: September 29, 2005

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