Exhibit 10.9

Employment Agreement

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”), made effective as of the 13th day of
January, 2006 (the “Effective Date”), by and between CHAPARRAL STEEL COMPANY, a
Delaware corporation (hereinafter referred to as the “Company”), and TOMMY A.
VALENTA (hereinafter referred to as the “Executive”).

 

WITNESSETH:

 

WHEREAS, Executive has been elected to the position of President and Chief
Executive Officer of the Company and as a member of its Board of Directors;

 

WHEREAS, the Company and Executive previously entered into an Employment
Agreement effective July 29, 2005;

 

WHEREAS, the Company desires to modify the terms and condition of Executive’s
employment in order to insure the retention of Executive’s services and
Executive is willing to render such services on the terms and conditions set
forth herein:

 

NOW, THEREFORE, the Company and the Executive, in consideration of the premises
and promises each to the other herein contained, have agreed and do hereby agree
and covenant as follows:

 

15.5

Employment and Term:

 

(a) Position and Term. The Company agrees to employ the Executive as the
President and Chief Executive Officer of the Company, during the three (3) year
period commencing on January 13, 2006 and ending January 13, 2009 (the “Term”),
and the Executive agrees to serve the Company in such capacity during such Term
unless terminated earlier pursuant to Section 3 (the “Employment Period”). Such
Term will automatically be extended for one (1) year as of January 13 of each
year commencing as of January 13, 2007 so that the unexpired term of the
Agreement as of January 13 of each year will always be three (3) years, unless
either party on or prior to such January 13 provides the other written notice of
termination at least thirty (30) days prior to such January 13 in which case the
Agreement will expire in three (3) years (i.e., on the January 13 that is three
(3) years from the January 13 with respect to which such notice of termination
is given), unless this Agreement is terminated earlier pursuant to Section 3.

 

(b) Duties. Executive will report to the Board of Directors of the Company and
will have general management over the business, affairs and property of the
Company in the ordinary course of its business with all such powers with respect
to such general management as may be reasonably incident to such
responsibilities. The Board of Directors may assign Executive additional duties
during the Term; provided, that such duties are not inconsistent with those set
forth in the preceding sentence. Executive agrees to devote all of his time and
attention during normal business hours during such term to the business and
affairs of the Company, its subsidiaries and affiliates, subject to Section 1(d)
hereof.

 

(c) Additional Duties for Company. Executive will serve as a Director of the
Company and/or one or more of its subsidiaries or affiliates if elected as such
and will hold the offices with the Company and/or its subsidiaries or affiliates
to which, from time to time, he may be elected or appointed during the
Employment Period. Executive agrees that he will not be entitled to receive any
compensation for serving as a Director of the Company or, with respect to the
subsidiaries or affiliates of the Company, in any capacity other than the
compensation to be paid to Executive pursuant to this Agreement or any other
written agreement between the Company or any of its subsidiaries or affiliates
and Executive.

 

(d) Additional Activities. During the Employment Period, Executive may serve on
charitable boards and other nonprofit organizations and attend to personal
investments, provided, that such efforts involve a reasonable amount of time and
do not detract from his duties with the Company and

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its subsidiaries and affiliates. Further, with the approval of the Board of
Directors, Executive may serve on the board of directors of unaffiliated “for
profit” entities.

 

(e) Place of Performance. In connection with his employment under this
Agreement, Executive will be based at 300 Ward Road, Midlothian, Texas
76065-9661. The Company will not, without the written consent of Executive,
relocate or transfer Executive’s place of performance to a location that
increases Executive’s daily commute distance based on the location of
Executive’s principal residence as of the Effective Date to more than fifty
(50) miles (one-way), except for reasonably required travel on Company business
which is not materially greater than such travel requirements prior thereto.

 

15.6

Compensation

 

(a) Base Annual Compensation. Executive will receive a base salary at the rate
of Five Hundred Thousand Dollars ($500,000.00) per annum payable in periodic
installments in accordance with the Company’s payment practices and procedures.

 

(b) Incentive Compensation. Executive will participate in all incentive plans in
which executive officers of the Company participate and will participate at
multiples consistent with the Company’s current incentive plans (i.e., Executive
will receive incentive payments calculated at a rate at least thirty three
percent (33%) higher than the rate used to calculate payments to executive
officers pursuant to single year incentive plans and at a rate at least fifty
percent (50%) higher than the rate used to calculate payments to executive
officers pursuant to multi-year incentive plans).

 

In the event that payment of any incentive compensation payable to Executive
pursuant to this Section 2(b) would not be deductible by the Company pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
then payment of the amount of such award which is not deductible will
automatically be deferred, with interest equivalent to U.S. Treasury Bills, up
to the earliest of (i) April 30th of the first year in which the Company
reasonably anticipates that the deduction of the payment of the amount will not
be limited or eliminated by application of Section 162(m) of the Code or
(ii) the date which is six (6) months and one (1) day following the Executive’s
termination of employment.

 

(c) Participation in Equity and Non-Equity Plans. Executive will participate in
all equity and non-equity plans made available to executive officers of the
Company to enable them to participate in the appreciation in value of the common
stock of the Company.

 

(d) Other Benefits and Perquisites. During the Period of Employment, Executive
will receive the following perquisites and other benefits:

 

(i) standard perquisites (e.g., company car or car allowance, club dues,
professional association membership);

 

(ii) the reimbursement of or payment for business travel;

 

(iii) the reimbursement for out of pocket expenses incurred by Executive in
performing his duties under this Agreement;

 

(iv) vacation time and holidays in accordance with Company policy;

 

(v) the reimbursement of legal fees incurred by Executive in connection with the
review and negotiation of this Agreement up to a maximum of Ten Thousand Dollars
($10,000);

 

(vi) the reimbursement of legal fees incurred by Executive in seeking to enforce
this Agreement, provided that any enforcement actions taken by Executive are not
frivolous or taken in bad faith and that such legal fees are incurred by
Executive and submitted to the Company for reimbursement no later than
December 31 of the second (2nd) calendar year following the year in which
Executive’s termination of employment occurs (i.e., pursuant to section 409A of
the Code the reimbursement of such legal fees must occur by December 31 of the
second (2nd) calendar year following Executive’s termination of employment);

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(vii) the provision of a ten (10) year level term life insurance policy of five
(5) times Executive’s Base Salary. Executive will have the right to designate
the beneficiary and the policy will be assigned to Executive on his termination
of employment;

 

(viii) participation in the Financial Security Plan of Chaparral Steel Company
(the “FSP”) pursuant to the terms of the Executive’s “Election to Participate,”
“Election Form” and “Plan Agreement,” as such documents are defined and
described in the FSP;

 

(ix) participation in any other group life, health or similar insurance program
made available to senior executives of the Company; and

 

(x) participation in any retirement, pension plan or other benefit programs made
available to senior executives of the Company.

 

(e) Annual Review. Executive’s total compensation (i.e., Base Salary and
incentive plan payment opportunities) will be reviewed annually by the Board of
Directors of the Company and such Base Salary and multiples of incentive plan
participation may not be decreased without Executive’s written consent.

 

15.7

Early Termination

 

(a) Death. Upon the death of Executive during the Term of this Agreement, the
Agreement will terminate and Executive will be entitled to payment of his Base
Salary accrued up to the date of his death plus any benefits payable pursuant to
the terms of the benefit plans specified in Section 2 in which Executive is a
participant (i.e., FSP benefits, transfer of the life insurance policy, group
life insurance benefits, 401(k) etc.).

 

(b) Disability. In the event of Executive’s “Disability” during the Term of the
Agreement, the Company may terminate Executive’s employment in which case this
Agreement will terminate and Executive will be entitled to payment of the
following benefits, the payment of which will be delayed for six (6) months and
one (1) day to the extent required by section 409A of the Code: (i) his Base
Salary for the remainder of the Term of the Agreement at the rate in effect for
the prior year of the Agreement, (ii) long-term disability benefits pursuant to
the terms of any long-term disability policy provided to senior executives of
the Company in which Executive has elected to participate, (iii) payment of any
benefits payable pursuant to the terms of the benefit plans in which Executive
is a participant (e.g., FSP benefits, transfer of the life insurance policy,
401(k) etc), and (iv) payment (in a lump sum) (with respect to each fiscal year
of the Company that ends during the remaining Term of this Agreement) of
incentive compensation in an amount equal to the amount of incentive
compensation paid during the prior year of the Agreement.

 

For purposes of this Agreement, “Disability” means Executive’s inability to
perform with or without reasonable accommodation the essential functions of his
position for an aggregate of one hundred twenty (120) days during any period of
one hundred eighty (180) consecutive days due to a mental or physical incapacity
as determined by the mutual agreement of a physician selected by the Company or
its insurers (the “Company Physician”) and a physician selected by Executive
(“Executive’s Physician”). In the event that the Company Physician and the
Executive’s Physician cannot agree on whether Executive is Disabled, such
determination will be made by a third physician who is jointly selected by the
Company Physician and the Executive’s Physician.

 

(c) Breach of Agreement. If the Company materially breaches this Agreement
during the Term and fails to cure such breach within thirty (30) days after
written notice thereof by Executive, Executive will be entitled to terminate his
employment and will be entitled to the following liquidated damages, the payment
of which will be delayed for six (6) months and one (1) day to the extent
required by section 409A of the Code:

 

(i) payment (in a lump sum) of Executive’s Base Salary through the remainder of
the Term of the Agreement (computed at the rate in effect for the prior year of
the Agreement);

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(ii) payment (in a lump sum) of incentive compensation (with respect to each
fiscal year of the Company that ends during the remainder of the Term of the
Agreement) computed based upon the amount of incentive compensation paid during
the prior year of the Agreement;

 

(iii) Notwithstanding any provision to the contrary in any option agreement,
restricted stock agreement, or other agreement relating to equity-type
compensation that may be outstanding between Executive and the Company,
Executive will become one hundred percent (100%) vested in all units, stock
options, incentive stock options, performance shares, stock appreciation rights,
restricted stock and stock awards held by Executive immediately prior to the
date of termination;

 

(iv) continued participation for the remainder of the Term of this Agreement in
any medical, dental, or vision benefit plans in which Executive participated in
at the time of his termination of employment (“Continued Medical”). Executive
will be required to continue to pay his portion of the cost of any insured
Continued Medical coverage on a pre-tax basis. However, to the extent that such
Continued Medical is self-funded by the Company, Executive will be required to
pay the full cost of such coverages on an after-tax basis in order to ensure
that the benefits payable to Executive are not includible in his gross income.
Such Continued Medical is in addition to any rights Executive may have to
continue such coverages under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended (“COBRA”). The pre-tax deduction for the self-funded
Continued Medical coverages described above will be taken from the lump sum
payment of Executive’s Base Salary described in Section 3(c)(i); provided,
however, that if such lump sum Base Salary payment is delayed for six (6) months
and one (1) day, Executive will not be required to pay the cost of Continued
Medical during such period and instead the Company will include the cost of such
coverage in Executive’s income and report it as wages on Form W-2. This clause
will not prohibit the Company from changing the terms of such medical, dental or
vision benefit plans provided that any such changes apply to all senior
executives of the Company (e.g., the Company may switch insurance carriers or
preferred provider organizations). The Company’s obligation under this Agreement
to provide Continued Medical will terminate if Executive obtains comparable
coverage under a subsequent employer’s medical, dental or vision benefit plans.
Executive must advise the Company of the attainment of any such subsequent
employer benefit coverages within thirty (30) days following such attainment;
and

 

(v) payment of any benefits payable pursuant to the terms of the benefit plans
specified in Section 2 in which Executive is a participant (i.e., FSP, 401(k)
etc.).

 

(d) Termination for Cause or Voluntary Resignation by Executive. If Executive’s
employment is terminated during the Term of this Agreement for “Cause,” or
Executive voluntarily resigns from the employment of the Company, the Company
will pay Executive his Base Salary through the date of termination at the rate
in effect at the time notice of termination is given. Such payments will
discharge the Company’s obligations hereunder.

 

For purposes of this Agreement, “Cause” includes any of the following:

 

(i) a material breach by Executive of Section 4 of this Agreement (regarding the
noncompetition, confidentiality, nonsolicitation and nondisparagement
provisions) which is not remedied within thirty (30) days after receipt of
written notice to Executive from the Company;

 

(ii) the commission of a willful criminal act by Executive, such as fraud,
embezzlement or theft;

 

(iii) the conviction, plea of no contest or nolo contendere, deferred
adjudication or unadjudicated probation of Executive for any felony or any crime
involving moral turpitude; or

 

(iv) Executive’s failure or refusal to carry out, or comply with, in any
material respect, any lawful directive of the Board of Directors of the Company
consistent with the terms of the Agreement which is not remedied within thirty
(30) days after Executive’s receipt of written notice from the Company;

 

provided, however, that no termination of Executive’s employment will be for
Cause until (A) there will have been delivered to Executive a written notice
specifying in detail the particulars of Executive’s conduct which is described
in either (i) or (iv) above, (B) Executive has been provided an opportunity to
be heard by the Board of Directors of the Company (with the assistance of
Executive’s counsel if Executive so desires), and (C) a resolution is adopted in
good faith by two thirds (2/3) of the full Board of Directors of the Company
confirming Executive’s conduct is within the scope of the conduct described in
either (i) or (iv) above (excluding the vote of

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Executive). No act, nor failure to act, on Executive’s part, will be considered
“willful” unless he has acted or failed to act with an absence of good faith and
without a reasonable belief that his action or failure to act was in the best
interest of the Company.

 

15.8

Non-Competition, Confidentiality and Nondisparagement

 

(a) Agreement not to Compete. Executive agrees that in the event his employment
with the Company is terminated for any reason whatsoever other than Cause,
Executive will not, for a period of two (2) years after the date of such
termination of employment, directly or indirectly, carry on or conduct, in
competition with the Company or its subsidiaries or affiliates, any business of
the nature in which the Company or its subsidiaries or affiliates are then
engaged in any geographical area in which the Company or its subsidiaries or
affiliates engage in business at the time of such termination or in which any of
them, prior to termination of Executive’s employment, evidenced in writing, at
any time during the six (6) month period prior to such termination, an intention
to engage in such business. Executive agrees that he will not so conduct or
engage in any such business either as an individual on his own account or as a
partner or joint venturer or as an executive, agent, consultant or salesman for
any other person or entity, or as an officer or director of a corporation or as
a shareholder in a corporation of which he will then own ten percent (10%) or
more of any class of stock. The provisions of this Section 4(a) will supersede
any and all non-compete provisions contained in any and all other agreements
which have been entered into between Executive and the Company and will survive
the termination of this Agreement.

 

(b) Confidential Information. Executive will not, directly or indirectly, at any
time following termination of his employment with the Company, reveal, divulge
or make known to any person or entity, or use for Executive’s personal benefit
(including without limitation for the purpose of soliciting business, whether or
not competitive with any business of the Company or any of its subsidiaries or
affiliates), any information acquired during the Employment Period with regard
to the financial, business or other affairs of the Company or any of its
subsidiaries or affiliates (including without limitation any list or record of
persons or entities with which the Company or any of its subsidiaries or
affiliates has any dealings), other than (i) information already in the public
domain, (ii) information of a type not considered confidential by persons
engaged in the same business or a business similar to that conducted by the
Company or its subsidiaries and affiliates, or (iii) information that Executive
is required to disclose under the following circumstances: (A) at the express
direction of any authorized governmental entity; (B) pursuant to a subpoena or
other court process; (C) as otherwise required by law or the rules, regulations,
or orders of any applicable regulatory body; or (D) as otherwise necessary, in
the opinion of counsel for Executive, to be disclosed by Executive in connection
with any legal action or proceeding involving Executive and the Company or any
subsidiary or affiliate of the Company in his capacity as an employee, officer,
director, or stockholder of the Company or any subsidiary or affiliate of the
Company. Executive will, at any time requested by the Company (either during or
within two (2) years after his employment with the Company), promptly deliver to
the Company all memoranda, notes, reports, lists and other documents (and all
copies thereof) relating to the business of the Company or any of its
subsidiaries and affiliates which he may then possess or have under his control.

 

(c) Agreement not to Solicit Employees. Executive agrees that, for a period of
two (2) years following the termination of the Employment Period, Executive will
not solicit or induce, or in any manner attempt to solicit or induce, any person
employed by, or any agent of, the Company or any of its subsidiaries or
affiliates to terminate such employee’s employment or agency, as the case may
be, with the Company or any subsidiary or affiliate.

 

(d) Nondisparagement. Executive agrees that he will not disparage the Company,
the Board of Directors of the Company, the Company’s executives, the Company’s
employees and the Company’s products or services during his Period of Employment
and thereafter. The Company likewise agrees that it will not disparage Executive
during Executive’s Period of Employment or thereafter. For purposes of this
Section 4(d), disparagement does not include (a) compliance with legal process
or subpoenas to the extent only truthful statements are rendered in such
compliance attempt, (b) statements in response to an inquiry from a court or
regulatory body, or (c) statements or comments in rebuttal of media stories or
alleged media stories.

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(e) Reasonableness of Restrictions. Executive acknowledges that the geographic
boundaries, scope of prohibited activities, and time duration set forth in this
Section 4 are reasonable in nature and are no broader than are necessary to
maintain the confidentiality and the goodwill of the Company and the
confidentiality of its Confidential Information and to protect the legitimate
business interests of the Company, and that the enforcement of such provisions
would not cause Executive any undue hardship nor unreasonably interfere with
Executive’s ability to earn a livelihood If any court determines that any
portion of this Section 4 is invalid or unenforceable, the remainder of this
Section 4 will not thereby be affected and will be given full effect without
regard to the invalid provisions. If any court construes any of the provisions
of this Section 4, or any part thereof, to be unreasonable because of the
duration or scope of such provision, such court will have the power to reduce
the duration or scope of such provision and to enforce such provision as so
reduced.

 

(f) Enforcement. Upon Executive’s employment with an entity that is not a
subsidiary or affiliate of the Company (a “Successor Employer”) during the
period that the provisions of this Section 4 remain in effect, Executive will
provide such Successor Employer with a copy of this Agreement and will notify
the Company of such employment within thirty (30) days thereof. Executive agrees
that in the event of a breach of the terms and conditions of this Section 4 by
Executive, the Company will be entitled, if it so elects, to institute and
prosecute proceedings, either in law or in equity, against Executive, to obtain
damages for any such breach, or to enjoin Executive from any conduct in
violation of this Section 4. Company and Executive both agree that in the event
of a breach of the nondisparagement provisions of Section 4.4(d), the adversely
affected party will be entitled, if it so elects, to institute and prosecute
proceedings, either in law or in equity, against the other, to obtain damages
for any such breach, or to enjoin the other from engaging in such disparagement.

 

15.9

Indemnification.

 

As required by the Company’s Bylaws, the Company will indemnify Executive for
any liability he incurs in the event that he is made a party to any legal
proceeding by reason of his employment as President and Chief Executive Officer
of the Company or as a member of the Company’s Board of Directors.

 

15.10 

Executive Acknowledgement.

 

Executive is entering into this Agreement of his own free will. Executive
acknowledges that he has had adequate opportunity to review this Agreement and
consult with counsel of his own choosing. Executive represents that he has read
and understands this Agreement, he is fully aware of this Agreement’s legal
effect and has not acted in reliance upon any statements made by the Company
other than those set forth in writing in the Agreement.

 

15.11 

Miscellaneous Provisions.

 

(a) Successors and Assigns. The rights and obligations of the Company under this
Agreement will inure to the benefit of and will be binding upon the successors
and assigns of the Company. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation, sale of assets or
otherwise) to all or substantially all of the business and/or assets of the
Company, by a written agreement in form and substance reasonably satisfactory to
Executive, 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. This Agreement is personal to Executive
and without the prior written consent of the Company is not assignable by
Executive otherwise than by will or the laws of descent and distribution. This
Agreement will inure to the benefit of and be enforceable by Executive’s
personal and legal representatives, executors, administrators, heirs,
distributes, devisees and legatees.

 

(b) Amendment. This Agreement will not be modified, changed or in any way
amended except by an instrument in writing approved by the Board of Directors of
the Company and signed by the Company and Executive.

 

(c) Severability. Except as otherwise provided in Section 4(e), if any provision
of this Agreement is held to be illegal, invalid or unenforceable under present
or future laws effective during

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the term of this Agreement, such provision will be fully severable; this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement; and the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, except as otherwise provided in
Section 4(e), in lieu of such illegal, invalid or unenforceable provision, there
will be added automatically as part of this Agreement a provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.

 

(d) Integration. The provisions of this Agreement constitute the entire and
complete understanding and agreement between the parties with respect to the
subject matter hereof, and supersede all prior and contemporaneous oral and
written agreements, representations and understandings of the parties, which are
hereby terminated.

 

(e) Choice of Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO PRINCIPLES
OF CONFLICT OF LAWS OF TEXAS OR ANY OTHER JURISDICTION, AND, WHERE APPLICABLE,
THE LAWS OF THE UNITED STATES.

 

(f) Survival. The provisions of Section 4, Section 5 and this Section 7 will
survive the termination of this Agreement.

 

(g) No Waiver. No waiver by either party at any time of any breach by the other
party of, or compliance with, any condition or provision of this Agreement to be
performed by the other party will be deemed a waiver of similar or dissimilar
provisions or conditions at any time.

 

(h) Notice. All notices and other communications hereunder will be in writing
and will 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 Executive:

  

_________________________

    

_________________________

    

_________________________

    

_________________________

    

Telephone: ________________

    

Fax: _____________________

If to the Company:

  

Chaparral Steel Company.

    

300 Ward Road

    

Midlothian, TX 76065-9661

    

Attention: _________________

    

Telephone: ________________

    

Fax: ______________________

 

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.

 

(i) Construction. This Agreement is deemed to be drafted equally by both
Executive and the Company and will be construed as a whole and according to its
fair meaning. Any presumption or principle that the language of this Agreement
is to be construed against any party will not apply. The headings in this
Agreement are only for convenience and are not intended to affect construction
or interpretation. Any references to paragraphs, subparagraphs, sections,
subsections or clauses are to those parts of this Agreement, unless the context
clearly indicates to the contrary. Also, unless the context clearly indicates to
the contrary, (i) the plural includes the singular and the singular includes the
plural; (ii) “and” and “or” are each used both conjunctively and disjunctively;
(iii) “any,” “all,” “each,” or “every” means “any and all”, and “each and every”
(iv) “includes” and “including” are each used without limitation; (v) “herein,”
“hereof,” “hereunder” and other similar compounds of the word “here” refer to
the entire Agreement and not to any particular paragraph, subparagraph, section
or subsection; and (vi) all pronouns and any variations thereof shall be deemed
to refer to the

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masculine, feminine, neuter, singular or plural as the identity of the entities
or persons referred to may require.

 

(j) No Mitigation. In no event will Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement and except as
provided in Section 3(c)(iv) (regarding Continued Medical) such amounts will not
be reduced whether or not Executive obtains other employment. Neither Executive
nor the Company will be liable to the other party for any damages for breach of
this Agreement in addition to the amounts payable under Section 3(c) arising out
of the termination of Executive’s employment prior to the end of the Term;
provided, however, that the Company will be entitled to seek damages from
Executive for any breach of Section 4 by Executive or for Executive’s criminal
misconduct and Executive may seek to enforce the provisions of Section 4(d) in
the event of a breach of such provisions by the Company.

 

(k) Restatement of Prior Agreement. Upon the execution of this Agreement by
Executive and the Company, this Agreement will restate and supersede the
Employment Agreement dated as of July 29, 2005, by and between Executive and the
Company (the “Prior Employment Contract”), and upon such execution hereof the
Prior Employment Contract will be superceded in full hereby. Any provision
contained in this Agreement that refers to or is dependent upon the time period
during which Executive has been employed by the Company will take into account
and include periods prior to the date hereof during which Executive was employed
by the Company, and the termination of the Prior Employment Contract will not be
deemed a termination or any cessation of Executive’s employment by the Company.

 

CHAPARRAL STEEL COMPANY

By:   /s/    J. CELTYN HUGHES            

J. Celtyn Hughes, Vice President

and Chief Financial Officer

 

ATTEST:

/s/    ROBERT E. CRAWFORD, JR.         Robert E. Crawford, Jr. Secretary

EXECUTIVE

/s/    TOMMY A. VALENTA         Tommy A. Valenta