exv10w1



 





Exhibit 10.1



CONSULTING AND NON-COMPETITION AGREEMENT




     THIS AGREEMENT is made and entered into this 24th day of September, 2004,
by and between COMMERCIAL METALS COMPANY, a Delaware corporation with offices
at 6565 N. MacArthur Boulevard, Suite 800, Irving, Texas 75039 (“Company”) and
HARRY J. HEINKELE, an individual with a residential address of 804 Loch Lomond
Drive, Arlington, Texas 76012 (“Heinkele”).



     WHEREAS, Heinkele has been employed by the Company for over 24 years, is
currently President of the Secondary Metals Processing Division (“SMPD”) and
will be retiring from employment with the Company effective with the close of
business on September 30, 2004; and



     WHEREAS, commencing October 1, 2004, the Company desires to secure the
services of Heinkele as a consultant on a part-time basis to provide
assistance and consultation with respect to the operations of SMPD and, by
mutual agreement, other segments of the Company; and



     WHEREAS, Heinkele desires to perform such consultation for the Company
following termination of his employment, all on the terms and conditions as
hereinafter set forth;



     NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:



     1. Status and Duties of Heinkele as a Consultant.





	 	A.	 	Effective October 1, 2004, Heinkele shall from
time to time upon the request of the Chief Executive Officer
of the Company or the President of SMPD and, subject to the
terms hereof, render assistance and advice to the Chief
Executive Officer of the Company or the President of SMPD as a
consultant. Heinkele’s consulting duties shall include, but
shall not be limited to, giving advice concerning SMPD
organization, acquisitions, dispositions, interviewing key
employees for hiring or promotional opportunities, strategy or
other managerial questions or concerns that may arise from
time to time. With the mutual consent of both parties,
Heinkele’s consulting duties may include similar tasks with
divisions or segments of the Company other than SMPD.
	 
	 	B.	 	Heinkele shall perform such duties at his
residence, the Company’s office at the address set forth
above, or at such other place or places as Company and
Heinkele may, by mutual agreement, deem appropriate. Heinkele
shall not be considered an employee of the Company for any
reason, it being the parties’ intent that Heinkele be at all
times for the duration of this Agreement an independent
contractor.





 









 







	 	C.	 	Heinkele shall be available to perform services
under this Agreement from an aggregate of not more than three
(3) days per month on such dates and at times reasonably
acceptable to both parties. However, it is understood that
Heinkele will do his utmost to assist the President of SMPD,
and Heinkele will make himself available for meetings, phone
or email communications whenever practical.





     2. Compensation.





	 	A.	 	As compensation for rendering consulting
services hereunder, the Company shall pay Heinkele a fee
of One Hundred Twenty Thousand ($120,000.00) per year,
each year’s compensation to be paid in twelve equal
monthly installments, the first installment of Ten
Thousand Dollars ($10,000.00) to be paid on October 1,
2004, and each succeeding installment becoming due and
payable on the first day of each calendar month for the
duration of this Agreement.
	 
	 	B.	 	Heinkele shall be reimbursed for all
reasonable expenses including out-of-pocket travel and
living expenses incurred while traveling further than 50
miles distance from the residence address above in
connection with the performance of services under this
Agreement. The Company shall promptly reimburse Heinkele
for such reasonable expenses after receipt of
documentation from Heinkele as required by the Company’s
policy as it may exist from time to time for expense
reporting and accounting.
	 
	 	C.	 	In the event of the death of Heinkele or
disability which renders Heinkele unable to perform any
duties for more than sixty (60) consecutive days during
the term of this Agreement, the obligation of the Company
to pay the consulting fee shall terminate effective with
the payment due the first of the month following the date
of death or the sixty first day of disability.





     3. Term of Consulting Period.





	 	A.	 	The term of the consulting period shall
commence October 1, 2004 and shall continue for
twenty-four (24) months, ending September 30, 2006, unless
earlier terminated for cause as hereinafter set forth.





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	 	B.	 	The Company may terminate Heinkele for cause
at any time, and from that date forward no further
obligations shall exist on the part of Company to
Heinkele. Termination for cause shall mean termination
based on the following events or conditions of which the
Company has reasonably persuasive evidence:







	 	1.	 	Overt and willful disobedience of
orders or directives issued to Heinkele and within
the scope of Heinkele’s duties to the Company.
	 
	 	2.	 	Conviction of Heinkele of the
commission of deliberate, illegal acts in connection
with the performance of duties under this Agreement.
	 
	 	3.	 	Violation by Heinkele of the
Company’s rules and policies concerning business
conduct, conflicts of interest, or the
non-competition or confidentiality obligations of
this Agreement.
	 
	 	4.	 	The immoderate use of alcoholic
drinks or illegal narcotics which renders Heinkele
incapable of performing services to a normal extent.





     4. Non-Competition Agreement.





	 	A.	 	In consideration of the payments to be made
by the Company to Heinkele under this Agreement, Heinkele
agrees and covenants with the Company that during the
duration of the consulting term, any renewals or
extensions thereof, and for a period of twelve months
following the termination of this Agreement for any reason
(including normal expiration after twenty four months or
termination for cause), Heinkele will not either, directly
or indirectly, (i) provide any individual, corporation
(including any non-profit corporation), general or limited
partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union,
governmental or quasi-governmental authority of any
nature, or other entity (collectively, a “Person”) who is
engaged in or is considering engaging in the purchase,
processing or sale of Restricted Products as herein
defined, any consulting services or advice, or (ii) own,
manage, operate, join, control or participate in the
ownership, management, operation or control of, or be
employed by any Person who is engaged in or is
considering engaging in the purchase, processing or sale
of Restricted Products. Restricted Products means any
metal products or materials including all forms of ferrous
and non-





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	 	 	 	ferrous scrap metals or other used or scrap metal
materials purchased, processed, sold or brokered by SMPD
during the period of Heinkele’s employment with the
Company as President of SMPD or during the term of this
Agreement. This restriction shall apply to those
activities of Heinkele described in (i) or (ii) above on
behalf of any Person who is engaged in or is considering
engaging in the purchase, processing or sale of
Restricted Products within in the United States as well
as any Person located outside of the United States who
purchases or sells Restricted Products for import to or
export from the United States.
	 
	 	B.	 	Notwithstanding the foregoing restrictions,
nothing in this Agreement and this covenant not to compete
shall be construed to restrict or prohibit ownership by
Heinkele of stock of any company in competition with the
Company listed on the New York or American Stock Exchanges
or traded as a NASDAQ National Market Issue provided
Heinkele’s combined ownership interest is not five (5)
percent or more of the outstanding voting shares of the
company.
	 
	 	C.	 	The Company and Heinkele agree that in the
case of a breach by Heinkele of any of the foregoing
covenants, damages would be difficult, if not impossible,
to prove, and the Company shall be entitled to injunctive
relief as its primary but not exclusive remedy against
Heinkele. If Heinkele is found to have violated any of
the foregoing covenants, the parties agree that the
duration of the non-competition period set forth above
shall be automatically extended by the same period of time
that Heinkele is determined to be in violation of the
foregoing covenants. The parties hereby further agree
that the restrictions and obligations herein set forth
including the duration of the non-competition obligation
and territory covered by the obligations are reasonable in
view of the substantial compensation being paid Heinkele
under this Agreement, the nationwide reach of the
Company’s operations and the worldwide sales and
purchasing activities of the Company over the 24 years
Heinkele was employed by the Company. If any of the
foregoing restrictions should be finally determined by any
court to be unenforceable in any particular area or
jurisdiction or enforceable in such area or jurisdiction
only if modified in duration or scope, then the parties
agree that this Agreement shall be amended and modified so
as to eliminate there from the particular area or
jurisdiction as to which such restriction is so held to be
unenforceable or deemed amended or modified in duration or
scope to comply with such court order; and as to all other
areas and jurisdictions and terms





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	 	 	 	and provisions hereof shall remain in full force and
effect as originally written. The provisions of this
paragraph and the rights and remedies to enforce such
provisions shall be assignable in favor of any successor
of the Company.





     5. Confidentiality.





	 	A.	 	Heinkele acknowledges that he has occupied a
position of trust and confidence with the Company as a key
employee of over 24 years and during that period and during
the performance of his duties under this Agreement, has had
and will have the opportunity to become familiar with the
following, any and all of which constitute confidential
information of the Company (collectively, “Confidential
Information”): (i) any and all trade secrets and proprietary
technology concerning the business and affairs of the Company,
product pricing, contract terms, hedging practices, data,
know-how, formulae, compositions, processes, samples,
inventions and ideas, past, current and planned product
development, supplier lists, customer lists, current and
anticipated customer requirements, price lists, market
studies, marketing plans and strategies, supply or sourcing
information, business plans and computer software and programs
of the Company and any other information, whether or not
documented in any manner, of the Company that is a trade
secret within the meaning of applicable trade secret law; (ii)
any and all information concerning the businesses and affairs
of the Company (which includes historical financial
statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, new
product development information, supplier or customer
information, the names and backgrounds of key personnel,
personnel training and techniques and materials), however
documented; and (iii) any and all notes, analyses,
compilations, studies, summaries, and other material prepared
by or for the Company containing or based, in whole or in
part, on any information included in the foregoing.
	 
	 	B.	 	Heinkele acknowledges and agrees that all
Confidential Information known or obtained by Heinkele,
whether before or after the date hereof, is the property of
the Company. Therefore, Heinkele agrees that he shall not, at
any time, other than as may be required and permitted by the
Company in the course and scope of the consulting services to
be provided under this Agreement, use or disclose to any
unauthorized Person or use for his own account or for the
benefit of any third party any Confidential Information,
whether Heinkele has such information in his memory or
embodied in writing or other physical form, without the
Company’s prior written consent, unless and to the extent that
the Confidential





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	 	 	 	Information is or becomes generally known to and available
for use by the public other than as a result of the
Heinkele’s actions or the actions of any other Person bound
by a duty of confidentiality to the Company or one of its
affiliates. If Heinkele becomes legally compelled by
deposition, subpoena or other court or governmental action to
disclose any of the Confidential Information, then Heinkele
will give the Company prompt notice to that effect, and will
cooperate with the Company if the Company seeks to obtain a
protective order concerning the Confidential Information.
Heinkele will disclose only such Confidential Information as
his counsel shall advise is legally required. Heinkele
agrees to deliver to the Company, at any time the Company may
request, all documents, memoranda, notes, plans, records,
reports, and other documentation, models, components,
devices, or computer software, whether embodied in a disk or
in other form (and all copies of all of the foregoing),
relating to the businesses, operations, or affairs of the
Company or any of its affiliates and any other Confidential
Information that Heinkele may then possess or have under his
control.





     6. Notices.



     Any notice required to be given pursuant to this Agreement shall be in
writing and shall be deemed given upon receipt if delivered by hand or if sent
by mail (registered or certified mail, postage prepaid, return receipt
requested) or on the next business day following the day of timely deposit for
next day delivery if sent by a recognized overnight delivery service addressed
to the respective address shown above.



     7. Modification.



     This Agreement may be modified only by the written consent of both of the
parties hereto.



[Signature Page Follows]




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     EXECUTED the day and year first above written.


	 	 	 	 	 
	 	COMMERCIAL METALS COMPANY

 	 
	 	By:  	/s/ Stanley A. Rabin
 	 
	 	 	STANLEY A. RABIN 	 
	 	 	President and
Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	HARRY J. HEINKELE

 	 
	 	By:  	/s/ H. J. Heinkele
 	 
	 	 	 	 
	 	 	 	 
	 





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