1999 Non-employee Director Stock Option Plan

COMMERCIAL METALS COMPANY


1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN


The Commercial Metals Company 1999 Non-Employee Director Stock Option Plan (hereinafter called the "Plan") was adopted by the Board of Directors of Commercial Metals Company, a Delaware corporation (hereinafter called the "Company"), effective as of November 22, 1999.


ARTICLE 1


PURPOSE


The purpose of the Plan is to attract and retain Outside Directors of Commercial Metals Company and to provide such persons with a proprietary interest in the Company through the issuance of Common Stock that will


(a) increase the interest of such persons in the Company's
welfare;


(b) furnish an incentive to such persons to continue their
services for the Company; and


(c) provide a means through which the Company may attract able
persons as directors.


ARTICLE 2


DEFINITIONS


For the purpose of the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:


2.1 "Black-Scholes Value" means the value of a Stock Option granted under the Plan to purchase one share of Common Stock determined pursuant to the option pricing model commonly known as the Black-Scholes method.


2.2 "Board" means the board of directors of the Company.


2.3 "Change of Control" means any of the following: (i) any consolidation, merger or share exchange of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a consolidation, merger or share exchange of the Company in which the holders of the Company's Common Stock immediately prior to such transaction have the same proportionate ownership of Common Stock of the surviving corporation immediately after such transaction; (ii) any sale, lease, exchange or other transfer (excluding transfer by way of pledge or hypothecation) in one transaction or a series of related transactions, of all or substantially all of the assets of the Company; (iii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; (iv) the cessation of control (by virtue of their not constituting a majority of directors) of the Board by the individuals (the "Continuing Directors") who (x) at the date of this Plan were directors or (y) become directors after the date of this Plan and whose election or nomination for election by the Company's stockholders, was approved by a vote of at least two-thirds of the directors then in office who


were directors at the date of this Plan or whose election or nomination for election was previously so approved; (v) the acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of an aggregate of 15% of the voting power of the Company's outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under the 1934 Act), provided, however, that notwithstanding the foregoing, an acquisition shall not constitute a Change of Control hereunder if the acquirer is (w) Daniel E. Feldman, Moses Feldman, Robert L. Feldman, or Sara B. Feldman (the "Feldmans"), or any of his or her affiliates, so long as the Feldmans and their affiliates do not beneficially own an aggregate of 25% or more of the shares of Common Stock then outstanding, (x) a trustee or other fiduciary holding securities under an employee benefit plan of the Company and acting in such capacity, (y) a Subsidiary of the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of voting securities of the Company or (z) any other person whose acquisition of shares of voting securities is approved in advance by a majority of the Continuing Directors; or (vi) in a Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion of a case involving the Company to a case under Chapter 7. Under sub-clause (w) of clause (v) of the preceding sentence, if a person or entity is an affiliate of one or more of the Feldmans and of another person or entity, such sub-clause (w) shall not serve to exempt such other person or entity in determining whether a Change of Control has occurred.


2.4 "Code" means the Internal Revenue Code of 1986, as amended.


2.5 "Committee" means the committee appointed or designated by the Board to administer the Plan in accordance with ARTICLE 3 of this Plan.


2.6 "Common Stock" means the common stock which the Company is currently authorized to issue or may in the future be authorized to issue.


2.7 "Company" means Commercial Metals Company, a Delaware corporation, and any successor entity.


2.8 "Date of Grant" means the effective date on which a Stock Option is awarded to an Outside Director as set forth in the applicable Stock Option Agreement in accordance with the terms of the Plan.


2.9 "Election Form" means a form approved by the Committee pursuant to which an Outside Director elects a method of payment of Fees.


2.10 "Employee" means common law employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Section 3401(c) of the Code) of the Company or any Subsidiary of the Company.


2.11 "Fair Market Value" means, as of a particular date, the mean of the highest and lowest prices per share on the New York Stock Exchange Consolidated Tape, or such reporting service as the Committee may select, on the appropriate date, or in the absence of reported sales on such day, the most recent previous day for which sales were reported.


2.12 "Fees" means the cash retainer payable by the Company to an Outside Director for service as an Outside Director of the Company, as such amount may be changed from time to time.


2.13 "Optioned Shares" means the full shares of Common Stock which a Participant may purchase pursuant to the exercise of a Stock Option granted pursuant to this Plan.


2


2.14 "Option Period" means the period during which a Stock Option may be exercised.


2.15 "Option Price" means the price which must be paid by a Participant upon exercise of a Stock Option to purchase a share of Common Stock.


2.16 "Options Election Period" means the period beginning on October 1(st) (or, with respect to the first full calendar year during the term of the Plan, November 22, 1999) of each year during the term of the Plan and ending on the following December 31(st), or such other time period designated by the Committee, during which Outside Directors may elect to receive Stock Options as payment of some or all of their Fees. If a person becomes an Outside Director on or after January 1(st) but before October 1(st), including a person serving as a director and an Employee who becomes an Outside Director because such director's employment with the Company terminates during such period, the Options Election Period for such person for that year shall commence on the date such person first becomes an Outside Director and end 30 days thereafter.


2.17 "Outside Director" means a director of the Company who is not an Employee.


2.18 "Participant" shall mean an Outside Director of the Company.


2.19 "Plan" means this Commercial Metals Company 1999 Outside Director Stock Option Plan, as amended from time to time.


2.20 "Plan Year" means a yearly period during the term of the Plan beginning on the date of the Company's annual meeting of stockholders and ending on the day before the Company's next annual meeting of stockholders.


2.21 "Retirement" means Termination of Service as a Director at or after attaining age 62.


2.22 "Stock Option" means a non-qualified option to purchase Common Stock granted under the Plan.


2.23 "Stock Option Agreement" means a written agreement between a Participant and the Company which sets out the terms of the grant of a Stock Option.


2.24 "Subsidiary" means (i) any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the other corporations in the chain, (ii) any limited partnership, if the Company or any corporation described in item (i) above owns a majority of the general partnership interest and a majority of the limited partnership interests entitled to vote on the removal and replacement of the general partner, and (iii) any partnership or limited liability company, if the partners or members thereof are composed only of the Company, any corporation listed in item (i) above or any limited partnership listed in item (ii) above. "Subsidiaries" means more than one of any such corporations, limited partnerships, partnerships or limited liability companies.


2.25 "Termination of Service as a Director" occurs when a Participant who is an Outside Director of the Company shall cease to serve as a director of the Company for any reason.


2.26 "Total and Permanent Disability" means that the Participant, because of ill health, physical or mental disability or any other reason beyond his or her control, is unable to perform his or her duties as a director for a period of six (6) continuous months, as determined in good faith by the Committee.


3


ARTICLE 3


ADMINISTRATION


The Plan shall be administered by a committee appointed by the Board (the "Committee"). The Committee shall consist of not fewer than two persons, each of whom must be a "Non-Employee Director", as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as such rule now exists or may hereafter be amended. Any member of the Committee may be removed at any time, with or without cause, by resolution of the Board. Any vacancy occurring in the membership of the Committee may be filled by appointment by the Board.


The Committee shall select one of its members to act as its Chairman and shall make such rules and regulations for its operation as it deems appropriate. A majority of the Committee shall constitute a quorum, and the act of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the act of the Committee. The Committee, in its discretion, shall (i) interpret the Plan, (ii) prescribe, amend, and rescind any rules and regulations necessary or appropriate for the administration of the Plan, and (iii) make such other determinations and take such other action as it deems necessary or advisable in the administration of the Plan; provided, however, that the Committee shall have no discretion with respect to the eligibility or selection of Outside Directors to receive awards under the Plan or the time at which any such awards are to be granted, and provided further, that the Committee shall not have the authority to take any action or make any determination that would materially increase the benefits accruing to Participants under the Plan. Any interpretation, determination, or other action made or taken by the Committee shall be final, binding, and conclusive on all interested parties.


ARTICLE 4


ELIGIBILITY; GRANT OF OPTIONS


4.1 Automatic Grant of Options. On the first day of every Plan Year, each Outside Director serving as such on that date shall automatically be granted a Stock Option to purchase one thousand five hundred (1,500) shares of Common Stock on such date, without further action by the Committee.


If a person becomes an Outside Director during a Plan Year on a date after the first day of a Plan Year, including a person serving as a director and an Employee who becomes an Outside Director because such director's employment with the Company terminates during such Plan Year, such Outside Director shall automatically be granted a Stock Option to purchase that number of shares of Common Stock equal to 1,500 multiplied by a fraction, the numerator of which shall be the number of days until the end of such Plan Year and the denominator of which shall be the total number of days in such Plan Year. In the event that such calculation would result in a fractional share being subject to a Stock Option, the number of shares that may be purchased under such Stock Option shall be rounded up to the next whole number of shares. Stock Options granted under this paragraph shall automatically be granted on the date such person becomes an Outside Director, without further action by the Committee.


4.2 Election to Receive Stock Options in Lieu of Cash Fees. A Participant may elect to receive all or part of the Fees otherwise payable to him or her during a calendar year in the form of a Stock Option to purchase the number of shares of Common Stock determined as set forth below in this Section 4.2. An Outside Director who wishes to receive Fees for a calendar year in the form of a Stock Option must irrevocably elect to do so by delivering a valid Election Form during the Options Election


4


Period to the Secretary of the Company or such other person as the Committee may designate. An Outside Director's timely election to receive a Stock ...