Exhibit 10.1
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made as of the 11th day of
May, 2004, by and between MAVERICK TUBE CORPORATION, a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxx ("Executive").
WHEREAS, the Board of Directors of the Company ("Board") has determined
that it is in the best interests of the Company and its stockholders that the
continuous employment of key management personnel be fostered; and
WHEREAS, the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of such personnel
to their management duties;
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the Company and the Executive hereby
agree as follows:
1. Definitions. Capitalized terms used in this Agreement have the meanings set
forth below.
(a) "Cause" means the commission of (i) an act or acts of personal
dishonesty performed by the Executive and intended to result in substantial
personal enrichment of the Executive at the expense of the Company or an
affiliate; (ii) an act of disloyalty or conduct clearly tending to bring
discredit upon the Company or any affiliate; or (iii) a felony involving moral
turpitude.
(b) "Change in Control" means:
(i) the acquisition, direct or indirect, by any individual, entity, or
group ("Person"), of beneficial ownership of thirty-five percent (35%) or
more of either all then outstanding shares of Stock or, if different, the
combined voting power of all then outstanding voting securities entitled to
vote generally in the election of directors ("Other Voting Securities") of
the Company, provided that the following acquisitions shall not constitute
a change of control: (A) any acquisition directly from the Company; (B) any
acquisition by the Company; (C) any acquisition by any employee benefit
plan or related trust sponsored or maintained by the Company or any
affiliate; and (D) any acquisition pursuant to a transaction immediately
following which the conditions described in clauses (A), (B), and (C) of
part (iii) of this paragraph (b) are satisfied; or
(ii) the failure for any reason of the Incumbent Directors to
constitute the majority of the Board; or
(iii) the approval by the stockholders of the Company of a
reorganization, merger, or consolidation (each, a "Transaction") unless, in
each case, following such
Transaction (A) all or substantially all of the beneficial owners of the
Stock and the combined voting power of all outstanding Other Voting
Securities of the Company immediately prior to such Transaction
beneficially own, directly or indirectly, more than fifty percent (50%) of,
respectively, the common stock and the combined voting power of all
outstanding Other Voting Securities of the corporation resulting from such
Transaction ("Resulting Corporation") in substantially the same proportions
as their ownership immediately prior to such Transaction; (B) no Person
(other than the Company and any employee benefit plan or related trust of
the Company or a Resulting Corporation) beneficially owns thirty-five
percent (35%) or more of, respectively, the then outstanding shares of
common stock of the Resulting Corporation or the combined voting power of
all then outstanding Other Voting Securities of such Resulting Corporation
and (C) at least a majority of the directors of the Resulting Corporation
were members of the Incumbent Board at the time of the execution of the
initial agreement providing for such Transaction; or
(iv) the approval by the stockholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the disposition of
substantially all of the assets of the Company other than to a corporation
with respect to which all of the following is true following such
disposition: (I) more than 50% of, respectively, the then outstanding
shares of common stock of such corporation ("New Stock") and the combined
voting power of all outstanding Other Voting Securities of such corporation
("New Other Voting Securities") is then owned beneficially, directly or
indirectly, by substantially all of the beneficial owners of the Stock and
the combined voting power of all outstanding Other Voting Securities of the
Company in substantially the same proportions as their ownership of such
securities of the Company immediately prior thereto; (II) no Person other
than the Company and any employee benefit plan or related trust of the
Company or of such corporation then beneficially owns thirty-five percent
(35%) or more of the New Stock or the New Other Voting Securities; and
(III) at least a majority of the directors of such corporation were members
of the Incumbent Board at the time of the execution of the initial
agreement or action providing for such disposition.
(c) "Effective Date" means the date on which the termination of the
Executive's employment is to be effective under the terms of any written notice
or other documentation thereof.
(d) "Good Reason" for termination by the Executive of his employment means
the occurrence (without the Executive's written consent) of any of the following
unless, in the case of any of (i), (v), (vi), or (vii), such act or failure to
act is corrected within five business days following the giving of notice of
termination by the executive, and in the case of (iii) below, such act is not
objected to in writing by the Executive within fourteen days after notification
thereof:
(i) the assignment to the Executive of duties inconsistent with his
status as an executive officer of the Company or a meaningful alteration,
adverse to the Executive,
in the nature or status of his responsibilities (other than reporting
responsibilities) from those in effect immediately prior to the Change in
Control;
(ii) a reduction in the Executive's Regular Annual Salary except for
an across-the-board salary reduction similarly affecting all senior
executives of the Company and all senior executives of any person or entity
in control of the Company;
(iii) a requirement by the Company that the Executive relocate his
residence outside the metropolitan area in which the Executive was based
immediately prior to a Change in Control, provided that business travel in
an amount substantially consistent with an Executive's previous travel
obligations shall in no event constitute such a requirement;
(iv) failure by the Company to pay any portion of his compensation
within fourteen days of the date it is due;
(v) failure by the Company to continue in effect any compensation plan
in which the Executive participates immediately prior to a Change in
Control that is material to the Executive's compensation, unless an
equitable arrangement has been made with respect to such plan;
(vi) failure by the Company to continue the Executive's participation
in a plan described in (v) or a substitute or alternative plan on a basis
not materially less favorable to the Executive as existed at the time of a
Change in Control;
(vii) failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by him prior to a Change in
Control; or
(viii) the determination by the Executive, in his sole and absolute
discretion, that the business philosophy or policies of the Company or its
successor or the implementation thereof is not compatible with those of the
Executive.
The Executive's continued employment shall not of itself constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.
(e) "Incumbent Director" means an individual who, as of the date of this
Agreement is a director of the Company; provided, however, that any individual
becoming a director of the Company after the date of this Agreement whose
election or nomination was approved by at least a majority of the Incumbent
Directors shall be deemed an Incumbent Director unless such individual became a
director as a result of either an actual or threatened election contest or
solicitation of proxies or consent by or on behalf of an individual or entity
other than the Board; or
(f) "Potential Change in Control" means:
(i) the entrance by the Company into an agreement the consummation of
which would result in the occurrence of a Change in Control;
(ii) the announced intention of the Company or any person or entity of
taking any action that, if consummated, would constitute a Change in
Control; or
(iii) the adoption by the Board of a resolution to the effect that for
purposes of this Agreement, a Potential Change in Control has occurred.
(g) "Regular Annual Salary" means the base annual salary being paid to the
Executive immediately prior to the Effective Date, exclusive of any bonuses or
other incentive compensation, but inclusive of any compensation then being
deferred by the Executive under the Company's Deferred Compensation Plan.
(h) "Retirement" means the termination of employment of a Company employee
if such employee immediately thereafter receives benefits under any retirement
plan of the Company in effect immediately prior to a Change in Control or if
such termination is in accordance with any retirement arrangement established
with the Executive's consent with respect to the Executive.
(i) "Stock" means the $.01 par value common stock of the Company.
(j) "Tax Gross-up Amount" means the sum of (x) an amount equal to all taxes
imposed upon Executive under Section 4999(a) of the Internal Revenue Code of
1986, as amended (the "Code"), resulting from payments or other benefits
(including, without limitation, accelerated vesting or exercisability of stock
rights or options) to Executive under this Agreement being deemed "excess
parachute payments," as such term is defined in Section 280(G)(b) of the Code
(the "Subject Taxes"), and (y) an amount which will as closely as reasonably
practicable approximate any additional income or excise taxes payable by
Executive as a result of the payment of the Subject Taxes on behalf of the
Executive pursuant to this Agreement.
(k) "Total Disability" means the inability of the Executive to perform the
duties of his position for the greater of 180 successive days or a total of 270
days in any period of 365 days or such period as constitutes "total disability"
under any disability insurance program or plan maintained by the Company.
2. Term. The term of this Agreement shall begin as of the date set forth above
and shall continue through May 11, 2007, provided that as of May 11, 2007 and
each May 11 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not less than six months prior to any
such date, either (i) the Company or the Executive shall have given notice to
the contrary, or (ii) a Change of Control has occurred. If a Change in Control
occurs at any time during the term or any renewal term of this Agreement,
notwithstanding notice of termination having been given, this Agreement shall
remain
in effect for a period of not less than thirty (30) months from the date of such
Change in Control.
3. Severance Pay. If the employment of Executive is terminated at a time not
within the thirty (30) month period following a Change in Control, other than
(i) by the Company for Cause, (ii) by reason of death, Total Disability, or
Retirement, or (iii) by the Executive without Good Reason, as of the Effective
Date, and in addition to all obligations otherwise owing to the Executive on the
Effective Date, the Company shall continue to pay to the Executive for a period
of six months following the Effective Date (I) amounts equal to those received
periodically prior to the Effective Date in payment of his Regular Annual
Salary, on the same periodic schedule as prior to the Effective Date, and (II)
benefits under group health and life insurance plans in which the Executive
participated prior to the Effective Date, to the extent permissible under the
terms of such plans to do so. Except as specifically provided herein, no other
payments or benefits will be furnished or paid, and all contributions or
deductions, if any (other than deductions made in connection with the benefits
specifically provided for herein, if any), shall cease as of the Effective Date.
4. Confidentiality. The Executive specifically acknowledges that all information
pertaining to the Company or its business received by him during the course of
his employment that has been designated confidential by the Company or has not
been made publicly available is the exclusive property of the Company, and the
Executive agrees that during and after his employment by the Company, he will
not disclose any of such information without the prior written consent of the
Board to anyone not employed by the Company or engaged by the Company to render
services to it. The Executive further agrees that he will not use such
information for his own benefit or the benefit of any party other than the
Company. This Section 4 shall survive termination of this Agreement.
5. Executive's Covenants. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control
during the term of this Agreement, the Executive will remain in the employ of
the Company following the occurrence of such event until the earliest of (i) six
months from the date of such Potential Change in Control, (ii) the date of a
Change in Control, (iii) the date of termination by the Executive of his
employment for Good Reason (determined by treating a Potential Change in Control
as a Change in Control in applying the definition of Good Reason) or by reason
of death, Retirement or Total Disability, or (iv) the termination by the Company
of the Executive's employment for any reason.
6. Compensation Upon Termination Following a Change in Control. If, within
thirty (30) months after the occurrence of a Change in Control, the Executive's
employment is terminated other than (i) by the Company for Cause, (ii) by reason
of death, Total Disability, or Retirement, or (iii) by the Executive without
Good Reason, then, in addition to all obligations otherwise owing to the
Executive on the Effective Date, the Company shall pay or provide to the
Executive within sixty (60) days of the Effective Date the following: (I) a lump
sum amount equal to the product of 2.5 and the sum of (a) the Executive's then
Regular Annual Salary, and (b) the annual amount that would be paid to Executive
pursuant to the Company's Performance Bonus Plan assuming that all performance
levels had been achieved
at maximum levels; (II) for a period of thirty (30) months following the
Effective Date, (A) the continuation of health insurance, life insurance, and
disability insurance benefits substantially the same as any such benefits
provided to Executive immediately prior to the Effective Date by the Company
under group insurance plans or otherwise, to the extent permissible under the
terms of such plans to do so and if such coverage is not permitted, amounts
necessary for premium payments for such coverage; (B) the continuation of
Executive's car allowance, and club membership fees, if any (or an amount
sufficient to cover such continued car allowance and club membership fees); and
(III) the Tax Gross-Up Amount, if applicable. Except as specifically provided
herein, no other payments or benefits will be furnished or paid, and all
contributions or deductions, if any (other than deductions made in connection
with the benefits specifically provided for herein, if any), shall cease as of
the Effective Date.
The Executive's employment shall be deemed to have been terminated within thirty
(30) months after the occurrence of a Change in Control by the Company without
Cause or by the Executive with Good Reason and the Executive shall be entitled
to receive the payments described in this Section 6 (i) if terminated prior to a
Change in Control without Cause at the direction of a person or entity who or
that has entered into an agreement with the Company the consummation of which
will constitute a Change in Control or (ii) if the Executive terminates his
employment with Good Reason prior to a Change in Control (determined by treating
a Potential Change in Control as a Change in Control in applying the definition
of Good Reason) if the circumstance or event that constitutes Good Reason occurs
at the direction of such person or entity.
7. Not an Employment Agreement; Superceding Effect. This Agreement shall not be
construed as creating an express or implied contract of employment. This
Agreement shall supercede any severance agreement previously entered into or
obligation otherwise agreed to between the parties hereto with respect to
severance payments.
8. Successors; Binding Agreement.
(a) In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business or assets (or a combination thereof) of the Company expressly to
assume 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. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to the payments described in Section 6
that would be payable upon termination by the Executive for Good Reason
immediately after a Change in Control.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives and other successors in interest, provided
that this Agreement may not be assigned by Executive. If Executive dies while
any amount (other than an amount that by its terms is to terminate upon his
death) would still be payable to him hereunder if he was still
living, all such amounts shall be paid in accordance with this Agreement to the
executors, personal representatives, or administrators of the Executive's
estate.
9. Fees. The Company shall pay to Executive all legal fees and expenses incurred
by Executive as a result of Executive's termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination or in
seeking to or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code, to any payment or
benefit provided hereunder) unless such termination is (i) by the Company for
Cause; (ii) by reason of death, Total Disability or Retirement, or (iii) by the
Executive without Good Reason.
10. Miscellaneous. No provision of this Agreement may be modified, waived, or
discharged unless so agreed by the parties in writing. No waiver shall be deemed
a waiver of the same or any other provision at the same or any other time. This
Agreement sets forth the entire agreement of the parties regarding its subject
matter. This Agreement shall be governed by the laws of the State of Missouri
other than the conflicts of law provisions thereof. All payments provided for
hereunder shall be made net of any applicable withholding requirements of
federal, state, or local law. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement as of the date set forth above.
MAVERICK TUBE CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
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Title: President & CEO
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EXECUTIVE:
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
