EXHIBIT 10.28
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made as of the 19 day of
February, 2003, by and between MAVERICK TUBE CORPORATION, a Delaware corporation
(the "Company"), and Xxx 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;
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(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;
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(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 November 11, 2003 and each November 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
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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
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(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
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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
Title: President & CEO
Executive:
/s/ Xxx Xxxxx, Feb. 19, 2003
Xxx Xxxxx
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