Exhibit 10.27
CONSULTING AGREEMENT
THIS AGREEMENT by and between LONE STAR TECHNOLOGIES, INC., a Delaware
corporation ("LST"), and XXXX X. XXXXXX ("Xxxxxx") dated as of July 23, 1998.
WITNESSETH THAT:
WHEREAS, Harbin has served LST as its Chief Executive Officer without any
retirement or other customary employee benefits;
WHEREAS, Harbin has informed the Corporation of his intention to retire as
Chief Executive Officer on July 1, 1998 and as Chairman and a director on
December 31, 1998;
WHEREAS, the Board of Directors and Compensation Committee of LST have
considered the accomplishments of LST and its subsidiaries under Harbin's
leadership and the great benefits that they have received from his extraordinary
services;
WHEREAS, the Board of Directors and Compensation Committee of LST have also
considered Harbin's good health and vitality, excellent reputation and valuable
relationships in the oil and gas industry and broad business experience and wise
judgment that LST could continue to benefit from;
WHEREAS, at the meetings of the Compensation Committee of LST on April 15,
1998 and the Board of Directors of LST on May 14, 1998, it was unanimously
decided that LST pay success and consulting fees of $3 million to Harbin or his
estate over a five-year period and that LST should retain Harbin to consult with
and advise the management and the Board of Directors of LST and enter into a
five-year consulting agreement with Harbin providing for the payment of the
success and consulting fees and his office expenses;
NOW, THEREFORE, it is hereby agreed as follows:
1. During the five-year term of this Agreement, commencing on January 1,
1999 and ending on December 31, 2003 (the "Term"), LST will pay Harbin the total
sum of Three Million Dollars ($3,000,000.00), payable as follows: One Million
Dollars ($1,000,000.00) on January 2, 1999 and the remaining Two Million Dollars
($2,000,000.00) in 60 monthly installments of $33,333.33 each, beginning on
January 31, 1999 and ending on December 31, 2003. If Harbin should die before
the end of the Term of this Agreement, his estate shall be entitled to receive,
in the amounts and the times
specified above, the compensation provided under this paragraph 1 to be paid
during the remaining portion of the Term. If a Change in Control of LST, as
defined in the 1985 Long-Term Incentive Plan of LST, as amended, occurs
before the end of the Term of this Agreement, all remaining payments under
this paragraph 1 shall be immediately paid by LST to Harbin or his estate.
No interest shall be accrued or paid with respect to any amount paid to
Harbin hereunder. The obligation of LST to make the payments specified in
this paragraph 1 to Harbin or his estate is absolute and shall not be
affected by Harbin's inability to perform any services hereunder or by any
set-off, counterclaim, recoupment, defense or other claim, right or action
that LST may have against Harbin or others. LST and Harbin recognize that
the payments provided for in this paragraph 1 are in consideration of the
valuable services that Harbin has rendered and continues to render as an
officer of LST and that while the value to LST of the consulting services
that Harbin provides pursuant to this Agreement may be considerable, those
payments are not conditioned on Harbin's providing those consulting services
to LST.
2. During the Term of this Agreement, Harbin will serve as independent
contractor and not as an employee of LST and, as requested by LST at any time
and from time to time, will consult with LST during ordinary business hours with
regard to LST's business and operations. The services which Harbin shall
perform and render hereunder shall include advice and consultation and the
performance of such other duties and services as shall be requested by LST
relating to:
(a) The maintenance and furtherance of satisfactory relationships
between LST and its existing and prospective customers and others having
business relationships with LST;
(b) Representing LST with trade groups and other organizations; and
(c) Generally, the business and affairs of LST.
3. LST shall pay for Harbin's office expenses in an amount not to exceed
$25,000 per year during the Term of this Agreement.
4. The relationship created between LST and Harbin by this Agreement is
that of independent contractors. Harbin shall not be, by reason hereof or any
action taken hereunder or pursuant hereto, an agent or representative of LST and
shall have no power or authority to assume or incur any liability or obligation
on behalf of LST or to bind LST in any respect.
5. During the term of this Agreement Harbin shall not, within the
"Restricted Geographic Area," directly or indirectly serve as a director,
officer or employee of or consultant to any person or entity that manufactures
or sells oil country tubular goods, specialty tubing or other products
competitive with those manufactured and/or sold by
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LST (collectively, "Products"). For purposes of this paragraph 5,
Restricted Geographic Area means Dallas and Xxxxxx Counties, Texas and any
area within a 25-mile radius of any customer or dealer to which LST sells or
ships Products during 1998. Harbin shall hold in a fiduciary capacity for
the benefit of LST all secret or confidential information relating to LST and
its business that Harbin obtains during his employment as an officer of LST
and his retention as a consultant to LST hereunder. LST's sole remedy for
any breach of Harbin's obligations under this Agreement shall be to obtain
injunctive relief to restrain any such breach or specific enforcement of this
Agreement. In no event shall any asserted violation of this Agreement
constitute a basis for deferring or withholding any amounts otherwise payable
to Harbin under paragraph 1 of this Agreement. If any of the covenants in
this paragraph 5, or any part thereof, is held to be unenforceable because of
the duration of such provision or the area covered thereby, the parties agree
that the court making such determination shall reduce the duration and/or
areas of such provision such that, in its reduced form, said provision shall
then be enforceable.
6. No interest or right of Harbin under this Agreement may be assigned,
anticipated, alienated or subject to attachment, garnishment, levy, execution or
other legal or equitable process except as required by law. Any attempt by
Harbin to assign, anticipate, alienate, pledge or encumber the same shall be
void. The obligations of LST to make payments to Harbin under this Agreement
are unfunded, and no provisions of this Agreement shall be deemed or construed
to create a trust fund or to xxxxx Xxxxxx a security interest. All payments
under this Agreement shall be made by LST out of its general assets, and the
right of Harbin or his estate to receive payments from LST hereunder shall be no
greater than the right of any unsecured general creditor of LST.
7. This Agreement is personal to Harbin and his rights hereunder can be
transferred only by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Harbin and his
legal representatives, successors, heirs, devisees and legatees. This Agreement
shall inure to the benefit of and be binding upon LST and its successors and
assigns. References to LST in this Agreement shall include any successor to the
business and/or assets of LST that assumes LST's obligations under this
Agreement, by operation of law or otherwise.
8. LST may withhold from amounts payable under this Agreement all taxes
that are required to be withheld by applicable laws or regulations.
9. This Agreement has been executed and delivered in the State of Texas
and shall be construed in accordance with and governed by the laws of that
State.
10. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
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11. This Agreement constitutes the entire agreement between LST and
Harbin with respect to the subject matter hereof and supersedes all other prior
agreements, both written and oral, between the parties with respect to such
subject matter. This Agreement may be amended by the parties hereto and the
terms and conditions hereof may be waived only by an instrument in writing
signed by each of the parties or, in the case of a waiver, by an instrument
signed by the party waiving compliance. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, and said
counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, Harbin has executed this Agreement and, pursuant to the
authorization of its Board of Directors and Compensation Committee, LST has
caused this Agreement to be executed on its behalf by a duly authorized officer,
all as of the date above written.
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
LONE STAR TECHNOLOGIES, INC.
By: /s/ Rhys J. Best
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Name: Rhys J. Best
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Title: President
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