HYDRIL CHANGE IN CONTROL AGREEMENT FOR OTHER EXECUTIVE OFFICERS HYDRIL COMPANY 3300 North Sam Houston Parkway East Houston, Texas 77032
Exhibit 10.13
HYDRIL CHANGE IN CONTROL AGREEMENT FOR OTHER EXECUTIVE OFFICERS
[INSERT DATE]
Dear :
Hydril Company (the “Corporation”) considers it essential to the best interests of its
stockholders to xxxxxx the continuous employment of key management personnel. In connection with
this, the Corporation’s Board of Directors (the “Board”) recognizes that, as is the case with many
corporations, the possibility of a change in control of the Corporation may exist and that such
possibility, and that such uncertainty and questions that it may raise among management, could
result in the departure or distraction of management personnel to the detriment of the Corporation
and its stockholders.
The Board previously had decided to reinforce and encourage the continued attention and
dedication of members of the Corporation’s management, including yourself, to their assigned duties
without distraction arising from the possibility of a change in control of the Corporation and had
entered into a letter agreement with you dated [ ], as amended, concerning certain
benefits to be paid to you upon severance from employment with the Corporation following a change
in control (the “Prior Agreement”).
The Corporation has now determined to offer to enter into a new letter agreement (the
“Agreement”) with you which, among other things, will have a longer term than the Prior Agreement.
Except for purposes of Sections 2, 5 and 6 of this Agreement or where the context otherwise
requires, henceforth in this Agreement “Corporation” shall be deemed to also include subsidiaries
of Hydril Company.
In order to induce you to remain in its employ, the Corporation and Hydril Company LP, a
wholly owned subsidiary of the Corporation, hereby agree that after this Agreement has been fully
executed, you shall receive the severance benefits set forth in this Agreement in the event your
employment with the Corporation is terminated under the circumstances described below subsequent to
a “Change in Control” (as defined in Section 2). If the Prior Agreement has not expired of its own
accord prior to the Effective Date (as defined
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below), this Agreement supersedes the Prior Agreement which, as of the Effective Date, will no
longer have any force or effect.
1. Term of Agreement. This Agreement shall commence on [January ___, 2007] (the
“Effective Date”) and shall continue in effect through the earlier of (i) the second anniversary of
the Effective Date or (ii) the end of the calendar month in which your 65th birthday occurs.
2. Change in Control. No benefits shall be payable hereunder unless there has been a
Change in Control. For purposes of this Agreement, a Change in Control shall be conclusively deemed
to have occurred if (and only if) any of the following events shall have occurred: (a) after the
date hereof any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than a person who is a director of the Corporation on the date hereof or any person
controlled by such a director, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation representing 35% or more of
the combined voting power of the Corporation’s then outstanding voting securities without prior
approval of a least two-thirds of the members of the Board of Directors of the Corporation in
office immediately prior to such person’s attaining such percentage interest; (b) the Corporation
is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest,
as a consequence of which members of the Board of Directors of the Corporation in office
immediately prior to such transaction or event thereafter constitute less than a majority of the
members of the board of directors or comparable governing body of the entity that is the survivor
of such transaction or event or, in the case of a sale of assets, the entity that is the successor
to the business of the Corporation; or (c) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the Corporation
(including for this purpose any new member whose election or nomination for election by the
Corporation’s stockholders was approved by a vote of at least two-thirds of the members then still
in office who were members at the beginning of such period) cease for any reason to constitute at
least a majority of the Board of Directors of the Corporation.
3. Termination Following Change in Control.
(i) General. If any of the events described in Section 2 constituting a
Change in Control shall have occurred, you shall be entitled to the benefits provided in Section
4(iii) upon the subsequent termination of your employment during the term of this Agreement if such
termination is (a) by the Corporation without Cause or (b) by you for Good Reason.
(ii) Cause. Termination by the Corporation of your employment for “Cause”
shall mean termination (a) upon your willful and continued failure to substantially perform your
duties with the Corporation or any such actual or anticipated failure after your issuance of a
Notice of Termination (as defined in Section 3(iv)) for Good Reason (as defined in Section 3(iii)),
after a written demand for substantial performance is delivered to you by the Board,
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which demand specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful participation in conduct which is
demonstrably and materially injurious to the Corporation, monetarily or otherwise, or (c) upon
there being substantial evidence that you are guilty of a crime classified as a felony (or the
equivalent thereof) under applicable law, or that you have been convicted of such a crime. For
purposes of this Section 3(ii), no act, or failure to act, on your part shall be deemed “willful”
unless done, or omitted to be done, by you not in good faith. In addition, “Cause” shall exist if
as a result of your becoming “Disabled” (as that term is defined in Section 409A(a)(2)(C) of the
Internal Revenue Code of 1986, as amended (the “Code”)), you shall have been absent from the
full-time performance of your duties with the Corporation for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination is given you shall not have returned to
the full-time performance of your duties (hereinafter, “Extended Disability”). Notwithstanding the
foregoing, you shall not be deemed terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after
reasonable notice to you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the Board’s good faith opinion you were guilty of conduct set forth
above in this Section 3(ii) and specifying the particulars thereof in reasonable detail.
(iii) Good Reason. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without your express written
consent, the occurrence after a Change in Control of any of the following circumstances unless, in
the case of subsections (a), (e), (f) or (g), such circumstances are fully corrected prior to the
Date of Termination (as defined in Section 3(v)) specified in the Notice of Termination (as defined
in Section 3(iv)) given in respect thereof:
(a) the assignment to you of any duties inconsistent with the position in the
Corporation or any subsidiary of the Corporation that you held immediately prior to the
Change in Control, or a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect immediately prior
to such Change in Control;
(b) the reduction of your annual base salary as in effect on the date hereof or as the
same may be increased from time to time;
(c) the relocation of the offices at which you are principally employed immediately
prior to the date of the Change in Control to a location more than 25 miles from such
location or your relocation to anywhere other than such prior office except for required
travel on the Corporation’s business to an extent substantially consistent with your present
business travel obligations;
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(d) failure to pay to you any portion of your current compensation or to pay to you any
portion of an installment of deferred compensation under any deferred compensation program
of the Corporation within seven (7) days of the date such compensation is due;
(e) failure to continue in effect any material compensation or benefit plan in which
you participate immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with respect to such
plan, or failure to continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of your participation relative to other participants, as
existed at the time of the Change in Control;
(f) failure to obtain an agreement from any successor to assume and agree to perform
this Agreement, as contemplated in Section 5; or
(g) any purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 3(iv) hereof (and, if
applicable, the requirements of Section 3(ii) hereof), which purported termination shall not
be effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this Section 3(iii) shall not be affected by
your incapacity due to physical or mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
(iv) Notice of Termination. Any purported termination of your employment by
the Corporation or by you (other than termination due to death which shall terminate your
employment automatically) shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 6. “Notice of Termination” shall mean a notice that shall
indicate the specific termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(v) Date of Termination, Etc. “Date of Termination” shall mean (a) if your
employment is terminated due to your death, the date of your death; (b) if your employment is
terminated for Extended Disability thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of your duties during such thirty
(30)-day period), and (c) if your employment is terminated pursuant to Section 3(ii) or Section
3(iii) or for any other reason (other than death or due to being Disabled), the date specified in
the Notice of Termination (which, in the case of a termination for Cause shall not be less than
thirty (30) days from the date such Notice of Termination is given, and in the case of a
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termination for Good Reason shall not be less than fifteen (15) nor more than sixty (60) days
from the date such Notice of Termination is given). Notwithstanding anything to the contrary
contained in this Section 3(v), if within fifteen (15) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the date on which the
dispute is finally determined, either by mutual written agreement of the parties, or as set forth
in Section 10; provided, however, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.
4. Compensation Upon Termination or During Disability. Following a Change in Control,
you shall be entitled to the benefits described below upon becoming Disabled, or upon termination
of your employment, as the case may be, provided that such period or termination occurs during the
term of this Agreement. The benefits to which you are entitled, subject to the terms and conditions
of this Agreement, are:
(i) Upon becoming Disabled, you shall continue to receive your base salary at the
rate in effect at the commencement of any such period, together with all compensation payable to
you under the Corporation’s disability plan or program or other similar plan during such period,
until your employment is terminated by the Corporation pursuant to Section 3(ii) hereof or by you.
Thereafter, or in the event your employment is terminated by reason of your death, your benefits
shall be determined under the Corporation’s retirement, insurance and other compensation programs
then in effect in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Corporation for Cause or by you
other than for Good Reason, the Corporation shall pay you your full base salary, when due, through
the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any compensation plan of the Corporation at the time
such payments are due, and the Corporation shall have no further obligations to you under this
Agreement.
(iii) If your employment by the Corporation shall be terminated by you for Good
Reason or by the Corporation other than for Cause (including Extended Disability), then you shall
be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base salary, when due, through the Date
of Termination at the rate in effect at the time Notice of Termination is given, at the time
specified in Section 4(iv), plus all other amounts to which you are entitled under any
compensation plan of the Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for periods subsequent to the Date of
Termination, the Corporation shall pay as severance pay to you, at the time
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specified in Section 4(iv), a lump sum severance payment (together with the payments
provided in Sections 4(iii)(c) and (d) below, the “Severance Payments”) equal to 200% of
your annual salary as in effect as of the Date of Termination or immediately prior to the
Change in Control, whichever is greater and without regard to whether you have been employed
by the Corporation or any of its subsidiaries for at least 12 consecutive months, and 200%
of the average of the annual bonuses awarded to you pursuant to the Corporation’s bonus
plan(s) for executive officers, or any successor bonus plan(s) thereto, with respect to the
three fiscal years preceding the Date of Termination; provided that if you shall not have
been continuously employed by the Corporation or any of its subsidiaries for the preceding
three full fiscal years, such average annual bonuses shall be determined based on the
aggregate of all bonuses paid to you with respect to any of such three fiscal years and the
actual period of your employment through the end of the preceding fiscal year (stated in
years, including a fraction thereof); and provided further that if no bonuses shall have
been paid to you with respect to the preceding fiscal year, such bonuses (for purposes of
computing both the average annual bonuses and the aggregate amount of Severance Payments)
shall be the greater of (x) the bonus award to you for such fiscal year, if any, theretofore
approved by the Corporation’s Board of Directors or a duly constituted committee thereof,
(y) your target bonus for such fiscal year, stated as a percentage of your base annual
salary, theretofore approved by the Corporation’s Board of Directors or a duly constituted
committee thereof, or (z) your current annual salary multiplied by the highest percentage
that your bonuses represented in relation to your base annual salary with respect to either
of the first two of the three preceding fiscal years.
(c) the Corporation shall pay to you all legal fees and expenses incurred by you as a
result of such termination (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement (as set forth in Section 10 of this Agreement)); and
(d) for a twenty-four (24) month period after such termination, the Corporation shall
arrange to provide you with life, disability, accident and group health insurance benefits
substantially similar to those that you were receiving immediately prior to the Notice of
Termination. Benefits otherwise receivable by you pursuant to this Section 4(iii)(d) shall
be reduced to the extent comparable benefits are actually received by you during the
twenty-four (24) month period following your termination, and any such benefits actually
received by you shall be reported to the Corporation.
(iv) The payments provided for in Section 4(iii)(a) shall commence not later than
the fifth day following the Date of Termination. The payments provided for in Sections 4(iii)(b)
shall be made on the date which is six months plus two days following the Date of Termination
together with interest calculated from the Date of Termination through the payment
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date at the rate provided in section 1274(d)(1)(C) of the Internal Revenue Code of 1986, as
amended (the “Code”).
(v) You shall not be required to mitigate the amount of any payment provided for in
this Section 4 by seeking other employment or otherwise and, except as provided in Section
4(iii)(d), the amount of any payment or benefit provided for in this Section 4 shall not be reduced
by any compensation earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. Successors, Binding Agreement.
(i) The Corporation shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this Agreement and shall
entitle you to terminate your employment and to receive compensation from the Corporation in the
same amount and on the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be deemed the Date of
Termination. Where the context requires, “Corporation” shall mean the Corporation as hereinbefore
defined and any successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by you and your
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would still be payable to you hereunder
had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the attention of the
Board with a copy to the Secretary of the Corporation, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
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7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by you
and such officer as may be specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of Texas without regard to its conflicts of law principles. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions
to such sections. Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of the Corporation under
Section 4 shall survive the expiration of the term of this Agreement. The section headings
contained in this Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
8. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together shall constitute one and the same
instrument.
10. Arbitration, Dispute Resolution.
(i) Arbitration Procedure. Any disagreement, dispute, controversy or claim
arising out of or relating to this Agreement or the interpretation of this Agreement or any
arrangements relating to this Agreement or contemplated in this Agreement or the breach,
termination or invalidity thereof shall be settled by arbitration in accordance with the Commercial
Arbitration Rules (the “Arbitration Rules”) of the American Arbitration Association (the “AAA”)
(except as otherwise provided in this Agreement) in Houston, Texas. The arbitral tribunal shall
consist of one arbitrator. In making any decision, the arbitrator shall apply and follow the
substantive law of Texas without reference to the conflicts of law provisions thereof. The parties
to the arbitration jointly shall directly appoint such arbitrator within thirty (30) days of
initiation of arbitration. If the parties shall fail to appoint such arbitrator as provided above,
such arbitrator shall be appointed by the AAA as provided in the Arbitration Rules. You and the
Corporation agree that the arbitral award may be enforced against the parties to the arbitration
proceeding or their assets wherever they may be found and that a judgment upon the arbitral award
may be entered in any court having jurisdiction thereof. The Corporation shall pay all fees and
expenses of the Arbitrator regardless of the result and shall provide all witnesses and
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evidence reasonably required by you to present your case. The Corporation shall pay to you all
reasonable arbitration expenses and legal fees incurred by you as a result of a termination of your
employment in seeking to obtain or enforce any right or benefit provided by this Agreement (whether
or not you are successful in obtaining or enforcing such right or benefit). Such payments shall be
made within five (5) days after the your request for payment accompanied with such evidence of fees
and expenses incurred as the Corporation reasonably may require.
(ii) Compensation During Dispute. Your compensation during any
disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
(a) If a purported termination by you for Good Reason occurs or is deemed to occur
following a Change in Control and during the term of this Agreement, and such termination is
disputed in accordance with Sections 3(v) and 10(i) of this Agreement, the Corporation shall
continue to pay you the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue you as a participant
in all compensation, benefit and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 10(i). Amounts paid under this Section 10(ii)(a) are in addition to
all other amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement. You agree to remain in the employ of the Corporation
during the resolution of the dispute and to continue to provide services unless your
employment is terminated earlier by death, upon becoming Disabled or retirement, or by
action of the Corporation. If the dispute is resolved by a determination that you did not
have Good Reason, this Agreement, in accordance with its terms, shall continue to apply to
the circumstances of the your employment by the Corporation and any termination thereof.
(b) If there is a termination by the Corporation followed by a dispute as to whether
you are entitled to the payments and other benefits provided under this Agreement, then,
during the period of that dispute the Corporation shall pay you fifty percent (50%) of the
amount specified in Sections 4(iii)(a) and 4(iii)(b) hereof (at the time specified in
Section 4(v)), and the Corporation shall provide you with the other benefits provided in
Section 4(iii) of this Agreement, if, but only if, you agree in writing that if the dispute
is resolved against you, you shall promptly refund to the Corporation all payments you
receive under Sections 4(iii)(a) and 4(iii)(b) of this Agreement plus interest at the rate
provided in Section 1274(d) of the Code, compounded quarterly. If the dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay you the sum
that was withheld during the period of the dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
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11. Confidential Information and Non-Solicitation.
(i) For a period of two (2) years after a termination of your employment with the
Corporation with respect to which you receive Severance Payments under Section 4 of this Agreement,
you shall not, except as may be required by applicable law, disclose to others or use, whether
directly or indirectly, any Confidential Information regarding the Corporation. “Confidential
Information” shall mean information about the Corporation, its subsidiaries and affiliates, and
their respective clients and customers that is not available to the general public and that was
learned by you in the course of your employment by the Corporation, including (without limitation)
any patterns, proprietary knowledge, trade secrets, data, formulae, information, and client and
customer lists and all papers, resumes, records (including computer records) and the documents
containing such Confidential Information. You acknowledge that such Confidential Information is
specialized, unique in nature and of great value to the Corporation, and that such information
gives the Corporation a competitive advantage in conducting its business. Upon the termination of
your employment for any reason whatsoever, you shall promptly deliver to the Corporation all
documents, computer tapes and disks (and all copies thereof) containing any Confidential
Information.
(ii) You recognize that you possess confidential information about other employees
of the Corporation relating to their education, experience, skills, abilities, compensation and
benefits, and interpersonal relationships with customers of the Corporation. You recognizes that
the information you possess about these other employees is not generally known, is of substantial
value to the Corporation in developing its business and in securing and retaining customers, and
has been acquired by you because of your business position with the Corporation. For a period of
two (2) years after a termination of your employment with the Corporation with respect to which you
receive Severance Payments under Section 4 of this Agreement, you shall not, directly or
indirectly, solicit, recruit or hire any employee of the Corporation for the purpose of being
employed by you or by any other person on whose behalf you are acting as an agent, representative
or employee and that you will not convey any such confidential information or trade secrets about
other employees of the Corporation to any business, individual, partner, firm, corporation, or
other entity.
(iii) You agree that the Corporation will or would suffer irreparable injury if you
were to violate any of the covenants set forth in this Section 11 and that the Corporation would by
reason of such violation be entitled to injunctive relief in a court of appropriate jurisdiction,
and you further consent and stipulate to the entry of such injunctive relief in such a court
prohibiting you from violating any of such covenants.
(iv) If it is determined by a court of competent jurisdiction in any state that any
restriction in this Section 11 is excessive in duration or scope or is unreasonable or
unenforceable under the laws of that state, it is the intention of the parties that such
restriction
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may be modified or amended by the court to render it enforceable to the maximum extent
permitted by the law of that state.
12. Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto; and any prior agreement of
the parties hereto in respect of the subject matter contained herein, including the Prior
Agreement, is hereby terminated and cancelled.
13. No Rights of Employment. No provision of this Agreement shall confer to any right
upon you to continue employment with the Corporation or any of its affiliates or subsidiaries.
14. Section 409A. Notwithstanding any provision of this Agreement to the contrary,
the following provisions shall apply for purposes of complying with Section 409A of the Code and
applicable Treasury authorities (“Section 409A”):
(i) If Executive is a “specified employee,” as such term is defined in Section 409A
and determined as described below in this Section 14, any payments or benefits payable or provided
as a result of Executive’s termination of employment that would otherwise be paid or provided
within six months and one day of such termination (other than death or Disability) shall instead be
paid or provided on the earlier of (i) the date that is six months and two days after Executive’s
termination, (ii) the date of Executive’s death, or (iii) the date that otherwise complies with the
requirements of Section 409A.
(ii) If any provision of this Agreement would result in the imposition of an
applicable tax under Section 409A, Executive and the Corporation agree that such provision will be
reformed to avoid imposition of the applicable tax in a manner that will result in the least
adverse economic impact on Executive.
If this letter sets forth our agreement on the subject matter hereof, kindly sign and return
to the Corporation the enclosed copy of this letter, which shall then constitute our agreement on
this subject.
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Agreed to this day of , 200_
By: |
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FORM OF
AGREEMENT FOR XXXXXXXXXXX X. XXXXXX
HYDRIL CHANGE IN CONTROL AGREEMENT
HYDRIL CHANGE IN CONTROL AGREEMENT
[INSERT DATE]
Dear Xx. Xxxxxx:
Hydril Company (the “Corporation”) considers it essential to the best interests of its
stockholders to xxxxxx the continuous employment of key management personnel. In connection with
this, the Corporation’s Board of Directors (the “Board”) recognizes that, as is the case with many
corporations, the possibility of a change in control of the Corporation may exist and that such
possibility, and that such uncertainty and questions that it may raise among management, could
result in the departure or distraction of management personnel to the detriment of the Corporation
and its stockholders.
The Board previously had decided to reinforce and encourage the continued attention and
dedication of members of the Corporation’s management, including yourself, to their assigned duties
without distraction arising from the possibility of a change in control of the Corporation and had
entered into a letter agreement with you dated January 15, 2002, as amended concerning certain
benefits to be paid to you upon severance from employment with the Corporation following a change
in control (the “Prior Agreement”).
The Corporation has now determined to offer to enter into a new letter agreement (the
“Agreement”) with you which, among other things, will have a longer term than the Prior Agreement.
In order to induce you to remain in its employ, the Corporation and Hydril Company LP, a
wholly owned subsidiary of the Corporation, hereby agrees that after this Agreement has been fully
executed, you shall receive the severance benefits set forth in this Agreement in the event your
employment with the Corporation is terminated under the circumstances described below subsequent to
a “Change in Control” (as defined in Section 2). If the Prior Agreement has not expired of its own
accord prior to the Effective Date (as defined
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below), this Agreement supersedes the Prior Agreement which, as of the Effective Date, will no
longer have any force or effect.
15. Term of Agreement. This Agreement shall commence on [January ___, 2007] (the
“Effective Date”) and shall continue in effect through the earlier of (i) the second anniversary of
the Effective Date or (ii) the end of the calendar month in which your 65th birthday occurs.
Except for purposes of Sections 2, 5 and 6 of this Agreement or where the context otherwise
requires, henceforth in this Agreement “Corporation” shall be deemed to also include subsidiaries
of Hydril Company.
16. Change in Control. No benefits shall be payable hereunder unless there has been a
Change in Control. For purposes of this Agreement, a Change in Control shall be conclusively deemed
to have occurred if (and only if) any of the following events shall have occurred: (a) after the
date hereof any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than a person who is a director of the Corporation on the date hereof or any person
controlled by such a director, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation representing 35% or more of
the combined voting power of the Corporation’s then outstanding voting securities without prior
approval of a least two-thirds of the members of the Board of Directors of the Corporation in
office immediately prior to such person’s attaining such percentage interest; (b) the Corporation
is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest,
as a consequence of which members of the Board of Directors of the Corporation in office
immediately prior to such transaction or event thereafter constitute less than a majority of the
members of the board of directors or comparable governing body of the entity that is the survivor
of such transaction or event or, in the case of a sale of assets, the entity that is the successor
to the business of the Corporation; or (c) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the Corporation
(including for this purpose any new member whose election or nomination for election by the
Corporation’s stockholders was approved by a vote of at least two-thirds of the members then still
in office who were members at the beginning of such period) cease for any reason to constitute at
least a majority of the Board of Directors of the Corporation.
17. Termination Following Change in Control.
(i) General. If any of the events described in Section 2 constituting a
Change in Control shall have occurred, you shall be entitled to the benefits provided in Section
4(iii) upon the subsequent termination of your employment during the term of this Agreement if such
termination is (a) by the Corporation without Cause or (b) by you for Good Reason.
(ii) Cause. Termination by the Corporation of your employment for “Cause”
shall mean termination (a) upon your willful and continued failure to substantially perform your
duties with the Corporation or any such actual or anticipated failure after your issuance of a
| EXECUTIVE | -15- | DATE |
Notice of Termination (as defined in Section 3(iv)) for Good Reason (as defined in Section
3(iii)), after a written demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful participation in conduct which is
demonstrably and materially injurious to the Corporation, monetarily or otherwise, or (c) upon
there being substantial evidence that you are guilty of a crime classified as a felony (or the
equivalent thereof) under applicable law, or that you have been convicted of such a crime. For
purposes of this Section 3(ii), no act, or failure to act, on your part shall be deemed “willful”
unless done, or omitted to be done, by you not in good faith. In addition, “Cause” shall exist if
as a result of your becoming “Disabled” (as that term is defined in Section 409A(a)(2)(C) of the
Internal Revenue Code of 1986, as amended (the “Code”)), you shall have been absent from the
full-time performance of your duties with the Corporation for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination is given you shall not have returned to
the full-time performance of your duties (hereinafter, “Extended Disability”). Notwithstanding the
foregoing, you shall not be deemed terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after
reasonable notice to you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the Board’s good faith opinion you were guilty of conduct set forth
above in this Section 3(ii) and specifying the particulars thereof in reasonable detail.
(iii) Good Reason. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without your express written
consent, the occurrence after a Change in Control of any of the following circumstances unless, in
the case of subsections (a), (e), (f) or (g), such circumstances are fully corrected prior to the
Date of Termination (as defined in Section 3(v)) specified in the Notice of Termination (as defined
in Section 3(iv)) given in respect thereof:
(a) the assignment to you of any duties inconsistent with the position in the
Corporation or any subsidiary of the Corporation that you held immediately prior to the
Change in Control, or a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect immediately prior
to such Change in Control;
(b) the reduction of your annual base salary as in effect on the date hereof or as the
same may be increased from time to time;
(c) the relocation of the offices at which you are principally employed immediately
prior to the date of the Change in Control to a location more than 25 miles from such
location or your relocation to anywhere other than such prior office except for required
travel on the Corporation’s business to an extent substantially consistent with your present
business travel obligations;
| EXECUTIVE | -16- | DATE |
(d) failure to pay to you any portion of your current compensation or to pay to you any
portion of an installment of deferred compensation under any deferred compensation program
of the Corporation within seven (7) days of the date such compensation is due;
(e) failure to continue in effect any material compensation or benefit plan in which
you participate immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with respect to such
plan, or failure to continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of your participation relative to other participants, as
existed at the time of the Change in Control;
(f) failure to obtain an agreement from any successor to assume and agree to perform
this Agreement, as contemplated in Section 5; or
(g) any purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 3(iv) hereof (and, if
applicable, the requirements of Section 3(ii) hereof), which purported termination shall not
be effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this Section 3(iii) shall not be affected by
your incapacity due to physical or mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
(iv) Notice of Termination. Any purported termination of your employment by
the Corporation or by you (other than termination due to death which shall terminate your
employment automatically) shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 6. “Notice of Termination” shall mean a notice that shall
indicate the specific termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(v) Date of Termination, Etc. “Date of Termination” shall mean (a) if your
employment is terminated due to your death, the date of your death; (b) if your employment is
terminated for Extended Disability thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of your duties during such thirty
(30)-day period), and (c) if your employment is terminated pursuant to Section 3(ii) or Section
3(iii) or for any other reason (other than death or due to being Disabled), the date specified in
the Notice of Termination (which, in the case of a termination for Cause shall not be less than
thirty (30) days from the date such Notice of Termination is given, and in the case of a
| EXECUTIVE | -17- | DATE |
termination for Good Reason shall not be less than fifteen (15) nor more than sixty (60) days
from the date such Notice of Termination is given). Notwithstanding anything to the contrary
contained in this Section 3(v), if within fifteen (15) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the date on which the
dispute is finally determined, either by mutual written agreement of the parties, or as set forth
in Section 10; provided, however, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.
18. Compensation Upon Termination or During Disability. Following a Change in
Control, you shall be entitled to the benefits described below upon becoming Disabled, or upon
termination of your employment, as the case may be, provided that such period or termination occurs
during the term of this Agreement. The benefits to which you are entitled, subject to the terms and
conditions of this Agreement, are:
(i) Upon becoming Disabled, you shall continue to receive your base salary at the
rate in effect at the commencement of any such period, together with all compensation payable to
you under the Corporation’s disability plan or program or other similar plan during such period,
until your employment is terminated by the Corporation pursuant to Section 3(ii) hereof or by you.
Thereafter, or in the event your employment is terminated by reason of your death, your benefits
shall be determined under the Corporation’s retirement, insurance and other compensation programs
then in effect in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Corporation for Cause or by you
other than for Good Reason, the Corporation shall pay you your full base salary, when due, through
the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any compensation plan of the Corporation at the time
such payments are due, and the Corporation shall have no further obligations to you under this
Agreement.
(iii) If your employment by the Corporation shall be terminated by you for Good
Reason or by the Corporation other than for Cause (including Extended Disability), then you shall
be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base salary, when due, through the Date
of Termination at the rate in effect at the time Notice of Termination is given, at the time
specified in Section 4(iv), plus all other amounts to which you are entitled under any
compensation plan of the Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for periods subsequent to the Date of
Termination, the Corporation shall pay as severance pay to you, at the time
| EXECUTIVE | -18- | DATE |
specified in Section 4(iv), a lump sum severance payment (together with the payments
provided in Sections 4(iii)(c) and (d) below, the “Severance Payments”) equal to 290% of
your annual salary as in effect as of the Date of Termination or immediately prior to the
Change in Control, whichever is greater and without regard to whether you have been employed
by the Corporation or any of its subsidiaries for at least 12 consecutive months, and 290%
of the average of the annual bonuses awarded to you pursuant to the Corporation’s bonus
plan(s) for executive officers, or any successor bonus plan(s) thereto, with respect to the
three fiscal years preceding the Date of Termination; provided that if you shall not have
been continuously employed by the Corporation or any of its subsidiaries for the preceding
three full fiscal years, such average annual bonuses shall be determined based on the
aggregate of all bonuses paid to you with respect to any of such three fiscal years and the
actual period of your employment through the end of the preceding fiscal year (stated in
years, including a fraction thereof); and provided further that if no bonuses shall have
been paid to you with respect to the preceding fiscal year, such bonuses (for purposes of
computing both the average annual bonuses and the aggregate amount of Severance Payments)
shall be the greater of (x) the bonus award to you for such fiscal year, if any, theretofore
approved by the Corporation’s Board of Directors or a duly constituted committee thereof,
(y) your target bonus for such fiscal year, stated as a percentage of your base annual
salary, theretofore approved by the Corporation’s Board of Directors or a duly constituted
committee thereof, or (z) your current annual salary multiplied by the highest percentage
that your bonuses represented in relation to your base annual salary with respect to either
of the first two of the three preceding fiscal years.
(c) the Corporation shall pay to you all legal fees and expenses incurred by you as a
result of such termination (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement (as set forth in Section 10 of this Agreement)); and
(d) for a thirty-five (35) month period after such termination, the Corporation shall
arrange to provide you with life, disability, accident and group health insurance benefits
substantially similar to those that you were receiving immediately prior to the Notice of
Termination. Benefits otherwise receivable by you pursuant to this Section 4(iii)(d) shall
be reduced to the extent comparable benefits are actually received by you during the
thirty-five (35) month period following your termination, and any such benefits actually
received by you shall be reported to the Corporation.
(iv) The payments provided for in Section 4(iii)(a) shall commence not later than
the fifth day following the Date of Termination. The payments provided for in Sections 4(iii)(b)
shall be made on the date which is six months plus two days following the Date of Termination
together with interest calculated from the Date of Termination through the payment
| EXECUTIVE | -19- | DATE |
date at the rate provided in section 1274(d)(1)(C) of the Internal Revenue Code of 1986, as
amended (the “Code”).
(v) You shall not be required to mitigate the amount of any payment provided for in
this Section 4 by seeking other employment or otherwise and, except as provided in Section
4(iii)(d), the amount of any payment or benefit provided for in this Section 4 shall not be reduced
by any compensation earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
19. Successors, Binding Agreement.
(i) The Corporation shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this Agreement and shall
entitle you to terminate your employment and to receive compensation from the Corporation in the
same amount and on the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be deemed the Date of
Termination. Where the context requires, “Corporation” shall mean the Corporation as hereinbefore
defined and any successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by you and your
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would still be payable to you hereunder
had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
20. Notice. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the attention of the
Board with a copy to the Secretary of the Corporation, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
| EXECUTIVE | -20- | DATE |
21. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by you
and such officer as may be specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of Texas without regard to its conflicts of law principles. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions
to such sections. Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of the Corporation under
Section 4 shall survive the expiration of the term of this Agreement. The section headings
contained in this Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
22. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
23. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together shall constitute one and the same
instrument.
24. Arbitration, Dispute Resolution.
(i) Arbitration Procedure. Any disagreement, dispute, controversy or claim
arising out of or relating to this Agreement or the interpretation of this Agreement or any
arrangements relating to this Agreement or contemplated in this Agreement or the breach,
termination or invalidity thereof shall be settled by arbitration in accordance with the Commercial
Arbitration Rules (the “Arbitration Rules”) of the American Arbitration Association (the “AAA”)
(except as otherwise provided in this Agreement) in Houston, Texas. The arbitral tribunal shall
consist of one arbitrator. In making any decision, the arbitrator shall apply and follow the
substantive law of Texas without reference to the conflicts of law provisions thereof. The parties
to the arbitration jointly shall directly appoint such arbitrator within thirty (30) days of
initiation of arbitration. If the parties shall fail to appoint such arbitrator as provided above,
such arbitrator shall be appointed by the AAA as provided in the Arbitration Rules. You and the
Corporation agree that the arbitral award may be enforced against the parties to the arbitration
proceeding or their assets wherever they may be found and that a judgment upon the arbitral award
may be entered in any court having jurisdiction thereof. The Corporation shall pay all fees and
expenses of the Arbitrator regardless of the result and shall provide all witnesses and
| EXECUTIVE | -21- | DATE |
evidence reasonably required by you to present your case. The Corporation shall pay to you all
reasonable arbitration expenses and legal fees incurred by you as a result of a termination of your
employment in seeking to obtain or enforce any right or benefit provided by this Agreement (whether
or not you are successful in obtaining or enforcing such right or benefit). Such payments shall be
made within five (5) days after the your request for payment accompanied with such evidence of fees
and expenses incurred as the Corporation reasonably may require.
(ii) Compensation During Dispute. Your compensation during any
disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
(a) If a purported termination by you for Good Reason occurs or is deemed to occur
following a Change in Control and during the term of this Agreement, and such termination is
disputed in accordance with Sections 3(v) and 10(i) of this Agreement, the Corporation shall
continue to pay you the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue you as a participant
in all compensation, benefit and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 10(i). Amounts paid under this Section 10(ii)(a) are in addition to
all other amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement. You agree to remain in the employ of the Corporation
during the resolution of the dispute and to continue to provide services unless your
employment is terminated earlier by death, upon becoming Disabled or retirement, or by
action of the Corporation. If the dispute is resolved by a determination that you did not
have Good Reason, this Agreement, in accordance with its terms, shall continue to apply to
the circumstances of the your employment by the Corporation and any termination thereof.
(b) If there is a termination by the Corporation followed by a dispute as to whether
you are entitled to the payments and other benefits provided under this Agreement, then,
during the period of that dispute the Corporation shall pay you fifty percent (50%) of the
amount specified in Sections 4(iii)(a) and 4(iii)(b) hereof (at the time specified in
Section 4(v)), and the Corporation shall provide you with the other benefits provided in
Section 4(iii) of this Agreement, if, but only if, you agree in writing that if the dispute
is resolved against you, you shall promptly refund to the Corporation all payments you
receive under Sections 4(iii)(a) and 4(iii)(b) of this Agreement plus interest at the rate
provided in Section 1274(d) of the Code, compounded quarterly. If the dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay you the sum
that was withheld during the period of the dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
25. Confidential Information and Non-Solicitation.
| EXECUTIVE | -22- | DATE |
(i) For a period of two (2) years after a termination of your employment with the
Corporation with respect to which you receive Severance Payments under Section 4 of this Agreement,
you shall not, except as may be required by applicable law, disclose to others or use, whether
directly or indirectly, any Confidential Information regarding the Corporation. “Confidential
Information” shall mean information about the Corporation, its subsidiaries and affiliates, and
their respective clients and customers that is not available to the general public and that was
learned by you in the course of your employment by the Corporation, including (without limitation)
any patterns, proprietary knowledge, trade secrets, data, formulae, information, and client and
customer lists and all papers, resumes, records (including computer records) and the documents
containing such Confidential Information. You acknowledge that such Confidential Information is
specialized, unique in nature and of great value to the Corporation, and that such information
gives the Corporation a competitive advantage in conducting its business. Upon the termination of
your employment for any reason whatsoever, you shall promptly deliver to the Corporation all
documents, computer tapes and disks (and all copies thereof) containing any Confidential
Information.
(ii) You recognize that you possess confidential information about other employees
of the Corporation relating to their education, experience, skills, abilities, compensation and
benefits, and interpersonal relationships with customers of the Corporation. You recognizes that
the information you possess about these other employees is not generally known, is of substantial
value to the Corporation in developing its business and in securing and retaining customers, and
has been acquired by you because of your business position with the Corporation. For a period of
two (2) years after a termination of your employment with the Corporation with respect to which you
receive Severance Payments under Section 4 of this Agreement, you shall not, directly or
indirectly, solicit, recruit or hire any employee of the Corporation for the purpose of being
employed by you or by any other person on whose behalf you are acting as an agent, representative
or employee and that you will not convey any such confidential information or trade secrets about
other employees of the Corporation to any business, individual, partner, firm, corporation, or
other entity.
(iii) You agree that the Corporation will or would suffer irreparable injury if you
were to violate any of the covenants set forth in this Section 11 and that the Corporation would by
reason of such violation be entitled to injunctive relief in a court of appropriate jurisdiction,
and you further consent and stipulate to the entry of such injunctive relief in such a court
prohibiting you from violating any of such covenants.
(iv) If it is determined by a court of competent jurisdiction in any state that any
restriction in this Section 11 is excessive in duration or scope or is unreasonable or
unenforceable under the laws of that state, it is the intention of the parties that such
restriction may be modified or amended by the court to render it enforceable to the maximum extent
permitted by the law of that state.
| EXECUTIVE | -23- | DATE |
26. Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto; and any prior agreement of
the parties hereto in respect of the subject matter contained herein, including the Prior
Agreement, is hereby terminated and cancelled.
27. No Rights of Employment. No provision of this Agreement shall confer to any right
upon you to continue employment with the Corporation or any of its affiliates or subsidiaries.
28. Section 409A. Notwithstanding any provision of this Agreement to the contrary,
the following provisions shall apply for purposes of complying with Section 409A of the Code and
applicable Treasury authorities (“Section 409A”):
(i) If Executive is a “specified employee,” as such term is defined in Section 409A
and determined as described below in this Section 14, any payments or benefits payable or provided
as a result of Executive’s termination of employment that would otherwise be paid or provided
within six months and one day of such termination (other than death or Disability) shall instead be
paid or provided on the earlier of (i) the date that is six months and two days after Executive’s
termination, (ii) the date of Executive’s death, or (iii) the date that otherwise complies with the
requirements of Section 409A.
(ii) If any provision of this Agreement would result in the imposition of an
applicable tax under Section 409A, Executive and the Corporation agree that such provision will be
reformed to avoid imposition of the applicable tax in a manner that will result in the least
adverse economic impact on Executive.
| EXECUTIVE | -24- | DATE |
If this letter sets forth our agreement on the subject matter hereof, kindly sign and
return to the Corporation the enclosed copy of this letter, which shall then constitute our
agreement on this subject.
| Sincerely, | ||||
| Title: [With each of Hydril Company and | ||||
| Hydril Company LP] |
Agreed to this day of , 200_
By: |
||||
