SEVERANCE AGREEMENT
Exhibit
10.25
This
Severance Agreement (the “Agreement”) is made as of the 11th day of May, 2005,
by and between MAVERICK TUBE CORPORATION, a Delaware corporation (the
“Company”), and Xxxxxxx X. Xxxxxxx (“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 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 $.0l par value common stock of the Company.
(j) “Tax
Gross-up Amount” means the sum of (x) an amount equal to all taxes imposed upon
Executive under Section 4999(a) of the Internal Revenue Code of 1986, as amended
(the “Code”), resulting from payments or other benefits (including, without
limitation, accelerated vesting or exercisability of stock rights or options) to
Executive under this Agreement being deemed “excess parachute payments, as such
term is defined in Section 280(G)(b) of the Code (the “Subject Taxes”), and (y)
an amount which will as closely as reasonably practicable approximate any
additional income or excise taxes payable by Executive as a result of the
payment of the Subject Taxes on behalf of the Executive pursuant to this
Agreement.
(k) “Total
Disability” means the inability of the Executive to perform the duties of his
position for the greater of 180 successive days or a total of 270 days in any
period of 365 days or such period as constitutes “total disability” under any
disability insurance program or plan maintained by the Company.
2. Term. The term
of this Agreement shall begin as of the date set forth above and shall continue
through May 11, 2007, provided that as of May 11, 2007, and each May 11
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless, not less than six months prior to any such date, either
(i) the Company or the Executive shall have given notice to the contrary, or
(ii) a Change of Control has occurred. If a Change in Control occurs at any time
during the term or any renewal term of this Agreement, notwithstanding notice of
termination having been given, this Agreement shall remain in effect for a
period of not less than thirty (30) months from the date of such Change in
Control.
3. Severance
Pay. If the
employment of Executive is terminated at a time not within the 30 (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 (Ill) 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 WFIEREOF, the parties have executed or caused to be executed this
Agreement as of the date set forth above.
|
By: |
/s/
Xxxxx Xxxxxxxxx | |
|
Executive: | ||
|
/s/
Xxxxxxx X. Xxxxxxx | ||
|
Xxxxxxx
X. Xxxxxxx | ||
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