EXHIBIT 10.16
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made as of the 11th day
of November, 1998, by and between MAVERICK TUBE CORPORATION, a Delaware
corporation (the "Company"), and ___________________ ("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 Section 4 are satisfied; or
(ii) the cessation of those individuals who, as of
the date of this Agreement, constitute the Board (the "Incumbent
Board") for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director after the
date of this Agreement whose election or nomination was approved by at
least a majority of the directors then comprising the Incumbent Board
shall be deemed a member of the Incumbent Board, other than an
individual becoming a director as a result of either an actual or
threatened election contest or solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) the approval by the stockholders of the
Company of a reorganization, merger, or consolidation (each, a
"Transaction") unless, in each case, following such Transaction (A) all
or substantially all of the beneficial owners of the Stock and the
combined voting power of all outstanding Other Voting Securities of the
Company immediately prior to such Transaction beneficially own,
directly or indirectly, more than fifty percent (50%) of, respectively,
the common stock and the combined voting power of all outstanding Other
Voting Securities of the corporation resulting from such Transaction
("Resulting Corporation") in substantially the same proportions as
their ownership immediately prior to such Transaction; (B) no Person
(other than the Company and any employee benefit plan or related trust
of the Company or a Resulting Corporation) beneficially owns
thirty-five percent (35%) or more of, respectively, the then
outstanding shares of common stock of the Resulting Corporation or the
combined voting power of all then outstanding Other Voting Securities
of such Resulting Corporation and (C) at least a majority of the
directors of the Resulting Corporation were members of the Incumbent
Board at the time of the execution of the initial agreement providing
for such Transaction; or
(iv) the approval by the stockholders of the Company
of (A) a complete liquidation or dissolution of the Company or (B) the
disposition of substantially all of the assets of the Company other
than to a corporation with respect to which all of the following is
true following such disposition: (I) more than 50% of, respectively,
the then outstanding shares of common stock of such corporation ("New
Stock") and the combined voting power of all outstanding Other Voting
Securities of such corporation ("New Other Voting Securities") is then
owned beneficially, directly or indirectly, by substantially all of the
beneficial owners of the Stock and the combined voting power of all
outstanding Other Voting Securities of the Company in substantially the
same proportions as their ownership of such securities of the Company
immediately prior thereto; (II) no Person other than the Company and
any employee benefit plan or related trust of the Company or of such
corporation then beneficially owns thirty-five percent (35%) or more of
the New Stock or the New Other Voting Securities; and (III) at least a
majority of the directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement
or action providing for such disposition.
(c)_____"Effective Date" means the date on which the
termination of the Executive's employment is to be effective under the terms of
any written notice or other documentation thereof.
(d)_____"Good Reason" for termination by the Executive of his
employment means the occurrence (without the Executive's written consent) of any
of the following unless, in the case of any of (i), (v), (vi), or (vii), such
act or failure to act is corrected within five business days following the
giving of notice of termination by the executive, in the case of (iii) below,
such act is not objected to in writing by the Executive within fourteen days
after notification thereof:
(i) the assignment to the Executive of duties
inconsistent with his status as an executive officer of the Company or
a meaningful alteration, adverse to the Executive, in the nature or
status of his responsibilities (other than reporting responsibilities)
from those in effect immediately prior to the Change in Control;
(ii) a reduction in the Executive's Regular Annual
Salary except for an across-the-board salary reduction similarly
affecting all senior executives of the Company and all senior
executives of any person or entity in control of the Company;
(iii) a requirement by the Company that the
Executive relocate his residence outside the metropolitan area in which
the Executive was based immediately prior to a Change in Control,
provided that business travel in an amount substantially consistent
with an Executive's previous travel obligations shall in no event
constitute such a requirement;
(iv) failure by the Company to pay any portion of
his compensation within fourteen days of the date it is due;
(v) failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately prior
to a Change in Control that is material to the Executive's
compensation, unless an equitable arrangement has been made with
respect to such plan;
(vi) failure by the Company to continue the
Executive's participation in a plan described in (v) or a substitute or
alternative plan on a basis not materially less favorable to the
Executive as existed at the time of a Change in Control;
(vii) failure by the Company to continue to provide
the Executive with benefits substantially similar to those enjoyed by
him prior to a Change in Control; or
(viii) the determination by the Executive, in his
sole and absolute discretion, that the business philosophy or policies
of the Company or its successor or the implementation thereof is not
compatible with those of the Executive.
The Executive's continued employment shall not of itself constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(e)_____"Potential Change in Control" means:
(i) the entrance by the Company into an agreement
the consummation of which would result in the occurrence of a Change in
Control;
(ii) the announced intention of the Company or any
person or entity of taking any action that, if consummated, would
constitute a Change in Control; or
(iii) the adoption by the Board of a resolution to
the effect that for purposes of this Agreement, a Potential Change in
Control has occurred.
(f)_____"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.
(g)_____"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.
(h)_____"Stock" means the $.01 par value common stock of the
Company.
(i)_____"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.
(j)_____"Total Disability" means the inability of the
Executive to perform the duties of his position for the greater of 180
successive days or a total of 270 days in any period of 365 days or such period
as constitutes "total disability" under any disability insurance program or plan
maintained by the Company.
2. Term. The term of this Agreement shall begin as of the date set
forth above and shall continue through November 11, 2001, provided that as of
November 11, 2001 and each November 11 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not less than
six months prior to any such date, either (i) the Company or the Executive shall
have given notice to the contrary, or (ii) a Change of Control has occurred. If
a Change in Control occurs at any time during the term or any renewal term of
this Agreement, notwithstanding notice of termination having been given, this
Agreement shall remain in effect for a period of not less than two years from
the date of such Change in Control.
3. Severance Pay. If the employment of Executive is terminated at a
time not within the thirty (30) month period following a Change in Control,
other than (i) by the Company for Cause, (ii) by reason of death, Total
Disability, or Retirement, or (iii) by the Executive without Good Reason, as of
the Effective Date, and in addition to all obligations otherwise owing to the
Executive on the Effective Date, the Company shall continue to pay to the
Executive for a period of six months following the Effective Date (I) amounts
equal to those received periodically prior to the Effective Date in payment of
his Regular Annual Salary, on the same periodic schedule as prior to the
Effective Date, and (II) benefits under group health and life insurance plans in
which the Executive participated prior to the Effective Date, to the extent
permissible under the terms of such plans to do so. Except as specifically
provided herein, no other payments or benefits will be furnished or paid, and
all contributions or deductions, if any (other than deductions made in
connection with the benefits specifically provided for herein, if any), shall
cease as of the Effective Date.
4. Confidentiality. The Executive specifically acknowledges that all
information pertaining to the Company or its business received by him during the
course of his employment that has been designated confidential by the Company or
has not been made publicly available is the exclusive property of the Company,
and the Executive agrees that during and after his employment by the Company, he
will not disclose any of such information without the prior written consent of
the Board to anyone not employed by the Company or engaged by the Company to
render services to it. The Executive further agrees that he will not use such
information for his own benefit or the benefit of any party other than the
Company. This Section 4 shall survive termination of this Agreement.
5. Executive's Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Potential Change in
Control during the term of this Agreement, the Executive will remain in the
employ of the Company following the occurrence of such event until the earliest
of (i) six months from the date of such Potential Change in Control, (ii) the
date of a Change in Control, (iii) the date of termination by the Executive of
his employment for Good Reason (determined by treating a Potential Change in
Control as a Change in Control in applying the definition of Good Reason) or by
reason of death or Retirement, or (iv) the termination by the Company of the
Executive's employment for any reason.
6. Compensation Upon Termination Following a Change in Control. If,
within thirty (30) months after the occurrence of a Change in Control, the
Executive's employment is terminated other than (i) by the Company for Cause,
(ii) by reason of death, Total Disability, or Retirement, or (iii) by the
Executive without Good Reason, then, in addition to all obligations otherwise
owing to the Executive on the Effective Date, the Company shall pay or provide
to the Executive within sixty (60) days of the Effective Date the following: (I)
a lump sum amount equal to the product of 2.5 and the sum of (a) the Executive's
then Regular Annual Salary, and (b) the annual amount that would be paid to
Executive pursuant to the Company's Performance Bonus Plan assuming that all
performance levels had been achieved at maximum levels; (II) for a period of
thirty (30) months following the Effective Date, (A) the continuation of health
insurance, life insurance, and disability insurance benefits substantially the
same as any such benefits provided to Executive immediately prior to the
Effective Date by the Company under group insurance plans or otherwise, to the
extent permissible under the terms of such plans to do so and if such coverage
is not permitted, amounts necessary for premium payments for such coverage; (B)
the continuation of Executive's car allowance, and club membership fees, if any
(or an amount sufficient to cover such continued car allowance and club
membership fees); and (III) the Tax Gross-Up Amount, if applicable. Except as
specifically provided herein, no other payments or benefits will be furnished or
paid, and all contributions or deductions, if any (other than deductions made in
connection with the benefits specifically provided for herein, if any), shall
cease as of the Effective Date.
The Executive's employment shall be deemed to have been
terminated following a Change in Control by the Company without Cause or by the
Executive with Good Reason (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 the payments
described in Section 5 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 al such
fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to or in connection with any tax audit or proceeding
to the extent attributable to the application of Section 4999 of the Code, to
any payment or benefit provided hereunder) unless such termination is (i) by the
Company for Cause; (ii) by reason of death, total disability or retirement, or
(iii) by the Executive without Good Reason.
10. Miscellaneous. No provision of this Agreement may be modified,
waived, or discharged unless so agreed by the parties in writing. No waiver
shall be deemed a waiver of the same or any other provision at the same or any
other time. This Agreement sets forth the entire agreement of the parties
regarding its subject matter. This Agreement shall be governed by the laws of
the State of Missouri other than the conflicts of law provisions thereof. All
payments provided for hereunder shall be made net of any applicable withholding
requirements of federal, state, or local law. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement as of the date set forth above.
MAVERICK TUBE CORPORATION
By:_______________________________
Title:____________________________
Executive:
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