Exhibit
10.36


 


LONE STAR
TECHNOLOGIES, INC. SECOND AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN


 


THIS PLAN, made and
executed at Dallas, Texas, by LONE STAR TECHNOLOGIES, INC., a Delaware
corporation, is being established primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees of Lone Star Technologies, Inc. and its participating
subsidiaries.


 


ARTICLE I.


 


DEFINITIONS


 


Section 1.1             Definitions.  Unless the context
clearly indicates otherwise, when used in this Plan:


 


(a)           “Account”
means a Deferral Account or Matching Account, as the context requires.


 


(b)           “Affiliated
Company” means any corporation or organization, other than an Employer, which
is a member of a controlled group of corporations (within the meaning of Section 414(b)
of the Internal Revenue Code of 1986, as amended (the “Code”)) or of an
affiliated service group (within the meaning of Section 414(m) of the
Code) with respect to which an Employer is also a member, and any other
incorporated or unincorporated trade or business which along with an Employer
is under common control (within the meaning of Section 414(c) of the
Code).


 


(c)           “Committee”
means the committee designated pursuant to Plan Section 2.1 to administer
this Plan.


 


(d)           “Company”
means Lone Star Technologies, Inc.


 


(e)           “Deferral
Account” means an account established and maintained on the books of an
Employer pursuant to Plan Section 3.2 to record a Participant’s interest
under this Plan attributable to amounts credited to such Participant pursuant
to Plan Section 3.2(a).


 


(f)            “Election
Period” means the period prior to the beginning of a Plan Year (or, with
respect to the Plan’s first Plan Year, the period prior to June 10, 2000)
which is specified by the Committee for the making of deferral elections for
such year pursuant to Plan Section 3.1.


 


(g)           “Eligible
Employee” means, with respect to a Plan Year, the Chief Executive Officer of
the Company and any other employee of an Employer (i) whose annual base
salary as of the first day of such year (as estimated by the Committee during
the Election Period for such year) will be at least equal to the greater of
$85,000 or the compensation threshold amount applicable in determining a highly
compensated employee for such year under Section 414(q)(1) of the Code,
and (ii) who is designated by the Chief Executive Officer of the Company
as an Eligible Employee for such year for the purposes of this Plan.


 


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(h)           “Employer”
includes the Company and any other incorporated or unincorporated trade or
business which may adopt this Plan with the consent of the Chief Executive
Officer of the Company.


 


(i)            “Matching
Account” means an account established and maintained on the books of an Employer
pursuant to Plan Section 3.2 to record a Participant’s interest under this
Plan attributable to amounts credited to such Participant pursuant to Plan Section 3.2(b).


 


(j)            “Participant”
means an Eligible Employee or former Eligible Employee for whom an Account is
being maintained under this Plan.


 


(k)           “Plan”
means this Lone Star Technologies, Inc. Second Amended and Restated
Deferred Compensation Plan as in effect from time to time.


 


(l)            “Plan
Year” means the 7-month period commencing June 1, 2000, and ending December 31,
2000, and the 12-month period commencing on each subsequent January 1 and
ending on the following December 31.


 


(m)          “Retirement”
means the termination of a Participant’s employment with an Employer or
Affiliated Company for any reason other than death or transfer to the employ of
another Employer or Affiliated Company either (i) on or after attaining
the age of 65 years, or (ii) with the consent of the Committee, on or
after attaining the age of 55 years.


 


(n)           “Unit”
means a fictional deferred compensation unit used solely for accounting
purposes under this Plan to determine the number of shares of Company common
stock to be distributed to a Participant pursuant to this Plan.


 


(o)           “Unit
Value” means an amount equal to (i) if Company common stock is listed or
admitted to trading on a securities exchange registered under the Securities
Exchange Act of 1934, the average of the closing sale prices per share of such
stock as reported on the principal stock exchange for the immediately preceding
5 days on which a sale of such stock was reported on such exchange,
(ii) if Company common stock is not listed or admitted to trading on any
such exchange, but is listed as a national market security by the National
Association of Securities Dealers, Inc. Automated Quotation System (“NASDAQ”)
or any similar system then in use, the average of the closing sale prices per
share of such stock as reported on NASDAQ or such system for the immediately
preceding 5 days on which a sale of such stock was reported on NASDAQ or
such system, and (iii) if Company common stock is not listed or admitted
to trading on any such exchange and is not listed as a national market security
on NASDAQ or any similar system then in use, but is quoted on NASDAQ or any
similar system then in use, the average or the mean between the closing high
bid and low asked quotations per share for such stock as reported on NASDAQ or
such system for the immediately preceding 5 days on which bid and asked
quotations for such stock were reported on NASDAQ or such system.


 


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ARTICLE II.


 


PLAN
ADMINISTRATION


 


Section 2.1             Committee.  This Plan shall be
administered by a Committee composed of at least three individuals appointed by
the Chief Executive Officer of the Company. Each member of the Committee so
appointed shall serve in such office until his or her death, resignation or
removal by the Chief Executive Officer of the Company. The Committee shall have
discretionary and final authority to interpret and implement the provisions of
the Plan. The Committee shall act by a majority of its members at the time in
office and such action may be taken either by a vote at a meeting or in writing
without a meeting. The Committee may adopt such rules and procedures for the
administration of the Plan as are consistent with the terms hereof and shall
keep adequate records of its proceedings and acts. Every interpretation,
choice, determination or other exercise by the Committee of any power or
discretion given either expressly or by implication to it shall be conclusive
and binding upon all parties having or claiming to have an interest under the
Plan or otherwise directly or indirectly affected by such action, without
restriction, however, on the right of the Committee to reconsider and
redetermine such action. The Employers shall indemnify and hold harmless each
member of the Committee against any claim, cost, expense (including attorneys’
fees), judgment or liability (including any sum paid in settlement of a claim with
the approval of the Company) arising out of any act or omission to act as a
member of the Committee under this Plan, except in the case of willful
misconduct.


 


ARTICLE III.



DEFERRED COMPENSATION PROVISIONS


 


Section 3.1             Deferral Election.  Subject to such
conditions, limitations and procedures as the Committee may prescribe from time
to time for the purposes of this Plan:


 


(a)           During
the Election Period for the Plan Year commencing June 1, 2000, an Eligible
Employee may elect to have the payment of any specified portion of the annual
base  salary otherwise payable by an
Employer to him or her during such year deferred for future payment by such
Employer in such manner and at such time or times permitted under Plan Section 3.5
as shall be specified by such Eligible Employee in such election; provided,
however, that the amount of annual base salary so deferred shall not exceed 25%
of the aggregate amount of (i) any cash bonus paid by an Employer to such
Eligible Employee after December 31, 1999, and prior to June 1, 2000,
and (ii) the annual base salary otherwise payable by an Employer to such
Eligible Employee during the 2000 calendar year.


 


(b)           During
the Election Period for each Plan Year commencing after December 31, 2000
and prior to January 1, 2005, an Eligible Employee may elect to have the
payment of (i) up to 25% of the annual base salary otherwise payable by an
Employer to him or her during such year, and (ii) any specified portion of
any cash bonus otherwise payable by an Employer to him or her during such year
which, when added to the amount to be deferred for such year pursuant to
clause (i) of this Plan Section 3.1, does not exceed 25% of the
aggregate amount of the annual base salary and cash bonuses otherwise payable
by an Employer to him or


 


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her during such year, deferred for future payment by
such Employer in such manner and at such time or times permitted under Plan Section 3.5
as shall be specified by such Eligible Employee in such election.


 


(c)           During
the Election Period for each Plan Year commencing after December 31, 2004,
an Eligible Employee may elect to have the payment of (i) up to 50% of the
annual base salary otherwise payable by an Employer to him or her during such
year, and (ii) any specified portion of any cash bonus otherwise payable by an
Employer to him or her during such year which, when added to the amount to be
deferred for such year pursuant to clause (i) of this Plan Section 3.1,
does not exceed 50% of the aggregate amount of the annual base salary and cash
bonuses otherwise payable by an Employer to him or her during such year,
deferred for future payment by such Employer in such manner and at such time or
times permitted under Plan Section 3.5 as shall be specified by such
Eligible Employee in such election.


 


All elections made
pursuant to this Plan Section 3.1 shall be made in writing on a form
prescribed by and filed with the Committee and shall be irrevocable.


 


Section 3.2             Participant Accounts.  For each
Plan Year an Employer shall establish and maintain on its books a Deferral
Account and a Matching Account for each Eligible Employee employed by such
Employer who elects to defer the receipt of compensation for such year pursuant
to Plan Section 3.1. Each such Account shall be designated by the name of
the Participant for whom established and the Plan Year to which it relates, and
shall be credited in accordance with the following provisions:


 


(a)           The
amount of compensation otherwise payable by an Employer to a Participant during
a Plan Year that such Participant has elected to defer pursuant to Plan Section 3.1
shall be credited (as a dollar amount) by such Employer to such Participant’s
Deferral Account for that year no later than 15 days after the end of the
month during which such amount would otherwise have been paid by such Employer
to such Participant.


 


(b)           No
later than 15 days after the end of each quarter during a Plan Year, a
dollar amount equal to 50% of the compensation otherwise payable by an Employer
to a Participant during that quarter which is deferred by such Participant
pursuant to Plan Section 3.2(a) shall be credited by such Employer to such
Participant’s Matching Account for that year; provided, however, that
(i) the credit referred to in this Plan Section 3.2(b) shall be made
for a Participant only if he or she is in the employ of (or on authorized leave
of absence from) an Employer or Affiliated Company on the last day of such
quarter, and (ii) the total dollar amount credited to a Participant’s Matching
Account for any Plan Year pursuant to this first sentence of Plan Section 3.2(b)
shall not exceed $25,000. On or before the last day of each Plan Year quarter,
the Chief Executive Officer of the Company shall determine and notify the
Committee as to whether the dollar amounts to be credited to Matching Accounts
with respect to compensation deferred during that quarter shall remain credited
to such Matching Accounts as dollar amounts or be converted into Units. If the
dollar amount credited to a Matching Account with respect to compensation
deferred during a Plan Year quarter is to be converted into Units, such dollar
amount shall be converted into Units by dividing such dollar amount by the Unit
Value on the last day of such quarter. Any provision of this Plan to the
contrary notwithstanding,


 


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for the purposes of this Plan the period commencing June 1, 2000,
and ending September 30, 2000, shall be treated as a Plan Year quarter.


 


If a Participant contributes at least 6% of his or her
eligible compensation to the Employer’s 401(k) plan during a calendar year
beginning on or after January 1, 2003 and if the amount deferred by such
Participant pursuant to Plan Section 3.2(a) reduces his or her eligible
compensation under such 401(k) plan for such year to an amount less than the
Maximum Eligible Compensation ($183,333 or, if higher, the maximum annual
amount of an employer’s 401(k) matching contribution for such year divided by
..06), an additional amount equal to 6% of the lower of (x) the amount
deferred during such Plan Year by such Participant pursuant to Plan Section 3.2(a)
or (y) the amount that the Maximum Eligible Compensation exceeds such
Participant’s actual eligible compensation under such 401(k) plan shall be
credited by such Employer to such Participant’s Matching Account. Such
additional amount shall be credited to the Matching Account no later than
15 days after the end of such Plan Year, and the total dollar amount
credited to such Participant’s Matching Account for such Plan Year pursuant to
this Plan Section 3.2(b), including such additional amount, shall not
exceed $28,000.


 


If there is a termination
of a Participant’s employment with his or her Employer, other than a
termination by such Employer without Cause or a termination due to death,
Disability, Retirement, or a transfer to the employment of another Employer or
Affiliated Company, prior to the beginning of the third Plan Year commencing
after the end of the Plan Year to which a Matching Account relates, the full
amount of such Matching Account, including all adjustments made pursuant to
Plan Section 3.3, shall thereupon be forfeited to such Employer. This
provision shall only apply to Matching Accounts for a Plan Year beginning on or
after January 1, 2003.


 


“Cause” for termination
of a Participant’s employment means his or her conviction of any act of fraud,
embezzlement or theft or any felony involving moral turpitude, his or her
illegal conduct or gross misconduct that in either case is willful and results
in a material damage to his or her Employer’s business or reputation or his or
her willful failure or refusal to perform his or her duties or obligations to
such Employer or to comply in all material respects with the lawful directives
of such Employer’s Chief Executive Officer or Board of Directors, provided that
the Participant has received written notice from such Employer stating the
nature of such failure or refusal and has reasonable opportunity to correct the
stated deficiency.


 


“Disability” means the
Participant’s inability to perform his or her essential job functions, even
with reasonable accommodation, for more than 60 consecutive calendar days or
more than 90 calendar days in any 6 month period.


 


The definition of “Retirement”
is set forth in Plan Section 1.1(m).


 


Section 3.3             Account Adjustments.  Subject to
such conditions, limitations and procedures as the Committee may prescribe from
time to time for the accounting purposes of this Plan, at the end of each Plan
Year quarter (and at such other times as the Committee may prescribe) the
amount credited as a dollar amount to each Account maintained by an Employer
for a Participant shall be adjusted as a dollar amount to reflect the
investment results that would be attributable to the hypothetical investment of
such credited amount in accordance with investment directions given by such
Participant. The investment directions given and the


 


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hypothetical investments made pursuant to this Plan Section 3.3
are fictitional devices established solely for the accounting purposes of this
Plan, and shall not require any Employer to make any actual investment or
otherwise set aside or earmark any asset for the purposes of this Plan.


 


Section 3.4             Additional Matching Account Adjustments.  If
a cash dividend is paid on Company common stock, on the date said dividend is
paid each Matching Account which is then credited with Units shall be further
credited with the number of Units equal to the amount of said dividend per
share of Company common stock multiplied by the number of Units then credited
to such Matching Account, with the product thereof divided by the Unit Value on
the date such dividend is paid. If the Company effects a split of its shares of
common stock or pays a dividend in the form of shares of Company common stock,
or if the outstanding shares of Company common stock are combined into a
smaller number of shares, the number of Units then credited to each Matching
Account shall be increased or decreased to reflect proportionately the increase
or decrease in the number of outstanding shares of Company common stock
resulting from such split, dividend or combination. In the event of a
reclassification of shares of Company common stock not covered by the
foregoing, or in the event of a liquidation, separation or reorganization
(including, without limitation, a merger, consolidation or sale of assets)
involving the Company, the Board of Directors of the Company shall make such
adjustments, if any, to each Matching Account then credited with Units as such
Board in its absolute discretion may deem appropriate.


 


Section 3.5             Account Payments.  The amount
credited to each Account maintained by an Employer for a Participant
(i) shall become distributable to such Participant pursuant to this Plan Section 3.5
on the first to occur of (A) the date specified by such Participant in his
or her election filed with the Committee for such Account during the Election
Period for the Plan Year to which such Account relates (which date, with
respect to a Deferral Account established for a Plan Year commencing on or
after January 1, 2003 or a Matching Account, shall not be prior to the
beginning of the third Plan Year commencing after the end of the Plan Year to
which such Deferral Account or Matching Account relates), (B) the date as
of which such Participant’s employment with an Employer or Affiliated Company
terminates for any reason other than Retirement, death or transfer to the
employ of another Employer or Affiliated Company, or (C) the date after
such Participant’s Retirement which is specified by the Committee in its
discretion as the date such Account shall become distributable, and
(ii) shall be distributed to such Participant either in a single
distribution or in approximately equal annual installments over a period of up
to 10 years, such form of distribution to be made in accordance with such
Participant’s election filed with the Committee for such Account during the
Election Period for the Plan Year to which such Account relates. When an amount
credited as a dollar amount to an Account maintained by an Employer for a
Participant becomes distributable, such amount shall be paid by such Employer
to such Participant in cash and charged against such Account. When Units
credited to an Account maintained by an Employer for a Participant become
distributable, such Units shall be canceled and the Employer maintaining such
Account shall deliver or cause to be delivered to such Participant a stock
certificate evidencing the Participant’s ownership of one share of Company
common stock for each Unit so canceled. If the amount credited to an Account is
paid in installments over a period of years, the provisions of Plan Sections
3.3 and 3.4 shall continue to apply to the amount credited to such Account from
time to time.


 


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Section 3.6             Death of Participant.  Upon the
death of a Participant, the dollar amount and Units credited to each Account
maintained by an Employer for such Participant shall be converted by such
Employer into cash and shares of Company common stock as provided in Plan Section 3.5,
and shall be distributed by such Employer in a single distribution to the
beneficiary or beneficiaries designated by such Participant. Such designation
of beneficiary or beneficiaries shall be made in writing on a form prescribed
by and filed with the Committee and shall remain in effect until changed by
such Participant by the filing of a new beneficiary designation form with the Committee.
If a Participant fails to so designate a beneficiary, or in the event all of
the designated beneficiaries are individuals who either predecease the
Participant or survive the Participant but die prior to receiving the full
amount payable under this Plan, any remaining amount payable under this Plan
shall be paid to such Participant’s estate. All distributions under this Plan Section 3.6
shall be made as soon as practicable following a Participant’s death.


 


Section 3.7             Hardship Distributions.  If a
Participant encounters an unanticipated severe financial emergency which is
caused by an event or series of events beyond the control of such Participant
and which has or will result in a
severe financial hardship to such Participant if he or she does not receive an
early distribution from an Account being maintained for such Participant under
this Plan, the Committee in its absolute discretion may direct the Employer
maintaining such Account to pay to such Participant and charge against such
Account such portion of the amount then credited to such Account (including, if
appropriate, the entire balance thereof) as the Committee shall determine to be
necessary to alleviate the severe financial hardship of such Participant. No
distribution shall be made to a Participant pursuant to this Plan Section 3.7
unless such Participant requests such a distribution in writing and provides to
the Committee such information and documentation with respect to his or her
financial emergency and hardship as may be requested by the Committee. In no
event shall a distribution be made pursuant to this Plan Section 3.7 with
respect to any Matching Account established for a Plan Year commencing on or
after January 1, 2003 if such distribution would be on a date that is
prior to the beginning of the third Plan Year commencing after the end of the
Plan Year to which such Matching Account relates.


 


Section 3.8             Elective Withdrawals and Forfeitures.  At
the end of any month during a Plan Year, a Participant may withdraw from the
Plan:


 


(a)           All
or any portion of the amount credited to any Matching Account maintained by an
Employer for such Participant which relates to a Plan Year that ended at least
2 years prior to the beginning of the Plan Year that includes the
effective date of such withdrawal; and


 


(b)           All
or any portion of the amount credited to any Deferral Account maintained by an
Employer for such Participant; provided, however, that any provision of this
Plan to the contrary notwithstanding, (i) no such withdrawal may be made
unless written notice of such withdrawal is given by the withdrawing
Participant to the Committee at least 15 days prior to the effective date
thereof, and (ii) upon making a withdrawal from any Account maintained by
an Employer, the withdrawing Participant (A) shall thereupon forfeit to
such Employer 10% of the amount such Participant elected to withdraw from such
Account, and (B) shall be ineligible to defer any base salary or cash
bonus otherwise payable by an Employer


 


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to him or her after the effective date of such withdrawal and prior to
the beginning of the third Plan Year commencing after the end of the Plan Year
that includes the effective date of such withdrawal.


 


ARTICLE IV.



AMENDMENT AND TERMINATION


 


Section 4.1             Amendment and Termination.  The
Board of Directors of the Company shall have the right and power at any time
and from time to time to amend this Plan, in whole or in part, on behalf of all
Employers, and at any time to terminate this Plan or any Employer’s
participation hereunder; provided, however, that no such amendment or
termination shall reduce the amounts actually credited to a Participant’s
Accounts as of the date of such amendment or termination, or further defer the
dates for the payment of such amounts, without the consent of the affected
Participant.


 


ARTICLE V.


 


MISCELLANEOUS
PROVISIONS


 


Section 5.1             Nature of Plan and Rights.  This
Plan is unfunded and maintained by the Employers primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees of the Employers. The Units credited and Accounts
maintained under this Plan are fictional devices used solely for the accounting
purposes of this Plan to determine an amount of money to be paid and a number
of shares of Company common stock to be delivered by an Employer to a
Participant pursuant to this Plan, and shall not be deemed or construed to
create a trust fund or security
interest of any kind for or to grant a property interest of any kind to any
Participant, designated beneficiary or estate. The amounts credited by an
Employer to Accounts maintained under this Plan are and for all purposes shall
continue to be a part of the general liabilities of such Employer, and to the extent
that a Participant, designated beneficiary or estate acquires a right to
receive a payment or payments from such Employer pursuant to this Plan, such
right shall be no greater than the right of any unsecured general creditor of
such Employer.


 


Section 5.2             Spendthrift Provision.  No
Account balance or other right or interest under this Plan of a Participant,
designated beneficiary or estate may be assigned, transferred or alienated, in
whole or in part, either directly or by operation of law, and no such balance,
right or interest shall be liable for or subject to any debt, obligation or
liability of such Participant, designated beneficiary or estate.


 


Section 5.3             Employment Noncontractual.  The
establishment of this Plan shall not enlarge or otherwise affect the terms of
any Participant’s employment with an Employer, and such Employer may terminate
the employment of such Participant as freely and with the same effect as if
this Plan had not been established.


 


Section 5.4             Claims Procedure.  If any person
(hereinafter called the “Claimant”) feels that he or she is being denied a
benefit to which he or she is entitled under this Plan, such


 


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Claimant may file a written claim for said
benefit with the Committee. Within 60 days of the receipt of such claim
(or within 120 days of the receipt of such claim if special circumstances
require an extension of the time for processing the claim, in which event the
Committee or its designated representative will furnish the Claimant with a
written notice indicating the special circumstances and the time by which a
determination with respect to the claim will be made), the Committee or its
designated representative shall determine and notify the Claimant as to whether
he or she is entitled to such benefit. Such notification shall be in writing
and, if denying the claim for benefit, shall set forth the specific reason or
reasons for the denial, make specific reference to the pertinent provisions of
this Plan, and advise the Claimant that he or she may, within 60 days of
the receipt of such notice, in writing request the Committee to review such
denial. In connection with such request for review, the Claimant and/or his or
her duly authorized representative may examine copies of any relevant documents
and submit information and comments in writing to support the granting of the
benefit being claimed. The final decision of the Committee with respect to the
claim being reviewed shall be made within 60 days following the receipt of
the Claimant’s request for review unless special circumstances require an
extension of time for reviewing the claim, in which event (i) the
Committee or its designated representative will furnish a written notice of
such extension to the Claimant, and (ii) the final decision of the
Committee shall be made as soon as possible but in no event later than
120 days after the receipt of the Claimant’s request for review. The
Committee shall in writing notify the Claimant of its final decision, again
specifying the reasons therefor and the pertinent provisions of this Plan upon
which such decision is based. The final decision of the Committee with respect
to a claim shall be conclusive and binding upon the Claimant and all other
parties having or claiming to have an interest in such claim.


 


Section 5.5             Applicable Law.  This Plan shall
be governed and construed in accordance with the internal laws (and not the
principles relating to conflicts of laws) of the State of Texas, except where
superseded by federal law.


 


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