Exhibit 10.1

 

PERFORMANCE SHARE UNIT AGREEMENT

 

 

This PERFORMANCE SHARE UNIT AGREEMENT (“Agreement”) is made and entered into as
of January 15, 2018 (“Effective Date”) by and between Northwest Pipe Company
(the “Company”), and XXX (“Employee”) (collectively, “the parties”).

 

RECITALS

 

The Company has determined that it would like to provide certain financial
incentives to Employee in order to encourage continued employment, on the terms
and subject to the conditions set forth in this Agreement.

 

AGREEMENT

 

The parties hereto hereby agree as follows:

 

1.             Performance Share Unit Grant. The Employee shall receive a
Performance Share Unit (“PSU”) Grant on the following terms:

 

1.1     Grant. The Company hereby grants Employee an award of XXX PSUs, subject
to all of the terms and conditions of this Agreement and the Company’s
stockholder approved 2007 Stock Incentive Plan (the “Plan”). The grant of PSUs
obligates the Company, upon vesting in accordance with this Agreement, to
deliver to Employee one share of common stock of the Company (a “Share”) for
each PSU. The number of Performance Shares that may vest and the timing of
vesting of the Performance Shares shall depend upon achievement of certain
performance goals and shall be determined in accordance with the Performance
Matrices attached hereto as Appendix A. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in the
Plan.

 

1.2     Company’s Obligation to Pay. Unless and until the PSUs have vested in
the manner set forth in Sections 1.3 through 1.5, Employee will have no right to
payment of such PSUs. Prior to actual payment of any vested PSUs, such PSUs will
represent an unsecured obligation. Payment of any vested PSUs shall be made only
in whole Shares.

 

1.3     Vesting Schedule. Except as provided in Sections 1.4 and 1.5, the PSUs
awarded by this Agreement shall vest in accordance with the vesting provisions
set forth in Appendix A. PSUs shall not vest unless the Employee has been
continuously employed by the Company or by one of its subsidiaries from the
Effective Date until the date the PSUs vest in accordance with the provisions of
this Agreement.

 

1.4     Change in Control. In the event a change in control of the Company (as
defined in Appendix B) occurs at any time prior to March 29, 2019, the PSUs will
be immediately vested.

 

1.5     Committee Discretion. The Compensation Committee of the Company’s Board
of Directors (the “Committee”), in its discretion, may accelerate the vesting of
the PSUs or any portion thereof at any time, subject to the terms of the Plan.
If so accelerated, such PSUs will be considered as having vested as of the date
specified by the Committee.

 

 

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1.6     Payment after Vesting. Any PSUs that vest in accordance with
Sections 1.3 through 1.5 will be paid to the Employee as soon as practicable
following the date of vesting, subject to Section 1.10.

 

1.7     Clawback Provision. If the Company’s financial statements are the
subject of a restatement due to misconduct, to the extent permitted by governing
law, in all appropriate cases, the Company will seek reimbursement of excess
share compensation granted to Employee per this Agreement. Excess share
compensation means the positive difference, if any, between (1) the award paid
to Employee, and (ii) the award that would have been paid to you had the award
been calculated based on the Company’s financial statements as restated.

 

1.8     Forfeiture. Notwithstanding any contrary provision of this Agreement,
any PSUs that have not vested pursuant to Sections 1.3 through 1.5 at the time
of the Employee’s termination of service (with or without cause) with the
Company and its subsidiaries will be forfeited and automatically transferred to
and reacquired by the Company at no cost to the Company.

 

1.9     Death of Employee. Any distribution of Shares that vested during
Employee’s lifetime which is to be made to the Employee under this Agreement
after the Employee is deceased shall be made to the administrator or executor of
the Employee’s estate. Any such administrator or executor must furnish the
Company with (a) written notice of his or her status as transferee, and
(b) evidence satisfactory to the Company to establish the validity of the
transfer and compliance with any laws or regulations pertaining to said
transfer.

 

1.10     Withholding of Taxes. When Shares are issued as payment for vested
PSUs, the Company (or the employing Subsidiary) may withhold a portion of the
Shares that have an aggregate market value sufficient to pay federal, state,
local and foreign income, social insurance, employment and any other applicable
taxes required to be withheld by the Company or the employing Subsidiary with
respect to the Shares, unless the Company, in its sole discretion, either
requires or otherwise permits the Employee to make alternate arrangements
satisfactory to the Company for such withholdings in advance of the arising of
any withholding obligations. The number of Shares withheld pursuant to the prior
sentence will be rounded up to the nearest whole Share, with no refund for any
value of the Shares withheld in excess of the tax obligation as a result of such
rounding. Notwithstanding any contrary provision of this Agreement, no Shares
will be issued unless and until satisfactory arrangements (as determined by the
Company) have been made by the Employee with respect to the payment of any
income and other taxes which the Company determines must be withheld or
collected with respect to such Shares. In addition and to the maximum extent
permitted by law, the Company (or the employing Subsidiary) has the right to
retain without notice from salary or other amounts payable to the Employee, cash
having a sufficient value to satisfy any tax withholding obligations that the
Company determines cannot be satisfied through the withholding of otherwise
deliverable Shares. All income and other taxes related to the PSU award and any
Shares delivered in payment thereof are the sole responsibility of the Employee.
By accepting this award, the Employee expressly consents to the withholding of
Shares and to any additional cash withholding as provided for in this
Section 1.10.

 

 

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1.11     Rights as Shareholder. Neither the Employee nor any person claiming
under or through the Employee will have any of the rights or privileges of a
shareholder of the Company in respect of any Shares deliverable hereunder unless
and until certificates representing such Shares (which may be in book entry
form) shall have been issued, recorded on the records of the Company or its
transfer agents or registrars, and delivered to the Employee (including through
electronic delivery to a brokerage account). After such issuance, recordation
and delivery, the Employee will have all the rights of a shareholder of the
Company with respect to voting such Shares and receipt of dividends and
distributions on such Shares.

 

1.12     Grant is Not Transferable. This grant of Performance Shares and the
rights and privileges conferred hereby may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any way (whether by operation of law
or otherwise) and will not be subject to sale under execution, attachment or
similar process, until the Employee has been issued Shares in payment of the
Performance Shares. Upon any attempt to sell, pledge, assign, hypothecate,
transfer or otherwise dispose of this grant, or any right or privilege conferred
hereby, or upon any attempted sale under any execution, attachment or similar
process, this grant and the rights and privileges conferred hereby immediately
will become null and void.

 

1.13     Restrictions on Sale of Securities. The Shares issued as payment for
vested PSUs under this Agreement will be registered under U.S. federal
securities laws and will be freely tradable upon receipt. However, an Employee’s
subsequent sale of the Shares may be subject to any market blackout-period that
may be imposed by the Company and must comply with the Company’s insider trading
policies, and any other applicable securities laws.

 

1.14     Additional Conditions to Issuance of Certificates for Shares. The
Company shall not be required to issue any certificate or certificates for
Shares hereunder prior to fulfillment of all the following conditions: (a) the
admission of such Shares to listing on all stock exchanges on which such class
of stock is then listed; (b) the completion of any registration or other
qualification of such Shares under any U.S. state or federal law or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; (c) the obtaining of any approval or
other clearance from any U.S. state or federal governmental agency, which the
Committee shall, in its absolute discretion, determine to be necessary or
advisable; and (d) the lapse of such reasonable period of time following the
date of vesting of the PSUs as the Committee may establish from time to time for
reasons of administrative convenience.

 

1.15     Modifications to the Agreement. This Agreement constitutes the entire
understanding of the parties on the subjects covered. The Employee expressly
warrants that Employee is not accepting this Agreement in reliance on any
promises, representations, or inducements other than those contained herein.
Modifications to this Agreement can be made only in an express written contract
executed by a duly authorized officer of the Company. Notwithstanding anything
to the contrary in the Plan or this Agreement, the Company reserves the right to
revise this Agreement as it deems necessary or advisable, in its sole discretion
and without the consent of the Employee, to comply with Section 409A of the Code
or to otherwise avoid imposition of any additional tax or income recognition
under Section 409A of the Code prior to the actual payment of Shares pursuant to
this award of Performance Shares.

 

 

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1.16     Adjustments Upon Changes in Capital. The aggregate number of PSUs
covered by this Agreement will be proportionally adjusted for any increase or
decrease in the number of issued and outstanding Shares resulting from a stock
split-up or consolidation of Shares or any like capital adjustments, or the
payment of any stock dividend.

 

2.             Not a Contract of Employment. Nothing in this Agreement is
intended to be construed to be a contract of employment or shall give Employee
any right to continue employment for any period of time. Nothing in this
Agreement is intended to require Employee to provide services to the Company for
any period of time. The parties acknowledge that Employee’s employment may be
terminated by either Employee or the Company at any time.

 

3.             Termination. This Agreement shall terminate upon the earlier to
occur; (i) the Final Date, (ii) the Employee’s death or Disability, (iii) the
termination of Employee’s employment with the Company or any successor by the
Company for Cause or without Cause; or (iv) the voluntary or involuntary
termination of Employee’s employment with the Company or in the event of a
Change in Control.

 

4.             Miscellaneous.

 

4.1     No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.

 

4.2     Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement. Counterpart signature pages may be
delivered via email.

 

4.3     Choice of Law; Jurisdiction. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Oregon, without giving effect to any choice of law or conflict of law rules or
principles. The parties hereby irrevocably submit to the jurisdiction of the
courts of Oregon and waive any claim or defense of inconvenient or improper
forum or lack of personal jurisdiction under any applicable law or decision.

 

4.4     Agreement to Arbitrate Disputes. To facilitate efficient resolution of
all disputes arising out of or related in any way to the interpretation or
application of this Agreement or to Employee’s employment with the Company or
the termination of that employment, the Parties agree all such disputes shall be
resolved exclusively, fully, and finally by binding arbitration. The parties
understand and agree that pursuant to this Agreement they are waiving the right
to have disputes resolved in court by a judge or jury and instead to have such
disputes resolved by a neutral arbitrator. Arbitration proceedings pursuant to
this provision shall occur within 50 miles of Employee’s place of employment, in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association (AAA) in effect at the time a demand for
arbitration is made. Those rules are available on the Internet at
http://www.adr.org or by calling the AAA at 1-800-559-3222.

 

 

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4.5     Complete Agreement; Waiver; Amendment. This Agreement and the documents
cited herein constitute the parties’ entire agreement, arrangement, and
understanding regarding the subject matter, superseding any prior or
contemporaneous agreements, arrangements, or understandings, whether written or
oral, between the Employee and the Company regarding the same subject matter;
and may not be modified, amended, discharged, or terminated, nor may any of
their provisions be varied or waived, except by a further signed written
agreement between the parties, subject to section 1.15.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first set forth above.

 

  THE COMPANY:

 

  NORTHWEST PIPE COMPANY

 

 

  By:    _________________________________________

Scott Montross

Chief Executive Officer

EMPLOYEE:

 

 

 

 

______________________________________________

XXX

 

Date:

 

 

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Appendix A

 

2018 PSU Performance Condition

 

The information below shows the Target number of Performance Shares that will
vest and be paid with respect to the 2018 financial performance in achieving
levels of Earnings before Interest Expense, Income Taxes, Depreciation and
Amortization (“EBITDA”) margin over the measurement period. The column captioned
“Payout (% of Target”) shows the multiple or fraction of the Target Performance
Shares granted to each employee that will vest and be paid at each respective
level of EBITDA Margin. The actual Vesting Multiple will be determined by
interpolation based on the actual EBITDA Margin. For example, if EBITDA Margin
for 2018 is 9.7%, the Vesting Multiple would be 150%.

 

EBITDA margin will be calculated using amounts as reflected in the Company’s
audited consolidated financial statements before extraordinary or unusual items
(e.g. charges for acquisition, divestiture and restructuring activities and
gains/losses on sales) and the cumulative effect of any change in accounting
principles.

 

If the Company’s Net Income before extraordinary or unusual items (e.g. charges
for acquisition, divestiture and restructuring activities and gains/losses on
sales) and the cumulative effect of any change in accounting principles is
negative, the payout is 0%.

 

 

 

2018 Target Performance Shares

 

Vest Date

XXX

March 29, 2019

 

 

 

EBITDA Margin Performance

Payout (% of Target)

 

10.7%

200%

   

8.7%

100%

   

6.7%

25%

   

<6.7%

0%

 

 

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Appendix B

 

Change in Control; Person.

 

A.

For purposes of this Agreement, a “Change in Control” shall mean the occurrence
of any of the following events:

 

1.       The consummation of:

 

a.        any consolidation, merger or plan of share exchange involving the
Company (a “Merger”) in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock of the Company (“Company
Shares”) would be converted into cash, securities or other property, other than
a Merger involving Company Shares in which the holders of Company Shares
immediately prior to the Merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the Merger,

 

b.        any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, the assets of the
Company; or

 

c.        the adoption of any plan or proposal for the liquidation or
dissolution of the Company.

 

2.       At any time during a period of two consecutive years, individuals who
at the beginning of such period constituted the Board (“Incumbent Directors”)
shall cease for any reason to constitute at least a majority thereof unless each
new director elected during such two-year period was nominated or elected by
two-thirds of the Incumbent Directors then in office and voting (with new
directors nominated or elected by two-thirds of the Incumbent Directors also
being deemed to be Incumbent Directors); or

 

3.       Any Person (as hereinafter defined) shall, as a result of a tender or
exchange offer, open market purchases, or privately negotiated purchases from
anyone other than the Company, have become the beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Company ordinarily having the right to vote for
the election of directors (“Voting Securities”) representing thirty percent
(30%) or more of the combined voting power of the then outstanding Voting
Securities.

 

Notwithstanding anything in the foregoing to the contrary, unless otherwise
determined by the Board, no Change in Control shall be deemed to have occurred
for purposes of this Agreement if (1) you acquire (other than on the same basis
as all other holders of the Company Shares) an equity interest in an entity that
acquires the Company in a Change in Control otherwise described under
subparagraph A.1 above, or (2) you are part of a group that constitutes a Person
which becomes a beneficial owner of Voting Securities in a transaction that
otherwise would have resulted in a Change in Control under subparagraph A.3
above.

 

B.

For purposes of this Agreement, the term “Person” shall mean and include any
individual, corporation, partnership, group, association or other “person,” as
such term is used in Section 13(d)(3) or Section 14(d)(2) of the Securities
Exchange Act of 1934 (the “Exchange Act”), other than the Company or any
employee benefit plan(s) sponsored by the Company.