Exhibit 10.1

CENTERPOINT ENERGY, INC.

CHANGE IN CONTROL PLAN

CenterPoint Energy, Inc., a Texas corporation (the “Company”), has adopted the
CenterPoint Energy, Inc. Change in Control Plan, effective as of January 1, 2015
(the “Plan”), for the benefit of certain employees of the Company and its
subsidiaries, on the terms and conditions hereinafter stated. The Plan is
intended to help retain qualified employees and provide financial security to
certain employees of the Company whose employment with the Company and its
Affiliates may be terminated under circumstances entitling them to severance
benefits as provided herein.

The Plan, as a “severance pay arrangement” within the meaning of
Section 3(2)(B)(i) of ERISA, is intended to be excepted from the definitions of
“employee pension benefit plan” and “pension plan” set forth under Section 3(2)
of ERISA, and is intended to meet the descriptive requirements of a plan
constituting a “severance pay plan” within the meaning of regulations published
by the Secretary of Labor at Title 29, Code of Federal Regulations §
2510.3-2(b).

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

Section 1.01. Definitions. Capitalized terms used in the Plan shall have the
following respective meanings, except as otherwise provided or as the context
shall otherwise require:

“Affiliate” shall mean any company or other entity controlled by, controlling or
under common control with the Company within the meaning of Section 414 of the
Code.

“Board” shall mean the Board of Directors of the Company.

“Cause” means a Participant’s (a) gross negligence in the performance of the
Participant’s duties, (b) intentional and continued failure to perform the
Participant’s duties, (c) intentional engagement in conduct which is materially
injurious to the Company or its Affiliates (monetarily or otherwise) or
(d) conviction of a felony or a misdemeanor involving moral turpitude. For this
purpose, an act or failure to act on the part of a Participant will be deemed
“intentional” only if done or omitted to be done by a Participant not in good
faith and without reasonable belief that his or her action or omission was in
the best interest of the Company, and no act or failure to act on the part of a
Participant will be deemed “intentional” if it was due primarily to an error in
judgment or negligence.

“CEO” means the Company’s President and Chief Executive Officer.

“Change in Control” shall be deemed to have occurred upon the occurrence of any
of the following events:

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(A) 30% Ownership Change: Any Person makes an acquisition of Beneficial
Ownership of Outstanding Voting Stock (including any acquisition of Beneficial
Ownership deemed to have occurred pursuant to Rule 13d-5 under the Exchange Act)
and is, immediately thereafter, the Beneficial Owner of 30% or more of the then
Outstanding Voting Stock, unless such acquisition is made by a Parent
Corporation resulting from a Business Combination (other than the Company) if,
following such Business Combination, the conditions specified in clauses (i),
(ii), (iii) and (iv) of subsection (c) of this definition are satisfied; or any
Group is formed that is the Beneficial Owner of 30% or more of the Outstanding
Voting Stock; or

(B) Board Majority Change: Individuals who are Incumbent Directors cease for any
reason to constitute a majority of the members of the Board; or

(C) Major Mergers and Acquisitions: Approval by the shareholders of the Company
of a Business Combination (or if there is no such approval by shareholders,
consummation of such Business Combination) unless, immediately following such
Business Combination, (i) all or substantially all of the individuals and
entities that were the Beneficial Owners of the Outstanding Voting Stock
immediately prior to such Business Combination will (or do) beneficially own,
directly or indirectly, more than 70% of the then outstanding shares of voting
stock of the Parent Corporation resulting from such Business Combination in
substantially the same relative proportions as their ownership, immediately
prior to such Business Combination, of the Outstanding Voting Stock, (ii) if the
Business Combination involves the issuance or payment by the Company of
consideration to another entity or its shareholders, the total fair market value
of such consideration plus the principal amount of the consolidated long-term
debt of the entity or business being acquired (in each case, determined as of
the date of consummation of such Business Combination by a majority of the
Incumbent Directors) will not (or does not) exceed 50% of the sum of the fair
market value of the Outstanding Voting Stock plus the principal amount of the
Company’s consolidated long-term debt (in each case, determined immediately
prior to such consummation by a majority of the Incumbent Directors), (iii) no
Person (other than any Parent Corporation resulting from a Business Combination)
will (or does) beneficially own, directly or indirectly, 30% or more of the then
outstanding shares of voting stock of the Parent Corporation resulting from such
Business Combination and (iv) a majority of the members of the board of
directors of the Parent Corporation resulting from such Business Combination
were Incumbent Directors immediately prior to consummation of such Business
Combination; or

(D) Major Asset Dispositions: Approval by the shareholders of the Company of a
Major Asset Disposition (or if there is no such approval by shareholders
consummation of such Major Asset Disposition) unless, immediately following such
Major Asset Disposition, (i) individuals and entities that were Beneficial
Owners of the Outstanding Voting Stock immediately prior to such Major Asset
Disposition will (or do) beneficially own, directly or indirectly, more than 70%
of the then outstanding shares of voting stock of the Company (if it continues
to exist) and of the entity that acquires the largest portion of such assets

 

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(or the entity, if any, that owns a majority of the outstanding voting stock of
such acquiring entity) and (ii) a majority of the members of the board of
directors of the Company (if it continues to exist) and of the entity that
acquires the largest portion of such assets (or the entity, if any, that owns a
majority of the outstanding voting stock of such acquiring entity) were
Incumbent Directors immediately prior to consummation of such Major Asset
Disposition

For purposes of the foregoing definition:

 

  (1) “Beneficial Owner,” “Beneficial Ownership” and “Beneficially Own” are used
as defined for purposes of Section 13(d)(3) under the Exchange Act.

 

  (2) “Business Combination” means (x) a merger or consolidation involving the
Company or its stock or (y) an acquisition by the Company, directly or through
one or more subsidiaries, of another entity or its stock or assets.

 

  (3) “Election Contest” is used as it is defined for purposes of Rule 14a-11
under the Exchange Act.

 

  (4) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

  (5) “Group” is used as it is defined for purposes of Section 13(d)(3) of the
Exchange Act.

 

  (6) “Incumbent Director” means a director of the Company (x) who was a
director of the Company on the Effective Date, or (y) who becomes a director
subsequent to such date and whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of a majority of the Incumbent
Directors at the time of such election or nomination, except that any such
director shall not be deemed an Incumbent Director if his initial assumption of
office occurs as a result of an actual or threatened Election Contest or other
actual or threatened solicitation of proxies by or on behalf of a Person other
than the Board.

 

  (7) “Major Asset Disposition” means the sale or other disposition in one
transaction or a series of related transactions of 70% or more of the assets of
the Company and its subsidiaries on a consolidated basis; and any specified
percentage or portion of the assets of the Company shall be based on fair market
value, as determined by a majority of the Incumbent Directors.

 

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  (8) “Outstanding Voting Stock” means outstanding voting securities of the
Company entitled to vote generally in the election of directors; and any
specified percentage or portion of the Outstanding Voting Stock (or of other
voting stock) shall be determined based on the combined voting power of such
securities.

 

  (9) “Parent Corporation resulting from a Business Combination” means the
Company if its stock is not acquired or converted in the Business Combination
and otherwise means the entity which as a result of such Business Combination
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries.

 

  (10) “Person” means an individual, entity or Group.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.

“Company” means CenterPoint Energy, Inc., a Texas corporation, and any successor
thereto.

“Compensation” means the greater of (a) the sum of a Participant’s annual base
salary plus Target Bonus determined immediately prior to the date on which a
Change in Control occurs, or (b) the sum of a Participant’s annual base salary
plus Target Bonus determined immediately prior to the date of the Participant’s
Covered Termination.

“Compensation Committee” shall mean the Compensation Committee of the Board.

“Covered Termination” means any termination of a Participant’s employment with
the Company or any Affiliate that is a “Separation from Service” (within the
meaning of Code Section 409A and Treasury Regulation § 1.409A-1(h)(3) (or any
successor regulations or guidance thereto)) thereof:

 

  (A) that does not result from any of the following:

 

  (1) death;

 

  (2) disability entitling the Participant to benefits under the Company’s
long-term disability plan;

 

  (3) involuntary termination for Cause; or

 

  (4) resignation by the Participant, unless such resignation is for Good
Reason; and

 

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  (B) that occurs:

 

  (1) during the three-month period ending immediately prior to the date a
Change in Control occurs, provided that a binding agreement to effect a Change
in Control has been executed as of the Participant’s termination date (a
“Pre-Change in Control Covered Termination”); or

 

  (2) within two years after the date upon which a Change in Control occurs.

“Effective Date” shall mean January 1, 2015.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.

“Good Reason” means any one or more of the following events:

(A) a failure to maintain a Participant in the position, or a substantially
equivalent position, with the Company and/or an Affiliate, as the case may be,
which the Participant held immediately prior to the Change in Control;

(B) a significant adverse change in the authorities, powers, functions,
responsibilities or duties which a Participant held immediately prior to the
Change in Control;

(C) a material reduction in a Participant’s annual base salary as in effect
immediately prior to the date on which a Change in Control occurs;

(D) a significant reduction in a Participant’s qualified retirement benefits,
nonqualified benefits and welfare benefits provided to the Participant
immediately prior to the date on which a Change in Control occurs; provided,
however, that a contemporaneous diminution of or reduction in qualified
retirement benefits and/or welfare benefits which is of general application and
which uniformly and contemporaneously reduces or diminishes the benefits of all
covered employees shall be ignored and not be considered a reduction in
remuneration for purposes of this paragraph (D);

(E) a material reduction in a Participant’s overall compensation opportunities
(as contrasted with overall compensation actually paid or awarded) under the STI
Plan, a long-term incentive plan or other equity plan (or in such substitute or
alternative plans) from that provided to the Participant immediately prior to
the date on which a Change in Control occurs;

(F) a change in the location of a Participant’s principal place of employment
with the Company by more than 50 miles from the location where the Participant
was principally employed immediately prior to the date on which a Change in
Control occurs; or

 

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(G) a failure by the Company to provide directors and officers liability
insurance covering a Participant comparable to that provided to the Participant
immediately prior to the date on which a Change in Control occurs;

provided, however, that no later than 30 days after learning of the action (or
inaction) described herein as the basis for a termination of employment for Good
Reason, a Participant shall advise the Company in writing that the action (or
inaction) constitutes grounds for a termination of his or her employment for
Good Reason, in which event the Company shall have 30 days (the “Cure Period”)
to correct such action (or inaction). If such action (or inaction) is not
corrected prior to the end of the Cure Period, then the Participant may
terminate his or her employment with the Company for Good Reason within the
30-day period following the end of the Cure Period by giving written notice to
the Company. If such action (or inaction) is corrected before the end of the
Cure Period, then the Participant shall not be entitled to terminate his or her
employment for Good Reason as a result of such action (or inaction).

“LTI Plan” means the CenterPoint Energy, Inc. 2009 Long-Term Incentive Plan or
any successor plan or program thereto.

“Officer” means the CEO, the Executive Chairman of the Board and each Executive
Vice President, Senior Vice President and Vice President of the Company.

“Participant” shall mean each Officer who satisfies the requirements of
Section 2.01(a) of the Plan.

“Plan” shall mean this CenterPoint Energy, Inc. Change in Control Plan, as
amended, supplemented or modified from time to time in accordance with its
terms.

“Retirement Plan” means the CenterPoint Energy Retirement Plan, as amended and
restated effective January 1, 2009, and as thereafter amended.

“Severance Multiple” means (a) three (3), in the case of the CEO, (b) two (2),
in the case of the Executive Chairman of the Board, Executive Vice Presidents
and Senior Vice Presidents of the Company, (c) one and one half (1.5), in the
case of Vice Presidents of the Company with ten (10) or more Years of Service as
of the date of the Covered Termination, and (d) one (1), in the case of Vice
Presidents of the Company with less than ten (10) Years of Service as of the
date of the Covered Termination.

“Severance Period” means a period of time equal to (a) three (3) years, in the
case of the CEO, (b) two (2) years, in the case of the Executive Chairman of the
Board, Executive Vice Presidents and Senior Vice Presidents of the Company,
(c) one and one half (1.5) years, in the case of Vice Presidents of the Company
with ten (10) or more Years of Service as of the date of the Covered
Termination, and (d) one (1) year, in the case of Vice Presidents of the Company
with less than ten (10) Years of Service as of the date of the Covered
Termination.

“STI Plan” means the CenterPoint Energy, Inc. Short Term Incentive Plan or any
successor plan or program thereto.

 

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“Target Bonus” means a Participant’s target incentive award opportunity under
the STI Plan in effect for the year with respect to which the target bonus
amount is being determined or, if no such plan is then in effect, for the last
year in which such a plan was in effect, expressed as a dollar amount based upon
the Participant’s annual base salary for the year of such determination.

“Waiver and Release” means a legal document, in a form determined by the
Compensation Committee, in which a Participant, in exchange for certain
severance benefits described in Section 3.01, among other things, releases the
Company, the Affiliates, their directors, officers, employees and agents, their
employee benefit plans and the fiduciaries and agents of said plans from
liability and damages in any way related to the Participant’s employment with or
separation from the Company or any of its Affiliates.

“Welfare Benefit Coverage” means each of medical, dental and vision benefit
coverage.

“Years of Service” means full years of employment with the Company and its
Affiliates, provided that a partial year of less than 6 months will be
disregarded and a partial year of 6 months or more will be considered one
(1) Year of Service.

Section 1.02. Interpretation. In the Plan (a) the words “herein,” “hereof” and
“hereunder” refer to the Plan as a whole and not to any particular Article,
Section or other subdivision, (b) reference to any Article or Section, means
such Article or Section hereof and (c) the words “including” (and with
correlative meaning “include”) means including, without limiting the generality
of any description preceding such term and (c) words used in the singular shall
include the plural and the plural shall include the singular. The Article and
Section headings herein are for convenience only and shall not affect the
construction hereof.

ARTICLE II

ELIGIBILITY AND EFFECT OF CHANGE IN CONTROL

Section 2.01. Participants.

(a) Participants in the Plan shall be each Officer who (A) is not party to an
individual employment agreement providing for severance benefits and (B) has
executed a written participation agreement in a form determined by the
Compensation Committee. For the avoidance of doubt, an individual must be an
Officer as of the date of a Change in Control (or, if earlier, his or her
Covered Termination) in order to be eligible for the benefits described in
Article III.

(b) This Plan is only for the benefit of the Participants, and no other
employees, personnel, consultants or independent contractors shall be eligible
to participate in the Plan or to receive any rights or benefits hereunder.

Section 2.02. Effect of a Change in Control. Notwithstanding any provision of
the LTI Plan or agreements thereunder to the contrary, upon the occurrence of a
Change in Control, any performance criteria applicable to awards outstanding
under the LTI Plan shall be considered to have been achieved at the target
level, and, except as provided in Section 3.01(f) below, such awards shall vest
on the date originally scheduled subject to the Participant’s continued
employment through such date.

 

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ARTICLE III

SEVERANCE AND RELATED TERMINATION BENEFITS

Section 3.01. Severance Benefits. If a Participant experiences a Covered
Termination, then, subject to the Waiver and Release requirements in
Section 3.02 below, the Participant shall be entitled to receive the following:

(a) Accrued Obligations: A lump sum cash payment in amount equal to the
aggregate of:

 

  (1) the Participant’s base salary through the date of the Covered Termination,
to the extent not already paid;

 

  (2) the Participant’s earned, but not taken, vacation days though the date of
the Covered Termination; and

 

  (3) reimbursement for any unreimbursed business expenses properly incurred by
the Participant, in accordance with the Company’s applicable policy, prior to
the date of the Covered Termination.

The amount due to the Participant pursuant to this Section 3.01(a) shall be paid
as soon as practicable following the date of the Covered Termination in
accordance with the Company’s normal payroll policies and practices.

(b) Severance Amount: A lump sum cash payment in an amount equal to the
Participant’s Compensation multiplied by the Participant’s Severance Multiple.
Such severance payment due to the Participant pursuant to this Section 3.01(b)
shall be paid on the second business day immediately following the end of the
six-month period commencing on the date of the Participant’s Covered
Termination, along with simple interest on the severance amount at the
short-term applicable Federal rate provided for in Code Section 7872(f)(2)(A),
based on the period commencing on the date of the Participant’s Covered
Termination and ending on the payment date.

(c) Pro-Rated Bonus: A lump sum cash payment in an amount equal to the Target
Bonus in effect at the time of the Participant’s Covered Termination based on
the Participant’s eligible earnings under the STI Plan as of the date of the
Participant’s Covered Termination, but reduced by any amount payable under the
terms of the STI Plan for the performance year in which the Change in Control is
consummated. Such pro-rated bonus due to the Participant pursuant to this
Section 3.01(c) shall be paid on the second business day immediately following
the end of the six-month period commencing on the date of the Participant’s
Covered Termination, along with simple interest on the bonus amount at the
short-term applicable Federal rate provided for in Code Section 7872(f)(2)(A),
based on the period commencing on the date of the Participant’s Covered
Termination and ending on the payment date.

 

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(d) Welfare Benefit Coverage: Subject to the Participant’s timely election of
and continued eligibility for continuation coverage under COBRA and subject to
the Participant’s payment of applicable premiums on the same basis as similarly
situated active executives of the Company, continued Welfare Benefit Coverage
for the Participant and his or her eligible dependents for a period of two years
following (i) the date of the Participant’s Covered Termination or (ii) in the
case of a Pre-Change in Control Covered Termination, the date of the Change in
Control. Notwithstanding the foregoing, (1) to the extent the Company’s benefits
plans and programs do not provide for the Welfare Benefit Coverage as of the
date of the Participant’s Covered Termination or (2) if the Company’s
obligations contemplated by this Section 3.01(d) would result in the imposition
of excise taxes on the Company for failure to comply with the nondiscrimination
requirements of the Patient Protection and Affordable Care Act of 2010, as
amended, and the Health Care and Education Reconciliation Act of 2010, as
amended (to the extent applicable), the Company shall discontinue the Welfare
Benefit Coverage and the Participant shall be entitled to a lump-sum payment
equal to an amount reasonably necessary for the Participant to procure insurance
providing for Welfare Benefit Coverage for the Participant and his or her
eligible dependents during the applicable coverage period provided in the first
sentence of this Section 3.01(d).

(e) Outplacement: Outplacement services for a 9-month period after (i) the date
of the Participant’s Covered Termination or (ii) in the case of a Pre-Change in
Control Covered Termination, the date of the Change in Control, in connection
with the Participant’s efforts to obtain new employment under the outplacement
program adopted by the Company. The Participant shall not be entitled to a cash
payment in lieu of such services.

(f) LTI Plan: The Participant shall fully vest in any awards under the LTI Plan
for which the performance criteria were deemed achieved at the target level
pursuant to Section 2.02 above. Such awards shall be paid to the Participant as
soon as practicable following the date of the Covered Termination or, if
required to comply with Code Section 409A, on the regularly scheduled payment
date of such award.

(g) Enhanced Retirement Plan Benefit: The Participant shall be entitled to an
amount not less than the amount that the Participant would have been entitled to
receive under the cash balance formula of the Retirement Plan as if the
Participant (i) was fully vested in his or her Retirement Plan benefit and
(ii) remained an employee of the Company or its Affiliates throughout the
Severance Period following (A) the date of the Participant’s Covered Termination
or (B) in the case of a Pre-Change in Control Covered Termination, the date of
the Change in Control based on his or her Compensation, with such enhanced
benefit paid under the Company’s Benefit Restoration Plan in accordance with its
terms and conditions.

(h) All Other Benefit Plans or Programs. The Participant’s participation in all
other employee benefit plans and/or programs at the Company and the Affiliates
shall cease as of the date of the Participant’s Covered Termination, subject to
the terms and conditions of the governing documents of those employee benefit
plans and/or programs.

 

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Section 3.02. Waiver and Release Requirement. Payment of the benefits under
Section 3.01(b) through Section 3.10(g) is subject to the Participant’s timely
execution and return of the Waiver and Release to the Company, without
subsequent revocation during the seven-day period following such execution date
(the “Waiver and Release Revocation Period”). The Participant shall have 50 days
following (i) the date of the Participant’s Covered Termination, or (ii) in the
case of a Pre-Change in Control Covered Termination, the date of the Change in
Control, to consider, execute and return the Waiver and Release to the Company
and shall then have the right to revoke the Waiver and Release during the Waiver
and Release Revocation Period. If the Participant fails to timely execute and
return the Waiver and Release to the Company or revokes such Waiver and Release
during the Waiver and Release Revocation Period, then the Participant shall
forfeit, and shall not be entitled to, any of the benefits described in
Section 3.01(b) through Section 3.01(g).

Section 3.03. Code Section 280G.

(a) Potential Reduction. Anything in this Plan to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution in the nature of compensation (within the meaning of
Code Section 280G(b)(2)) to or for the benefit of the Participant, whether paid
or payable or distributed or distributable pursuant to the terms of this Plan or
otherwise, but determined without regard to any reduction (if any) required
under this Section 3.03 (the “Payment”), would be subject to the excise tax
imposed by Code Section 4999, together with any interest or penalties imposed
with respect to such excise tax (“Excise Tax”), then the Company shall
automatically reduce (the “Reduction”) the Participant’s Payment to the minimum
extent necessary to prevent the Payment (after the Reduction) from being subject
to the Excise Tax, but only if, by reason of the Reduction, the after-tax
benefit of the reduced Payment exceeds the after-tax benefit if such Reduction
was not made. If the after-tax benefit of the reduced Payment does not exceed
the after-tax benefit if the Payment is not reduced, then the Reduction shall
not apply. If the Reduction is applicable, the Payment shall be reduced in such
a manner that provides the Participant with the best economic benefit and, to
the extent any portions of the Payment are economically equivalent with each
other, each shall be reduced pro rata.

(b) Determinations. All determinations required to be made under this
Section 3.03, including the after-tax benefit and calculation of the Reduction,
shall be made by a nationally recognized certified public accounting firm that
is selected by the Company (the “Accounting Firm”), which may be the Company’s
independent auditors. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control or the Accounting Firm declines or is unable to serve, the
Participant shall appoint another nationally recognized certified public
accounting firm, which is reasonably agreed to by the Company, to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). In the event that the Accounting Firm
determines that no Excise Tax is payable by the Participant, either with or
without application of the Reduction under this Section 3.03, then the
Accounting Firm shall furnish the Participant with a written opinion that
failure to report the Excise Tax on the Participant’s applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. If the Reduction is applicable, the Company shall provide the
Participant with a written summary of the portions of the Payment that will be
reduced. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. All determinations by the Accounting Firm made under this
Section 3.03 shall be binding upon the Company and the Participant.

 

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Section 3.04. Welfare Benefit Coverage Payments. If the Company provides the
Participant with one or more Welfare Benefit Coverages pursuant to
Section 3.01(d), and the amount of such benefits or the value of such benefit
coverage (including, without limitation, any insurance premiums paid by the
Company to provide such benefits) is subject to any income, employment or
similar tax imposed by federal, state or local law, or any interest or penalties
with respect to such tax (such tax or taxes, together with any such interest and
penalties, being hereafter collectively referred to as the “Income Tax”) because
such benefits cannot be provided under a nondiscriminatory health plan described
in Section 105 of the Code or for any other reason, the Company will pay to the
Participant an additional payment or payments (collectively, an “Income Tax
Payment”). The Income Tax Payment will be in an amount such that, after payment
by the Participant of all taxes (including any interest or penalties imposed
with respect to such taxes), the Participant retains an amount of the Income Tax
Payment equal to the Income Tax imposed with respect to such welfare benefits or
such welfare benefit coverage. In accordance with Treasury Regulation §
1.409A-3(i)(1)(v), in no event shall the Company pay the Participant (or pay on
the Participant’s behalf) the Income Tax Payment to which the Participant is
entitled under this Section 3.04 later than the end of the Participant’s taxable
year next following the Participant’s taxable year in which the Participant
remits the Income Tax to the Internal Revenue Service (or in the case of costs
and expenses payable under this Section 3.04, no later than the end of the
Participant’s taxable year next following the Participant’s taxable year in
which the taxes that are the subject of the audit or litigation are remitted to
the Internal Revenue Service, or where as a result of such audit or litigation
no taxes are remitted, the end of the Participant’s taxable year next following
the Participant’s taxable year in which the audit is completed or there is a
final and nonappealable settlement or other resolution of the litigation). For
purposes of clarity, this Section 3.04 shall not apply to any cash payment made
to a Participant pursuant to Section 3.01(d) in replacement of any Welfare
Benefit Coverages.

ARTICLE IV

LEGAL FEES AND EXPENSES

It is the intent of the Company that the Participant not be required to incur
legal fees and the related expenses associated with the interpretation,
enforcement or defense of the Participant’s rights under this Plan by litigation
or otherwise because the cost and expense thereof would detract from the
benefits intended to be extended to the Participant hereunder. Accordingly, if
it should appear to the Participant that the Company has failed to comply with
any of its obligations under this Plan or in the event that the Company or any
other person takes or threatens to take any action to declare this Plan void or
unenforceable, or institutes any litigation or other action or proceeding
designed to deny, or to recover from, the Participant the benefits provided or
intended to be provided to the Participant hereunder, the Company irrevocably
authorizes the Participant from time to time to retain counsel of the
Participant’s choice, at the expense of the Company as hereafter provided, to
advise and represent the Participant in connection with any such interpretation,
enforcement or defense, including, without limitation, the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any director, officer, stockholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Participant entering into an attorney-client relationship with
such counsel, and in that connection the

 

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Company and the Participant agree that a confidential relationship will exist
between the Participant and such counsel. Without regard to whether the
Participant prevails, in whole or in part, in connection with any of the
foregoing, the Company will pay and be solely financially responsible for any
and all attorneys’ fees and related expenses incurred by the Participant in
connection with any of the foregoing except to the extent that a final judgment
no longer subject to appeal finds that a claim or defense asserted by the
Participant was frivolous. In such a case, the portion of such fees and expenses
incurred by the Participant as a result of such frivolous claim or defense shall
become the Participant’s sole responsibility and any funds advanced by the
Company shall be repaid to the Company.

With respect to the Company’s obligations under this Article IV, the fees and
expenses of counsel selected by the Participant pursuant to this Article IV will
be paid, or reimbursed to the Participant if paid by the Participant, on a
regular, periodic basis upon presentation by the Participant to the Company of a
statement or statements prepared by such counsel in accordance with its
customary practices, with such payment to be made no later than March 15th of
the year following the year in which the expenses are incurred. The pendency of
a claim by the Company that a claim or defense of the Participant is frivolous
or otherwise lacking merit shall not excuse the Company from making periodic
payments of legal fees and expenses until a final judgment is rendered as
hereinabove provided. Any failure by the Company to satisfy any of its
obligations under this Article IV will not limit the rights of the Participant
hereunder. Subject to the foregoing, the Participant will have the status of a
general unsecured creditor of the Company and will have no right to, or security
interest in, any assets of the Company or any Affiliate.

ARTICLE V

RESTRICTIVE COVENANTS

Section 5.01. Confidentiality. The Participant acknowledges that in the course
of his or her employment with the Company, the Company agrees to provide to the
Participant Confidential Information regarding the Company and the Company’s
business and has previously provided the Participant other such Confidential
Information. In return for this and other consideration, provided under this
Plan, the Participant agrees that he or she will not, while employed by the
Company and thereafter, disclose or make available to any other person or
entity, or use for his own personal gain, any Confidential Information, except
for such disclosures as required in the performance of his or her duties
hereunder as may otherwise be required by law or legal process (in which case
the Participant shall notify the Company of such legal or judicial proceeding as
soon as practicable following his receipt of notice of such a proceeding, and
permit the Company to seek to protect its interests and information). For
purposes of this Plan, “Confidential Information” shall mean any and all
information, data and knowledge that has been created, discovered, developed or
otherwise become known to the Company or any of its Affiliates or ventures or in
which property rights have been assigned or otherwise conveyed to the Company or
any of its Affiliates or ventures, which information, data or knowledge has
commercial value in the business in which the Company is engaged, except such
information, data or knowledge as is or becomes known to the public without
violation of the terms of this Plan. By way of illustration, but not limitation,
Confidential Information includes business trade secrets, secrets concerning the
Company’s plans and strategies, nonpublic information concerning material market
opportunities, technical trade secrets,

 

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processes, formulas, know-how, improvements, discoveries, developments, designs,
inventions, techniques, marketing plans, manuals, records of research, reports,
memoranda, computer software, strategies, forecasts, new products, unpublished
financial information, projections, licenses, prices, costs, and employee,
customer and supplier lists or parts thereof.

Section 5.02. Return of Property. The Participant agrees that at the time of
leaving the Company’s employ, he or she will deliver to the Company (and will
not keep in his or her possession, recreate or deliver to anyone else) all
Confidential Information as well as all other devices, records, data, notes,
reports, proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, materials, equipment, customer or client lists or information, or any
other documents or property (including all reproductions of the aforementioned
items) belonging to the Company or any of its Affiliates or ventures, regardless
of whether such items were prepared by the Participant.

Section 5.03. Non-Solicitation and Non-Competition.

(a) Non-Solicitation. For consideration provided under this Plan, including, but
not limited to the Company’s agreement to provide the Participant with
Confidential Information (as defined in Section 5.01) regarding the Company and
the Company’s business, the Participant agrees that while employed by the
Company and for one year following a Covered Termination he or she shall not,
without the prior written consent of the Company, directly or indirectly,
(i) hire or induce, entice or solicit (or attempt to induce, entice or solicit)
any employee of the Company or any of its Affiliates or ventures to leave the
employment of the Company or any of its Affiliates or ventures or (ii) solicit
or attempt to solicit the business of any customer or acquisition prospect of
the Company or any of its Affiliates or ventures with whom the Participant had
any actual contact while employed at the Company.

(b) Non-Competition. For consideration provided under this Plan, including, but
not limited to the Company’s agreement to provide the Participant with
Confidential Information regarding the Company and the Company’s business, the
Participant agrees that while employed by the Company and for one year following
a Covered Termination he or she will not, without the prior written consent of
the Company, acting alone or in conjunction with others, either directly or
indirectly, engage in any business that is in competition with the Company or
accept employment with or render services to such a business as an officer,
agent, employee, independent contractor or consultant, or otherwise engage in
activities that are in competition with the Company.

(c) Restricted Area. The restrictions contained in this Section 5.03 are limited
to a 50-mile radius around any geographical area in which the Company engages
(or has definite plans to engage) in operations or the marketing of its products
or services at the time of the Participant’s Covered Termination.

Section 5.04. Restrictions Reasonable. The Participant acknowledges that the
restrictive covenants under this Article V, for which the Participant received
valuable consideration from the Company as provided in this Plan, including, but
not limited to the Company’s agreement to provide the Participant with
Confidential Information regarding the Company and the Company’s business are
ancillary to otherwise enforceable provisions of this Plan that the

 

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consideration provided by the Company gives rise to the Company’s interest in
restraining the Participant from competing and that the restrictive covenants
are designed to enforce the Participant’s consideration or return promises under
this Plan. Additionally, the Participant acknowledges that these restrictive
covenants contain limitations as to time, geographical area, and scope of
activity to be restrained that are reasonable and do not impose a greater
restraint than is necessary to protect the goodwill or other legitimate business
interests of the Company, including, but not limited to, the Company’s need to
protect its Confidential Information.

ARTICLE VI

CLAIMS PROCEDURE

Section 6.01. Claims Procedure

(a) It shall not be necessary for a Participant or beneficiary who has become
entitled to receive a benefit hereunder to file a claim for such benefit with
any person as a condition precedent to receiving a distribution of such benefit.
However, any Participant or beneficiary who believes that he or she has become
entitled to a benefit hereunder and who has not received, or commenced
receiving, a distribution of such benefit, or who believes that he or she is
entitled to a benefit hereunder in excess of the benefit which he or she has
received, or commenced receiving, may file a written claim for such benefit with
the Compensation Committee at any time on or prior to the end of the fiscal year
next following the fiscal year in which he or she allegedly became entitled to
receive a distribution of such benefit. Such written claim shall set forth the
Participant’s or beneficiary’s name and address and a statement of the facts and
a reference to the pertinent provisions of the Plan upon which such claim is
based. The Compensation Committee shall, within 90 days after such written claim
is filed, provide the claimant with written notice of its decision with respect
to such claim. If such claim is denied in whole or in part, the Compensation
Committee shall, in such written notice to the claimant, set forth in a manner
calculated to be understood by the claimant the specific reason or reasons for
denial; specific references to pertinent provisions of the Plan upon which the
denial is based; a description of any additional material or information
necessary for the claimant to perfect his or her claim and an explanation of why
such material or information is necessary; and an explanation of the provisions
for review of claims set forth in Section 6.01(b) below.

(b) A Participant or beneficiary who has filed a written claim for benefits with
the Compensation Committee which has been denied may appeal such denial to the
Compensation Committee and receive a full and fair review of his or her claim by
filing with the Compensation Committee a written application for review at any
time within 60 days after receipt from the Compensation Committee of the written
notice of denial of his or her claim provided for in Section 6.01(a) above. A
Participant or beneficiary who submits a timely written application for review
shall be entitled to review any and all documents pertinent to his or her claim
and may submit issues and comments to the Compensation Committee in writing. Not
later than 60 days after receipt of a written application for review, the
Compensation Committee shall give the claimant written notice of its decision on
review, which written notice shall set forth in a manner calculated to be
understood by the claimant specific reasons for its decision and specific
references to the pertinent provisions of the Plan upon which the decision is
based.

 

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(c) Any act permitted or required to be taken by a Participant or beneficiary
under this Section 6.01 may be taken for and on behalf of such Participant or
beneficiary by such Participant’s or beneficiary’s duly authorized
representative. Any claim, notice, application or other writing permitted or
required to be filed with or given to a party by this Article shall be deemed to
have been filed or given when deposited in the U.S. mail, postage prepaid, and
properly addressed to the party to whom it is to be given or with whom it is to
be filed. Any such claim, notice, application, or other writing deemed filed or
given pursuant to the preceding sentence shall in the absence of clear and
convincing evidence to the contrary, be deemed to have been received on the
fifth (5th) business day following the date upon which it was filed or given.
Any such notice, application, or other writing directed to a Participant or
beneficiary shall be deemed properly addressed if directed to the address set
forth in the written claim filed by such Participant or beneficiary.

ARTICLE VII

Miscellaneous Provisions

Section 7.01. Conflicts with Other Agreements. In the event that a Participant
becomes entitled to benefits under a prior or subsequent agreement pertaining to
a Participant’s employment by the Company or any Affiliate thereof (other than
this Plan) or the benefits to which a Participant is entitled as a result of
such employment and such benefits conflict with the terms of this Plan, the
Participant will receive the greater and more favorable of each of the benefits
provided under either this Plan or such other agreement or benefits, on an
individual benefit basis, provided, however, that any such other conflicting
payment is payable under its terms in the same calendar year and in the same
form as the corresponding benefit payable under this Plan.

Section 7.02. Notices. All notices and other communications provided for in the
Plan shall be in writing and shall be sent, delivered or mailed, addressed as
follows: (a) if to the Company, at the Company’s principal office address or
such other address as the Company may have designated by written notice for
purposes hereof, directed to the attention of the Compensation Committee, and
(b) if to any Participant, at his or her residence address on the records of the
Company or to such other address as he or she may have designated to the Company
in writing for purposes hereof. Each such notice or other communication shall be
deemed to have been duly given or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, except that any
change of notice address shall be effective only upon receipt.

Section 7.03. Litigation Assistance. Each Participant agrees to assist the
Company with any litigation matters related to the Company or any of its
subsidiaries or affiliates as may be reasonably requested by the Company’s
General Counsel following the date of the Participant’s Covered Termination. The
Company shall reimburse a Participant for any reasonable travel or other
business expenses incurred in connection with providing such assistance and
cooperation. A Participant shall provide such services as an independent
contractor and such services shall be limited solely to those matters with which
the Participant is suitably experienced and knowledgeable by reason of the
Participant’s education, training, background and prior employment with the
Company. The Company and each Participant agree to work out

 

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reasonable accommodations for the provision of such assistance so that it does
not unreasonably interfere with any of the Participant’s personal affairs,
business endeavors or future employment. The foregoing notwithstanding, the
Company and each Participant agree that the services provided by a Participant
under this Section 7.03, if any, shall not exceed twenty percent (20%) of the
average level of bona fide services performed by the Participant (whether as an
employee or an independent contractor of the Company) over the 36-month period
(or the full period of services to the Company if the Participant has been
providing services to the Company for less than 36 months) immediately preceding
the date of his or her Covered Termination.

Section 7.04. Code Section 409A.

(a) Interpretation. It is the intent of the Company and the Participants that
the provisions of this Plan comply with Code Section 409A and the Treasury
regulations and guidance issued thereunder. Accordingly, the Company and the
Participants intend that this Plan be interpreted and operated consistent with
such requirements of Code Section 409A in order to avoid the application of
penalty taxes under Code Section 409A to the extent reasonably practicable. The
Company shall neither cause nor permit: (a) any payment, benefit or
consideration to be substituted for a benefit that is payable under this Plan if
such action would result in the failure of any amount that is subject to Code
Section 409A to comply with the applicable requirements of Code Section 409A; or
(b) any adjustments to any equity interest to be made in a manner that would
result in the equity interest becoming subject to Code Section 409A unless,
after such adjustment, the equity interest is in compliance with the
requirements of Code Section 409A to the extent applicable.

(b) Delay of Payment. Notwithstanding any provision of this Plan to the
contrary, if a Participant is a “Specified Employee” (as that term is defined in
Code Section 409A) as of the date of the Participant’s Covered Termination, then
any amounts or benefits which are payable under this Plan upon the Participant’s
“Separation from Service” (within the meaning of Code Section 409A), other than
due to death, which are subject to the provisions of Code Section 409A and not
otherwise excluded under Code Section 409A, and would otherwise be payable
during the first six-month period following such Separation from Service, shall
be paid on the second business day that (a) is at least six months after the
date of the Participant’s Covered Termination or (b) follows the Participant’s
date of death, if earlier.

(c) Reimbursements and In-Kind Benefits. All reimbursements and in-kind benefits
provided pursuant to this Plan shall be made in accordance with Treasury
Regulation § 1.409A-3(i)(1)(iv) such that any reimbursements or in-kind benefits
will be deemed payable at a specified time or on a fixed schedule relative to a
permissible payment event. Specifically, (i) the amounts reimbursed and in-kind
benefits provided under this Plan, other than total reimbursements that are
limited by a lifetime maximum under a group health plan, during a Participant’s
taxable year may not affect the amounts reimbursed or in-kind benefits provided
in any other taxable year, (ii) the reimbursement of an eligible expense shall
be made on or before the last day of a Participant’s taxable year following the
taxable year in which the expense was incurred, and (iii) the right to
reimbursement or an in-kind benefit is not subject to liquidation or exchange
for another benefit.

 

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Section 7.05. No Mitigation. No Participant shall be required to mitigate the
amount of any payment provided for in the Plan by seeking or accepting other
employment following a termination of his or her employment with the Company or
otherwise. Except as otherwise provided in Section 3.01, the amount of any
payment provided for in the Plan shall not be reduced by any compensation or
benefit earned by a Participant as the result of employment by another employer
or by retirement benefits. The Company’s obligations to make payments to any
Participant required under the Plan shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, right or action that the
Company may have against such Participant.

Section 7.06. Amendment or Termination. The Board may amend (in whole or in
part) or terminate the Plan at any time; provided, however, that the Plan cannot
be amended or terminated during the two-year period following a Change in
Control. Notwithstanding the foregoing, no termination shall reduce or terminate
any Participant’s right to receive, or continue to receive, any payments and
benefits that became payable in respect of a termination of employment that
occurred prior to the date of such termination of the Plan. Notwithstanding the
foregoing, nothing herein shall abridge the Compensation Committee’s authority
to designate new Participants to participate in the Plan in accordance with
Section 2.01 hereof.

Section 7.07. Administration.

(a) The Compensation Committee shall have full and final authority, subject to
the express provisions of the Plan, with respect to designation of the
Participants and administration of the Plan, including but not limited to, the
authority to construe and interpret any provisions of the Plan and to take all
other actions deemed necessary or advisable for the proper administration of the
Plan, and such decisions shall be binding on all parties.

(b) The Company shall indemnify and hold harmless each member of the
Compensation Committee and any other employee of the Company that acts at the
direction of the Compensation Committee against any and all expenses and
liabilities arising out of his or her administrative functions or fiduciary
responsibilities, including any expenses and liabilities that are caused by or
result from an act or omission constituting the negligence of such member in the
performance of such functions or responsibilities, but excluding expenses and
liabilities that are caused by or result from such member’s or employee’s own
gross negligence or willful cause. Expenses against which such member or
employee shall be indemnified hereunder shall include, without limitation, the
amounts of any settlement or judgment, costs, counsel fees, and related charges
reasonably incurred in connection with a claim asserted or a proceeding brought
or settlement thereof.

Section 7.08. Successors. This Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (a) the
person or entity acquiring such assets or a substantial portion thereof shall
expressly assume by an instrument in writing all duties and obligations of the
Company hereunder or (b) the Company shall provide, through the establishment of
a separate reserve therefor, for the payment in full of all amounts which are or
may reasonably be expected to become payable to Participants hereunder.

 

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Section 7.09. No Assignment. A Participant’s right to receive payments or
benefits hereunder shall not be assignable or transferable, whether by pledge,
creation or a security interest or otherwise, whether voluntary, involuntary, by
operation of law or otherwise, other than a transfer by will or by the laws of
descent or distribution, and in the event of any attempted assignment or
transfer contrary to this Section 7.10, the Company shall have no liability to
pay any amount so attempted to be assigned or transferred. The benefits under
this Plan shall inure to the benefit of and be enforceable by a Participant’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

Section 7.10. Tax Withholding. The Company may withhold from any benefits
payable under this Plan all federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or ruling.

Section 7.11. No Employment Rights Conferred. This Plan shall not be deemed to
create a contract of employment between any Participant and the Company and/or
its Affiliates. Nothing contained in the Plan shall (a) confer upon any
Participant any right with respect to continuation of employment with the
Company or (b) subject to the rights and benefits of any Participant hereunder,
interfere in any way with the right of the Company to terminate such
Participant’s employment at any time.

Section 7.12. Entire Plan. This Plan contains the entire understanding of the
Participants and the Company with respect to severance arrangements maintained
on behalf of the Participants by the Company. There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the
Participants and the Company with respect to the subject matter herein other
than those expressly set forth herein.

Section 7.13. Prior Agreements. This Plan supersedes all prior agreements,
programs and understandings (including all written and verbal agreements and
understandings) between each Participant and the Company regarding the terms and
conditions of each Participant’s employment and severance arrangements.

Section 7.14. Severability. If any provision of the Plan is, becomes or is
deemed to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of the Plan shall not be
affected thereby.

Section 7.15. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to its
conflict of laws rules, and applicable federal law.

 

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