EXHIBIT 10.2

 

LOGO [g337560g02v82.jpg]

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT and an ancillary agreement to be effective
simultaneously herewith entitled “Confidentiality, Non-Competition and
Non-Solicitation Agreement” (the “Confidentiality Agreement”), a copy of which
is attached hereto as Attachment A, and incorporated herein by reference for all
purposes, (this agreement and the Confidentiality Agreement being hereinafter
collectively referred to as “this Agreement”) is entered into effective as of
May 8, 2012 (the “Effective Date”), by and between Powell Industries, Inc. and
its affiliates (the “Company”) and Milburn E. Honeycutt (“Executive”).

WHEREAS, the Company desires to continue the employment of Executive as Vice
President & Chief Accounting Officer of the Company from and after the Effective
Date until such date as his employment shall end pursuant to the terms and
conditions contained herein; and

WHEREAS, Executive desires to continue employment with the Company in such
position pursuant to the terms and conditions contained herein;

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

I. EMPLOYMENT TERM.

The term of this Agreement shall commence on the Effective Date and expire at
the earlier of:

a. The last day of the month in which the Executive reaches age 65, in which
case, unless the parties agree otherwise, Executive’s employment shall continue
at will and shall be terminable by either party, for any reason, in which event
the executive shall be entitled to the severance benefits provided for under
Section V.B; or

b. The date Executive’s employment terminates subject to the provisions of this
Agreement regarding termination, resignation or retirement.

Executive and the Company acknowledge that the employment relationship provided
herein may be terminated at any time, upon written notice to the other party for
any reason, at the option of either the Company or Executive. However, as
provided in this Agreement, Executive may be entitled to certain severance
benefits depending upon the circumstances of Executive’s termination of
employment. The period Executive is employed by the Company under this Agreement
is referred to herein as the “Employment Term.”

 

II. CERTAIN DEFINITIONS

A. “Accrued Rights” shall mean:

1. Executive’s earned, but unpaid compensation, to include base salary, vehicle
allowance, short term incentive and long term incentive compensation through the
date of termination;

2. Reimbursement, within sixty (60) days following submission by Executive to
the Company of appropriate supporting documentation, for any unreimbursed
reasonable business expenses properly incurred by Executive in the performance
of Executive’s duties in accordance with the Company’s expense reimbursement
policy prior to the date of Executive’s termination, provided claims for such
reimbursement (accompanied by appropriate supporting documentation) are
submitted to the Company within ninety (90) days following the date such
expenses were incurred and within thirty (30) days following Executive’s
termination; and

--------------------------------------------------------------------------------

3. Such Employee Benefits, if any, as to which Executive may be entitled under
the terms of the employee benefit plans of the Company.

B. “Cause” shall mean:

1. Executive’s conviction of (or plea of nolo contendere to) a felony;

2. Executive’s dishonesty, theft, embezzlement or fraud with respect to the
business, property, reputation or affairs of the Company;

3. Executive’s willful violation of the Company’s Business Code of Conduct and
Business Ethics and/or any other of the Company’s employment, personnel, safety
or other policies as now exist or as may hereafter be amended;

4. Executive’s having committed any material violation of any federal or state
law regulating securities (without having relied on the advice of the Company’s
attorney or outside auditor) or having been the subject of any final order,
judicial or administrative, obtained or issued by the Securities and Exchange
Commission, or any regulatory authority having jurisdiction over the Company’s
securities for any securities violation involving fraud, including, without
limitation, any such order consented to by Executive in which findings of facts
or any legal conclusions establishing liability are neither admitted nor denied;

5. Executive’s willful and continued failure to devote substantially all of his
business time to the Company’s business affairs (excluding failures due to
illness, incapacity, vacations, incidental civic activities and incidental
personal time); or

6. Executive’s unauthorized disclosure of confidential information of the
Company that is materially injurious to the Company.

Notwithstanding the above, however, and except with regard to the events
described in subparagraph (1) above, Cause shall not exist with respect to any
matter unless the Company gives the Executive written notice of such matter
within ninety (90) days of the date the Company knew of its occurrence. Such
notice shall specify with reasonable particularity the acts, events or
conditions which are claimed to constitute Cause. If the Company fails to give
such notice timely, the Company shall be deemed to have waived its right to
terminate Executive for Cause with respect to such matter.

Upon receipt of the notice described above, Executive shall have thirty
(30) days to (i) cure or correct the acts, event or conditions specified in the
notice, (ii) commence Executive’s best efforts to cure or correct the event
constituting such and continue such efforts until the act, event or condition is
cured; or (iii) if applicable, provide the Company with written evidence or
documentation that the acts or events claimed to constitute Cause did not occur,
or were not performed or omitted by Executive, or otherwise do not constitute
Cause as described in this Agreement.

For purposes of this definition, no act, or failure to act, on Executive’s part
shall be deemed “willful” unless done, or omitted to be done, by Executive not
in good faith and without reasonable belief that Executive’s action or omission
was in the best interest of the Company.

C. “Change of Control” shall mean any of the following:

1. any “person” (as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), (other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any affiliate, or any corporation owned, directly or

 

2

--------------------------------------------------------------------------------

indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), acquires “beneficial
ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing 35% or more of the combined voting power
of the Company’s then outstanding securities; provided, however, that if the
Company engages in a merger or consolidation in which the Company or surviving
entity in such merger or consolidation becomes a subsidiary of another entity,
then references to the Company’s then outstanding securities shall be deemed to
refer to the outstanding securities of such parent entity;

2. a change in the composition of the Board, as a result of which fewer than a
majority of the directors are Incumbent Directors. “Incumbent Directors” shall
mean directors who either (i) are directors of the Company as of the Effective
Date, or (ii) are elected, or nominated for election, to the Board with the
affirmative votes of at least two-thirds of the Incumbent Directors at the time
of such election or nomination, but Incumbent Director shall not include an
individual whose election or nomination occurs as a result of either (1) an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or (2) an actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board of Directors of the Company;

3. the consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity (or if the surviving entity is or
shall become a subsidiary of another entity, then such parent entity) more than
50% of the combined voting power of the voting securities of the Company (or
such surviving entity or parent entity, as the case may be) outstanding
immediately after such merger or consolidation;

4. the stockholders of the Company approve a plan of complete liquidation of the
Company; or

5. the sale or disposition (other than a pledge or similar encumbrance) by the
Company of all or substantially all of the assets of the Company other than to a
subsidiary or subsidiaries of the Company.

D. “Date of Termination” shall mean the date the Notice of Termination is given
unless such Notice of Termination is by Executive in which event the Date of
Termination shall not be less than 30 days following the date the Notice of
Termination is given. Further, a Notice of Termination given by Executive due to
a Good Reason event that is corrected by the Company before the Date of
Termination shall be void.

E. “Disability” shall mean that Executive: (i) is unable to perform the
essential functions of Executive’s job title and duties by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months, provided that Executive or his representative has
provided the Company with certification of such disability from a licensed
physician or other medical services provider acceptable to the Company in its
sole discretion; (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, receiving
income replacement benefits for a period of not less than three months under an
accident and health plan or disability insurance policy covering employees of
the Company; or (iii) is determined by the Social Security Administration to be
disabled.

F. “Good Reason” shall mean:

1. a material reduction in Executive’s authority, duties or responsibilities or
the assignment to Executive of duties or responsibilities inconsistent in any
material respect from those of Executive in effect immediately prior to the
change;

2. a material reduction of Executive’s compensation and benefits, including,
without limitation, annual base salary, targeted short-term incentive
compensation, targeted long-term incentive compensation, and equity incentive
opportunities, from those in effect immediately prior to the change;

 

3

--------------------------------------------------------------------------------

3. the Company fails to obtain a written agreement from any successor or assigns
of the Company to assume and perform this Agreement as provided in Section VI.I
hereof;

4. the Company requires Executive, without Executive’s consent, to be based at
any office located more than 50 miles from the Company’s offices to which
Executive was based immediately prior to the Change of Control, except for
travel reasonably required in the performance of Executive’s duties; or

5. the Company’s breach of a material term of this Agreement.

Notwithstanding the above, however, Good Reason shall not exist with respect to
any matter unless the Executive gives the Company written notice of such matter
within ninety (90) days of the date the Executive knew or reasonably should have
known of its occurrence. Such notice shall specify with reasonable
particularity, the acts, events or conditions which are claimed to constitute
Good Reason. If the Executive fails to give such notice timely, the Executive
shall be deemed to have waived Executive’s right to resign for Good Reason with
respect to such matter.

Upon receipt of the notice described above, the Company shall have sixty
(60) days to (i) cure or correct the acts, event or conditions specified in the
notice, (ii) commence the Company’s best efforts to cure or corrects the event
constituting such and continue such efforts until the act, event or condition is
cured; or (iii) if applicable, provide the Executive with written evidence or
documentation that the acts or events claimed to constitute Good Reason did not
occur, or otherwise do not constitute Good Reason as described in this
Agreement.

For purposes of this Agreement, “Good Reason” shall be construed to refer to
Executive’s positions, duties, and responsibilities in the position or positions
in which Executive was serving before any event as described in subparagraphs
(1) through (5) above, which shall not include titles or positions with
subsidiaries and affiliates of the Company that are held primarily for
administrative convenience.

“Good Reason” shall also include any of the foregoing acts or omissions by a
successor in interest to the Company as referenced in Sections II.C(3), (4) or
(5) above.

G. “Notice of Termination” shall mean a written notice delivered to the other
party indicating the specific termination provision in this Agreement relied
upon for termination of Executive’s employment which shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated. For the
purpose, termination of Executive’s employment shall be interpreted consistent
with the meaning of the term “Separation from Service” in
Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the
“Code”) and applicable regulation authority.

H. “Poor Performance” shall mean Executive’s willful and continued failure to
perform substantially the duties of Executive’s position after a written demand
for substantial performance is delivered to him which specifically identifies
the nature of such unacceptable performance, and which is not cured by Executive
within a reasonable period, not to exceed sixty (60) days. For purposes of the
definition in of “Poor Performance” as used herein, no act, or failure to act,
on Executive’s part shall be deemed “willful” unless done, or omitted to be
done, by Executive not in good faith and without reasonable belief that
Executive’s action or omission was in the best interest of the Company.

I. “Protected Period” shall mean the 24-month period beginning on the effective
date of a Change of Control.

J. “Retirement” shall mean Executive has reached 62 years of age (“normal
retirement”) or age 60 with at least five (5) years of active service (“early
retirement”); provided, however that Executive cannot be required to retire and
must consent in writing to any Retirement.

K. “Severance Period” shall mean the time period during which the Executive
receives salary continuation benefits following a termination of employment by
the Company for Poor Performance as described in Section V.C Without Cause or
Resignation by Executive for Good Reason either prior to a Change in Control as
described Section V.D or after a Change in Control as described in Section V.E.

 

4

--------------------------------------------------------------------------------

L. “Targeted STIC” shall mean the targeted value of Executive’s annual Short
Term Incentive Compensation opportunity for the year in which the Date of
Termination occurs, or the target value in place prior to a material reduction
in compensation, or the fiscal year immediately preceding a Change of Control
whichever is a greater amount.

M. “Targeted LTIC” shall mean the targeted value of Executive’s annual Long Term
Incentive Compensation opportunity for the year in which the Date of Termination
occurs, or the target value in place prior to a material reduction in
compensation, or the fiscal year immediately preceding a Change of Control,
whichever is a greater amount.

N. “Termination Base Salary” shall be the greater of, the Executive’s base
salary at the rate in effect at the time the Notice of Termination, or the
Executive’s base salary in place prior to a material reduction in compensation,
or the Executive’s base salary in effect immediately prior to a Change of
Control.

III. POSITION.

A. During the Employment Term, Executive shall serve as the Company’s Vice
President & Chief Accounting Officer. In such position, Executive shall report
to Chief Financial Officer,or as directed by the Board of Directors of the
Company, and shall have the authority, responsibilities, and duties reasonably
accorded to, expected of and consistent with Executive’s position, as may be
assigned to Executive. The Executive’s principal place of employment shall be
the principal offices of the Company currently located in Houston; provided,
however, that Executive understands and agrees that Executive will be required
to travel from time to time for business reasons.

B. During the Employment Term, Executive shall devote his full business time,
attention and efforts to the performance of Executive’s duties hereunder and
will not engage in any other activity (for compensation or otherwise without
written notice to, and the written consent of the Board of Directors of the
Company (the “Board”)) which, in the good faith opinion of the Board, could,
either individually or in the aggregate, reasonably be expected to conflict or
interfere with or otherwise adversely affect the rendition of such performance
either directly or indirectly. The foregoing limitations shall not be construed
as prohibiting Executive from making personal investments in such form or manner
as will neither require Executive’s services in the operation or affairs of the
companies or businesses in which such investments are made nor violate the terms
of this Agreement hereof or otherwise conflict or interfere with Executive’s
responsibilities to the Company; provided, however, that Executive agrees he
will not join any boards (other than community and civic boards which do not
interfere with his duties to the Company) without the prior written approval of
the Board.

IV. COMPENSATION.

A. Base Salary. The Company shall pay Executive a base salary at the annual rate
of $200,850 payable in accordance with the Company’s payroll practices for
similarly situated executives (the “Base Salary”). Executive’s Base Salary shall
be subject to review annually by and at the sole discretion of the Compensation
Committee of the Board (the “Compensation Committee”).

B. Short Term Incentive Compensation Award. For each fiscal year (“Fiscal Year”)
of the Company during the Employment Term, Executive shall be given the
opportunity to earn annual Short Term Incentive Compensation Award (the “STIC
Award”). Executive’s annual Short Term Incentive Compensation opportunity for
each Fiscal Year ending during the Employment Term shall be set by the
Compensation Committee, in its sole discretion. The actual STIC Award payable to
Executive with respect to a Fiscal Year shall be dependent upon the achievement
of performance objectives established by the Compensation Committee for such
Fiscal Year and may be greater or less than the Short Term Incentive
Compensation opportunity depending on performance objective results. The
Compensation Committee shall also have the sole right to determine whether
Executive may be entitled to a discretionary bonus at any time and to determine
the criteria to be considered in making such decision. Except as otherwise
provided in this Agreement, the payment of STIC Award shall be at the same time
as Short Term Incentive Compensation Awards are paid to other similar executives
of the Company.

 

5

--------------------------------------------------------------------------------

C. Long Term Incentive Compensation Award. During the Employment Term, Executive
shall be shall be given the opportunity to earn annual Long Term Incentive
Compensation Award (the “Target LTIC Award”) under the Company’s Equity
Incentive Plan (the “Equity Plan”), as modified, amended or replaced from time
to time. Executive’s annual Targeted Long Term Incentive Compensation Award for
each Fiscal Year during the Employment Term shall be set by the Compensation
Committee, in its sole discretion. The actual LTIC Award payable to Executive
with respect to a Fiscal Year shall be dependent upon the achievement of
performance objectives established by the Compensation Committee for such Fiscal
Year and may be greater or less than the Target Long Term Incentive Compensation
opportunity depending on performance objective results. Except as otherwise
provided in this Agreement, the payment of LTIC Award shall be at the same time
as Long Term Incentive Compensation Awards are paid to other similar executives
of the Company.

D. Employee Benefits. During the Employment Term, Executive shall be eligible to
participate in the Company’s employee benefit plans as in effect from time to
time (collectively, “Employee Benefits”) on the same basis as such employee
benefit plans are generally made available to other comparable executives of the
Company.

E. Vacation. Executive shall be entitled to four (4) weeks of annual vacation
leave for each Fiscal Year during which Executive is employed (prorated for
Executive’s initial year, if not a full year). Such leave shall be administered
in accordance with the Company’s vacation policy.

F. Automobile Allowance. During the Employment Term, Executive shall be entitled
to an automobile allowance of $2,000 per month paid in accordance with the
Company’s normal payroll practices.

G. Business Expenses. During the Employment Term, reasonable business expenses
incurred by Executive in the performance of Executive’s duties hereunder shall
be reimbursed by the Company in accordance with the Company’s expense
reimbursement policy.

V. TERMINATION OF EMPLOYMENT.

Executive shall not have a “termination of employment” for purposes of this
Agreement unless such termination constitutes a “separation from service” for
purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and
the applicable Treasury Regulations thereunder (the “Code”). Notwithstanding any
other provision of this Agreement, the provisions of this Section V shall
exclusively govern Executive’s rights upon termination of employment with the
Company and its affiliates.

A. By the Company for Cause or Resignation by Executive Without Good Reason.

1. The Employment Term and Executive’s employment hereunder may be terminated by
the Company for Cause or by Executive’s resignation without Good Reason.

2. If Executive’s employment is terminated by the Company for Cause, or if
Executive resigns without Good Reason, then, subject to the further terms of
this Agreement, Executive shall be entitled to receive:

a. The Accrued Rights (refer to Section II.A)

B. Retirement, Disability or Death.

1. The Employment Term and Executive’s employment hereunder shall terminate upon
Executive’s Retirement, Disability or Death; provided, however, that if
Executive retires under circumstances that would constitute “Good Reason”,
Executive shall be deemed to have terminated for “Good Reason” and be entitled
to the applicable rights and benefits provided in this agreement.

 

6

--------------------------------------------------------------------------------

2. Upon termination of Executive’s employment hereunder for either Retirement,
Disability or Death, then Executive or Executive’s estate (as the case may be)
shall be entitled to receive the following:

a. The Accrued Rights (refer to Section II.A); and

b. A prorated portion of the Targeted STIC for the current Fiscal Year, prorated
based on the percentage of the current Fiscal Year that shall have elapsed
through the date of termination; and

c. With respect to any outstanding equity-based awards, whether “time-based” or
“performance-based” vesting (including, but not limited to, any unvested
options, restricted stock, restricted stock units, and performance share units)
such outstanding awards shall immediately vest; and

d. In the event of termination for Disability or Death, an amount, paid on the
first business day of each month, equal to 100% of the applicable monthly COBRA
premium under the Company’s group health plan, continued for the lesser of
(i) twelve (12) months or (ii) until such COBRA coverage for Executive
terminates.

C. By the Company for Poor Performance.

1. The Employment Term and Executive’s employment hereunder may be terminated by
the Company for Poor Performance.

2. If Executive’s Employment is terminated by the Company for Poor Performance
then Executive shall be entitled to receive from the Company the following:

a. The Accrued Rights (refer to Section II.A);

b. Continued payment of Executive’s Termination Base Salary for twelve
(12) months (the “Severance Period”) following the date of such termination,
payable in accordance with the Company’s normal payroll practices as in effect
on the date of termination;

c. With respect to any outstanding equity-based awards, whether “time-based” or
“performance-based” vesting (including, but not limited to, any unvested
options, restricted stock, restricted stock units, and performance share units)
such outstanding awards shall be forfeited; and

d. An amount, paid on the first business day of each month equal to one hundred
percent (100%) of the applicable COBRA premium under the Company’s group health
plan, continued for the lesser of (1) twelve (12) months from the date of
termination of Executive’s employment; or (2) the date on which Executive
qualifies for health insurance as a result of employment by or association with
a subsequent employer.

D. By the Company Without Cause and not for Poor Performance or Resignation by
Executive for Good Reason Prior to a Change in Control.

1. The Employment Term and Executive’s employment hereunder may be terminated by
the Company without Cause or by Executive’s resignation for Good Reason.

2. If Executive’s employment is terminated by the Company without Cause (and
other than by reason of Executive’s death or Disability) or if Executive resigns
for Good Reason, then Executive shall be entitled to receive from the Company
the following:

a. The Accrued Rights (refer to Section II.A);

 

7

--------------------------------------------------------------------------------

b. Continued payment of Executive’s Termination Base Salary for twelve
(12) months (the “Severance Period”) following the date of such termination,
payable in accordance with the Company’s normal payroll practices as in effect
on the date of termination;

c. An amount equal to one (1) times the Target Short Term Incentive Compensation
of Executive for the Fiscal Year in which Executive’s employment terminates,
which amount shall be payable in one (1) installment due six (6) months after
the date of Executive’s termination of employment;

d. With respect to any outstanding equity-based awards, whether “time-based” or
“performance-based” vesting (including, but not limited to, any unvested
options, restricted stock, restricted stock units, and performance share units)
such outstanding awards shall immediately vest.

e. An amount, paid on the first business day of each month, equal to 100% of the
applicable monthly COBRA premium under the Company’s group health plan,
continued for the lesser of (i) eighteen (18) months from the date of
termination of Executive’s employment or (ii) the date on which Executive
qualifies for health insurance as a result of employment by or association with
a subsequent employer;

f. Outplacement services for twelve (12) months from the termination date or
until Executive obtains substantially comparable employment (as determined by
the Company), whichever is shorter. Such outplacement services shall be
commensurate with Executive’s position and reasonable in amount, but not to
exceed $25,000; and

g. Notwithstanding anything in this Agreement to the contrary, if Executive is a
“disqualified individual” (as defined in Section 280G(c) of the Code), and the
payments and benefits provided for in this Section V.D of this Agreement,
together with any other payments and benefits which Executive has the right to
receive from the Company or any other person, would constitute a “parachute
payment” (as defined in Section 280G(b)(2) of the Code), then the payments and
benefits provided for in this Agreement shall be either (a) reduced (but not
below zero) so that the present value of such total amounts and benefits
received by Executive from the Company and/or such person(s) will be $1.00 less
than three (3) times Executive’s “base amount” (as defined in Section 280G(b)(3)
of the Code) and so that no portion of such amounts and benefits received by
Executive shall be subject to the excise tax imposed by Section 4999 of the Code
or (b) paid in full, whichever produces the better “net after-tax position” to
Executive (taking into account any applicable excise tax under Section 4999 of
the Code and any other applicable taxes). The reduction of payments and benefits
hereunder, if applicable, shall be made by reducing, first, payments or benefits
to be paid in cash hereunder in the order in which such payment or benefit would
be paid or provided (beginning with such payment or benefit that would be made
last in time and continuing, to the extent necessary, through to such payment or
benefit that would be made first in time) and, then, reducing any benefit to be
provided in-kind hereunder in a similar order. The determination as to whether
any such reduction in the amount of the payments and benefits provided hereunder
is necessary shall be made by the Company in good faith. If a reduced payment or
benefit is made or provided and through error or otherwise that payment or
benefit, when aggregated with other payments and benefits from the Company (or
its affiliates) used in determining if a “parachute payment” exists, exceeds
$1.00 less than three (3) times Executive’s base amount, then Executive shall
immediately repay such excess to the Company upon notification that an
overpayment has been made. Nothing in this paragraph shall require the Company
to be responsible for, or have any liability or obligation with respect to,
Executive’s excise tax liabilities under Section 4999 of the Code.

E. By the Company Without Cause and Not for Poor Performance or Resignation by
Executive for Good Reason During the Protected Period Following a Change in
Control.

 

8

--------------------------------------------------------------------------------

1. Upon the effective date of a Change in Control during the Employment Term,
all of Executive’s unvested incentive, performance and equity-based awards
(including, but not limited to, any unvested options, restricted stock,
performance, and phantom share units under the Company’s equity incentive plan
or any other equity plan subsequently adopted by the Company) granted to
Executive after the Effective Date shall vest in full.

2. If Executive’s employment is terminated by the Company without Cause (and
other than by reason of Poor Performance or Executive’s death or Disability) or
if Executive resigns for Good Reason during the Protected Period immediately
following a Change in Control, then Executive shall be entitled to receive from
the Company (in lieu of any other severance payments or benefits under this
Agreement), the following:

a. The Accrued Rights (refer to Section II.A);

b. Continued payment of Executive’s Termination Base Salary for twenty-four
(24) months (“Severance Period”) following the date of such termination, payable
in accordance with the Company’s normal payroll practices as in effect on the
date of termination;

c. An amount equal to two (2) times the Targeted Short Term Incentive
Compensation of Executive for the Fiscal Year in which Executive’s employment
terminates; which amount shall be payable in one (1) installment due six
(6) months after the date of Executive’s termination of employment;

d. With respect to any outstanding equity-based awards, whether “time-based” or
“performance-based” vesting (including, but not limited to, any unvested
options, restricted stock, restricted stock units, and performance share units)
such outstanding awards shall immediately vest.

e. An amount, paid on the first business day of each month, equal to 100% of the
applicable monthly COBRA premium under the Company’s group health plan,
continued for the lesser of (i) eighteen (18) months from the date of
termination of Executive’s employment or (ii) the date on which Executive
qualifies for health insurance as a result of employment by or association with
a subsequent employer;

f. Outplacement services for twelve (12) months from Executive’s termination
date or until Executive obtains substantially comparable employment (as
determined by the Company), whichever is shorter. Such outplacement services
shall be commensurate with Executive’s position and reasonable in amount, but
not to exceed $25,000; and

g. Benefits paid to Executive pursuant to this Section V.E of this Agreement
shall be grossed-up by the Company to cover (1) any federal excise tax due by
that Executive on account of these benefit payments and (2) any federal income
and employment taxes due on federal excise tax.

h. Notwithstanding anything in this Agreement to the contrary, if Executive is a
“disqualified individual” (as defined in Section 280G(c) of the Code), and the
payments and benefits provided for in this Section IV.C of this Agreement,
together with any other payments and benefits which Executive has the right to
receive from the Company or any other person, would constitute a “parachute
payment” (as defined in Section 280G(b)(2) of the Code), then the payments and
benefits provided for in this Agreement shall be either (a) reduced (but not
below zero) so that the present value of such total amounts and benefits
received by Executive from the Company and/or such person(s) will be $1.00 less
than three (3) times Executive’s “base amount” (as defined in Section 280G(b)(3)
of the Code) and so that no portion of such amounts and benefits received by
Executive shall be subject to the excise tax imposed by Section 4999 of the Code
or (b) paid in full, whichever produces the better “net after-tax position” to
Executive (taking into account any applicable excise tax under Section 4999 of
the Code and any other applicable

 

9

--------------------------------------------------------------------------------

taxes). The reduction of payments and benefits hereunder, if applicable, shall
be made by reducing, first, payments or benefits to be paid in cash hereunder in
the order in which such payment or benefit would be paid or provided (beginning
with such payment or benefit that would be made last in time and continuing, to
the extent necessary, through to such payment or benefit that would be made
first in time) and, then, reducing any benefit to be provided in-kind hereunder
in a similar order. The determination as to whether any such reduction in the
amount of the payments and benefits provided hereunder is necessary shall be
made by the Company in good faith. If a reduced payment or benefit is made or
provided and through error or otherwise that payment or benefit, when aggregated
with other payments and benefits from the Company (or its affiliates) used in
determining if a “parachute payment” exists, exceeds $1.00 less than three
(3) times Executive’s base amount, then Executive shall immediately repay such
excess to the Company upon notification that an overpayment has been made.
Nothing in this paragraph shall require the Company to be responsible for, or
have any liability or obligation with respect to, Executive’s excise tax
liabilities under Section 4999 of the Code.

F. Notice of Termination. Any purported termination of employment by the Company
or by Executive (other than due to Executive’s death) shall be communicated by
written Notice of Termination to the other party hereto in accordance with the
notice provisions hereof. With respect to any termination of employment by
Executive, such notice of termination shall be communicated to the Company at
least thirty (30) days prior to such termination.

G. Officer/Board Resignation. Upon termination of Executive’s employment for any
reason, Executive shall be deemed hereby to have resigned, effective as of the
date of such termination and to the extent applicable, from the Board (and any
committees thereof) and as an officer of the Company and the board of directors
(and any committees thereof) and as an officer of any and all of the Company’s
affiliates. As a condition to receipt of the severance benefits described
herein, Executive agrees to provide written confirmation of such resignations to
the Company.

H. Waiver and Release. Notwithstanding any other provisions of this Agreement to
the contrary, unless expressly waived, in writing, by the Compensation Committee
of the Board, in its sole discretion, the Company shall not make or provide, and
Executive shall not be entitled to receive, any severance payments or benefits
provided under this Agreement, other than the Accrued Rights, unless (i) within
fifty (50) days from the date on which Executive’s employment is terminated,
Executive (or his estate) executes and delivers to the Company a general release
(which shall be provided by the Company not later than five (5) days from the
date on which Executive’s employment is terminated and be substantially in the
form attached hereto as Attachment B, whereby Executive (or his estate or
legally appointed personal representative) releases the Company (and affiliates
of the Company and other designated persons) from all employment based or
related claims of Executive and all obligations of the Company to Executive
other than with respect to (x) the Company’s obligations to make and provide the
severance payments and benefits as provided in this Agreement and (y) any vested
benefits to which Executive is entitled under the terms of any Company benefit
or equity plan, and (ii) Executive does not revoke such release within any
applicable revocation period following Executive’s delivery of the executed
release to the Company. If the requirements of this Section are satisfied, then
the severance payments and benefits which Executive is otherwise entitled to
receive under this Agreement shall begin or be made, as applicable, without
interest, on the later of (i) the sixtieth (60th) day following the date on
which Executive’s employment was terminated or (ii) on the tenth (10th) business
day after expiration of Executive’s right to revoke the release described in
this section, provided that Executive does not revoke such release. If the
requirements of this Section are not satisfied by Executive (or his estate or
legally appointed personal representative), then no severance payments or
benefits, other than the Accrued Rights, shall be due Executive (or his estate)
pursuant to this Agreement.

I. Compliance with IRC Section 409A.

1. Notwithstanding anything in this Agreement to the contrary, if, at the time
of Executive’s termination of employment with the Company and its affiliates,
Executive is a “specified employee,” as defined in Section 409A of the Code, and
the deferral of the commencement of any payments or benefits otherwise payable
hereunder as a result of such termination of employment is necessary in order to
avoid

 

10

--------------------------------------------------------------------------------

the additional tax under Section 409A of the Code, then the Company will defer
the payment or the commencement of any such payments or benefits hereunder
(without any reduction in such payments or benefits ultimately paid or provided
to Executive) until the date that is six months following Executive’s
termination of employment with the Company (or the earliest date as is permitted
under Section 409A of the Code). Any payment amounts deferred pursuant to this
Section will be accumulated and paid to Executive (without interest) in a lump
sum and the balance of any remaining payments due Executive will be paid monthly
or at such times as otherwise provided herein.

2. Any reimbursement of any costs and expenses by the Company to Executive under
this Agreement shall be made by the Company in no event later than the close of
Executive’s taxable year following the taxable year in which the cost or expense
is incurred by Executive. The expenses incurred by Executive in any calendar
year that are eligible for reimbursement under this Agreement shall not affect
the expenses incurred by Executive in any other calendar year that are eligible
for reimbursement hereunder and Executive’s right to receive any reimbursement
hereunder shall not be subject to liquidation or exchange for any other benefit.

3. Each payment that Executive may receive under this Agreement shall be treated
as a “separate payment” for purposes of Section 409A of the Code.

4. Except as provided in V.I.1, and notwithstanding anything in this Agreement
to the contrary, the payment of an Annual Bonus, Performance Award, cash
incentive award or equity-based award due thereunder shall be paid in all events
within 2 1/2 months after the end of the year in which such award (or prorated
part) first becomes “vested,” within the meaning of Section 409A of the Code.

5. To the extent that Section 409A of the Code applies to any terms or
conditions of this Agreement, such terms and conditions shall be interpreted in
a manner that is consistent with Section 409A of the Code.

VI. MISCELLANEOUS.

A. Agreement Ancillary to Other Agreements. This Agreement is ancillary to and
part of other agreements between the Company and Executive including, the
Confidentiality Agreement and the Company’s agreements to: (i) disclose, and to
continue to disclose its Confidential Information and Trade Secrets to
Executive; (ii) provide initial and continued training, education and
development to Executive; (iii) provide Executive with Confidential Information
and Trade Secrets about, and the opportunity to develop relationships with,
Company’s employees, Customers and Suppliers, and employees and agents of its
Customers and Suppliers.

B. Governing Law/Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to conflict of
laws principles thereof. Each party to this Agreement hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts in Houston, Texas,
for the purposes of any proceeding arising out of or based upon this Agreement.

C. Arbitration. Any dispute, claim or controversy arising out of or relating to
this Agreement or the breach, termination, enforcement, interpretation or
validity thereof shall be determined by arbitration in Houston, Harris County,
Texas before one arbitrator. The arbitration shall be administered by the
American Arbitration Association pursuant to its rules for the resolution of
employment disputes, and the following provisions:

1. Unless otherwise ordered by the arbitrator, limited discovery consisting of
one (1) deposition of each party and each expert; not more than fifteen
(15) requests for production of documents; and not more than ten
(10) interrogatories.

2. Subject to applicable law, the arbitrator may award attorneys’ fees and the
costs of arbitration to the prevailing party.

3. Anything herein to the contrary notwithstanding, either party shall have the
right to seek and obtain injunctive relief to prevent a threatened breach of
this Agreement, including the Confidentiality Agreement.

 

11

--------------------------------------------------------------------------------

D. Other Agreements.

1. The Confidentiality Agreement attached hereto as Attachment A is an integral
part of this Agreement, and this Agreement shall not become effective unless and
until Executive has executed both this Agreement and the Confidentiality
Agreement. A default under or breach of the Confidentiality Agreement shall
constitute a breach of this Agreement. In addition to any and all other remedies
available to Company, in the event of a breach of or default under this
Agreement, or in the event that the Company obtains any form of equitable
relief, order or injunction, whether temporary or permanent, for the enforcement
of any of the provisions of this Agreement or the Confidentiality Agreement, the
Company shall be entitled to recover, and the Executive (or his estate) shall be
obligated to repay and return to the Company, upon written demand therefore, an
amount equal to all severance or other benefits paid to, or on behalf of, the
Executive (or his estate) pursuant to the provisions of this Agreement (other
than the Accrued Rights) on or after the date of termination of Executive’s
employment.

2. In the event of a conflict between the rights and benefits granted by this
agreement, and those granted under any other incentive, stock option, stock
grant or similar plan or agreement (with the exception of the “Executive
Severance Protection Plan” referred to below), Executive shall be entitled to
the rights and benefits described in this agreement.

E. Prior Agreements. Prior to the execution of this Agreement, the Company has
issued certain equity-based and/or non-equity based incentives or awards to
Executive. This Agreement shall supersede or modify the terms of any such
agreements only to the extent specifically stated herein. Otherwise, the terms
of this Agreement and the Confidentiality Agreement referred to herein, contain
the entire understanding and agreement of the parties with respect to the
employment of Executive by the Company and the termination of such employment.

F. No Waiver. The failure of a party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver of such
party’s rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

G. Severability. In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby.

H. Assignment. Neither this Agreement nor any of Executive’s rights and duties
hereunder, shall be assignable or delegable by Executive. Any purported
assignment or delegation by Executive in violation of the foregoing shall be
null and void ab initio and of no force and effect. This Agreement may be
assigned by the Company to a person or entity which is an affiliate or a
successor in interest to substantially all of the business operations of the
Company. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such affiliate or successor
person or entity.

I. Successor Agreement. At, or simultaneously with, a Change of Control (as
described in this Agreement), the Company will require any successor to all or
substantially all of the business and/or assets of the Company (whether direct
or indirect, and whether by purchase, merger, consolidation or otherwise) to
expressly assume and agree, in writing, to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no succession had taken place. Failure of the successor to so assume this
Agreement shall constitute “Good Reason as defined in Section I.F of this
Agreement.

J. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given on the earlier of (i) the date that such notice
is delivered by hand or overnight courier or (ii) three (3) days after it has
been mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below in this
Agreement, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address
shall be effective only upon receipt.

 

12

--------------------------------------------------------------------------------

IF TO THE COMPANY:   

Powell Industries, Inc.

Attention: Chief Executive Officer

  

8550 Mosley Road

Houston, Texas 77075

IF TO EXECUTIVE:   

Milburn E. Honeycutt

20 Stonecliff Circle

Sugar Land, TX 77479

K. Prior Employment. The Company has employed Executive for Executive’s general
skills, management abilities and experience in the Company’s Business (as
defined in the Confidentiality Agreement referred to herein). Executive
acknowledges that Executive has been specifically instructed not to bring,
disclose or use in any fashion any confidential information, trade secrets,
proprietary information, data or technology, nor any confidential pricing
information, belonging to any prior employer. In no event is Executive
authorized to use or disclose any such information to the Company or any of its
employees.

L. Executive’s Representations. Executive hereby represents to the Company that
(i) all confidential information, trade secrets or proprietary information, data
or technology, belonging to any prior employer, including those that might have
been contained on Executive’s personal computer, cell phone or other electronic
communications or storage device have been returned and/or deleted in accordance
with any policy of or agreement with Executive’s prior employer and (ii) the
execution and delivery of this Agreement by Executive and the Company and the
performance by Executive of Executive’s duties hereunder shall not constitute a
breach of, or otherwise contravene, the terms of any employment agreement or
other agreement or policy to which Executive is a party or otherwise bound.

M. Reimbursement of Legal Expenses. The Company shall reimburse Executive for
reasonable and customary fees charged by Executive’s attorney to provide legal
counsel review and defense concerning this Agreement, not exceed $10,000.

N. Cooperation. Executive shall provide Executive’s reasonable cooperation in
connection with any action or proceeding (or any appeal from any action or
proceeding) which relates to events occurring during Executive’s employment
hereunder. Executive shall be entitled to reimbursement for reasonable and
customary expenses incurred for purposes of cooperating in any action or
proceeding pursuant to this Section. This provision shall survive any
termination of this Agreement.

O. Indemnification. Executive shall be indemnified by the Company against
liability as an officer and director of the Company and any subsidiary or
affiliate of the Company to the maximum extent permitted by the Company’s bylaws
by applicable law or by any indemnity agreement heretofore or hereafter executed
between the Company and Executive. Executive’s rights under this Section shall
continue so long as Executive maybe subject to such liability, whether or not
this Agreement may have terminated prior thereto. The Company will insure
Executive, for the duration of his employment with the Company and thereafter
with respect to his acts and omissions occurring during such employment, under a
contract of director and officer liability insurance to the same extent as such
insurance insures members of the Board.

P. Withholding of Taxes. The Company may withhold from any amounts or benefits
payable under this Agreement all taxes it may be required to withhold pursuant
to any applicable law or regulation.

Q. Counterparts. This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

R. Survival. The provisions of this Agreement, together with the provisions of
the Confidentiality, Non-Competition and Non-Solicitation Agreement, attached
and part of this Agreement as Schedule A, shall each survive the termination of
Executive’s employment, regardless of how such termination is caused.

 

13

--------------------------------------------------------------------------------

S. Executive Severance Protection Plan. The rights and benefits provided in this
agreement are intended to replace the rights and benefits heretofore provided by
the Powell Industries, Inc. Executive Severance Protection Plan adopted and
effective September 20, 2002 (the Prior Plan). By execution of this agreement,
Executive waives and releases any rights, benefits or payments to which
Executive would have been entitled to under the Prior Plan and acknowledges that
the Prior Plan has been or will be terminated by the Company.

 

14

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE DULY EXECUTED THIS AGREEMENT
EFFECTIVE FOR ALL PURPOSES AS OF THE EFFECTIVE DATE.

 

BY EXECUTIVE: /s/ Milburn E. Honeycutt Milburn E. Honeycutt Date: May 8, 2012

 

BY POWELL INDUSTRIES, INC.: /s/ Thomas W. Powell

Thomas W. Powell

President & Chief Executive Officer

Chairman of the Board

Date: May 8, 2012

 

 

15

--------------------------------------------------------------------------------

ATTACHMENT A

 

LOGO [g337560g02v82.jpg]

CONFIDENTIALITY, NON-COMPETITION AND

NON-SOLICITATION AGREEMENT

This Confidentiality, Non-Competition and Non-Solicitation Agreement (“this
Agreement”) is entered into between Powell Industries, Inc., on behalf of
itself, and any and all of its subsidiaries, affiliates or successors (all of
whom are hereinafter collectively referred to as “Company”) and Milburn E.
Honeycutt (“Executive”) in connection with and ancillary to an Executive
Employment Agreement (the “Employment Agreement”) being entered into between the
Company and Executive of even date herewith.

 

I. Nondisclosure of Confidential Information and Trade Secrets

A. Company’s Agreements. During the course of Executive’s employment by the
Company, the Company agrees: (i) to provide Executive with specialized training
and continuing training and development regarding its products, services,
methods, systems and operations; (ii) to provide Executive with access to its
Confidential Information and Trade Secrets (as defined herein); and (iii) to
provide Executive with Confidential Information and Trade Secrets about, and the
opportunity to develop close relationships with the Company’s management
personnel, employees, Customers (as defined herein), Suppliers (as defined
herein) and the employees, agents and representatives of Customers and
Suppliers.

B. Company’s Business. Company is engaged in the highly competitive business of
the design, manufacture and packaging of equipment and systems for the
distribution, control, generation and management of electrical and other power
sources (all of which is hereinafter collectively referred to as the “Company’s
Business”). Executive acknowledges that because of the highly competitive nature
of the Company’s Business, the use and protection of the Company’s Confidential
Information and Trade Secrets as defined in this Agreement is critical to the
Company’s continued successful operation and business and is an essential
element of this Agreement.

C. Definition of Confidential Information and Trade Secrets. Confidential
Information and Trade Secrets, as used in this Agreement, includes, but is not
limited to, written, electronic, oral and visual information relating to:

1. Lists of, and all information about, each person or entity to which Company
has sold, or made a proposal to sell any products, goods, services or equipment
which comprise any part of the Company’s Business (all of which are hereinafter
collectively referred to as “Customers”);

2. Lists of, and all information about, each person or entity from which the
Company has acquired equipment, inventory, components, products or services used
by the Company to design, manufacture, fabricate, sell or deliver any of the
products or services which comprise the Company’s Business (all of which are
hereinafter collectively referred to as Supplier;

3. All Customer contact information, which includes information about the
identity and location of individuals with decision-making authority and the
particular preferences, needs or requirements of the Customer, or such
individual, with respect to any of the products, goods, services or equipment
which comprise any part of the Company’s Business, and all information about the
particular needs or requirements of Customers based on geographical, economic or
other factors;

4. Financial information of any kind about Customers, including sales and
purchase histories, trend information about the growth or shrinking of a
particular Customer’s needs, purchases or requirements; profit margins or
markups, as well as all information about the costs and expenses which the
Company incurs to provide products or services to its Customers;

 

16

--------------------------------------------------------------------------------

5. The Company’s procedures, forms, methods, and systems for marketing to
Customers and potential customers including all of its Customer development
techniques and procedures, including training and other internal manuals, forms
and documents;

6. All Supplier contact information, which includes information about the
identify and location of individuals with decision-making authority and the
particular capabilities, capacities, expertise, prices and/or schedules of such
Suppliers;

7. All of the Company’s non-public business, expansion, marketing, development,
financial or budgeting plans, strategies, forecasts or proposals;

8. All of the Company’s pricing and hedging formulas, methodologies, practices
and systems, including those based upon particular Customers, quantities, or
geographic, seasonal, economic or other factors, including all information about
the price, terms, quantities or conditions of any products or services sold or
furnished by the Company to its Customers;

9. Technical information about the Company, including designs, drawings,
engineering and information regarding the configuration, assembly or contents of
any of the Company’s products or any of its hardware, equipment, tools,
machinery or other manufacturing, fabrication or assembly devices or processes,
or those of any of its Customers, consultants, vendors, suppliers, or any person
or entity which provides manufacturing or fabrication services to the Company;

10. Any non-public financial information of any kind about the Company or its
operations;

11. Information disclosed to the Company by third parties, concerning the
Company’s products, goods or services, bids or bidding processes, product or
manufacturing specifications (except to the extent such information is publicly
disclosed), contracts, procedures, or business practices;

12. Employee lists, phone numbers and addresses, pay rates, benefits and
compensation packages, training programs and manuals, and other confidential
information regarding the Company’s personnel.

D. Confidential Information and Trade Secrets. Company and Executive agree that
Confidential Information and Trade Secrets includes current, updated and future
data, information, reports, evaluations and analyses of Company, its financial
performance and results, or its Executives, including their compensation,
performance or evaluation, as well as correspondence, proposals, contracts and
other communications with, or financial, sales or other information about the
Company’s Customers and Suppliers, and includes (i) those which are provided to
Executive after the date hereof, (ii) those which Executive creates, in whole or
in part; (iii) those to which or for which Executive provides input or
information; and (iv) those which Executive uses for the purpose of performing
Executive’s duties for the Company or making decisions relating to the Company’s
Business, its Customers, Suppliers or employees. Anything to the contrary not
withstanding, however, Confidential Information and Trade Secrets shall not
include (i) general industry knowledge acquired by Executive as a result of
Executive’s prior employment, (ii) non-confidential information acquired by
Executive from any prior employment, (iii) contact information about Customers,
Suppliers and others with whom Executive dealt prior to Executive’s employment
with the Company; and (iv) any other information generally available to the
public.

E. Protection of Confidential Information and Trade Secrets. During the term of
Executive’s employment and at all times thereafter, Executive will keep all
Confidential Information and Trade Secrets in strict confidence and will not use
or disclose any Confidential Information and Trade Secrets for any purpose other
than the performance of Executive’s duties for Company. Executive will not use
any Confidential Information and Trade Secrets for the gain or benefit of any
person or entity other than the Company or for Executive’s own personal gain or
benefit. Executive will not cause the transmission, removal or transport of
Confidential Information and Trade Secrets from the Company’s premises except in
accordance with the Company’s approved procedures and then only to the extent
necessary to perform Executive’s duties, while employed by the Company.
Executive will not provide any information about the Company’s Executives to any
competitor or recruiter.

 

17

--------------------------------------------------------------------------------

II. Intellectual Property and Work Product.

A. If Executive creates, invents, designs, develops, contributes to or improves
any Works, either alone or with third parties, at any time during Executive’s
employment by the Company and within the scope of such employment and/or with
the use of any the Company resources (“Company Works”), Executive shall promptly
and fully disclose same to the Company and hereby irrevocably assigns, transfers
and conveys, to the maximum extent permitted by applicable law, all rights and
intellectual property rights therein (including rights under patent, industrial
property, copyright, trademark, trade secret, unfair competition and related
laws) to the Company to the extent ownership of any such rights does not vest
originally in the Company.

B. Executive agrees to keep and maintain adequate and current written records
(in the form of notes, sketches, drawings, and any other form or media requested
by the Company) of all Company Works. The records will be available to and
remain the sole property and intellectual property of the Company at all times.

C. During the Employment Term, Executive shall take all requested actions and
execute all requested documents (including any licenses or assignments required
by a government contract) at the Company’s expense (but without further
remuneration) to assist the Company in validating, maintaining, protecting,
enforcing, perfecting, recording, patenting or registering any of the Company’s
rights in the Prior Works and Company Works. If the Company is unable for any
other reason to secure Executive’s signature on any document for this purpose,
then Executive hereby irrevocably designates and appoints the Company and its
duly authorized officers and agents as Executive’s agent and attorney in fact,
to act for and in Executive’s behalf and stead to execute any documents and to
do all other lawfully permitted acts in connection with the foregoing.

D. Executive shall not improperly use for the benefit of, bring to any premises
of, divulge, disclose, communicate, reveal, transfer or provide access to, or
share with the Company any confidential, proprietary or non-public information
or intellectual property relating to a former employer or other third party
without the prior written permission of such third party. Executive hereby
indemnifies, holds harmless and agrees to defend the Company and its officers,
directors, partners, employees, agents and representatives from any breach of
the foregoing covenant. Executive shall comply with all relevant policies and
guidelines of the Company, including regarding the protection of confidential
information and intellectual property and potential conflicts of interest.
Executive acknowledges that the Company may amend any such policies and
guidelines from time to time, and that Executive remains at all times bound by
their most current version.

 

III. Non-Competition and Non-Solicitation of Customers

A. Non-Competition.

1. So long as Executive is employed by the Company or one of its affiliates, and
for the greater of (i) one year from the date of the termination of Executive’s
employment or (ii) the “Severance Period” as defined in Section II-I of the
Executive’s Employment Agreement (collectively the “Restricted Period”),
Executive will not, whether on Executive’s own behalf or on behalf of or in
conjunction with any person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise whatsoever
(“Person”), directly or indirectly:

 

  (a) call upon, communicate with, solicit or assist in soliciting any Customer
or Supplier, or any agent or employer of either, using any Confidential
Information and Trade Secrets in any way;

 

  (b) participate in, work on or otherwise be involved in or with any project,
contract, proposal, work, sale, bid or other undertaking (collectively
“Project”), if Executive worked on, participated in, was involved, or
communicated with other employees of the Company, Customers, Suppliers or other
third parties, with regard to any such Project during the six (6) months prior
to the date of the termination of Executive’s employment.

 

18

--------------------------------------------------------------------------------

B. Non-Solicitation.

1. During the Restricted Period, Executive will not, whether on Executive’s own
behalf or on behalf of or in conjunction with any Person, directly or
indirectly:

 

  (a) solicit or encourage any employee of the Company or its affiliates to
leave the employment of the Company or its affiliates; or

 

  (b) hire any employee who was employed by the Company or its affiliates as of
the date of Executive’s termination of employment with the Company or who left
the employment of the Company or its affiliates coincident with, or within one
year prior to or after, the termination of Executive’s employment with the
Company.

2. During the Restricted Period, Executive will not, directly or indirectly,
solicit or encourage to cease to work with the Company or its affiliates any
consultant then under contract with the Company or its affiliates.

3. It is expressly understood and agreed that although Executive and the Company
consider the restrictions contained in this Section 3 to be reasonable, if a
final judicial determination is made by a court of competent jurisdiction that
the time or territory or any other restriction contained in this Agreement is an
unenforceable restriction against Executive, the provisions of this Agreement
shall not be rendered void but shall be deemed amended to apply as to such
maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this Agreement
is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

 

IV. Company Property

Executive also agrees that all (i) correspondence, proposals, notes, reports,
memoranda, records and files; (ii) plans, specifications, drawings, blueprints,
and designs; (iii), training, service or other manuals; (iv) Customer or
personnel lists or files, including mailing or contact lists; (v) computer
software, programs, disks or files; (vi) tools, materials or equipment;
(vii) photographs, photostats, negatives, undeveloped film; (viii) tape or
electronic recordings (ix) information contained on any electronic storage or
communications device used by Executive during Executive’s employment with the
Company, including those furnished by the Company and those owned by Executive,
and (x) any other documents or programs, whether compiled by Executive or other
Executives of the Company, or its contractors, vendors or consultants, and those
which were made available to Executive while employed at the Company, which
contain any Confidential Information and Trade Secrets or concern or describe
any part of the Company’s Business, Executive’s employment or the Company’s or
Executive’s dealings, transactions or communications with any Customers (all of
which is hereinafter collectively referred to as Company Information), are and
shall remain the sole and exclusive property of the Company. Executive agrees
that this includes any Company Information contained on or within any personal
computer, blackberry, cell phone, iPad, or any other telephonic or electronic
communication or data storage device, including those owned by Executive which
were used during Executive’s employment with the Company (all of which are
hereinafter collectively called Electronic Devices). At any time upon the
Company’s request, and without request upon termination of Executive’s
employment, however such termination is caused, Executive will deliver to the
Company any files, records, notes or other documents which were used during
Executive’s employment with the Company or which contain any Company
Information. Executive will not keep in Executive’s possession nor disclose nor
deliver to anyone else any Company Information whether in electronic, paper or
any other format.

 

V. Rights and Remedies Upon Breach

A. If Executive breaches any of the provisions of this Agreement, the Company
will have all of the following rights and remedies, each of which shall be
independent of the other and severally enforceable, and all of which shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity: (i) to have this Agreement specifically enforced
by any court of competent jurisdiction; (ii) to seek and

 

19

--------------------------------------------------------------------------------

obtain injunctive or other equitable relief of any kind, Executive hereby
acknowledging and agreeing that any such breach or threatened breach will cause
irreparable injury to the Company and that monetary damages will not provide an
adequate remedy to the Company; (iii) to require Executive to account for and
pay over to the Company all compensation, profits, monies, or other benefits
derived or received by Executive as a result of any act or transaction
constituting a breach of this Agreement.

B. Executive agrees and stipulates that in any action or claim brought by
Executive or in any action or claim brought against Executive involving the
provisions of this Agreement, Executive hereby expressly waives any claim or
defense that the non-competition, non-solicitation and non-disclosure covenants
contained in this Agreement are unenforceable, void or voidable, for any reason,
including, but not limited to, fraud, misrepresentation, illegality, failure of
consideration, illusory contract, mistake, or any other legal defense as to the
validity or enforceability of this Agreement.

C. In addition to any and all other remedies available to Company, in the event
of a breach of or default under this Agreement, or in the event that the Company
obtains a judgment, which becomes final after the expiration of time for all
appeals, that Executive has violated any of the provisions of Section II or
Section III of this Attachment A, the Company shall be entitled to recover, and
the Executive (or his estate) shall be obligated to repay and return to the
Company, upon written demand therefore, an amount equal to all severance or
other benefits paid to, or on behalf of, the Executive (or his estate) pursuant
to the provisions of the Employment Agreement (other than the Accrued Rights) on
or after the date of termination of Executive’s employment.

 

VI. General Provisions

A. Employment Agreement. The Employment Agreement is an integral part of this
Agreement, and this Agreement is an integral part of the Employment Agreement. A
breach of or default under this Agreement shall constitute a material breach of
the Employment Agreement; provided, however, that none of the notice
requirements of the Employment Agreement shall be applicable to any actual
breach of this Agreement.

B. Other Agreements. To the extent that Executive has heretofore entered into an
agreement with the Company containing confidentiality, non disclosure, non
competition and/or non-solicitation provisions, this Agreement shall constitute
an amendment, modification and continuation of all such agreements and
obligations, which shall be deemed to be modified as provided herein. No
modification of or amendment to this Agreement, nor any waiver of rights under
this Agreement, shall be effective unless it is in writing and signed by both
Executive and the Company. Any subsequent change or changes in Executive’s
duties, salary or compensation will not affect the validity or scope of this
Agreement.

C. Agreement Ancillary to Other Agreements. This Agreement is ancillary to and
part of other agreements between the Company and the Executive, including the
Employment Agreement and the Company’s agreements to: (i) disclose, and to
continue to disclose its Confidential Information and Trade Secrets to
Executive; (ii) provide initial and continued training, education and
development to Executive; (iii) provide Executive with Confidential Information
and Trade Secrets about, and the opportunity to develop close relationships with
the Company’s management personnel, employees, Customers, Suppliers and the
employee’s agents and representative of Customers and Suppliers.

D. Severability. If one or more of the provisions in this Agreement are held to
be void or unenforceable in whole or in part, the remaining provisions will
continue in full force and effect. Executive further agrees that in the event
the length of time, the geographic area or definition of business activity as
set forth herein, is deemed unreasonable, or otherwise unenforceable, in any
court proceedings, the Executive and the Court may reform, modify or reduce such
restrictions such that they are reasonable and enforceable.

E. “At Will” and Termination. This Agreement does not alter in any way the
at-will nature of employment between Executive and the Company, which may be
terminated by the Company or by Executive in accordance with the terms of
Executive Employment Agreement of even date herewith.

 

20

--------------------------------------------------------------------------------

F. Choice of Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Texas. All obligations payable or
performable hereunder shall be payable and performable at the Company’s offices
in Houston, Harris County, Texas.

G. Enforceability. This Agreement shall be enforceable by the Company, and any
of its successors, assigns, affiliates, subsidiaries, parent or related
corporations or entities, including any person or entity to which the Company
sells, transfers or assigns all or any part of its assets, or any entity to, in
or with which the Company may hereafter enter into a merger transaction of any
kind. Executive shall have no right to transfer or assign Executive’s rights or
obligations hereunder.

H. Survival. The provisions of this Agreement shall survive the termination of
Executive’s employment by the Company, regardless of how such employment is
terminated.

BY SIGNING BELOW, EXECUTIVE REPRESENTS THAT EMPLOYEE HAS READ THIS AGREEMENT
CAREFULLY AND UNDERSTANDS AND AGREES TO ITS TERMS, INCLUDING THOSE LIMITING
EXECUTIVE’S RIGHTS TO SOLICIT CUSTOMERS OR EXECUTIVES OF THE COMPANY.

 

BY EXECUTIVE:     BY POWELL INDUSTRIES, INC.:

May 8, 2012

   

May 8, 2012

Date     Date

/s/ Milburn E. Honeycutt

   

/s/ Thomas W. Powell

Milburn E. Honeycutt     Thomas W. Powell Vice President &     President & Chief
Executive Officer Chief Accounting Officer     Chairman of the Board

 

21