Document:

exv10w1

EXHIBIT 10.1

CONFIDENTIAL TREATMENT

POWELL SUPPLY AGREEMENT

     This Powell Supply Agreement (the “Agreement”) is made and entered into this 7th
day of August, 2006 (the “Effective Date”) by and between General Electric Company (“GE”), a New
York corporation on behalf of and for the benefit of its GE Consumer & Industrial and GE Energy
business components (GE Consumer & Industrial, together with its Affiliates, is referred to herein
as “Buyer”), and Powell Industries, Inc., a Delaware corporation (hereinafter called “Seller,”
together with Buyer referred to as the “Parties” and each individually as a “Party”). GE Energy is
entering into this Agreement solely for the limited purposes of agreeing to be bound by the
provisions of Section 2.14 and Articles 15, 21, 24, 25, 26, 27 and 29, and shall be deemed to be a
Party or the Buyer for purposes of the obligations set forth in those sections or articles only
and, further, shall be deemed a third party beneficiary with respect to all of Buyer’s rights and
Seller’s obligations hereunder.

Recitals

     Seller and Buyer have entered into that certain Asset Purchase Agreement (the “Purchase
Agreement”) with an effective date of even date herewith pursuant to which Seller is acquiring
Buyer’s business in the MV Market (as defined below), including certain assets related to such
business, from Buyer (the “Acquisition”).

     In connection with this Agreement and the Purchase Agreement, Seller and Buyer have entered
into that certain Purchase Agreement together with certain ancillary agreements, including a GE
Supply Agreement (the “GE Supply Agreement”) and Transition Services Agreement (the “Transition
Services Agreement” and collectively with the Purchase Agreement and the GE Supply Agreement, the
“Transaction Agreements”).

     As a condition precedent to the execution and delivery of the Transaction Agreements and the
consummation of the Acquisition, Seller and Buyer have agreed to enter into this Agreement.

     NOW, THEREFORE, in consideration of the mutual premises, covenants and agreements set forth
herein, the parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1 “Acquisition” shall have the meaning set forth in the Recitals.

1.2 “Affiliate” shall mean and refer to any entity or entities that are directly or indirectly
controlled by (i) GE Consumer & Industrial (including. without limitation, the GE C&I China
Affiliates) or (ii) Seller, respectively.

1.3 “Agreement” shall have the meaning set forth in the preamble.

1.4 “ANSI Products” means American National Standard Institute compliant metal-clad switchgear
which comprises an integrated assembly of vacuum circuit breakers, voltage and current instrument
transformers, power bus, control components, and protective devices

 

 

 

			
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coordinated electrically and mechanically for the distribution of electrical energy and the
protection of electrical systems and connected loads. The vacuum circuit breakers have voltage
ratings from 1,000 Volts to 69,000 Volts, current ratings from 1,000 Amperes to 6,000 Amperes and
interrupting ratings from 25,000 Amperes to 63,000 Amperes and a mechanical operating mechanism
design to separate power contacts and break the electrical circuit in 5 cycles or less after a trip
signal is received, and shall expressly not include, by way of example and not limitation and for
the avoidance of doubt, ANSI medium voltage motor control centers and ANSI load interrupt switches,
non-ANSI medium voltage switchgear and circuit breakers and Low Voltage Products.

1.5 “Backlog Contracts” shall mean all contracts of Buyer that have been formally acknowledged and
accepted by Buyer with respect to Burlington Products as of the Effective Date and that Buyer is
therefore legally bound to fulfill and which have not been fulfilled as of the Effective Date.

1.6 “Base Powell Products” shall mean the following ANSI Products offered by Seller on the
Effective Date and any future Product derived from the following ANSI Products:

     (a) arc resistant medium voltage switchgear;

     (b) non-arc resistant medium voltage switchgear (15kV and below); and

     (c) 27-38 kV switchgear (arc resistant or non-arc resistant).

1.7
“Bid” shall have the meaning set forth in
Section 3.1.

1.8 “Burlington Products” shall mean and be limited to the existing range of ANSI Products set
forth on Exhibit A and assembly components related thereto (including but not limited to
OEM Express), and any future ANSI Product(s) derived from one or more Burlington Products
(excluding arc resistant Products and non-arc resistant 27-38 kV switchgear).

1.9 “Buyer” shall have the meaning set forth in the preamble.

1.10 [*] shall have the meaning set forth in Section 2.3(b).

1.11 “Confidential Information” shall have that meaning set forth in Article 15.

1.12 [*] shall have the meaning set forth in Section 3.3.

1.13 “Effective Date” shall have the meaning set forth in the preamble.

1.14 “FCPA” shall have the meaning set forth in Article 21.

1.15 “GE” shall mean the General Electric Company.

1.16 “GE Affiliate” shall mean and refer to any entity or entities that directly or indirectly
control, or are controlled by or are under common control with General Electric Company.

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1.17 “GE C&I China Affiliate” shall mean any Affiliate of GE Consumer & Industrial, including but
not limited to, Shanghai GE Breakers Co. and Shanghai GE Guangdian Co., with operations in China
which include, to the extent applicable, the manufacture, marketing or sale of ANSI Products.

1.18 “GE Consumer & Industrial” means the operating division of GE known by that name at the time
of Closing, including, without limitation, the GE Electrical Distribution Business, and any
successor operating units or divisions which may, during the Term of the Agreement, include the GE
Electrical Distribution Business, whether such business is controlled by GE Consumer & Industrial
or by GE or any GE Affiliate.

1.19 “GE Electrical Distribution Business” means the business of designing, manufacturing, having
manufactured for it, procuring for sale or lease, selling, leasing, or reselling, marketing or
representing MV Switchgear Products in the MV Market including, without limitation, the sales and
distribution of Burlington Products by the GE Field Sales Organization.

1.20 “GE Energy” means and shall be limited to the transmission and distribution organization (also
known as the T&D organization) of GE Energy, or any such successor organization within GE, which
sells, leases, procures for sale or lease, markets, or represents Required Products. For the
avoidance of doubt, GE Energy does not and is not intended to include any other operation of GE
Energy.

1.21 “GE Field Sales Organization” shall mean the global GE Consumer & Industrial field sales
organization and/or any successor organization and GE Energy.

1.22 “Initial Backlog Products” shall mean those Burlington Products that are manufactured by Buyer
under the Transition Services Agreement consistent with the Backlog Contracts which amount in
revenue to Seller of up to an aggregate amount of [*].

1.23 “Initial
Term” shall have the meaning set forth in Section 6.1.

1.24 “JAMS” shall have the meaning set forth in Section 25.1.

1.25 [*] shall have the meaning set forth in Section 3.5.

1.26 “Losses” shall mean losses, damages, liabilities, expenses (including but not limited to
reasonable attorneys’ fees, legal expenses and other reasonable dispute resolution costs), fees,
penalties, fines, judgments and settlements.

1.27 “Low Voltage Products” shall mean Seller’s low voltage switchgear, low voltage motor control
centers and medium voltage motor control centers. For the avoidance of doubt, products listed in
this definition are non-arc resistant.

1.28 “MV Market” shall mean and be limited to the market for ANSI Medium Voltage Switchgear and
Circuit Breakers.

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1.29 “MV Switchgear Products” shall mean collectively Burlington Products and Base Powell Products.

1.30 “Non-ANSI Products” shall mean any medium voltage switchgear product that is not an ANSI
Product.

1.31 “No
Bid” shall have the meaning set forth in Section 3.1.

1.32 “OECD” shall have the meaning set forth in Article 21.

1.33 “OECD Convention” shall have the meaning set forth in Article 21.

1.34 “OEM Express” shall mean unfinished products sold to an original equipment manufacturer for
the purpose of allowing such manufacturer to complete such product to its own or its customer’s
specifications.

1.35 “Parties” shall have the meaning set forth in the preamble.

1.36 “Party” shall have the meaning set forth in the preamble.

1.37 “Powell Ancillary Product” shall mean Seller’s arc resistant low voltage switchgear, arc
resistant medium voltage motor control centers, arc resistant low voltage motor control centers,
and medium voltage buses and the assembly components related thereto, and any future Products
derived from Powel Ancillary Products.

1.38 “Power Control Modules” shall mean self-contained solutions built around electrical switchgear
and motor controls with other necessary equipment for a total turnkey package; provided, that,
because Power Control Modules are typically used in offshore applications, they must structurally
conform to international shipping and vessel standards.

1.39 “Power Control Rooms” shall mean self-contained solutions built around electrical switchgear
and motor controls with other necessary equipment for a total turnkey package which are typically
used in onshore applications.

1.40 “Products” means, collectively, Burlington Products, Base Powell Products, Powell Ancillary
Products, Power Control Modules, Power Control Rooms and Non-ANSI Products and mutually agreed to
additions thereto.

1.41 “Purchase Agreement” shall have the meaning set forth in the Recitals.

1.42 “Purchase Order”
or “PO” shall mean a written purchase order or other procurement document
issued by Buyer and accepted by Seller for the purchase of Products under this Agreement.

1.43
“Renewal Term” shall have the meaning set forth in Section 6.1.

1.44 “Request” shall have the meaning set forth in Section 3.1.

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1.45 “Required Products” shall mean the following:

	 	(a)	 	Burlington Products;
	 
	 	(b)	 	Base Powell Products; and
	 
	 	(c)	 	Power Control Modules and Power Control Rooms.

1.46 “Seller” shall have the meaning set forth in the preamble.

1.47 “Speedi” means Buyer’s software application which contains a module used to help provide
budgetary quotes for medium voltage switchgear and contains a high-level module to configure such
quotes.

1.48 “Support Central for Sales Workflow” means Web-based, workflow applications owned and hosted
by Buyer, which contain five (5) specific workflows pertinent to the sales of switchgear as
follows: request for quote, clean order process, change notice process, pre negotiation factory
slotting process and pull in order process.

1.49 “Transition Products” shall mean any Products manufactured for Seller by Buyer pursuant to the
Transition Services Agreement between Buyer and Seller of even date herewith.

ARTICLE 2

SCOPE OF AGREEMENT

2.1 Scope

As of the Effective Date, this Agreement will apply to and govern all purchases by Buyer from
Seller of the Products. The terms and conditions affixed to a PO shall not apply except as
permitted under Section 3.3 hereof. In the event of a conflict between the provisions of this
Agreement and the provisions on a Purchase Order permitted under Section 3.3, the provisions of the
Purchase Order shall govern. Further, this Agreement does not, expressly or impliedly, constitute
an acceptance by Buyer of any Seller offer to sell, quotation, proposal or Bid, and any reference
in this Agreement to any such offer, quotation, proposal or Bid shall neither constitute a
modification of any of the terms and conditions of this Agreement nor any intent or indication by
Buyer to be bound by any such offer to sell, quotation, proposal or Bid.

2.2 Product Purchase Requirements

During the Term of this Agreement and subject to the provisions of Section 3.2 below:

     (a) Buyer will purchase from Seller one hundred percent (100%) of Buyer’s requirements for the
Required Products or their functional equivalents;

     (b) any GE C&I China Affiliate will, and Buyer will cause such GE C&I China Affiliate to, purchase
from Buyer one hundred percent (100%) of such GE C&I China Affiliate’s

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requirements for ANSI medium voltage circuit breakers and ANSI switchgear components (including,
for the avoidance of doubt, those included in non-ANSI equipment) to the extent Seller has such
Products available at the prices requested in a manner consistent with past pricing and practices;
and

     (c) If and when Seller sells arc resistant medium voltage switchgear, 27-38 kV switchgear,
Power Control Modules or Power Control Rooms to Buyer under this Agreement in connection with a
larger equipment package for a particular sale by Buyer to the same customer, Buyer shall also
purchase from Seller under this Agreement one hundred percent (100%) of its requirements for [*]
(or the functional equivalents of each) to be included in such package [*].

2.3 Bids

Buyer’s obligation under Section 2.2 shall be contingent upon the following:

(i) Seller has timely submitted a Bid (as defined below) for such Required Product;

(ii) the Bid substantially meets the requirements of the applicable Request [*];

(iii) there are no [*] products [*] than such Required Product, except that, with respect to
[*];

(iv) [*];

(v) when Seller is providing a quote for a Bid for Required Products with comparable
quality, performance, delivery times, terms and features for the same customer project
through both Buyer’s sales channels and channels other than Buyer, there is [*]; and

(vi) notwithstanding subsections (iv) and (v) above and in connection with a Burlington
Product included in a Bid [*].

In addition, if at any time during the Term of this Agreement, either Party becomes aware
that Seller accords to any other Seller customer purchasing like quantities of comparable
products (in terms of quality, performance, delivery time, and features) more favorable
prices and/or contract terms than provided to Buyer for the product hereunder, Seller will
provide Buyer with [*].

2.4 Resolution Process For Bids

If Seller does not meet the requirements of Section 2.3 on a recurring or repeated basis, then the
following process for resolution shall govern:

First, senior representatives of the Parties shall promptly engage in good faith discussions to
resolve Buyer’s concerns.

Second, if Buyer’s concerns cannot be resolved in a mutually satisfactory manner, and until such
concerns can be resolved to the Parties’ mutual satisfaction, [*].

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[*].

Fourth, if Seller originally did not meet the requirements of Section 2.3, then after such time as
Seller reasonably demonstrates to Buyer that Seller has become compliant with the provisions of
Section 2.3 [*].

If Buyer has availed itself of the process set forth in this Section 2.4 and, as a result, either
Party is dissatisfied with the result, such Party is not precluded from utilizing the alternative
dispute resolution process in Article 24 and the arbitration procedures of Article 25 hereof;
provided, however, such Party may not do so until the senior representatives have held good faith
discussions and failed to reach a mutually acceptable conclusion under this Section 2.4.

2.5 Subject to the provisions of this Agreement, including but not limited to Articles 2 and 3,
Seller will make available to Buyer the Products required to be purchased from Seller by Buyer
under Section 2.2 hereof.

2.6 Buyer may from time to time purchase from Seller, and Seller may sell to Buyer Non-ANSI
Products, Powell Ancillary Products and Low Voltage Products not otherwise required to be purchased
under Section 2.2(c) hereof. For the avoidance of doubt, the terms of this Agreement shall apply
to and govern all purchases by Buyer from Seller of such Products.

2.7 In order to facilitate communication among the Parties and ensure a good working relationship:

     (a) Each Party shall designate a management level individual as its account manager(s) to the
other Party (“Account Managers”). The Account Managers will facilitate Seller inventory
compatibility with Buyer requirements, ensure the timely and efficient implementation of processes
to ensure a high level of consistent service to Buyer and act as a focal point for resolution of
each Party’s problems.

     (b) Senior representatives of the Parties, including legal counsel, shall meet at least once a
quarter to discuss subjects of mutual interest and concern in a manner consistent with applicable
competition laws, including Buyer’s purchasing requirements and forecasts, trends in Buyer’s
end-customer requirements, new product development, productivity, significant changes in
manufacturing locations or process, and current or potential dispute. This group shall also be the
group responsible for resolving disputes under Sections 2.4 prior to submission of such disputes to
the alternative dispute resolution process of Article 24.

2.8 Buyer shall be free to set its own resale prices for any Products purchased from Seller
hereunder, and, consistent with the terms of this Agreement, to go to market in any manner it
determines is commercially appropriate and in its own best interests.

2.9 Buyer hereby agrees to cause all of the Buyer Affiliates to continue to purchase MV Switchgear
Products from Seller in a manner consistent with Section 2.2 hereof.

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2.10 Buyer shall use reasonable commercial best efforts to actively and diligently promote the sale
of and solicit orders for Products and to meet sales targets consistent with past practice,
including, for example, the continued use of sales incentive programs, such as the Alliance
Products Program or its equivalent, with the GE Field Sales Organization

2.11 Buyer shall keep Seller timely informed of all material complaints received by Buyer from any
customers associated with Products.

2.12 Buyer shall use commercially reasonable best efforts as it endeavors to maintain and
strengthen its current sales relationships with any operating unit or Affiliate of Seller which
currently uses or procures the Products.

2.13 Each Party shall develop and maintain its web sites as reasonably necessary to support the
sale of Products by Buyer. Each Party shall provide appropriate links, at no cost to the other
Party, to the other Party and at a cost to third parties as reasonably determined by such Party.
Such Party shall maintain and be responsible for enhancements to Internet connections, including
e-mail and linking.

2.14 During the Term of this Agreement, GE Energy shall continue to serve as [*].

2.15 Notwithstanding any other provision of this Agreement to the contrary, Buyer hereby
acknowledges and agrees that Seller shall not be deemed to be in breach of any provision of this
Agreement for, and Buyer waives any rights it may have with respect to, (i) Buyer’s obligations in
the Asset Purchase Agreement, including applicable representations and warranties contained
therein, and (ii) Buyer’s obligations in the Transition Services Agreement, including applicable
warranties contained therein, which shall survive for the Term of this Agreement.

2.16 Seller acknowledges that Buyer may have outstanding bids and quotes related to its existing
contracts as of the Effective Date and that, with respect to such outstanding bids and quotes,
Seller will not be presented with an opportunity to give a Bid; provided, however, that Seller has
all rights to manufacture Burlington Products required to be delivered under such existing
contracts in the manner provided under the Transition Services Agreement and Asset Purchase
Agreement.

2.17 License and Access Rights.

     (a) Consistent with the purpose and the scope of this Agreement and the Transaction
Agreements, Buyer, on behalf of itself and its Affiliates, grants to Seller and its wholly owned
subsidiaries a fully paid access-only, non-exclusive, non-transferable (except as provided in
Section 29.2), worldwide license to the Speedi application. Buyer has no support or upgrade
responsibility to Seller on an application if at Buyer’s sole discretion Buyer materially
discontinues use of such application. Buyer will provide Seller ninety (90) days written notice
prior to discontinuation of Speedi. Buyer will pay for updates of Speedi if initiated by Buyer,
and Seller will pay for updates of Speedi if initiated by Seller.

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     (b) Consistent with the purpose and the scope of this Agreement and the Transaction
Agreements, Buyer, on behalf of itself and its Affiliates, grants to Seller and its wholly owned
subsidiaries a fully paid access-only, non-exclusive, non-transferable (except as provided in
Section 29.2), worldwide right to access to the Support Central for Sales Workflow applications.
Buyer has no support or upgrade responsibility to Seller on any such application if at Buyer’s sole
discretion Buyer materially discontinues use of such application. Buyer will provide Seller ninety
(90) days written notice prior to discontinuation of Support Central for Sales Workflow or any
application thereunder. Buyer will pay for updates of Support Central for Sales Workflow if
initiated by Buyer, and Seller will pay for updates of Support Central for Sales Workflow if
initiated by Seller.

     (c) Consistent with the purpose and scope of this Agreement and the Transaction Agreements,
Seller grants Buyer a limited, fully paid, non-exclusive, non-transferable (except as provided in
Section 29.2), license of the intellectual property rights acquired by Seller from Buyer under the
Purchase Agreement for the sole purposes permitted under this Agreement and the Transaction
Agreements. In furtherance of such license, Seller grants Buyer a right of access to the
information underlying such intellectual property rights at reasonable times and locations, subject
to Article 15 hereof.

ARTICLE 3

PURCHASES OF PRODUCTS

3.1 When Buyer purchases from Seller pursuant to this Agreement, Buyer will issue to Seller a
request for quote (the “Request”). The Request will contain:

     (a) a general description of the Products to be purchased hereunder;

     (b) drawings and specifications of Buyer related to the Products (the “Product
Specifications”);

     (c) desired delivery date, destination and export handling, if applicable;

     (d) Buyer inspection and hold point requirements;

     (e) terms and conditions of Buyer’s customer;

     (f) desired title transfer, transportation and payment terms;

     (g) Buyer drawing or technical approval requirements;

     (h) special packaging requirements, if any; and

     (i) all other applicable contractual documents required by Buyer’s customer.

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     Upon receipt of the Request, Seller shall use its best efforts to prepare and submit to Buyer
a bid (the “Bid”) or no bid decision (“No Bid”) within the time period specified by Buyer’s
customer and indicated in the Request, but if no time is so specified, within five (5) business
days after receipt of the Request for all Products other than Power Control Modules and Power
Control Rooms, and within a mutually agreeable time with respect to Power Control Modules and Power
Control Rooms. Buyer reserves the right to modify the terms of the Request if Buyer’s customer
requires such modifications, in which case, Buyer will adjust the time period for submission of a
Bid to the extent allowed by Buyer’s customer. Seller will immediately notify Buyer should Seller
be unable to submit a Bid within the required period, and, if such delay is agreeable to Buyer,
will submit a Bid as soon as practicable after the original bid date contained in the Request. If
such a delay is not agreeable to Buyer (or to Buyer’s customer), then Seller will be deemed to have
elected not to submit a Bid pursuant to Section 3.2. Unless otherwise specified by Seller, a Bid
shall expire thirty (30) days from the date of issuance. Buyer will be notified immediately should
situations arise in which a return date for a Request cannot be supported. Seller’s obligations to
submit timely Bids is subject to prompt notification from Buyer to Seller with respect to each
particular Request.

3.2 Seller may, in its sole discretion, provide a No Bid in the following situations without
breaching any of its obligations under this Agreement:

     (a) The Request relates to a project in which the only product for which a bid is being
solicited is [*];

     (b) The Request relates to [*]; and

     (c) The Request relates to Powell-designed [*].

3.3 Whenever Buyer purchases Product, Buyer will issue a Purchase Order setting forth all matters
agreed to by the Parties related to that purchase of the particular Products. A Purchase Order
shall not be considered final until accepted by Seller.

3.4 If, in response to a Request, Seller issues a Bid that does not meet the requirements of
Section 2.3 above or a No Bid, [*]. In the event that Seller fails to reply to a Request with
either a Bid or No Bid within five (5) business days after Seller’s receipt of the Request, or, in
the case of [*], within the agreed amount of time after Seller’s receipt of the Request, [*].

3.5 Further to the provisions contained in Section 3.4, in the event Seller issues a [*] Request as
originally presented to Seller. [*]. It is understood that acceptance of a Request by Seller [*].
If Seller does not issue such a Bid as provided for in this Section 3.5 [*].

3.6 Buyer may at any time, in writing, propose changes within the general scope of any Purchase
Order, in any one or more of the following: (i) drawings, or specifications where the goods to be
furnished are to be specially manufactured for Buyer in accordance therewith;

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(ii) method of shipment or packaging; and (iii) place of delivery. Seller shall inform Buyer, in
writing, within either (i) five (5) business days following the date of receipt of such change
request or (ii) in the case of Power Control Modules or Power Control Rooms, within an agreed
amount of time following receipt of Buyer’s notice, of any change in price or schedule that would
result from the change. Such Seller response will contain an expiration date. After the
expiration date, such Seller response will no longer be valid. No change will be effective unless
mutually agreed in writing.

3.7 If Buyer desires to implement a change and the Parties are unable to agree between them upon
corresponding adjustments, the Buyer and/or Seller may initiate the alternative dispute resolution
process set forth in Article 24 hereof for the purpose of establishing an equitable adjustment in
the contract price or delivery schedule, or both.

3.8 Where Seller implements a change at the written direction of Buyer without a prior written
agreement regarding the adjustment in price and/or schedule, any claim by Seller for adjustment
must be made in writing within thirty (30) days from receipt by Seller of Buyer’s written
notification of change; and in such case should the Parties be unable to agree upon corresponding
price and schedule adjustments, the Buyer and/or Seller may initiate the alternative dispute
resolution process set forth in Article 24 hereof for the purpose of establishing an equitable
adjustment in the contract price or delivery schedule, or both.

ARTICLE 4

PRICING, PAYMENT TERMS AND TAXES 

4.1 Prices for the Products shall be as set forth in the Purchase Order.

4.2 The specific payment terms for each Product purchased under this Agreement will be specified in
the applicable Purchase Order and in no case will be [*], inclusive of advance payments,
progressive payments, or milestone payments. In the absence of such payment terms in the PO, they
will be receipt of full payment, without any offset, [*] days from the date of shipment. Prices
and payment will be in U.S. Dollars. Large custom engineered projects having several months
duration and for which Buyer and Seller mutually agree in the applicable Purchase Order or other
release mechanism to payment terms based on specific milestone completions rather than shipment may
have such milestone payment schedules as agreed to by the Parties in the Purchase Order, and may
also provide for [*] or other payment terms common to such projects.

4.3 All prices provided herein are exclusive of federal, state and local excise, sales, use,
property and similar taxes, unless otherwise provided on the Purchase Order. Buyer shall have no
liability for any taxes based on Seller’s net assets or income or for which Buyer has an
appropriate resale or other exemption.

4.4 If either Party disputes an amount owed by the other Party, all other amounts owed by such
Party not in dispute shall be promptly paid.

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ARTICLE 5

[*]

5.1 For the Products set forth below that are purchased by Buyer from Seller under this Agreement,
[*]:

     (a) For the purchase of Burlington Products (not including Initial Backlog Products) and
Seller’s non-arc resistant medium voltage switchgear 15 kV or less included in Base Powell
Products, [*].

     (b) For the purchase of Base Powell Products (excluding non-arc resistant medium voltage
switchgear 15kV or less), Powell Ancillary Products and Low Voltage Products, [*].

     (c) For the purchase of Power Control Modules and Power Control Rooms, [*].

[*] exclusive of each other subsection [*].

ARTICLE 6

TERM AND TERMINATION

6.1 Unless otherwise terminated as provided for herein, the initial term of this Agreement shall be
fifteen (15) years beginning on the Effective Date (the “Initial Term”) and will automatically
renew for additional successive three-year terms (each a “Renewal Term”)(the Initial Term and any
Renewal Term collectively referred to herein as the “Term”).

6.2 This Agreement may be terminated at any time after the Effective Date:

     (a) by the mutual written agreement of Buyer and Seller;

     (b) by written notice from Buyer to Seller, upon the material failure of Seller to perform any
material agreement or covenant of Seller hereunder in any material respect; provided, however, that
the right to terminate this Agreement under this Section 6.2(b) shall not be exercised unless
Seller fails to substantially cure its non-performance within ninety (90) days following written
notice from Buyer to Seller of the existence of such non-performance; or

     (c) by written notice from Seller to Buyer, upon the material failure of Buyer to perform any
material agreement or covenant of Buyer hereunder in any material respect; provided, however, that
the right to terminate this Agreement under this Section 6.2(c) shall not be exercised unless Buyer
fails to substantially cure its non-performance within ninety (90) days following written notice
from Seller to Buyer of the existence of such non-performance; or

     (d) by either Party for any reason, upon one year written notice (given within the fourteenth year
of the Initial Term or within the second year of any Renewal Term) prior to the end of the then
current Term of this Agreement.

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6.3 Effect of Termination.

     (a) In the event of a termination of this Agreement pursuant to:

          (i) Section 6.2(a) or (d), the parties shall meet as promptly as practicable to decide upon a
mutually agreed upon plan for terminating the relationship; or

          (ii) Sections 6.2(b) or (c), either Buyer or Seller, as the non-breaching party, will have the
right to make a claim for all Losses (at law or in equity), subject to the provisions of Articles
24 and 25 hereof, whenever arising or incurred, including amounts paid in settlement and reasonable
attorneys’ fees and expenses, if any, pursuant to this Agreement.

     (b) In the event of the termination of this Agreement pursuant to Section 6.2, this Agreement
shall become void and have no effect, except that the provisions set forth in Section 29.1 of this
Agreement and any other section of this Agreement which, by its terms, survives this Agreement,
shall survive any such termination.

     (c) Within thirty (30) days of the date of termination of this Agreement, each Party shall pay
to the other any outstanding balances under this Agreement, in each case, through the termination
date.

6.4 Remedies. In addition to any right to terminate this Agreement under Section 6.2(b) or (c) and
in the event of a material uncured breach of this Agreement, the injured Party shall have the
right, but not the obligation to seek monetary compensation for any Losses incurred, subject to the
provisions of Articles 24 and 25 hereof. A failure to terminate shall not be construed as
approval, tacit or otherwise, for the act of breach, nor shall it be deemed a waiver of any rights
in contract or at law.

6.5 Survival of Purchase Order. Except in the case of nonpayment and unless otherwise agreed to in
writing by the Parties, the termination of this Agreement shall not affect the rights and
obligations of the Parties under Purchase Orders that have been accepted by Seller but are not yet
completed at the time of the termination. This Agreement shall remain in effect as to those
uncompleted Purchase Orders until such Purchase Orders have been completed.

ARTICLE 7

SHIPPING AND DELIVERY 

7.1 Shipment and delivery of Products shall be in accordance with the requirements of Buyer’s
customer as specified in a Purchase Order. Unless otherwise mutually agreed by the Parties and
designated by Buyer in the applicable Purchase Order, title and risk of loss will pass from Seller
to Buyer upon delivery F.O.B. Seller’s dock. Shipment will be made by the mode of transportation
specified by Buyer in the Purchase Order and charges for unique packaging requirements, shipping
and transportation of Products shall be allocated in accordance with the PO. In the absence of
specific shipping instructions on the PO, the method of shipping and

13

 

transportation shall be the most commercially practical and cost effective method selected by
Seller and shall be paid by Seller.

7.2 On a quarterly basis in the month preceding the last month of each calendar quarter, Buyer will
provide Seller a non-binding estimate of anticipated manufacturing and engineering requirements by
Product for the upcoming six months (line rates). These forecasts are estimates only, and shall
not be construed as a commitment by Buyer to purchase a specific quantity or type of Product, or to
purchase its requirements of any Product other than as provided in Section 2 above. Under no
circumstances shall Buyer be under an obligation to Seller for Products not specifically covered by
a Purchase Order or in an amount in excess of the quantity so specified in a Purchase Order.
Seller may, in Seller’s discretion, make materials commitments or production arrangements in excess
of the amount or in advance of the time necessary to meet the requirements of each PO, but Buyer
will not be responsible for any materials or production commitments other than those directly
related to the POs received from Buyer. Unless otherwise stipulated in the PO, Products shipped
more than three (3) weeks in advance or in excess of the Purchase Order requirements may be
returned to Seller by Buyer at Seller’s risk and expense, and Seller shall reimburse Buyer for all
costs incurred for warehousing, storage and handling of said advance or excess Products.

ARTICLE 8

DESIGN, MANUFACTURING AND QUALITY

8.1 Seller shall be responsible for the design (excluding any Buyer-directed design enhancements,
modifications or customizations but specifically including any Seller-directed design enhancements,
modifications or customizations to Burlington Products) and the manufacture of all Products.
Seller also shall be responsible for and shall take all necessary steps to ensure that the Products
comply with all applicable codes, laws, rules and regulations (both in the country of manufacture
and in the countr(ies) specified in a Purchase Order where Buyer or Buyer’s customer will use or
distribute the Products). Products shall conform in quality and safety to all Seller and
governmental requirements, will be subject to acceptance in accordance with the PO and shall be
inspected at Seller’s factory in accordance with the PO and its standard factory test procedures,
as provided below. Buyer shall be responsible for the design relating to Products with
Buyer-directed design enhancements, modifications or customizations.

8.2 Seller shall meet the specifications of the PO in the design and manufacturing of the Products,
and the Products shall pass all required testing set forth in the PO.

8.3 Buyer and Seller shall cooperate and consult to obtain any required customer acceptance,
including specification confirmation, of Products in accordance with the Purchase Order. Seller
shall inspect and factory test the Products in order to determine that the Products meet or exceed
the specifications contained in its related PO. Seller shall maintain Product design,
manufacturing, testing, inspection and other safety and quality-related processes that are adequate
to ensure the safety and reliability of all Products. All commercially reasonable specification
compliance and reliability testing costs shall be borne by Seller. At the request of

14

 

Buyer’s customer, all data and documentation produced from specification compliance and reliability
testing called for in the PO shall be submitted to Buyer for review and approval. Testing of the
Products by either Party shall not negate, diminish or relieve Seller’s obligations or
responsibilities under any express or implied warranty, indemnification, hold harmless or other
similar term or provision under this Agreement. Buyer shall have no obligation to purchase any
Product until the Product is inspected and tested pursuant to the above process.

8.4 Once a PO is issued by Buyer for the purchase of the Products and accepted by Seller, Seller
shall not alter the terms, including Product specifications, of the PO without Buyer’s written
approval.

8.5 Seller shall, at its own expense, be responsible for obtaining all approvals or certifications
(governmental or otherwise) required in connection with the intended use of Products, including but
not limited to, UL and ANSI approvals. Buyer shall not be obligated to take delivery of any such
Products until all such approvals are secured.

8.6 Seller will provide to Buyer’s customer, upon the request of Buyer’s customer, all Product data
and associated technical specifications for commercialization and service of the purchased Product.
For clarity, Seller will not provide Buyer or Buyer’s customer with proprietary design data, but
will supply the materials required by the PO (e.g., instruction books and manuals).

8.7 Seller shall maintain Product quality levels and Product service levels that are consistent
with Seller’s quality practices as of the Effective Date and its ISO 9001 certification or any
successor certification as in effect from time to time.

ARTICLE 9

INSPECTION

As required by any particular PO, Products shall be subject to inspection by Buyer (or Buyer’s
representative) during the period of manufacture subject to mutually agreed schedules and charges
and to final inspection and acceptance by Buyer (or Buyer’s representative) at Seller’s facility
prior to shipment. Seller shall notify Buyer (or Buyer’s designated representative) in writing as
provided on the Purchase Order prior to scheduled shipment of Products for purposes of such final
inspection and acceptance. If Buyer (or Buyer’s representative) fails to make such inspection
within that period (or as otherwise arranged with Seller), Buyer will be deemed to have waived its
right to inspection and acceptance will occur upon shipment. Buyer’s failure (or the failure of
Buyer’s representative) to inspect or reject non-conforming Products or failure to detect defects
by inspection shall not relieve Seller from responsibility under Article 12, “Warranty.” Seller
shall provide and maintain an inspection and process control system consistent with their existing
quality practices and its ISO 9001 certification or any successor certification in effect from time
to time. Records of all inspection work by Seller shall be retained in accordance with Seller’s
then-existing retention policy.

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ARTICLE 10

REJECTIONS

When any of the Products under a particular PO are found to be defective or unusable as provided in
such PO, or otherwise not in conformity with the requirements of such PO, including but not limited
to the Product Specifications, prior to installation, Buyer may reject such Products and require
Seller, at Seller’s expense, to inspect the Products and to repair or replace non-conforming
Products (or parts thereof) with Products (or parts thereof) that conform to such PO and to
otherwise take such actions as may be required to cure all defects and/or bring the Products into
conformity with all the requirements of the PO.

ARTICLE 11

SELLER’S FAILURE TO PROVIDE PRODUCT

In the event that Seller fails to deliver Products to Buyer in breach of Seller’s obligations under
this Agreement and a specific Purchase Order and Seller does not diligently commence to cure such
failure in a manner reasonably satisfactory to Buyer within ten (10) days of receipt of written
notice of same from Buyer, Buyer shall have the right to cancel, in whole or in part, any Purchase
Order affected by such delay. In addition, Buyer shall have the right to procure replacement
products for the cancelled Products to the extent included in such Purchase Order, and Seller shall
be liable to Buyer for any difference in the price of such replacement products and the prices set
forth in the Purchase Order.

ARTICLE 12

WARRANTY

12.1 Seller shall provide such Product warranties as are mutually agreed in writing by the Parties
in writing and specified on the accepted Purchase Order. Except as so otherwise agreed in writing
by the Parties in the accepted Purchase Order, Seller warrants to Buyer (for the benefit of Buyer,
its successors, assigns and customers of Products sold by Buyer) that Products furnished hereunder
will conform to the mutually agreed Product Specifications, be new and of good material and
workmanship, free from all material defects in design (excluding any Buyer directed design
enhancements, modifications or customizations but specifically including any Seller’s design
enhancements, modifications or customizations to Burlington Products), material, workmanship and
title, comply with all applicable laws, and will be of the kind and quality specified in the PO.
Except as otherwise agreed in the accepted PO, Seller’s warranties shall apply only to failures to
meet said warranties (excluding any defects in title) which appear within [*] from installation or
[*] from the date of shipment, which ever occurs first; provided, however, that (a) if Buyer, as
specified in the PO transfers title to or leases such Products (including equipment incorporating
such Products) to a third party, such period shall run until [*] from shipment by Seller and (b)
any such limitation on the period of Seller’s warranty shall in no way limit Seller’s indemnity
obligations for third party claims or product recall provided elsewhere under this Agreement.

16

 

12.2 The warranties and remedies related to defects (except as to title) set forth in Section 12.1
herein and the accepted Purchase Orders are conditioned upon (a) proper storage, installation, use
and maintenance, and conformance with any written recommendations of Seller; (b) absence of
alterations, tampering or other actions impacting negatively the Product’s functionality and
(c) Buyer promptly notifying Seller of any defects upon receipt of notice of such defect from its
customer (whether oral or written) and, if required, promptly making the Product available for
correction.

12.3 If any Product fails to meet the warranties referenced in Section 12.1 (except title), Seller
shall, at Seller’s option, either promptly repair or replace such Product at Seller’s sole expense.
If repair or replacement is not feasible, Seller shall promptly refund the purchase price of the
Product to Buyer. Notwithstanding the foregoing, this Section 12.3 shall in no way limit Seller’s
indemnity obligations for third party claims or product recall provided elsewhere under this
Agreement.

12.4 Buyer will provide notice of warranty claims to Seller’s Account Manager. Seller will provide
and/or participate as required in the analysis of any defective Product to identify the main cause
of such defect and also initiate appropriate corrective action. Analysis will be performed on 100%
of Products that are returned as a result of a defect, or as otherwise agreed between Buyer and
Seller. Seller will apply reasonable commercial efforts to respond to Buyer within a commercially
reasonable period of time from receipt of returned Product with a written analysis of the cause of
failure.

12.5 Unless an alternate method of response is mutually agreed, Buyer will commence to dispatch a
field service representative to investigate customer warranty claims within 24 hours from Buyer’s
notification to Seller. If in Buyer’s judgment, circumstances dictate an immediate response, Buyer
may send, at its expense, a field service representative prior to notification to Seller. If
Product is found to be defective, Seller will reimburse Buyer for its direct costs associated with
sending its field service representative. All warranty servicing will be provided by Seller at
Seller’s expense.

12.6 This Article 12 sets forth Buyer’s exclusive remedies for its claims (except as to title and
excluding claims for indemnification against third party claims and product recall obligations
provided elsewhere under this Agreement) based on defect in or failure of Products, whether the
claim is in contract or tort (including negligence) and however instituted. Except as set forth in
Section 18.1 and elsewhere in this Agreement, the foregoing warranties are exclusive and in lieu of
all other warranties, whether written, oral, implied or statutory. NO IMPLIED STATUTORY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, IMPLIED WARRANTY OF NON-INFRINGEMENT, OR ANY
WARRANTY THAT MIGHT OTHERWISE ARISE FROM THE COURSE OF DEALING BETWEEN THE PARTIES OR FROM ANY
USAGE OR TRADE SHALL APPLY. Upon the expiration of the warranty period, all such warranty
liability (other than pending claims for which Seller has been placed on notice, title claims,
claims for indemnification from third party claims and product recall obligations) shall terminate.

17

 

ARTICLE 13

HAZARDOUS CONDITIONS AND PRODUCT RECALLS

13.1 If at any time Seller learns of any issue relating to a potential safety hazard or unsafe
condition involving Products, or is advised by any governmental agency having jurisdiction that
such a potential safety hazard or unsafe condition may exist, Seller shall immediately advise Buyer
by the most expeditious means of communication under the circumstances, such as by telephone,
email, fax, or overnight mail, with confirmation of delivery. If a hazardous or unsafe condition
should exist (or be determined to exist by any governmental agency having jurisdiction) in any
Products, causing significant risk of serious personal injury or property damage under normal use
and service, Seller and Buyer shall cooperate in correcting the hazardous or unsafe condition.
But, in accordance with Section 19 of this Agreement, Seller will remain responsible for any
liability, claim, cost or expense that Buyer or its customers may incur in connection with the
correction.

13.2 If Seller, Buyer, or any governmental agency having jurisdiction finds at any time that any
Products contain a defect or a serious quality or performance deficiency, or are not in compliance
with any applicable governmental code, standard or requirement, making it advisable that the
affected Products be recalled or repaired, Seller shall promptly undertake appropriate corrective
actions including those required by any applicable law and the regulations thereunder, and shall
file all necessary papers descriptive of corrective action programs, and other related documents
and carry out corrective action programs. Buyer shall cooperate with and assist Seller in any such
filing and in taking corrective action, and Seller shall timely locate with Buyer’s assistance, at
Seller’s expense, all Products subject to recall or repair. Seller shall make all necessary
repairs or modifications to the affected Products, at its expense, except to the extent that Seller
and Buyer agree to the performance of such repairs by Buyer or Buyer’s customers upon mutually
acceptable terms. Seller and Buyer recognize that, under certain conditions, other
Seller-manufactured products may contain the same defect or noncompliance condition contained in
the affected Products. Seller and Buyer agree that any recall involving any Products shall be
treated separately from similar recalls of other Seller products, provided that such separate and
distinct treatment is lawful and that Seller shall in no event fail to provide the same level of
protection to Buyer with respect to the affected Products as Seller provides to Seller’s other
customers in connection with such similar recalls. Either Party shall give prior notice to the
other Party before making any statements to the public concerning safety hazards affecting
Products, except where such prior notice would interfere with the timely notification required to
be given under any applicable law or regulation, including requirements under U.S. securities laws.
In all cases, each Party shall be the sole authority to make statements on its own behalf to a
governmental agency concerning safety hazards affecting Products.

13.3 For the Term of this Agreement, Seller shall monitor and keep records of all safety-related
field incidents involving Seller-manufactured or Seller-distributed Products that are substantially
similar to Products purchased by Buyer under this Agreement, and shall regularly inform Buyer about
those incidents and make those records available upon Buyer’s reasonable request.

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ARTICLE 14

TRADEMARKS

14.1 Products shall bear only such names and trademarks as are specified in this Agreement or
otherwise agreed to in writing by Buyer and Seller. Any such names and trademarks shall remain the
sole and exclusive property of, and any rights that may accrue from such tradename/trademark usage
shall inure to the sole benefit of the Party who owns such trademarks, or Buyer’s customers, if the
designated trademark and/or trade name is owned (or licensed) by Buyer’s customers. The Parties
acknowledge and agree that such use of the other Party’s trademarks, markings and concepts in
connection with the Products shall not at any time or in any manner give the other Party the right
to, ownership of or interest in or the right to otherwise use such trademarks, designs or markings.
It is understood and agreed that the respective trademarks and tradenames of Seller and Buyer
shall remain the sole and exclusive property of each such Party.

14.2 Unless otherwise agreed by the Parties in writing, Products sold under this Agreement shall be
branded as follows:

     (a) Burlington Products shall [*]. In all cases, the internal service contact information
will be Seller’s contact information. [*]. Any exception to the requirements of this Article 14
must be as required by applicable law or as agreed to in writing by the Parties.

     (b) [*]. In all cases, the internal contact information will be Seller’s contact information.

     (c) Power Control Modules and Power Control Rooms, Base Powell Products, and Powell Ancillary
Products, and all the related assembly components will [*]. In all cases, the internal service
contact information will be Seller’s contact information.

     (d) All other Products purchased by Buyer under this Agreement will [*].

14.3 Seller agrees to use the name and trademarks of Buyer, GE or its customers only on and in
connection with Products manufactured for Buyer pursuant to this Agreement and only in forms and
arrangements approved in advance in writing by Buyer. Seller shall not sell or dispose of any
Product bearing any of Buyer’s or GE’s trademarks or trade names (or those of their customers) to
any person or entity other than Buyer, unless expressly authorized to do so in writing by Buyer.
In the event that any Products so labeled are not delivered to Buyer, whether due to scrap,
rejections, cancellation of orders or otherwise, Seller will promptly remove and destroy or, at the
request of Buyer, return to Buyer, any and all labels, nameplates, or other trademarks placed on
such Products. It is understood and agreed that money damages would not be a sufficient remedy for
any breach of the provisions of this Article 14 and that the Party being harmed shall be entitled
to equitable relief, including injunction and specific performance, as a remedy for any such
breach. Such remedies shall not be deemed to be the exclusive remedies for

19

 

a breach by a Party of this Article 14 but shall be in addition to all other remedies available to
such Party at law or in equity.

14.4 Buyer will provide Seller with a layout of the Product nameplate and shipping container label,
as well as the artwork for Buyer’s logo and name, the site and date code tables if applicable.

14.5 In addition to the foregoing, if any statute, law, rule or regulation of any jurisdiction in
which Products are sold require that the name of the manufacturer of the Products be indicated
thereon, sufficient identification for compliance shall be placed on those Products.

14.6 Any actions taken by Buyer, in Buyer’s sole discretion, to disallow the use of Buyer’s brand
or trade name by Seller will not be considered presumptively as a breach of this Agreement by
either Party. Accordingly, Buyer shall continue to buy Required Products under Seller’s brand if
Buyer disallows use of Buyer’s brand or trade name by Seller; provided, however, if Buyer’s
discontinuance results from Seller’s uncured continued material breach of this Agreement, Buyer’s
termination rights under Section 6.2(b) hereof shall still apply to the extent set forth in Section
6.2(b).

ARTICLE 15

DISCLOSURE OF INFORMATION

Each Party agrees and acknowledges that, as a result of this Agreement and the Transaction
Agreements, each of them will be exposed to the confidential and proprietary information of the
other Party and the other Party’s Affiliates and employees, including, but not limited to, all non
public information related to each Party’s business (the “Confidential Information”). Each Party
agrees to take all commercially reasonable measures to mark as “Proprietary,” “Confidential,” or
with other similar restrictive markings, any Confidential Information disclosed in writing or other
tangible form to the other party or, if initially disclosed in unmarked or intangible form, to
reduce the Confidential Information to a properly marked tangible form and provide such marked
Confidential Information to the receiving party within thirty (30) days from the date of
disclosure. Notwithstanding the above, both parties acknowledge and agree that, as a result of the
Purchase Agreement, Seller will acquire all confidential information as defined therein (“PA
Confidential Information”). For purposes of this Section and this Agreement, “Confidential
Information” shall be deemed to include PA Confidential Information. Each Party agrees to take all
commercially reasonable measures to prevent the Confidential Information from being acquired or
retained by unauthorized Persons (including Buyer preventing disclosures to other operating units
of GE) to the same extent it protects its own confidential and proprietary information, and Buyer
will not disclose the Confidential Information to other operating units of GE or third parties
(except for outside consultants and advisors of such party as needed to perform under this
Agreement and the Transaction Agreements) without the prior written consent of Seller, except as
permitted by the Agreement or the Transaction Agreements or as required by applicable law. Neither
Buyer nor any of its Affiliates, on the one hand, nor GE or any GE Affiliate, on the other hand,
may disclose or use the Confidential Information of Seller for any purpose other than the
performance of its obligations pursuant to this Agreement or the Transaction Agreements or as
required by applicable law (except for disclosure to outside

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	*	 	A confidential portion of material has been omitted and filed separately with the Commission

consultants and advisors of such party on an as-needed basis). To further this end, each Party
agrees to extend its respective obligations under this Section 15 for a period equal to the longer
of [*] or [*] following the termination of this Agreement. Notwithstanding the foregoing,
Confidential Information shall not include (a) information that is in the recipient’s possession
prior to disclosure to it (other than Confidential Information relating to MV Switchgear Products,
the MV Market or the GE Electrical Distribution Business acquired by Seller from Buyer), (b)
information that is or becomes publicly available, provided that such public availability does not
result from the misappropriation or misuse of such information by the recipient and (c) information
that is developed independently by the recipient without the use of any Confidential Information.
Any rights of access to information granted to either Party by the other Party in the Purchase
Agreement, including as set forth in Sections 1.7 and 4.3 thereof, shall hereby survive for the
Term of this Agreement.

ARTICLE 16

EXCUSABLE DELAYS

Except with respect to any obligation of payment, neither party shall be liable to the other for
delay in performance or failure to perform due to causes beyond its reasonable control including,
by way of example and not limitation, acts of God, acts of the other party, strikes, serious global
shortage of materials, earthquakes, storms, floods, wash-outs, explosions, breakage or accident to
equipment or machinery material to the development and construction of the Products, acts
(including failure to act) of any governmental authority, governmental priorities, fires, sabotage,
epidemics, wars, riots, terrorist acts, and which, in any event, is not a result of the negligence
or willful misconduct of the Party claiming the right to delay performance on account of such
occurrence. If the performance of a Party is excused by this Article, such Party agrees to furnish
the other Party with prompt written notice of the event that has prevented performance and agrees
to use reasonable commercial efforts to eliminate the effect of such event. If Seller is unable to
perform for more than thirty (30) days due to one of the causes above, Buyer may cancel the
affected Purchase Order without penalty to either Party. Delay of Seller’s suppliers or scarcity
of materials or parts or delays in transportation shall not excuse Seller’s performance hereunder
unless or except as is due to one of the causes noted above.

ARTICLE 17

NON-SOLICITATION

17.1 During the Term of this Agreement:

     (a) Neither Buyer nor Seller shall directly or indirectly solicit or induce any third party
sales representative that has a business relationship with the other Party or any of its Affiliates
in the MV Market to discontinue such existing relationship in the MV Market; or

     (b) Buyer shall not, for a period of four (4) years after the Effective Date, directly or
indirectly recruit, solicit, induce or influence any employee of Seller or any of Seller’s
Affiliates to discontinue such employment relationship, except for general solicitations such as
job fairs, print or media advertising, etc. or direct unsolicited inquiries by such employees; or

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	*	 	A confidential portion of material has been omitted and filed separately with the Commission.

     (c) Neither Party shall directly or indirectly denigrate or in any manner undertake to
discredit or disparage the other Party or, as may be applicable, any Affiliate or any successor
thereof or any person, operation or entity associated with the transactions contemplated by this
Agreement.

17.2 If the length of time, type of activity, geographic area or other restrictions set forth in
this Article 17 are deemed unreasonable in any court proceeding, the Parties hereto agree that the
court may reduce such restrictions to ones it deems reasonable, valid, and enforceable under
applicable laws to protect the substantial investment of both Parties in the MV Market, the
goodwill attached thereto, the mutually beneficial long-term relationship established in the
Agreement and the confidential information of both Parties relating to the Products.

17.3 Each Party understands that the other Party will not have an adequate remedy at law for the
breach or threatened breach of any one or more of the covenants set forth in this Article 17 and
agrees that in the event of any such breach or threatened breach, the non-breaching Party, in
addition to the other remedies which may be available to it, may file a suit to enjoin the
breaching Party from the breach or threatened breach of such covenants. In the event the
non-breaching Party commences legal action to enforce its rights under this Article 17, the
prevailing Party in such action shall be entitled to recover all of its costs and expenses in
connection therewith, including reasonable attorneys’ fees.

ARTICLE 18

INSURANCE

18.1 It is understood and agreed by the Parties that neither the policy limits of insurance
required of Seller under this Article 18 nor the actual amounts of insurance maintained by Seller
under its insurance program shall in any way limit or reduce Seller’s indemnity obligations under
this Agreement.

18.2 Seller shall obtain and at all times during the Term of this Agreement maintain at its own
expense public liability, property damage and other insurance coverage of not less than [*] per
occurrence with a cap of not less than [*] and with carriers reasonably acceptable to Buyer.
Seller shall also maintain at its own expense product liability insurance in the amount of at least
[*] per occurrence involving one person in any incident, and an additional [*] per occurrence
involving more than one person in any incident, naming Buyer as a co-insured party. The insurance
provided by Seller hereunder does not alleviate Seller from any of its obligations under this
Agreement.

18.3 Within ten (10) days after the Effective Date of this Agreement, Seller shall furnish Buyer
with a certificate of insurance as evidence of the above required insurance and that all coverages
provided shall be primary. The product liability insurance obtained must be occurrence based and
shall cover the actions of any subcontractor that Seller may utilize under this Agreement. Such
insurance shall require the underwriters to provide Buyer thirty (30) days

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advance written notice of any cancellation or adverse material change with respect to any of the
policies.

ARTICLE 19

INDEMNITY AND LIMITATION OF LIABILITY

19.1 Seller warrants that, the Products [*] furnished hereunder, and any part thereof, shall be
delivered free of any rightful claim of any third party for infringement of any patent or other
proprietary rights (including copyrights). Seller shall indemnify and hold Buyer, GE and Buyer’s
customers harmless against any actual or threatened Losses, subject to Articles 24 and 25
hereunder, based on a claim by a third party that the manufacture, use, offer to sell or sale of
any Products purchased by Buyer under this Contract constitutes an infringement of any patent(s) or
other proprietary rights (including copyrights) of any third party in the United States, and, if
notified promptly in writing by Buyer and given authority, information and assistance by Buyer (at
Seller’s expense), will defend any suit or proceeding brought against GE, Buyer, or its customers
insofar as it is based on such a claimed infringement, and Seller shall pay all damages and costs
awarded therein. If, as a result of any such suit or proceeding the use or sale of Products
purchased by Buyer from Seller under this Agreement is enjoined, Seller, at its own expense and
option, shall provide for Buyer’s supply of Products by (a) procuring the right for Buyer and
Buyer’s customers to use and sell such Products, (b) replacing the enjoined Products with
interchangeable Products which have substantially the same quality and performance but which are
non-infringing, or (c) authorizing Buyer to return its inventory of enjoined Products and refund to
Buyer the full purchase price of such Products and any direct costs of Buyer associated with such
return.

19.2 Seller assumes no liability for infringements of patent or other proprietary rights covering
any combination of the Products with any other product not supplied by Seller, any incorporated GE
products or components pursuant to Section 2 or any method or process in which the Products may be
used, where such infringement would not have occurred but for such combination or use.
Furthermore, Seller shall not be liable and Buyer will indemnify and hold Seller harmless for any
patent infringement or infringement of other proprietary rights arising from modifications made by
Buyer or made by Seller in compliance with Buyer’s design, specification or instruction, where such
infringement would not have occurred but for such modifications or compliance, except to the extent
that the infringement arises from the manufacturing process employed by Seller (unless such process
is specified in writing by the Buyer).

19.3 Seller agrees to indemnify and hold harmless Buyer from and against any Losses asserted by
third parties for:

     (a) except as provided below, damage to third party property (including economic or financial
loss), or for death or bodily injury, or both, that actually or allegedly results from (i) any
failure of Product to comply with the Product Specifications (functional, design or otherwise),
warranties or certifications of this Agreement; (ii) the negligence or willful misconduct of Seller
or its sub-suppliers (other than Buyer) in designing, manufacturing, or otherwise handling Product
or parts therefor, to the extent such damage or injury is attributable to the negligence or willful
misconduct of Seller; (iii) defects in Product giving rise to claims

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based on strict or product liability; (iv) failure to warn or inadequate warnings or
instructions, or (v) breach of this Agreement, except that, in the event that any such damage or
injury is caused by the joint or concurrent negligence of Seller and Buyer, the Loss shall be borne
by Seller and Buyer in proportion to their negligence; provided, however, Seller shall not be
liable for any claims arising from modifications or improper use made by Buyer in compliance with
Buyer’s designs, specifications or instructions or resulting from the incorporation of Buyer
products or components, where such claim would not have occurred but for such modifications,
compliance or incorporation. Specifications provided to Seller pursuant to the Acquisition under
the Purchase Agreement shall not be considered specifications furnished by Buyer for purposes of
this Section 19.3; or

     (b) violation by Seller in any material respect of any governmental laws, rules, ordinances or
regulations.

19.4 Buyer agrees to indemnify and hold harmless Seller from and against any Losses asserted by
third parties for:

     (a) any claims arising from (i) improper use or tampering by Buyer, (ii) modifications made in
compliance with Buyer’s designs, specifications or instructions, or (iii) the incorporation of
Buyer products or components, where such claim would not have occurred but for such modifications,
compliance, tampering or incorporation;

     (b) any claims arising from Buyer’s customers as a result of representations about or
warranties on Products made to such customer not consistent with the Seller’s representations about
or warranties on Products made to Buyer;

     (c) any claims arising from the [*];

     (d) any claims for personal or bodily injury, including death, suffered or incurred by Buyer’s
employees while performing acts pursuant to this Agreement, except to the extent caused by the
negligence or willful misconduct of Seller; or

     (e) breach of this Agreement.

19.5 In order to make a claim for indemnification under this Article 19, a Party seeking
indemnification must give the other Party prompt notice of any such claim and all necessary
information and assistance so such Party, at its option, may participate in the defense or
settlement of such claim and the Party seeking indemnification does not take any adverse position
to the other Party in connection with such claim.

24

 

19.6 In the event of any such claims, the indemnified Party shall: (1) promptly notify the
indemnifying Party, (2) at the indemnifying Party’s expense, reasonably cooperate with the
indemnified Party in the defense thereof, and (3) not settle any such claims without the
indemnifying Party’s consent which indemnifying Party agrees not to unreasonably withhold. The
indemnifying Party shall keep the indemnified Party informed at all times as to the status of the
indemnifying Party’s efforts and consult with the indemnified Party (or counsel to the indemnified
Party) concerning the indemnifying Party’s efforts; and, the indemnifying Party shall not settle
the claim without the indemnified Party’s prior written consent, which consent will not be
unreasonably withheld.

19.7 IN NO EVENT (OTHER THAN IN FULFILLMENT OF ITS INDEMNIFICATION OBLIGATIONS FOR THIRD PARTY
CLAIMS AND PRODUCT RECALL) WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING
NEGLIGENCE) OR OTHERWISE, SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL OR PUNITIVE DAMAGES INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFIT OR REVENUES, LOSS OF
USE OF THE PRODUCTS OR ANY ASSOCIATED EQUIPMENT, COST OF CAPITAL, COST OF SUBSTITUTE PRODUCTS,
FACILITIES, SERVICES OR REPLACEMENT POWER, OR DOWN TIME COSTS.

19.8 Additionally, Seller’s liability to Buyer for any Losses, subject to the provisions of
Articles 24 and 25 hereof, arising out of, or resulting from this Agreement, or from its
performance or breach, or from the Products furnished hereunder, shall not exceed the purchase
amount provided on the Purchase Order for the Products which gave rise to the claim, whether as a
result of breach of contract, warranty, tort (including negligence) or otherwise, except (a) as
otherwise mutually agreed by the Parties and provided on the applicable accepted Purchase Order, or
(b) in fulfillment of Seller’s indemnification obligations for third party claims and product
recall obligations hereunder.

19.9 The provisions of this Article 19 shall survive any termination or expiration of this
Agreement.

ARTICLE 20

PUBLIC DISCLOSURE

20.1 Seller may issue a press release regarding the Acquisition, this Agreement and the Transaction
Agreements immediately (but in no event later than thirty (30) days) following the Effective Date,
the substance of such announcement to be subject to reasonable changes by Buyer; provided however,
that Seller shall have final approval with respect to any such press release, other than with
respect to statements attributable to Buyer. Buyer may not make any public announcement with
respect to the Acquisition, this Agreement or the Transaction Agreements without the prior written
consent of Seller, which consent shall not be unreasonably withheld. Subject to the preceding
sentences, and except as otherwise agreed in writing by Seller and Buyer or as required by law or
regulation, each of Seller and Buyer shall maintain as

25

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

confidential the existence, terms and conditions of this Agreement and the Transaction Agreements.

20.2 Buyer acknowledges that Seller will be required under the rules and regulations (the “SEC
Rules”) promulgated by the Securities and Exchange Commission (the “SEC”) to file this Agreement
and one or more of the Transaction Agreements with the SEC within four days of the Effective Date.
Seller agrees to seek confidential treatment of certain sensitive provisions contained in such
documents in the manner prescribed under the SEC Rules (which, among other things, would require a
filing of the entire document to be mailed to the SEC one day prior to the required filing).
Seller and Buyer agree to work together in redacting such provisions of this Agreement and the
other Transaction Agreements prior to the date that they are required to be filed with the SEC. [*]
Notwithstanding the foregoing, Buyer acknowledges that the filing is ultimately Seller’s disclosure
requirement with the SEC. Seller can make no assurances that any of such provisions will not
ultimately be required to be filed in the event such request for confidential treatment is reviewed
by the SEC, and Buyer agrees that Seller will not be in violation of any provisions of this
Agreement or any other Transaction Agreement to the extent it is required to file such provisions
by the SEC.

ARTICLE 21

COMPLIANCE WITH LAW

21.1 After the Effective Date, the Parties and their respective agents, representatives and
affiliates, shall comply in all material respects with all applicable laws in performing their
obligations under this Agreement, including without limitation the following:

     (a) FCPA. Buyer and Seller are especially sensitive to and concerned about the application of
the U.S. Foreign Corrupt Practices Act (the “FCPA”) as amended by the International Anti-Bribery
and Fair Competition Act of 1998 which may be applicable to either of the Parties to this Agreement
within the jurisdiction of the United States and any of the U.S. citizens which may be principals
or shareholders or members or directors or officers of any of the Affiliates of either Party and,
accordingly, recognizes that the FCPA’s anti-bribery provisions prohibit the direct or indirect
payment of money or anything of value with corrupt intent to employees or officials of a foreign
government, public international organization, or political party in order to obtain or retain
business or to secure any improper advantage and that the record keeping and accounting provisions
thereof require the books, records and accounts are kept in reasonable detail and accurately and
fairly reflect transactions and dispositions of assets. Each Party agrees that neither it nor any
of its Affiliates will at any time engage in any action that would constitute a violation of the
FCPA.

     (b) OECD. Each Party represents that it is also familiar with and that the other Party is
concerned about the application of the Organization For Economic Cooperation and Development (the
“OECD”) promulgated by the Convention in Combating Bribery of Foreign Public Officials in
International Business Transactions (the “OECD Convention”).Each Party agrees that neither it nor
any of its Affiliates will at any time engage in any action that would constitute a violation of
the OECD.

26

 

     (c) Equal Opportunity. Each Party represents that it is in compliance and will remain in
compliance with any and all requirements imposed by law, regulation or Executive Order upon prime
contractors or subcontractors under contract with any governmental agency, including the Equal
Opportunity Clause set forth in 41 CFR Chapter 60-1.4, the Affirmative Action Clause regarding
Special Disabled Veterans and Veterans of the Vietnam Era set forth in 41 CFR Chapter 60-250.5(a),
the Affirmative Action Clause regarding Workers with Disabilities set forth in 41 CFR Chapter
60-741,5(a) and any other provisions of contractual clauses required by the OFCCP as set forth in
41 CFR Chapter 60, as well as any Executive Orders as now or hereafter issued, amended or codified
which requirements are incorporated herein by reference. By accepting or performing this Agreement,
each Party certifies in accordance with 41 CFR part 60 — 1.8 with respect to orders exceeding
$10,000 and not otherwise exempt from the Equal Opportunity Clause (E.O. 11246 as amended by E.O.
11375) that it does not and will not maintain segregated facilities or permit its employees to
perform services at any location under its contract where segregated facilities are maintained, and
that it will obtain similar certification before the award of any non-exempt contract. Executive
Order 13201 Compliance: Each Party agrees to comply with the provisions of 29 CFR 470.

     (d) Fair Labor Standards Act. Seller certifies and covenants that Products will be produced
and provided, in compliance with the requirements of the Fair Labor Standards Act of 1938, as
amended. Seller further certifies and covenants that none of the Products supplied hereunder have
been or will be produced or supplied (by Seller or its sub-suppliers (other than Buyer)) utilizing
forced, indentured, convict or child labor or utilizing the labor of persons in violation of the
minimum working age law in the country of manufacture or in any jurisdiction in which services are
provided, or in violation of minimum wage, hour of service or overtime laws of the country of
manufacture or provided services.

     (e) Import/Export Regulations.

          (i) Each Party and its Affiliates shall comply with applicable import and export laws and
regulations of the United States and of any other country in which they perform under this
Agreement and with all applicable export licenses and their provisions, including licenses to
import or export the Products.

          (ii) Upon either Party’s request, the other Party shall promptly furnish any necessary
documentation, including import certificates from the U.S. Government or any other relevant
government, which is reasonably necessary to support a Party’s application for import or export
authorizations issued by any relevant government.

          (iii) If any relevant government denies, fails to grant, or revokes any import or export
authorizations necessary for the performance of a Purchase Order under this Agreement, the Party
who receives such notice shall immediately notify the other Party, and neither Party shall be
responsible for performance or payment under this Agreement for any directly affected activities.

27

 

ARTICLE 22

ENVIRONMENTAL, HEALTH, SAFETY AND SECURITY

22.1 For all Products sold or otherwise transferred to Buyer under this Agreement containing
hazardous materials, Seller shall provide all relevant information pursuant to Occupational Safety
and Health Act (OSHA) regulations codified at 29 CFR 1910.1200, including completed Material Safety
Data Sheets (OSHA Form 20) and mandated labeling information, including information satisfying
similar EU MSDS/labeling requirements, or any similar requirements in any other jurisdictions to
which Buyer informs Seller the Products are likely to be shipped, whether or not the standard
applies to the activities of Seller.

22.2 Seller shall disclose to Buyer the existence of any and all hazardous materials contained in
Products and other materials sold or otherwise transferred to Buyer hereunder, which Products shall
not contain arsenic, asbestos, benzene, cadmium, carbon tetrachloride, hexavalent chromium, lead,
mercury, polybrominated biphenyls (PBB), polybominated diphenyl ethers (PBDE) (flame retardants),
polychlorinated biphenyls (PCB), any other hazardous substances the use of which is restricted
under EU Directive 2002/95/EU (27 January 2003) (RoHS Directive), as amended, or any other
chemicals currently restricted, or as may become restricted under the Montreal Protocol or any
other applicable law, rule or regulation in the place of final sale or to which Buyer informs
Seller the goods are likely to be shipped, unless Buyer expressly agrees otherwise in writing.

22.3 Seller also represents, certifies and covenants (i) that no substance contained in Products is
a “hazardous substance” as defined under CERCLA, or if so, that Products are produced in compliance
with applicable state and federal requirements and Occupational Safety and Health Act (OSHA)
regulations, and (ii) that any chemical substance constituting or contained in the Products is not
on the list of chemical substances compiled and published by the Administrator of the US
Environmental Protection Administration pursuant to the Toxic Substances Control Act (15 USC
Section 2601, et seq.) as amended, the European Inventory of Existing Commercial Chemical
Substances (EINECS), the European List of Notified Chemical Substances (ELINCS), or any equivalent
lists in any other jurisdiction to which Buyer informs Seller Products will likely be shipped. In
addition, Seller certifies that the Products, in all material respects, are in compliance with the
applicable laws, rules and regulations administered by the U.S. Environmental Protection Agency.

22.4 Seller covenants that any wood packing or wood pallet materials are in compliance with the
import restrictions and treatment requirements of the United States Code of Federal Regulations, 7
CFR 319.40-1 through 319.40-11, as may be changed or amended, and the International Plant
Protection Convention Standards on Wood Packing Materials. Seller shall provide Buyer with any
certifications required by Buyer to evidence such compliance.

28

 

ARTICLE 23

NO AGENCY

In performing its duties hereunder, Seller shall act solely as an independent contractor and not as
an agent, partner, joint venturer or employee of Buyer or its Affiliates. Neither Party shall
represent to third persons that Seller’s status with respect to Buyer is anything other than that
of an independent contractor. Neither Party shall have any express or implied right or authority
to assume or create any obligations on behalf or in the name of the other Party or to bind the
other Party to any contract or undertaking with any other person, nor shall such Party represent
that it has such authority. Seller shall not have the right to control and shall not exercise the
right to control, the acts, activities, or conduct of Buyer’s employees, and nothing contained
herein shall be deemed to make Seller a joint employer with respect to any employees of Buyer.

ARTICLE 24

ALTERNATIVE DISPUTE RESOLUTION

24.1 Alternative Dispute Resolution. Unless otherwise specified in this Agreement, any dispute
arising out of or relating to this Agreement shall be resolved in accordance with the procedures
specified in this Section 24, which shall be the required procedures for the attempt to resolve any
such disputes, and shall be a condition precedent to the right to demand arbitration pursuant to
Article 23.

24.2 Mandatory Negotiation.

     (a) The Parties shall attempt in good faith to resolve any dispute arising out of or relating
to this Agreement promptly by negotiation between the Parties. Any Party may give the other Party
written notice of any dispute not resolved in the normal course of business. Within fifteen (15)
days after delivery of the notice, the receiving Party shall submit to the other Party a written
response. The notice and the response shall include: (a) a statement of each Party’s position and a
summary of arguments supporting that position, and (b) the name and title of the executive,
employee or advisor who will represent that Party in meetings and of any other person who will
accompany the executive. Within thirty (30) days after delivery of the disputing Party’s notice,
the Parties shall meet at such location as mutually agreed by the Parties, at a mutually convenient
time and, thereafter, as often as they reasonably deem necessary to attempt to resolve the dispute.
All reasonable requests for information made by one party to the other will be honored.

     (b) If the matter has not been resolved to the satisfaction of both parties within sixty (60)
days of the initiating Party’s notice, or if the Parties fail to meet within thirty (30) days, then
the matter shall be brought before the Chief Executive Officer of Seller, on the one hand, and the
President and Chief Executive Officer of the Consumer & Industrial operating component of GE, on
the other hand, to negotiate a final resolution.

     (c) If the matter has not been resolved by the officers described in subsection (b) above to
the satisfaction of both Parties within thirty (30) days, either Party may initiate Arbitration
pursuant to Article 25.

29

 

24.3 Confidentiality. All negotiations, discussions, and communications made or conducted pursuant
to the procedures set forth in this Article 24 are confidential, constitute Confidential
Information hereunder and shall be treated as compromise and settlement negotiations for purposes
of the Federal Rules of Evidence and any other applicable rules of evidence.

ARTICLE 25

ARBITRATION

25.1 Any dispute or difference arising under this Agreement which cannot be resolved pursuant to
Article 24 shall be decided by arbitration in accordance with this Article. Any such arbitration
shall be conducted expeditiously and confidentially in accordance with the commercial Arbitration
Rules of the Judicial Arbitration and Mediation Service (“JAMS”) as such rules shall be in effect
on the date of delivery of demand for arbitration. Any such arbitration shall be heard and
conducted in Fulton County, Georgia. Notwithstanding the rules of the JAMS or as otherwise
provided in this Agreement, the arbitration panel in any such arbitration shall consist of three
persons who must be retired state or federal judges and shall have the authority to retain such
experts familiar with the switchgear manufacturing business as they deem necessary. Within twenty
(20) days of delivery of any demand for arbitration hereunder, the Party or Parties demanding
arbitration shall appoint one arbitrator, the Party or Parties responding to the arbitration demand
shall appoint one arbitrator and the two arbitrators so selected shall appoint the third arbitrator
within twenty (20) days of their appointment. If the two selected arbitrators are unable to agree
upon the selection of a third arbitrator after reasonable efforts, a panel of seven qualified
persons shall be requested from the JAMS. The Parties shall alternatively and successively strike
one person at a time, from such list; and the last remaining person on such list shall be the third
designated arbitrator. Once appointed, the arbitrators shall permit the Parties to engage in such
reasonable discovery as is requested and required. Each Party to the arbitration proceedings shall
be given a copy of all information submitted to the arbitrators and shall be given a reasonable
opportunity to respond to such information. Unless otherwise provided in this Agreement, each
Party shall pay the fees of its own attorneys, expenses of witnesses and all other expenses
connected with the presentation of such Party’s case in arbitration; provided, however, that the
ultimate costs of any arbitration, including the cost of the record or transcripts thereof, if any,
administrative fees, arbitrators’ costs and arbitration fees, and all other fees involved,
including reasonable attorney’s and expert’s fees, shall be borne by the Parties in the manner
established by the arbitrators. The arbitrators shall be required to render their decision within
thirty (30) days after the Parties have finished presenting the controversy to them. Temporary
injunctive or other similar temporary equitable relief may be sought and obtained pending the
arbitration of any matter pursuant to this Agreement.

25.2 The arbitrators shall consider customary and standard practices in the switchgear
manufacturing business, and shall decide the issues presented to them by a majority vote of the
arbitrators. All conclusions of law reached by the arbitrators shall be made in accordance with
the internal substantive laws of the State of New York without regard to conflict of laws
principles. Any award rendered by the arbitrators shall be accompanied by a written opinion
setting forth the findings of fact and conclusions of law relied upon in reaching their decision.
Any decision made by the arbitrators shall be final and binding on the Parties and there shall be
no appeal from the written decision of the arbitrators; judgment may be entered on the decision of
the arbitrators by any court having jurisdiction.

30

 

25.3 The Parties agree that the existence, conduct and content of any arbitration shall be kept
strictly confidential and no Party shall disclose to any person any information about such
arbitration, except as may be required by law or for financial reporting purposes in each Party’s
financial statements.

25.4 The provisions contained in this Article shall survive termination of this Agreement.

ARTICLE 26

WAIVER OF JURY TRIAL

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS
LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HAS ELECTED TO MAKE THE
DISPUTE RESOLUTION PROVISIONS OF ARTICLE 24 EXCLUSIVE AND FURTHER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR
VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (C) IT MAKES THIS WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS ARTICLE 26.

ARTICLE 27

AUTHORITY

Each Party, on behalf of itself and its Affiliates, hereto represents and warrants to the other
Party that such Party has all requisite power and authority to execute and deliver this Agreement
on its behalf and on behalf of its Affiliates, and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by each Party hereto and
constitutes the legal, valid and binding obligation of such Party, enforceable against such Party
in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, fraudulent conveyance and similar laws affecting creditors’ rights
and remedies generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in equity).

ARTICLE 28

AUDIT RIGHTS

28.1 Buyer shall keep true and correct work papers, receipts and other data supporting its purchase
requirements as set forth in Article 2 of this Agreement. At any time with reasonable notice to
Buyer and without unreasonable disruption to Buyer’s business, a third party representative of
Seller shall have full and complete access to the books and records, including

31

 

electronic records, reasonably related to the requirements described above. In addition, such
representative will have reasonable opportunities during this time to discuss the computations with
Buyer’s employees and representatives that are familiar with such requirements. The purpose of
this access to Buyer’s books and records and employees is for Seller, at its discretion, to audit
the fulfillment of such requirements. At no time will the third party representative take any
information off-site or make any copies or other reproductions. The third party representative
will not share its work papers but merely report a pass or fail and in the case of a fail, the
impact of failure. The third party representative will be at Seller’s expense.

28.2 To the extent that Seller has any objections to Buyer’s determination of its fulfillment of
the requirements described in Section 28.1 above, Seller shall provide a written notice to Buyer
stating any such objections and the basis for such objections. If a notice of objection is
delivered, the parties shall resolve the dispute pursuant to Articles 24 and/or 25 of this
Agreement.

ARTICLE 29

MISCELLANEOUS

29.1 Survival. Regardless of the circumstances of termination or expiration of this Agreement, the
provisions of Section 6.5 and Articles 12, 13, 14, 15, 18, 19, 23, 24 and 25 will survive the
termination or expiration and continue according to their terms.

29.2 Assignment. This Agreement shall not be assignable by any Party hereto without the prior
written consent of the other Party hereto, which consent shall not be unreasonably withheld;
provided, however, that either Party may freely assign without such consent its rights and
obligations under this Agreement to an Affiliate who is engaged in the business of electrical
products manufacturing; provided further, that, the assignee of this Agreement expressly accepts
this Agreement and assumes all of the obligations hereunder. In the event of such assignment, the
assignor shall not be deemed to be released from its obligations under this Agreement even though
the assignee has assumed all of the obligations of this Agreement unless and until the other Party
to this Agreement has accepted in writing the replacement of assignor with assignee. In every
instance, the assigning Party shall give the other Party written notice of intention to assign at
least thirty (30) days in advance of the assignment.

29.3 Notices. All notices, requests, demands, waivers, and other
communications made in connection with this Agreement shall be in writing and
shall be (a) mailed by first-class or certified mail, return receipt requested,
postage prepaid, (b) transmitted by hand delivery or reputable overnight
delivery service or (c) sent by facsimile transmission, addressed as follows:

32

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

	 	 	 	 	 
	 

	 	To Seller:	 	Powell Industries, Inc.
	 

	 	 	 	8550 Mosley Drive
	 

	 	 	 	Houston, Texas 77075
	 

	 	 	 	Attention: Chief Financial Officer
	 

	 	 	 	Facsimile: [*]

	 	 	 	 	 
	 

	 	With a copy to:	 	 
	 
	 	 	 	 
	 

	 	 	 	[*]
	 

	 	 	 	Winstead Sechrest & Minick P.C.
	 

	 	 	 	919 Milam Street, Suite 2400
	 

	 	 	 	Houston, Texas 77002
	 

	 	 	 	Facsimile: [*]

	 	 	 	 	 
	 

	 	To Buyer:
	 	General Electric Company
	 

	 	 	 	Chief Executive Officer
	 

	 	 	 	GE Consumer & Industrial Products
	 

	 	 	 	Appliance Park, Bldg. 35
	 

	 	 	 	Louisville, KY 40225
	 

	 	 	 	Facsimile: [*]
	 
	 	 	 	 
	 

	 	With a copy to:	 	 
	 
	 	 	 	 
	 

	 	 	 	General Electric Company
	 

	 	 	 	General Counsel
	 

	 	 	 	GE Consumer Products
	 

	 	 	 	Appliance Park, Bldg. 2
	 

	 	 	 	Louisville, KY 40225
	 

	 	 	 	Facsimile: [*]

or, in each case, at such other address as may be specified in writing to the other parties hereto.
All notices, requests, demands, waivers and other communications required to be given hereunder
shall be effective when delivered by hand, when deposited in the United States mail, with proper
postage for first-class or certified mail, prepaid or in the case of a facsimile, upon receipt of
confirmation of transmission by the transmitting equipment.

29.4 Amendments and Waivers. The provisions of this Agreement may not be amended, changed, waived,
extended, discharged or terminated orally but only by an instrument in writing, duly executed by
both Parties.

29.5 Applicable Law. Except as otherwise provided herein, this Agreement and all rights and
obligations hereunder, including matters of construction, validity and performance shall be
governed by the laws of the State of New York, without giving effect to the principles of conflicts
of laws thereof.

33

 

29.6 Severability. The invalidity, in whole or in part, of any of the articles or paragraphs of
this Agreement will not affect the remainder of such article or paragraph or any other article or
paragraph of this Agreement.

29.7 Complete Agreement. This Agreement, along with the Transaction Agreements and their Schedules
and Exhibits, constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the subject matter
hereof, including any agreements and understandings, whether oral or written, between Seller or any
of its Affiliates and Buyer or any of its Affiliates, including any of GE’s operating components or
divisions whether domestic or foreign, except that any existing supply agreements between Seller
and GE (except Buyer) shall remain in full force and effect. This Agreement is intended, as of the
Effective Date, to supersede and replace that certain Sourced Product Purchase Agreement by and
between the Parties dated June 3, 2005.

29.8 Expenses. Unless otherwise stated herein or in any related agreement, each of the Parties
shall bear and pay their respective expenses, costs and fees in connection with the transactions
contemplated hereby, including the fees and expenses related to the preparation, execution and
delivery of this Agreement and the fees and expenses of any attorneys, accountants or other
professionals.

29.9 Headings. The headings contained in this Agreement are for convenience of reference only and
shall not affect the meaning or interpretation of this Agreement.

29.10 Counterparts. This Agreement may be executed in several counterparts, each of which shall be
deemed an original and all of which shall together constitute one and the same instrument.

29.11 No Third Party Beneficiaries. Nothing in this Agreement shall confer any rights upon any
person or entity other than the parties hereto and their respective successors and permitted
assigns.

29.12 Payment of Fees. Notwithstanding anything in Articles 24 or 25 to the contrary, neither
Party shall withhold any payment that is due pursuant to this Agreement and the amount for which is
not otherwise in dispute.

34

 

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and
year first written herein.

	 	 	 	 	 	 	 	 	 
	SELLER:	 	BUYER:	 	 
	 
	 	 	 	 	 	 	 	 
	POWELL INDUSTRIES, INC.	 	GENERAL ELECTRIC COMPANY	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	GE Consumer & Industrial	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 /s/ Don R. Madision	 	By:	 	 /s/ Paul J. Foody	 	 
	 

	 	 

Don R. Madison,
	 	Name:
	 	 
Paul
J. Foody	 	 
	 

	 	Vice President and Chief Financial Officer
	 	Title:
	 	 
GM-Electrical
Distribution
	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	GENERAL ELECTRIC COMPANY	 	 
	 	 	 	 	GE Energy	 	 
	 	 	 	 	for the limited purposes set forth in the
first paragraph of this Agreement:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 /s/ Robert J. Gilligan	 	 
	 

	 	 	 	Name:
	 	 
Robert
J. Gilligan
	 	 
	 

	 	 	 	Title:
	 	 
GM,
GE
Energy Services
	 	 
	 

	 	 	 	 	 	 

	 	 

35

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

	 	 	 
	 

	 	Exhibit A

Burlington Products

	 	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	VB1-4.16-250-X
	 	1200	 	4.76	 	ML-18	 	PV-52B
	VB1-4.16-250-X
	 	2000	 	4.76	 	ML-18	 	PV-52B
	VB1-4.16-250-X
	 	1200	 	4.76	 	ML-18	 	PV-52E
	VB1-4.16-250-X
	 	2000	 	4.76	 	ML-18	 	PV-52E
	VB-4.16-250-X
	 	3000	 	4.76	 	ML-17	 	PV-43A
	VB1H-4.16-250-X
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	VB-4.16-250-X
	 	3500	 	4.76	 	ML-17	 	PV-43A
	VB1H-4.16-250-X
	 	3500	 	4.76	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VB1-4.16-350-X
	 	1200	 	4.76	 	ML-18	 	PV-44B
	VB1-4.16-350-X
	 	2000	 	4.76	 	ML-18	 	PV-44B
	VB-4.16-350-X
	 	3000	 	4.76	 	ML-17	 	PV-43A
	VB1H-4.16-350-X
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	VB-4.16-350-X
	 	3500	 	4.76	 	ML-17	 	PV-43A
	VB1H-4.16-350-X
	 	3500	 	4.76	 	ML-18H	 	PV-43B
	VB1-4.16-350-X(3)
	 	1200	 	4.76	 	ML-18	 	PV-44B
	VB1-4.16-350-X(3)
	 	2000	 	4.76	 	ML-18H	 	PV-44B
	VB1H-4.16-350-X(3)
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VBH-4.16-450-X
	 	1200	 	4.76	 	ML-17H	 	PV-67A OR 67B
	VBH-4.16-450-X
	 	2000	 	4.76	 	ML-17H	 	PV-67A OR 67B
	VBH-4.16-450-X
	 	3000	 	4.76	 	ML-17H	 	PV-67A OR 67B
	VBH-4.16-450-X
	 	3500	 	4.76	 	ML-17H	 	PV-67A OR 67B
	 
	 	 	 	 	 	 	 	 
	VB1-7.2-500-X
	 	1200	 	8.25	 	ML-18	 	PV-41A
	VB1-7.2-500-X
	 	2000	 	8.25	 	ML-18	 	PV-41A
	VB-7.2-500-X
	 	3000	 	8.25	 	ML-17	 	PV-43A
	VB1H-7.2-500-X
	 	3000	 	8.25	 	ML-18H	 	PV-43B
	VB-7.2-500-X
	 	3500	 	8.25	 	ML-17	 	PV-43A
	VB1H-7.2-500-X
	 	3500	 	8.25	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VBH-7.2-785-X
	 	1200	 	8.25	 	ML-17H	 	PV-67A OR 67B
	VBH-7.2-785-X
	 	2000	 	8.25	 	ML-17H	 	PV-67A OR 67B
	VBH-7.2-785-X
	 	3000	 	8.25	 	ML-17H	 	PV-67A OR 67B
	VBH-7.2-785-X
	 	3500	 	8.25	 	ML-17H	 	PV-67A OR 67B
	 
	 	 	 	 	 	 	 	 
	VB1-13.8-500-X
	 	1200	 	15.0	 	ML-18	 	PV-50E
	VB1-13.8-500-X
	 	2000	 	15.0	 	ML-18	 	PV-50E
	VB-13.8-500-X
	 	3000	 	15.0	 	ML-17	 	PV-43A
	VB1H-13.8-500-X
	 	3000	 	15.0	 	ML-18H	 	PV-43B
	VB-13.8-500-X
	 	3500	 	15.0	 	ML-17	 	PV-43A
	VB1H-13.8-500-X
	 	3500	 	15.0	 	ML-18H	 	PV-43B
	VB1-13.8-500-X (3)
	 	1200	 	15.0	 	ML-18	 	PV-41A
	VB1-13.8-500-X (3)
	 	2000	 	15.0	 	ML-18	 	PV-41A
	 
	 	 	 	 	 	 	 	 
	VB1-13.8-750-X
	 	1200	 	15.0	 	ML-18	 	PV-41A
	VB1-13.8-750-X
	 	2000	 	15.0	 	ML-18	 	PV-41A
	VB-13.8-750-X
	 	3000	 	15.0	 	ML-17	 	PV-43A

36

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

	 	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	VB1H-13.8-750-X
	 	3000	 	15.0	 	ML-18H	 	PV-43B
	VB-13.8-750-X
	 	3500	 	15.0	 	ML-17	 	PV-43A
	VB1H-13.8-750-X
	 	3500	 	15.0	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VB1-13.8-1000-X
	 	1200	 	15.0	 	ML-18	 	PV-44B
	VB1-13.8-1000-X
	 	2000	 	15.0	 	ML-18	 	PV-44B
	VB-13.8-1000-X
	 	3000	 	15.0	 	ML-17	 	PV-43A
	VB1H-13.8-1000-X
	 	3000	 	15.0	 	ML-18H	 	PV-43B
	VB-13.8-1000-X
	 	3500	 	15.0	 	ML-17	 	PV-43A
	VB1H-13.8-1000-X
	 	3500	 	15.0	 	ML-18H	 	PV-43B
	VB1-13.8-1000-X (3)
	 	1200	 	15.0	 	ML-18	 	PV-44B
	VB1-13.8-1000-X (3)
	 	2000	 	15.0	 	ML-18	 	PV-44B
	VB1H-13.8-1000-X(3)
	 	3000	 	15.0	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VBH-13.8-1500-X
	 	1200	 	15.0	 	ML-17H	 	PV-67A OR 67B
	VBH-13.8-1500-X
	 	2000	 	15.0	 	ML-17H	 	PV-67A OR 67B
	VBH-13.8-1500-X
	 	3000	 	15.0	 	ML-17H	 	PV-67A OR 67B
	VBH-13.8-1500-X
	 	3500	 	15.0	 	ML-17H	 	PV-67A OR 67B
	 
	[*]
	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	VB1-4.76-31.5-X
	 	1200	 	4.76	 	ML-18	 	PV-52E
	VB1-4.76-31.5-X
	 	2000	 	4.76	 	ML-18	 	PV-52E
	VB1-4.76-31.5-X
	 	1200/2000	 	4.76	 	ML-18	 	PV-52E
	VB1-4.76-31.5-X (3)
	 	1200	 	4.76	 	ML-18	 	PV-52E
	VB1-4.76-31.5-X (3)
	 	2000	 	4.76	 	ML-18	 	PV-52E
	VB1-4.76-31.5-X (3)
	 	1200/2000	 	4.76	 	ML-18	 	PV-52E
	VB1-4.76-31.5-X
	 	1200	 	4.76	 	ML-18	 	PV-41A
	VB1-4.76-31.5-X
	 	2000	 	4.76	 	ML-18	 	PV-41A
	VB1-4.76-31.5-X
	 	1200/2000	 	4.76	 	ML-18	 	PV-41A
	VB1H-4.76-31.5-X
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	VB1H-4.76-31.5-X
	 	3500	 	4.76	 	ML-18H	 	PV-43B
	VB1-4.76-31.5-X (3)
	 	1200	 	4.76	 	ML-18	 	PV-41A
	VB1-4.76-31.5-X (3)
	 	2000	 	4.76	 	ML-18	 	PV-41A
	VB1-4.76-31.5-X (3)
	 	1200/2000	 	4.76	 	ML-18	 	PV-41A
	VB1H-4.76-31.5-X (3)
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	VB1H-4.76-31.5-X (3)
	 	3500	 	4.76	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VB1-4.76-40-X
	 	1200	 	4.76	 	ML-18	 	PV-44B
	VB1-4.76-40-X
	 	2000	 	4.76	 	ML-18	 	PV-44B
	VB1H-4.76-40-X
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	VB1H-4.76-40-X
	 	3500	 	4.76	 	ML-18H	 	PV-43B
	VB1-4.76-40-X (3)
	 	1200	 	4.76	 	ML-18	 	PV-44B
	VB1-4.76-40-X (3)
	 	2000	 	4.76	 	ML-18	 	PV-44B
	VB1H-4.76-40-X(3)
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	VB1H-4.76-40-X(3)
	 	3500	 	4.76	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VB1-4.76-50-X
	 	1200	 	4.76	 	ML-18	 	PV-44B

37

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

	 	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	VB1-4.76-50-X
	 	2000	 	4.76	 	ML-18	 	PV-44B
	VB1H-4.76-50-X
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	VB1H-4.76-50-X
	 	3500	 	4.76	 	ML-18H	 	PV-43B
	VB1-4.76-50-X (3)
	 	1200	 	4.76	 	ML-18	 	PV-44B
	VB1-4.76-50-X (3)
	 	2000	 	4.76	 	ML-18	 	PV-44B
	VB1H-4.76-50-X(3)
	 	3000	 	4.76	 	ML-18H	 	PV-43B
	VB1H-4.76-50-X(3)
	 	3500	 	4.76	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VBH-4.76-63-X
	 	1200	 	4.76	 	ML-17H	 	PV-67A or 67B
	VBH-4.76-63-X
	 	2000	 	4.76	 	ML-17H	 	PV-67A or 67B
	VBH-4.76-63-X
	 	3000	 	4.76	 	ML-17H	 	PV-67A or 67B
	VBH-4.76-63-X
	 	3500	 	4.76	 	ML-17H	 	PV-67A or 67B
	 
	 	 	 	 	 	 	 	 
	VB1-8.25-40-X
	 	1200	 	8.25	 	ML-18	 	PV-44B
	VB1-8.25-40-X
	 	2000	 	8.25	 	ML-18	 	PV-44B
	VB1H-8.25-40-X
	 	3000	 	8.25	 	ML-18H	 	PV-43B
	VB1H-8.25-40-X
	 	3500	 	8.25	 	ML-18H	 	PV-43B
	VB1-8.25-40-X (3)
	 	1200	 	8.25	 	ML-18	 	PV-44B
	VB1-8.25-40-X (3)
	 	2000	 	8.25	 	ML-18	 	PV-44B
	VB1H-8.25-40-X(3)
	 	3000	 	8.25	 	ML-18H	 	PV-43B
	VB1H-8.25-40-X(3)
	 	3500	 	8.25	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VBH-8.25-50-X
	 	1200	 	8.25	 	ML-17H	 	PV-66A
	VBH-8.25-50-X
	 	2000	 	8.25	 	ML-17H	 	PV-66A
	VBH-8.25-50-X (3)
	 	1200	 	8.25	 	ML-17H	 	PV-66A
	VBH-8.25-50-X (3)
	 	2000	 	8.25	 	ML-17H	 	PV-66A
	VBH-8.25-50-X (3)
	 	1200	 	8.25	 	ML-17H	 	PV-67A/67B
	VBH-8.25-50-X (3)
	 	2000	 	8.25	 	ML-17H	 	PV-67A/67B
	VBH-8.25-50-X (3)
	 	3000	 	8.25	 	ML-17H	 	PV-67A/67B
	VBH-8.25-50-X (3)
	 	3500	 	8.25	 	ML-17H	 	PV-67A/67B
	VBH-8.25-50-X
	 	1200	 	8.25	 	ML-17H	 	PV-67A or 67B
	VBH-8.25-50-X
	 	2000	 	8.25	 	ML-17H	 	PV-67A or 67B
	VBH-8.25-50-X
	 	3000	 	8.25	 	ML-17H	 	PV-67A or 67B
	VBH-8.25-50-X
	 	3500	 	8.25	 	ML-17H	 	PV-67A or 67B
	 
	 	 	 	 	 	 	 	 
	VBH-8.25-63-X
	 	1200	 	8.25	 	ML-17H	 	PV-67A or 67B
	VBH-8.25-63-X
	 	2000	 	8.25	 	ML-17H	 	PV-67A or 67B
	VBH-8.25-63-X
	 	3000	 	8.25	 	ML-17H	 	PV-67A or 67B
	VBH-8.25-63-X
	 	3500	 	8.25	 	ML-17H	 	PV-67A or 67B
	 
	 	 	 	 	 	 	 	 
	VB1-15-20-X
	 	1200	 	15	 	ML-18	 	PV-50E
	VB1-15-20-X
	 	2000	 	15	 	ML-18	 	PV-50E
	VB1-15-20-X
	 	1200/2000	 	15	 	ML-18	 	PV-50E
	VB1H-15-20-X
	 	3000	 	15	 	ML-18H	 	PV-43B
	VB1H-15-20-X
	 	3500	 	15	 	ML-18H	 	PV-43B
	VB1-15-20-X (3)
	 	1200	 	15	 	ML-18	 	PV-41A
	VB1-15-20-X (3)
	 	2000	 	15	 	ML-18	 	PV-41A
	VB1-15-20-X (3)
	 	1200/2000	 	15	 	ML-18	 	PV-41A
	VB1H-15-20-X(3)
	 	3000	 	15	 	ML-18H	 	PV-43B
	VB1H-15-20-X(3)
	 	3500	 	15	 	ML-18H	 	PV-43B

38

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

	 	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	VB1-15-25-X
	 	1200	 	15	 	ML-18	 	PV-41A
	VB1-15-25-X
	 	2000	 	15	 	ML-18	 	PV-41A
	VB1-15-25-X
	 	1200/2000	 	15	 	ML-18	 	PV-41A
	VB1H-15-25-X
	 	3000	 	15	 	ML-18H	 	PV-43B
	VB1H-15-25-X
	 	3500	 	15	 	ML-18H	 	PV-43B
	VB1-15-25-X (3)
	 	1200	 	15	 	ML-18	 	PV-41A
	VB1-15-25-X (3)
	 	2000	 	15	 	ML-18	 	PV-41A
	VB1-15-25-X (3)
	 	1200/2000	 	15	 	ML-18	 	PV-41A
	VB1H-15-25-X(3)
	 	3000	 	15	 	ML-18H	 	PV-43B
	VB1H-15-25-X(3)
	 	3500	 	15	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VB1-15-31.5-X
	 	1200	 	15	 	ML-18	 	PV-41A
	VB1-15-31.5-X
	 	2000	 	15	 	ML-18	 	PV-41A
	VB1-15-31.5-X
	 	1200/2000	 	15	 	ML-18	 	PV-41A
	VB1H-15-31.5-X
	 	3000	 	15	 	ML-18H	 	PV-43B
	VB1H-15-31.5-X
	 	3500	 	15	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VB1-15-31.5-X (3)
	 	1200	 	15	 	ML-18	 	PV-41A
	VB1-15-31.5-X (3)
	 	2000	 	15	 	ML-18	 	PV-41A
	VB1-15-31.5-X (3)
	 	1200/2000	 	15	 	ML-18	 	PV-41A
	VB1H-15-31.5-X (3)
	 	3000	 	15	 	ML-18H	 	PV-43B
	VB1H-15-31.5-X (3)
	 	3500	 	15	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VB1-15-40-X
	 	1200	 	15	 	ML-18	 	PV-44B
	VB1-15-40-X
	 	2000	 	15	 	ML-18	 	PV-44B
	VB1H-15-40-X
	 	3000	 	15	 	ML-18H	 	PV-43B
	VB1H-15-40-X
	 	3500	 	15	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VB1-15-40-X (3)
	 	1200	 	15	 	ML-18	 	PV-44B
	VB1-15-40-X (3)
	 	2000	 	15	 	ML-18	 	PV-44B
	VB1H-15-40-X (3)
	 	3000	 	15	 	ML-18H	 	PV-43B
	VB1H-15-40-X (3)
	 	3500	 	15	 	ML-18H	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	VBH-15-50-X
	 	1200	 	15	 	ML-17H	 	PV-66A
	VBH-15-50-X
	 	2000	 	15	 	ML-17H	 	PV-66A
	 
	 	 	 	 	 	 	 	 
	VBH-15-50-X (3)
	 	1200	 	15	 	ML-17H	 	PV-66A
	VBH-15-50-X (3)
	 	2000	 	15	 	ML-17H	 	PV-66A
	 
	 	 	 	 	 	 	 	 
	VBH-15-50-X (3)
	 	1200	 	15	 	ML-17H	 	PV-67A/67B
	VBH-15-50-X (3)
	 	2000	 	15	 	ML-17H	 	PV-67A/67B
	VBH-15-50-X (3)
	 	3000	 	15	 	ML-17H	 	PV-67A/67B
	VBH-15-50-X (3)
	 	3500	 	15	 	ML-17H	 	PV-67A/67B
	 
	VBH-15-50-X
	 	1200	 	15	 	ML-17H	 	PV-67A or 67B
	VBH-15-50-X
	 	2000	 	15	 	ML-17H	 	PV-67A or 67B
	VBH-15-40-X
	 	3000	 	15	 	ML-17H	 	PV-67A or 67B
	VBH-15-40-X
	 	3500	 	15	 	ML-17H	 	PV-67A or 67B

39

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

	 	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	VBH-15-63-X
	 	1200	 	15	 	ML-17H	 	PV-67A or 67B
	VBH-15-63-X
	 	2000	 	15	 	ML-17H	 	PV-67A or 67B
	VBH-15-63-X
	 	3000	 	15	 	ML-17H	 	PV-67A or 67B
	VBH-15-63-X
	 	3500	 	15	 	ML-17H	 	PV-67A or 67B

	 	 	 
	[*]
	 	 
	[*]
	 	 
	5kV — 250 MVA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	5kV — 350 MVA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 500 MVA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 750 MVA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 1000 MVA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 1500 MVA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	 
	 	 
	5kV — 31.5kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	5kV — 40kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	5kV — 50kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	5kV — 63kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 20kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 31.5kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 40kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 50kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC
	15kV — 63kA NEMA 1, 3R

	 	1200, 2000, 3000, 3500, and 4000FC

	 	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	VB2-27-16

	 	1200	 	27	 	ML-20
	 	PV-80A
	VB2-27-16

	 	2000	 	27	 	ML-20
	 	PV-80A
	VB2-27-25

	 	1200	 	27	 	ML-20
	 	PV-80A
	VB2-27-25

	 	2000	 	27	 	ML-20
	 	PV-80A
	[*]
	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 
	PVDB1-15.5-12

	 	600	 	15.5	 	ML-18
	 	PV-50E
	PVDB1-15.5-16

	 	800	 	15.5	 	ML-18
	 	PV-50E
	PVDB1-15.5-16

	 	1200	 	15.5	 	ML-18
	 	PV-50E
	PVDB1-15.5-20

	 	1200	 	15.5	 	ML-18
	 	PV-50E
	PVDB1-15.5-20

	 	2000	 	15.5	 	ML-18
	 	PV-41A
	PVDB1-15.5-25

	 	1200	 	15.5	 	ML-18
	 	PV-41A
	PVDB1-15.5-25

	 	2000	 	15.5	 	ML-18
	 	PV-41A
	PVDB1-15.5-40

	 	1200	 	15.5	 	ML-18
	 	PV-44A
	PVDB1-15.5-40

	 	2000	 	15.5	 	ML-18
	 	PV-44A
	PVDB1-15.5-40

	 	3000	 	15.5	 	ML-18H
	 	PV-43B
	 
	 	 	 	 	 	 	 	 
	PVDB2-28.0-12

	 	1200	 	28.0	 	ML-20
	 	PV-81A or PV-81B

40

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

	 	 	 	 	 	 	 	 	 	 	 	 	 
	PVDB2-28.0-20

	 	 	1200	 	 	 	28.0	 	 	ML-20
	 	PV-81A or PV-81B
	PVDB2-28.0-25

	 	 	1200	 	 	 	28.0	 	 	ML-20
	 	PV-81A or PV-81B 20
	PVDB2-28.0-12

	 	 	2000	 	 	 	28.0	 	 	ML-20
	 	PV-81A or PV-81B
	PVDB2-28.0-20

	 	 	2000	 	 	 	28.0	 	 	ML-20
	 	PV-81A or PV-81B
	PVDB2-28.0-12

	 	 	2000	 	 	 	28.0	 	 	ML-20
	 	PV-81A or PV-81B
	[*]
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	[*]
	 	 	 	 	 	 	 	 	 	 	 	 
	[*]
	 	 	 	 	 	 	 	 	 	 	 	 
	PV VL-4.16-250

	 	 	1200	 	 	 	4.76	 	 	ML-19
	 	PV-52F
	PV VL-4.16-250

	 	 	2000	 	 	 	4.76	 	 	ML-19
	 	PV-52F
	PV HD-4.16-250

	 	 	1200	 	 	 	4.76	 	 	ML-19
	 	PV-52F
	PV-VL-7.2-250

	 	 	1200	 	 	 	8.25	 	 	ML-18
	 	PV-41A
	PV-VL-7.2-250

	 	 	2000	 	 	 	8.25	 	 	ML-18
	 	PV-41A
	PV-VL-7.2-500

	 	 	1200	 	 	 	8.25	 	 	ML-17
	 	PV-43A
	PV-VL-7.2-500

	 	 	2000	 	 	 	8.25	 	 	ML-18
	 	PV-41A
	PV-VL-7.2-500

	 	 	2500	 	 	 	8.25	 	 	ML-17
	 	PV-43A
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PV-VL -13.8-150

	 	 	1200	 	 	 	15.0	 	 	ML-18
	 	PV-50E
	PV-VL -13.8-150

	 	 	2000	 	 	 	15.0	 	 	ML-18
	 	PV-50E
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PV-VL -13.8-250

	 	 	1200	 	 	 	15.0	 	 	ML-18
	 	PV-50E
	PV-VL -13.8-250

	 	 	2000	 	 	 	15.0	 	 	ML-18
	 	PV-50E
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PV-VL -13.8-500

	 	 	1200	 	 	 	15.0	 	 	ML-18
	 	PV-50E
	PV-VL -13.8-500

	 	 	2000	 	 	 	15.0	 	 	ML-18
	 	PV-50E
	PV-VL -13.8-500

	 	 	3000	 	 	 	15.0	 	 	ML-17
	 	PV-43A
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PV-VL -13.8-750

	 	 	1200	 	 	 	15.0	 	 	ML-18
	 	PV-41A
	PV-VL -13.8-750

	 	 	2000	 	 	 	15.0	 	 	ML-18
	 	PV-41A
	PV-VL -13.8-750

	 	 	3000	 	 	 	15.0	 	 	ML-17
	 	PV-43A
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PV-VL -13.8-1000

	 	 	1200	 	 	 	15.0	 	 	ML-18
	 	PV-44B
	PV-VL -13.8-1000

	 	 	2000	 	 	 	15.0	 	 	ML-18
	 	PV-44B
	PV-VL -13.8-1000

	 	 	3000	 	 	 	15.0	 	 	ML-17
	 	PV-43A

[*]

41

 

 

			
	*	 	A confidential portion of material has been omitted and filed separately with the Commission

SCHEDULE 5.1(a)

[*]

For the
period from the date of this Agreement until December 31, 2006, Buyer
shall be entitled to the following [*]:

	 	 	 
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]

For the
annual periods from January 1, 2007 until December 31, 2013, Buyer
shall be entitled to the following [*]:

	 	 	 
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]

For the annual periods from January 1, 2014 until this Agreement expires or is terminated, Buyer
shall be entitled to the following [*]:

	 	 	 
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]

[*].exv10w19

Exhibit 10.19

	 	 	 
	 

	 	CorVel Corporation
	Notice of Grant of Stock Options

	 	ID: 33-0282651
	and Option Agreement

	 	2010 Main Street Suite 600
	 

	 	Irvine, California 92614

Daniel J. Starck

You have been granted an option to acquire CorVel Corporation (the “Corporation”)
common stock (the “Common Stock”) as follows:

	 	 	 	 	 
	Non-Qualified Stock Option Grant No.

	 	 	003734	 
	Date of Grant

	 	 	2/4/2008	 
	Stock Option Plan

	 	 	1988	 
	Option Price Per Share

	 	$	25.10	 
	Total Number of Shares Granted

	 	 	6,000.00	 
	Total Price of Shares Granted

	 	$	150,600.00	 
	Expiration Date

	 	 	2/4/2013	 

Provided you continue to be a Service Provider (as defined in the Stock Option
Agreement attached hereto as Exhibit A) throughout the specified period, the Option
will become exercisable in accordance with Schedule A.

Optionee (and Optionee’s spouse) hereby agree(s) that the option is granted pursuant
to and in accordance with the express terms and conditions of the Stock Option
Agreement and the Corporation’s Restated Omnibus Incentive Plan.

	 	 	 
	/s/ V. Gordon Clemons

	 	2/11/2008

	 

	 	 
	CorVel Corporation

	 	Date
	 
	 	 
	/s/ Daniel J. Starck

	 	2/11/2008

	 

	 	 
	Daniel J. Starck

	 	Date
	 
	 	 
	 

	 	 
	Spouse

	 	Date

			
	 
	 	Date:     2/6/2008    
	 	 	 
	 
	 	Time:     3:14:22PM

 

 

CONFIDENTIAL TREATMENT REQUESTED

Schedule A

February 2008 Performance Option

Grant: 6,000 shares

Definitions:

“Revenue” shall mean all revenues recognized in the Company’s external financial statements during
each of the respective calendar years from the combination of: i) the Company’s Enterprise Comp
customers for the purchase of claims management and related claims services, including case
management and bill review, and ii) the Company’s MedCheck Select out-of-network bill review and
professional review services. The Targets and the Alternative Targets shall be adjusted upward
for any proforma expected annual revenue (as determined and approved by the Compensation Committee
of Board of Directors based upon the acquired entity’s most recent quarter financial statements)
acquired through acquisition of another entity at any time after January 1, 2008. The Targets and
Alternative Targets shall be adjusted on a pro rata basis by the amount of such annualized
revenue of the acquired entity upon the Closing of the acquisition.

“Calendar 2009 Achieve Target” shall mean the Company recognizes Revenue of at least
$[**,***,***]* during calendar year 2009.

“Calendar 2009 Achieve Alternate Target” shall mean the Company recognizes Revenue of at least
$[**,***,***]* during calendar year 2009.

“Calendar 2010 Achieve Target” shall mean the Company recognizes Revenue of at least
$[***,***,***]* during calendar year 2010.

“Calendar 2010 Achieve Alternate Target” shall mean the Company recognizes Revenue of at least
$[***,***,***]* during calendar year 2010.

“Calendar 2011 Achieve Target” shall mean the Company recognizes Revenue of at least
$[***,***,***]* during calendar year 2011.

“Calendar 2011 Achieve Alternate Target” shall mean the Company recognizes Revenue of at least
$[***,***,***]* during calendar year 2011.

Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to
them in the Stock Option Agreement.

 

			
	**	 	Confidential treatment requested pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934. In accordance with Rule 24b-2, these confidential portions have been omitted from this
exhibit and filed separately with the Securities Exchange Commission.

 

 

CONFIDENTIAL TREATMENT REQUESTED

Vesting Schedule:

Upon the Company achieving the specified targets set forth in the table below, the Option shall
become exercisable during each stated calendar year for the number of Option Shares set forth
opposite such targets described in the table below.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Performance Vesting	 	 	 
	Performance	 	Number of Option Shares That Will Vest †	 
	 	 	 	 	 	 	Calendar	 	 	Calendar	 	 	Calendar	 	 	 	 
	Calendar 2009	 	Calendar 2010	 	Calendar 2011	 	2009	 	 	2010	 	 	2011	 	 	Total	 
	 	 	   	 	 	 
	Achieve Target
	 	Fail to Achieve Any Target	 	Fail to Achieve Any Target	 	 	1,800	 	 	 	0	 	 	 	0	 	 	 	1,800	 
	Achieve Target
	 	Fail to Achieve Any Target	 	Achieve Alternate Target	 	 	1,800	 	 	 	0	 	 	 	1,500	 	 	 	3,300	 
	Achieve Target
	 	Fail to Achieve Any Target	 	Achieve Target	 	 	1.800	 	 	 	0	 	 	 	3,000	 	 	 	4,800	 
	Achieve Target
	 	Achieve Alternate Target	 	Fail to Achieve Any Target	 	 	1,800	 	 	 	900	 	 	 	0	 	 	 	2,700	 
	Achieve Target
	 	Achieve Alternate Target	 	Achieve Alternate Target	 	 	1,800	 	 	 	900	 	 	 	1,200	 	 	 	3,900	 
	Achieve Target
	 	Achieve Alternate Target	 	Achieve Target	 	 	1,800	 	 	 	900	 	 	 	2,400	 	 	 	5,100	 
	Achieve Target
	 	Achieve Target	 	Fail to Achieve Any Target	 	 	1.800	 	 	 	1.800	 	 	 	0	 	 	 	3,600	 
	Achieve Target
	 	Achieve Target	 	Achieve Alternate Target	 	 	1,800	 	 	 	1,800	 	 	 	1,200	 	 	 	4,800	 
	Achieve Target
	 	Achieve Target	 	Achieve Target	 	 	1,800	 	 	 	1,800	 	 	 	2,400	 	 	 	6,000	 
	Achieve Alternate Target
	 	Fail to Achieve Any Target	 	Fail to Achieve Any Target	 	 	900	 	 	 	0	 	 	 	0	 	 	 	900	 
	Achieve Alternate Target
	 	Fail to Achieve Any Target	 	Achieve Alternate Target	 	 	900	 	 	 	0	 	 	 	1,500	 	 	 	2,400	 
	Achieve Alternate Target
	 	Fail to Achieve Any Target	 	Achieve Target	 	 	900	 	 	 	0	 	 	 	3,000	 	 	 	3,900	 
	Achieve Alternate Target
	 	Achieve Alternate Target	 	Fail to Achieve Any Target	 	 	900	 	 	 	900	 	 	 	0	 	 	 	1,800	 
	Achieve Alternate Target
	 	Achieve Alternate Target	 	Achieve Alternate Target	 	 	900	 	 	 	900	 	 	 	1,200	 	 	 	3,000	 
	Achieve Alternate Target
	 	Achieve Alternate Target	 	Achieve Target	 	 	900	 	 	 	900	 	 	 	2,400	 	 	 	4,200	 
	Achieve Alternate Target
	 	Achieve Target	 	Fail to Achieve Any Target	 	 	900	 	 	 	1,800	 	 	 	0	 	 	 	2,700	 
	Achieve Alternate Target
	 	Achieve Target	 	Achieve Alternate Target	 	 	900	 	 	 	1,800	 	 	 	1,200	 	 	 	3,900	 
	Achieve Alternate Target
	 	Achieve Target	 	Achieve Target	 	 	900	 	 	 	1,800	 	 	 	2,400	 	 	 	5,100	 
	Fail to Achieve Any Target
	 	Fail to Achieve Any Target	 	Fail to Achieve Any Target	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 
	Fail to Achieve Any Target
	 	Fail to Achieve Any Target	 	Achieve Alternate Target	 	 	0	 	 	 	0	 	 	 	1,500	 	 	 	1,500	 
	Fail to Achieve Any Target
	 	Fail to Achieve Any Target	 	Achieve Target	 	 	0	 	 	 	0	 	 	 	3,000	 	 	 	3,000	 
	Fail to Achieve Any Target
	 	Achieve Alternate Target	 	Fail to Achieve Any Target	 	 	0	 	 	 	1,200	 	 	 	0	 	 	 	1,200	 
	Fail to Achieve Any Target
	 	Achieve Alternate Target	 	Achieve Alternate Target	 	 	0	 	 	 	1,200	 	 	 	1,200	 	 	 	2,400	 
	Fail to Achieve Any Target
	 	Achieve Alternate Target	 	Achieve Target	 	 	0	 	 	 	1,200	 	 	 	2,400	 	 	 	3,600	 
	Fail to Achieve Any Target
	 	Achieve Target	 	Fail to Achieve Any Target	 	 	0	 	 	 	2,400	 	 	 	0	 	 	 	2,400	 
	Fail to Achieve Any Target
	 	Achieve Target	 	Achieve Alternate Target	 	 	0	 	 	 	2,400	 	 	 	1,200	 	 	 	3,600	 
	Fail to Achieve Any Target
	 	Achieve Target	 	Achieve Target	 	 	0	 	 	 	2,400	 	 	 	2,400	 	 	 	4,800	 

Notwithstanding anything to the contrary in this Schedule A or the Stock Option Agreement
to which this Schedule A is attached, the Company shall have the right, in its sole
discretion, with or without the consent of the Optionee, to amend this Schedule A to adjust
any or all of the targets, dates and/or target Revenue amounts as it deems equitable to recognize
unusual or non-recurring events, including, but not limited to the Company’s acquisition of another
business entity or assets, a corporate merger or other consolidation, or the sale or
discontinuation of significant business operations or business units of the Company; changes in tax
laws or accounting procedures; and any other extraordinary circumstances.

 

 

Section 16 Insiders Discretionary Option Grant Program

CorVel Corporation

Stock Option Agreement

     A. The Board has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board (or the board of directors of any Parent or
Subsidiary) and consultants and advisors who provide services to the Company (or any Parent or
Subsidiary).

     B. Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and
this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Company’s grant of an option to Optionee.

     C. All capitalized terms in this Agreement shall have the meaning assigned to them in the
attached Appendix.

          Now, therefore, it is hereby agreed as follows:

          1. Grant of Option. Subject to and upon the terms and conditions set forth in this
Agreement, Optionee is hereby granted, as of the Grant Date, an option to purchase the Option
Shares. The Option Shares shall be purchasable from time to time during the option term at the
Exercise Price.

          2. Option Term. This option shall expire at the close of business on the Expiration
Date, unless sooner terminated in accordance with this Agreement.

          3. Limited Transferability.

               (a) During Optionee’s lifetime, this option shall be exercisable only by Optionee and shall
not be assignable or transferable other than by will, by the laws of descent and distribution
following the Optionee’s death, or to any “Family Member” (as such term is defined in the General
Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities
Act), provided that Optionee may not receive any consideration for such transfer, the Family Member
may not make any subsequent transfers other than by will or by the laws of descent and distribution
and the Company receives written notice of such transfer. This assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as those in effect for
this option immediately prior to such assignment and shall be set forth in such documents issued to
the assignee as the Company may deem appropriate.

               (b) Should Optionee die while holding this option, then this option shall be transferred in
accordance with Optionee’s will or the laws of inheritance. However, Optionee may designate one
or more persons as the beneficiary or beneficiaries of this option, and this option shall, in
accordance with such designation, automatically be transferred to such

 

 

beneficiary or beneficiaries upon Optionee’s death while holding this option. Such
beneficiary or beneficiaries shall take the transferred option subject to all the terms and
conditions of this Agreement, including (without limitation) the limited time period during which
this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

          4. Exercisability. This option shall become exercisable in one or more installments
as specified in the Grant Notice. As the option becomes exercisable for such installments,
those installments shall accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term.

          5. Effect of Cessation of Service.

               (a) Should Optionee cease to be a Service Provider for any reason (other than death,
Permanent Disability or Misconduct) while this option is outstanding, then this option shall
remain exercisable until the earlier of (i) the expiration of the three month period commencing
with the date of such cessation of Service Provider status or (ii) the Expiration Date.

               (b) Should Optionee cease to be a Service Provider by reason of Permanent Disability or death
while this option is outstanding, then the option shall remain exercisable until the earlier of (i)
the expiration of the twelve month period commencing with the date of such cessation of Service
Provider status or (ii) the Expiration Date.

               (c) Should Optionee cease to be a Service Provider due to termination for Misconduct, then
this option shall terminate immediately.

               (d) During the limited period of post-service exercisability, this option may not be
exercised in the aggregate for more than the number of Option Shares for which the option is
exercisable at the time Optionee ceased to be a Service Provider. This option shall, immediately
when Optionee ceases to be a Service Provider for any reason, terminate with respect to any Option
Shares for which this option is not otherwise at that time exercisable.
Upon the expiration of the limited post-service exercise period or (if earlier) upon the
Expiration Date, this option shall terminate entirely.

          6. Effect of Corporate Transaction.

               (a) This option, to the extent outstanding at the time of a Corporate Transaction but not
otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately
prior to the effective date of such Corporate Transaction, become exercisable for all of the Option
Shares at the time subject to this option. However, this option shall not become exercisable on
such an accelerated basis, if and to the extent: (i) this option is, in connection with the
Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or to be
replaced with a comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program
of the successor corporation which preserves the spread existing at the time of the Corporate
Transaction on any Option Shares for which this option is not otherwise at that

2

 

time exercisable (the excess of the Fair Market Value of those Option Shares over the
aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance
with the same exercise schedule for those Option Shares set forth in the Grant Notice.

               (b) Upon the consummation of the Corporate Transaction, this option shall terminate, except
to the extent assumed by the successor corporation (or parent thereof) in connection with the
Corporate Transaction.

               (c) If this option is assumed in connection with a Corporate Transaction, then this option
shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the
number and class of securities which would have been issuable to Optionee as a result of the
consummation of such Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price,
provided the aggregate Exercise Price shall remain the same.

               (d) This Agreement shall not in any way affect the right of the Company to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

          7. Adjustment in Option Shares. Should any change be made to the Common Stock by
reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of
shares, exchange of shares, reorganization, merger, consolidation, split-up, spinoff, or other
change affecting the outstanding Common Stock as a class without the Company’s receipt of
consideration, appropriate adjustments shall be made to (a) the total number and/or class of
securities subject to this option and (b) the Exercise Price in order to reflect such change and
thereby preclude a dilution or enlargement of benefits hereunder.

          8. Stockholder Rights. The holder of this option shall not have any stockholder
rights with respect to the Option Shares until such person shall have exercised the option in
accordance with the provisions of Paragraph 9, paid the Exercise Price and become a holder of
record of the purchased shares.

          9. Manner of Exercising Option.

               (a) In order to exercise this option with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or any other person or persons exercising
the option) must take the following actions:

               (i) Execute and deliver to the Company (A) a Notice of Exercise, in
substantially the form attached hereto as Exhibit I, that specifies the number of
Option Shares for which the option is being exercised and (B) any additional
documents which the Committee may, in its discretion, deem advisable.

3

 

               (ii) Pay the aggregate Exercise Price for the purchased shares in one or more
of the following forms:

               (A) cash or check payable to the Company’s order;

               (B) shares of Common Stock held by Optionee for the requisite period
necessary to avoid a charge to the Company’s reported earnings and valued at
Fair Market Value on the Exercise Date; or

               (C) through a special sale and remittance procedure pursuant to which
Optionee is to provide irrevocable written instructions (1) to a brokerage
firm to effect the immediate sale of the purchased shares and remit to the
Company, out of the sale proceeds available on the settlement date, an amount
sufficient to cover the aggregate Exercise Price payable for the purchased
shares plus all applicable Federal and state income and employment taxes
required to be withheld by the Company by reason of such purchase and (2) to
the Company to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.

               (iii) Furnish to the Company appropriate documentation that the person or
persons exercising the option (if other than Optionee) have the right to exercise
this option.

               (iv) Make appropriate arrangements with the Company (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction of
all Federal, state and local income and employment tax withholding requirements
applicable to the option exercise.

               (b) If payment of the exercise price is made by means of the surrender of shares of Common
Stock which are subject to certain restrictions, the number of shares of Common Stock issued upon
the exercise of the option equal to the number of shares of restricted stock surrendered shall be
subject to the same restrictions as the restricted stock that was surrendered.

               (c) Except to the extent the sale and remittance procedure specified in Paragraph 9(a)(ii)(C)
is utilized in connection with the option exercise, payment of the option price for the purchased
shares must accompany the Notice of Exercise.

               (d) Assuming Optionee does not sell the purchased shares of Common Stock on the Exercise
Date, as soon as practical after the Exercise Date, the Company shall either (i) issue to or on
behalf of Optionee (or any other person or persons exercising this option) a certificate for the
purchased Option Shares, with the appropriate legends affixed thereto, or (ii) instruct the
Company’s transfer agent to make a book-entry reflecting the purchase on its stockholder ledger.

               (e) In no event may this option be exercised for any fractional shares.

4

 

          10. Tax Withholding. The Committee may, in its discretion and upon such terms and
conditions as it may deem appropriate (including the applicable safe-harbor provisions of
Securities and Exchange Commission Rule 16b-3 or any successor rule or regulation) provide Optionee
(if Optionee is an Employee) with the election to surrender previously acquired shares of Common
Stock or have shares withheld in satisfaction of the tax withholding obligations. To the extent
necessary to avoid adverse accounting treatment, the number of shares that may be withheld for this
purpose shall not exceed the minimum number needed to satisfy the applicable income and employment
tax withholding rules. If Common Stock is used to satisfy the Company’s tax withholding
obligations, the shares of Common Stock shall have been held by Optionee for the requisite period
necessary to avoid a charge to the Company’s reported earnings and shall be valued at their Fair
Market Value when the tax, withholding is required to be made.

          11. Compliance with Laws and Regulations.

               (a) The exercise of this option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Company and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq Stock
Market, if applicable) on which the Common Stock may be listed for trading at the time of such
exercise and issuance.

               (b) The inability of the Company to obtain approval from any regulatory body having authority
deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant
to this option shall relieve the Company of any liability with respect to the non-issuance or sale
of the Common Stock as to which such approval shall not have been obtained. The Company, however,
shall use reasonable efforts to obtain all such approvals.

          12. Successors and Assigns. Except to the extent otherwise provided in this
Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon,
the Company and its successors and assigns and Optionee, Optionee’s assigns, the legal
representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option
designated by Optionee.

          13. Notices. Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Company at its principal
corporate offices. Any notice required to be given or delivered to Optionee shall be in writing
and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant
Notice. All notices shall be deemed effective upon personal delivery or three days after deposit
in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

          14. Construction. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In
the event of a conflict between the terms and conditions of the Plan and the terms and conditions
of this Agreement, the terms and conditions of this Agreement shall prevail. All

5

 

decisions of the Committee with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest in this option.

          15. Governing Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware without resort to its conflict-of-laws
rules.

          16. No Employment/Service Contract. Nothing in this Agreement or in the Plan shall
confer upon Optionee any right to continue to be a Service Provider of the Company (or any Parent
or Subsidiary) for any period of specific duration or otherwise interfere with or restrict in any
way the rights of the Company (or such Parent or Subsidiary) or Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee’s Service Provider status at any time and for
any reason whatsoever, with or without cause.

6

 

EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

     I hereby notify CorVel Corporation (the “Company”) that I,                     ,
elect to purchase                      shares of Common Stock of the Corporation (the “Purchased Shares”) at an option price of $                      per
share (the “Option Price”) pursuant to the option (the “Option”) granted to me on                     .

          My option was granted as a non-qualified stock option. I will need to report
taxable income at the time I exercise this Option and pay the corresponding withholding
tax (the “Withholding Tax”) to the Corporation. The Withholding Tax is computed on the
difference between the Option Price and the Fair Market Value of the stock on the date I
exercise the Option.

          Concurrently with the delivery of the Exercise Notice to the Chief Financial
Officer of the Corporation, I shall hereby pay to the Corporation the Option Price and
Withholding Tax for the Purchased Shares in accordance with the provisions of my
agreement with the Corporation evidencing the Option and shall deliver whatever
additional documents may be required by such agreement as a condition for exercise.

	 	 	 
	 

	 	 
	Date

	 	Optionee’s Signature
	 
	 	 
	If applicable, print name in exact
manner it is to appear on the stock
certificate:
	 	 
	 

	 	 
	 
	 	 
	Optionee’s Mailing Address:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	Address to which certificate is to be
sent, if different from address above:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	Brokerage Account Information
	 	 
	 

	 	 
	(Broker Name, Contact Info., Account #)
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

A-1

 

APPENDIX

          The following definitions shall be in effect under this Agreement:

     A. Agreement shall mean this Stock Option Agreement.

     B. Board shall mean the Board of Directors of the Company.

     C. Common Stock shall mean shares of the Company’s common stock, $0.0001 par value.

     D. Code shall mean the Internal Revenue Code of 1986, as amended.

     E. Committee shall mean a committee designated by the Board to administer the Plan,
which initially shall be the compensation committee of the Board. The Committee shall be comprised
of at least two directors but not less than such number of directors as shall be required to permit
awards granted under the Plan to qualify under Rule 16b-3 under the Securities Act and Section
162(m) of the Code, and each member of the Committee shall be a “Non-Employee Director ” within the
meaning of Rule 16b-3 under the Securities Act and an “Outside Director” within the meaning of
Section 162(m) of the Code.

     F. Company shall mean CorVel Corporation, a Delaware corporation, or any corporate
successor which shall assume the Plan.

     G. Corporate Transaction shall mean any of the following transactions for which the
approval of the Company’s stockholders is obtained:

     (i) a merger or acquisition in which the Company is not the surviving entity,
except for a transaction the principal purpose of which is to change the state of
the Company’s incorporation,

     (ii) the sale, transfer or other disposition of all or substantially all of the
assets of the Company to any entity other than a parent or subsidiary of the
Company, or

     (iii) any reverse merger in which the Company is the surviving entity but in
which fifty percent (50%) or more of the Company’s outstanding voting stock is
transferred to holders different from those who held such fifty percent (50%) or
greater interest immediately prior to such merger.

     H. Employee shall mean an individual for whom the Company or one or more of its
Parent or Subsidiaries reports his or her earnings on a Form W-2.

     I. Exercise Date shall mean the date on which the option shall have been exercised
in accordance with Paragraph 9.

A-2

 

     J. Exercise Price shall mean the exercise price per Option Share as specified
in the Grant Notice.

     K. Expiration Date shall mean the date on which the option expires as specified in
the Grant Notice.

     L. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

     (i) If the Common Stock is at the time listed on the Nasdaq National Market or
the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is reported
by the National Association of Securities Dealers on the Nasdaq National Market or
the Nasdaq Capital Market and published in The Wall Street Journal.

     (ii) If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock on
the date in question on the Stock Exchange determined by the Committee to be the
primary market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange and published in The Wall Street
Journal.

     (iii) If the Common Stock is not listed on the Nasdaq National Market, Nasdaq
Capital Market or a national securities exchange, the Fair Market Value shall be the
average of the closing bid and ask prices of the Common Stock on that day as
reported by the Nasdaq bulletin board or any comparable system on that day.

     (iv) If the Common Stock is not traded included in the Nasdaq bulletin board or
any comparable system, the Fair Market Value shall be the average of the closing bid
and ask prices on that day as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that purpose.

     (v) If the date in question is not a trading day, then the Fair Market Value
shall be determined based on prices for the trading day prior to the date in
question.

     M. Grant Date shall mean the date of grant of the option as specified in the
Grant Notice.

     N. Grant Notice shall mean the Notice of Grant of Stock Option accompanying this
Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced
hereby.

     O. Misconduct shall mean any of the following:

          (i) Optionee’s intentional misconduct or continuing gross neglect of duties
which materially and adversely affects the business and operations of the Company or
any Parent or Subsidiary employing Optionee;

A-3

 

          (ii) Optionee’s unauthorized use or disclosure of (or attempt to use or
disclose) confidential information or trade secrets of the Company or any Parent or
Subsidiary; or

          (iii) Optionee’s commission of an act involving embezzlement, theft, fraud,
falsification of records, destruction of property or commission of a crime or other
offense involving money or other property of the Company or any Parent or Subsidiary
employing Optionee.

               The reasons for termination of Optionee as a Service Provider set forth in this subparagraph
are not intended to be an exclusive list of all acts or omissions which the Company (or any Parent
or Subsidiary) may deem to constitute misconduct or other grounds for terminating Optionee (or any
other individual).

     P. Non-Statutory Option shall mean an option not intended to satisfy the requirements
of Code Section 422.

     Q. Notice of Exercise shall mean the notice of exercise in the form attached hereto
as Exhibit I.

     R. Option Shares shall mean the number of shares of Common Stock subject to the
option as specified in the Grant Notice.

     S. Optionee shall mean the person to whom the option is granted as specified in the
Grant Notice.

     T. Parent shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each such corporation in the unbroken chain (other
than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.

     U. Permanent Disability shall have the meaning assigned to “permanent and total
disability” as set forth in Code Section 22(e)(3).

     V. Plan shall mean the CorVel Corporation Restated Omnibus Incentive Plan (Formerly
The Restated 1988 Executive Stock Option Plan).

     W. Securities Act shall mean the Securities Act of 1933, as amended.

     X. Service Provider shall mean an individual who renders service on a periodic basis
to the Company, its Parent and/or any of its Subsidiaries as an Employee, a non-Employee member of
the board of directors or a consultant or independent advisor.

     Y. Stock Exchange shall mean the American Stock Exchange or the New York Stock
Exchange, or any other national stock exchange.

A-4

 

     Z. Subsidiary shall mean any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company, provided such corporation (other than the last
corporation in the unbroken chain) owns, at the time of determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. For purposes of all Non-Statutory Option grants under the Plan
and all Corporate Transaction provisions of the Plan, the term “Subsidiary” shall also include any
partnership, joint venture or other business
entity of which the Company owns, directly or indirectly through another entity, more than a
fifty percent (50%) interest in voting power, capital or profits.

A-5

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