Document:

ex10-6.htm

Exhibit 10.6

 

OTTER TAIL CORPORATION

EXECUTIVE RESTORATION PLUS PLAN

 

07.01.2012

 

 

1

 

 

TABLE OF CONTENTS

 

	
SECTION 1

	
Purpose and Administration

	
1

	  	
1.1.

	
Name of Plan

	
1

	  
	  	
1.2.

	
Effective Date

	
1

	  
	  	
1.3.

	
Purpose

	
1

	  
	  	
1.4.

	
Administration

	
1

	  
	  	  	  	  	  
	
SECTION 2

	
Definitions

	
2

	  	
2.1.

	
Account

	
2

	  
	  	
2.2.

	
Bonus

	
2

	  
	  	
2.3.

	
Change in Control

	
2

	  
	  	
2.4.

	
Code

	
3

	  
	  	
2.5.

	
Committee

	
3

	  
	  	
2.6.

	
Company

	
3

	  
	  	
2.7.

	
Compensation

	
3

	  
	  	
2.8.

	
Deferral Election

	
3

	  
	  	
2.9.

	
Disabled

	
3

	  
	  	
2.10.

	
Elective Deferred Subaccount

	
4

	  
	  	
2.11.

	
Employee

	
4

	  
	  	
2.12.

	
Employer

	
4

	  
	  	
2.13.

	
Employer Contributions

	
4

	  
	  	
2.14.

	
Employer Contributions Subaccount

	
4

	  
	  	
2.15.

	
ERISA

	
4

	  
	  	
2.16.

	
Investment Options

	
4

	  
	  	
2.17.

	
Otter Tail Corporation Retirement Savings Plan

	
5

	  
	  	
2.18.

	
Participant

	
5

	  
	  	
2.19.

	
Plan

	
5

	  
	  	
2.20.

	
Plan Administrator

	
5

	  
	  	
2.21.

	
Plan Year

	
5

	  
	  	
2.22.

	
Salary

	
5

	  
	  	
2.23.

	
Separation from Service

	
5

	  
	  	
2.24.

	
Unforeseeable Emergency

	
5

	  
	  	
2.25.

	
Valuation Date

	
5

	  
	  	
2.26.

	
Other Definitions

	
6

	  
	  	  	  	  	  
	
SECTION 3

	
Eligibility, Participation, Deferral Elections, and Employer Contributions

	
6

	  	
3.1.

	
Eligibility and Participation

	
6

	  
	  	
3.2.

	
Rules for Deferral Elections

	
6

	  

 

  

i

  

 

	  	
3.3.

	
Amounts Deferred

	
6

	  
	  	
3.4.

	
Cancellation of Deferral Elections

	
7

	  
	  	
3.5.

	
Employer Contributions

	
7

	  
	  	  	  	  	  
	
SECTION 4

	
Accounts

	
7

	  	
4.1.

	
Participant Accounts

	
7

	  
	  	
4.2.

	
Deferral Account Adjustments and Hypothetical Investment Options

	
7

	  
	  	
4.3.

	
Vesting

	
8

	  
	  	
4.4.

	
Investment Options

	
8

	  
	  	  	  	  	  
	
SECTION 5

	
Payment of Benefits

	
9

	  	
5.1.

	
Payment upon Separation from Service

	
9

	  
	  	
5.2.

	
Payment Upon Disability

	
9

	  
	  	
5.3.

	
Payment Upon Death of a Participant

	
9

	  
	  	
5.4.

	
Beneficiary

	
9

	  
	  	
5.5.

	
Accelerated Distribution Alternatives

	
9

	  
	  	
5.6.

	
Effect of Early Taxation

	
10

	  
	  	
5.7.

	
Permitted Delays

	
10

	  
	  	
5.8.

	
Withholding of Taxes

	
10

	  
	  	  	  	  	  
	
SECTION 6

	
Miscellaneous

	
11

	  	
6.1.

	
Rights Unsecured

	
11

	  
	  	
6.2.

	
No Enlargement of Rights

	
11

	  
	  	
6.3.

	
Interests Not Transferable

	
11

	  
	  	
6.4.

	
Forfeitures and Unclaimed Amounts

	
12

	  
	  	
6.5.

	
Controlling Law

	
12

	  
	  	
6.6.

	
Words and Headings

	
12

	  
	  	
6.7.

	
Action by the Company

	
12

	  
	  	
6.8.

	
No Fiduciary Relationship

	
12

	  
	  	
6.9.

	
Claims Procedures

	
12

	  
	  	
6.10.

	
Notice

	
14

	  
	  	
6.11.

	
No Guarantee of Benefits

	
15

	  
	  	
6.12.

	
Incapacity of Recipient

	
15

	  
	  	
6.13.

	
Corporate Successors

	
15

	  
	  	
6.14.

	
Severability

	
15

	  
	  	
6.15.

	
Indemnification

	
15

	  
	  	  	  	  	  
	
SECTION 7

	
Amendment and Termination

	
16

	  	
7.1.

	
Amendment or Termination

	
16

	  
	  	
7.2.

	
Effect of Amendment or Termination

	
16

	  

  

ii

  

 

SECTION 1

 

Purpose and Administration

 

	
1.1.

	
Name of Plan. Otter Tail Corporation, a Minnesota corporation, (“Company”), hereby adopts the Executive Restoration Plus Plan (“Plan”), as set forth herein.

 

	
1.2.

	
Effective Date.  The effective date of this Plan is July 1, 2012.

 

	
1.3.

	
Purpose.  The Company has established the Plan primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees of the Employer.  The Plan is intended: (1) to comply with Code section 409A and official guidance issued thereunder for all amounts earned under the Plan, and (2) to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

 

Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

 

The Company intends that the Plan (and any trust under the Plan as described in Section 6.1) shall be treated as unfunded for tax purposes and for purposes of Title I of ERISA.  The Plan is not intended to qualify under Code section 401(a).  The Company’s obligations hereunder, if any, to a Participant (or to a Participant’s beneficiary) shall be unsecured and shall be a mere promise by the Company to make payments hereunder in the future.  A Participant (and any Participant’s beneficiary) shall be treated as a general unsecured creditor of the Company.

 

	
1.4.

	
Administration.  The Plan shall be administered by the Committee, which shall act as the Plan Administrator.  The Plan Administrator shall have the powers, rights and duties set forth in the Plan and shall have the power, in the Plan Administrator’s sole and absolute discretion, to determine all questions arising under the Plan, including the determination of the rights of all persons with respect to the Plan and to interpret the provisions of the Plan and remedy any ambiguities, inconsistencies, or omissions.  Any decisions of the Plan Administrator shall be final and binding on all persons with respect to the Plan and the benefits provided under the Plan.  The Committee  may delegate some or all of the Plan Administrator’s authority under the Plan to one or more persons or providers, provided, however, that (i) such delegation must be in writing, and (ii) the delegate must accept such delegation in writing.  Any delegation may be rescinded by the Committee at any time.

 

Each person or entity to whom a duty or responsibility has been delegated shall be responsible for the exercise of such duty or responsibility and shall not be responsible for any act or failure to act of any other person or entity.

 

  

3

  

 

If a Participant is serving as the Plan Administrator (either individually or as a member of a committee), the Participant may not decide or determine any matter or question concerning such Participant’s benefits under the Plan that the Participant would not have the right to decide or determine if the Participant were not serving as the Plan Administrator.

 

SECTION 2

Definitions

 

For purposes of the Plan, the following words and phrases shall have the meanings set forth below, unless their context clearly requires a different meaning:

 

	
2.1.

	
Account.  “Account” means the bookkeeping account maintained under the Plan in the Participant’s name to reflect amounts deferred by the Participant under the Plan pursuant to Section 3 (as adjusted under Section 4) and any Employer Contributions made on behalf of the Participant pursuant to Section 3 (as adjusted under Section 4).  The Account shall be hypothetical in nature and shall be maintained for bookkeeping purposes only.  Neither the Plan nor the Account shall hold any actual funds or assets.  The Account shall consist of a Participant’s entire account balance, including his Elective Deferred Subaccount and Employer Contributions Subaccount.

 

	
2.2.

	
Bonus.  “Bonus” means an amount payable to an eligible Employee under an annual bonus or incentive compensation plan of the Company.

 

	
2.3.

	
Change in Control.  “Change in Control” means, for purposes of determining a Participant’s vested interest in his Employer Contributions Subaccount:

 

	
  

	
(a)

	
Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes or has become within a 12-month period ending on the date of the most recent acquisition the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities; or

 

	
  

	
(b)

	
Within a 12-month period the members of the Company’s Board of Directors at the beginning of that period cease to constitute a majority of the Company’s Board of Directors and the new members of the Board have not been endorsed by a majority of the Board members before the date of that change; provided that such change is the direct or indirect result of a proxy fight and contested election or elections for positions on the Board of Directors.

 

	
2.4.

	
Code.  “Code” means the Internal Revenue Code of 1986, as amended from time to time. Any reference to a section of the Code includes any comparable section or sections of any future legislation that amends, supplements or supersedes that section.

 

  

  

  

 

	
2.5.

	
Committee.  “Committee” means the Benefits Advisory Committee of the Company.

 

	
2.6.

	
Company.  “Company” means Otter Tail Corporation, a Minnesota corporation.

 

	
2.7.

	
Compensation.  “Compensation” means the total remuneration paid to the Participant by the Employer for services as an employee reportable on Treasury Form W-2 (or any comparable successor form) for the applicable period; subject, however, to the following:

 

	
  

	
(a)

	
Included Items. In determining a Participant’s Compensation there shall be included (i) elective contributions made by the Employer on behalf of the Participant that are not includible in gross income under Code sections 125, 132(f), 402(e)(3), 402(h), 403(b), 414(h)(2) and 457 including elective contributions authorized by the Participant under a retirement savings election under the Otter Tail Corporation Retirement Savings Plan, a cafeteria plan or any other qualified cash or deferred arrangement under Code section 401(k) and (ii) all elective deferrals under this or any other nonqualified plan of the Company.

 

	
  

	
(b)

	
Excluded Items. In determining a Participant’s Compensation there shall be excluded: (i) all expense reimbursements (including moving expenses and tuition reimbursements), and other similar payments, and (ii) all noncash remuneration, and (iii) welfare benefits (both cash and noncash) including third party sick pay (including short and long term disability insurance benefits), and (iv) income imputed from insurance coverages and premiums or employee discounts and other similar accounts, and (v) the value of stock options and stock appreciation rights (whether or not exercised) and other similar amounts, and (vi) all foreign service allowances, station allowances, foreign tax equalization payments and other similar payments, and (vii) taxable and nontaxable fringe benefits, prizes, gifts (both cash and noncash included) or awards provided by Employer (including any gross up) (viii) final payments on account of termination of employment (i.e., severance payments) and settlement for accrued but unused PTO plans, and (ix) the value of long term incentives under the Company’s  1999 Stock Incentive Plan or any successor Plan, and (x) Achievement Awards and other similar incentive payments, and (xi) similar emoluments consistent with the foregoing.

 

	
2.8.

	
Deferral Election.  “Deferral Election” means a written irrevocable election filed by the Participant with the Employer, as provided in Section 3.2, specifying the amount of Compensation to be deferred by the Participant for a Plan Year.

 

	
2.9.

	
Disabled.  “Disabled” or “Disability” means, with respect to a Participant, that the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (b) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (c) has been determined to be totally disabled by the Social Security Administration. Disability under subsections (a) and (b) shall be determined by a physician selected by the Company. A Participant shall cooperate with the Company, including making the Participant reasonably available for examination by physicians at the Company’s request and at the Company’s expense to determine whether or not the Participant is Disabled.

 

  

  

  

 

	
2.10.

	
Elective Deferred Subaccount.  “Elective Deferred Subaccount” means the bookkeeping account maintained to reflect the portion of a Participant’s Salary and Bonus deferred under the Plan pursuant to Section 3 (as adjusted under Section 4).  The Elective Deferred Subaccount shall be hypothetical in nature and shall be maintained for bookkeeping purposes only.  Neither the Plan nor the Elective Deferred Subaccount shall hold any actual funds or assets.

 

	
2.11.

	
Employee.  “Employee” means an employee of the Employer who meets the eligibility criteria set forth in Section 3.1 of the Plan and who is a member of a select group of management or highly compensated employees as defined under ERISA or the regulations thereunder.

 

	
2.12.

	
Employer.  “Employer” means the Company.

 

	
2.13.

	
Employer Contributions.  “Employer Contributions” means any Employer Contributions credited to a Participant’s Employer Contributions Subaccount pursuant to Section 3.5.

 

	
2.14.

	
Employer Contributions Subaccount.  “Employer Contributions Subaccount” means the bookkeeping account maintained to reflect Employer Contributions made on behalf of the Participant under the Plan pursuant to Section 3.5 (as adjusted under Section 4).  The Employer Contributions Subaccount shall be hypothetical in nature and shall be maintained for bookkeeping purposes only.  Neither the Plan nor the Employer Contributions Subaccount shall hold any actual funds or assets.

 

	
2.15.

	
ERISA.  “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.  Any reference to a section of ERISA includes any comparable section or sections of any future legislation that amends, supplements or supersedes that section.

 

	
2.16.

	
Investment Options.  The Plan Administrator will designate the hypothetical “Investment Options”, if any, available for participant selection from time to time.

 

	
2.17.

	
Otter Tail Corporation Retirement Savings Plan.  The “Otter Tail Corporation Retirement Savings Plan” means the Company’s retirement plan qualified under sections 401(a) and 401(k) of the Code as amended from time to time.

 

	
2.18.

	
Participant.  “Participant” means an Employee who meets the eligibility criteria set forth in Section 3.1 and who has made a Deferral Election in accordance with the terms of the Plan or otherwise had amounts credited to his Account.

 

  

  

  

 

	
2.19.

	
Plan.  “Plan” means the nonqualified deferred compensation plan named in Section 1.1.

 

	
2.20.

	
Plan Administrator.  The “Plan Administrator” means the Benefits Advisory Committee or its delegate appointed as described in Section 1.4.

 

	
2.21.

	
Plan Year.  “Plan Year” means the calendar year, however, the initial Plan Year shall be a short Plan Year, beginning on the Effective Date and ending on the following December 31.

 

	
2.22.

	
Salary.  “Salary” means the regular base salary paid to an eligible Employee by the Company.  Such pay shall be determined before any elections to defer or otherwise reduce compensation under this or any other nonqualified deferred compensation plan, and also before any salary reductions used for contributions or to purchase benefits under any other Company sponsored plans such as the Otter Tail Corporation Retirement Savings Plan.

 

	
2.23.

	
Separation from Service.  “Separation from Service” or “Separates from Service” means a “separation from service” within the meaning of Code section 409A.

 

	
2.24.

	
Unforeseeable Emergency.  “Unforeseeable Emergency” means a severe financial hardship of the Participant as described in Code section 409A resulting from:

 

	
  

	
(a)

	
A sudden and unexpected illness or accident of the Participant, the Participant’s beneficiary, the Participant’s spouse, or the Participant’s dependent (as defined in Code section 152(a));

 

	
  

	
(b)

	
Loss of Participant’s property due to casualty; or

 

	
  

	
(c)

	
Such other similar extraordinary and unforeseeable circumstances resulting from events beyond the control of the Participant.

 

Whether a Participant has an Unforeseeable Emergency shall be determined in the sole discretion of the Plan Administrator.

 

	
2.25.

	
Valuation Date.  “Valuation Date” means each business day the financial markets are open, unless the underlying investment requires a less frequent valuation.

 

	
2.26.

	
Other Definitions.  In addition to the terms defined in this Section 2, other terms are defined when first used in Sections of this Plan.

 

  

  

  

 

SECTION 3

Eligibility, Participation, Deferral Elections, and Employer Contributions

 

	
3.1.

	
Eligibility and Participation.  Any executive officer or employee of Otter Tail Corporation who is named by its Chief Executive Officer (“CEO”) is eligible to participate in the Plan. An Employee shall become a Participant as of a date specified by the CEO and shall remain a Participant until the entire balance of the Participant’s vested Account has been distributed.

 

	
3.2.

	
Rules for Deferral Elections.  Any Employee identified in Section 3.1 may make a separate Deferral Election to defer receipt of Salary and Bonus in accordance with the rules set forth below:

 

	
  

	
(a)

	
All Deferral Elections must be made in writing on the form prescribed by the Plan Administrator.  Each Deferral Election will be effective only when filed with the Plan Administrator no later than the date specified by the Plan Administrator.  In no event may a Deferral Election be made later than the last day of the Plan Year preceding the Plan Year in which the Compensation being deferred is earned.  Additionally, no election under this Plan will be allowed if the Employee has a deferral election in place under another account balance nonqualified deferred compensation plan sponsored by the Company that would be aggregated with this Plan under Code section 409A.

 

	
  

	
(b)

	
With respect to Plan Years following the Participant’s initial Plan Year of participation in the Plan, failure to complete timely another Deferral Election shall constitute a waiver of the Participant’s right to elect a different amount of Compensation to be deferred for each such Plan Year and shall be considered an affirmation and ratification to continue the Participant’s existing Deferral Election (i.e., an “evergreen election”).  However, a Participant may, prior to the beginning of any Plan Year, elect to increase or decrease the amount of Compensation to be deferred for the next following Plan Year by filing another Deferral Election with the Plan Administrator in accordance with paragraph (a) above.

 

	
3.3.

	
Amounts Deferred. Commencing on the effective date, a Participant may elect to:

 

Defer up to 50% of Salary, in 1% increments.

 

Defer up to 100% of Bonus, in 1% increments.

 

The amount of Compensation deferred by a Participant shall be credited to the Participant’s Elective Deferred Subaccount as soon as administratively practicable after the date the Compensation would be paid to the Participant absent such deferral.

 

	
3.4.

	
Cancellation of Deferral Elections. If a Participant becomes Disabled or obtains a distribution under Section 5.5(a) on account of an Unforeseeable Emergency during a Plan Year, his Deferral Election for such Plan Year shall be cancelled.

 

  

  

  

 

	
3.5.

	
Employer Contributions.  The Employer may, in its sole discretion, credit to the Employer Contributions Subaccount of any Employee an amount determined by the Employer in its sole discretion (an “Employer Contribution”) for a Plan Year.

 

	
  

	
(a)

	
Annual Employer Contributions.  Unless and until changed by the Employer, as of the Effective Date, the Employer Contribution for each Participant for each Plan Year shall be an amount equal to the sum of six and one-half percent (6.5%) of his Compensation for that Plan Year in excess of Code Section 401(a)(17) compensation limit in effect for that year plus three percent (3%) of the Participant’s Compensation for that year.  To be eligible for such contribution, the Participant must be actively employed as of the last day of the Plan Year for which the contribution is being made.

 

	
  

	
(b)

	
One-Time Opening Balance Contribution.  The Employer Contributions Subaccount for Shane Waslaski shall be credited with an Employer Contribution for 2011 and 2010 (each calendar year before January 1, 2012 in which he was an executive officer of the Employer) in an amount equal to the sum of six and one-half percent (6.5%) of his Compensation for each such year in excess of Code Section 401(a)(17)  compensation limit in effect for that year plus three percent (3%) of his total Compensation for that year.

 

SECTION 4

Accounts

 

	
4.1.

	
Participant Accounts.  All amounts deferred pursuant to one or more Deferral Elections under the Plan and any Employer Contributions shall be credited to a Participant’s Account and shall be adjusted under Section 4.2.

 

	
4.2.

	
Deferral Account Adjustments and Hypothetical Investment Options.  As of each Valuation Date, the Plan Administrator shall adjust amounts in a Participant’s Account to reflect earnings (or losses) in the Investment Options attributable to the Participant’s Account.  Earnings (or losses) on amounts in a Participant’s Account shall accrue commencing on the date the Account first has a positive balance and shall continue to accrue until the entire balance in the Participant’s Account has been distributed.  Earnings (or losses) shall be credited to a Participant’s Account based on the results that would have been achieved had amounts credited to the Account been invested as soon as practicable after crediting into the Investment Options selected by the Participant.  Nothing in this Section 4.2 or otherwise in the Plan, however, will require the Company to actually invest any amounts in such Investment Options or otherwise.

 

  

  

  

 

	
4.3.

	
Vesting.  A Participant shall be vested in his Account as follows:

 

	
  

	
(a)

	
A Participant’s Elective Deferred Subaccount shall be fully vested at all times.

 

	
  

	
(b)

	
A Participant’s Employer Contributions Subaccount shall be vested to the same extent he is vested in any employer contributions under the Otter Tail Corporation Retirement Savings Plan from time to time, provided, however, that a Participant shall become fully vested in their Employer Contributions Subaccount upon his death, his becoming Disabled or upon a Change in Control; provided the date on which the Participant becomes fully vested in the Employer Contributions as a result of any of those events must occur while the Participant is actively employed by or associated with the Employer.

 

	
  

	
To the extent that any amounts credited to a Participant’s Employer Contribution Subaccount are not vested at the time such amounts are otherwise payable under Section 5, such amounts shall be forfeited.

 

	
4.4.

	
Investment Options.  If applicable, the Plan Administrator shall from time to time specify procedures to allow Participants to make elections as to the deemed investment of amounts newly credited to their Account, as well as the deemed investment of amounts previously credited to their Account.  Participant fund selections must be made to the Plan Administrator or designated agent.  Fund selections will be effective within a reasonable period of time as determined by the means used to communicate such selections and generally accepted business practices.

 

The Plan Administrator or its designated agent may take investment instructions from a Participant as of any business day regarding Investment Options.  Investment elections and/or transfer instructions may be accepted in a manner determined by the Plan Administrator.

 

Investment Options are selected solely for purposes of determining hypothetical gains and/or losses to a Participant’s bookkeeping Account.  Neither the Plan nor any Account shall hold any actual funds or assets.  The Plan Administrator may change Investment Options at its discretion.

 

SECTION 5

Payment of Benefits

 

	
5.1.

	
Payment upon Separation from Service.  The vested portion of a Participant’s Account shall be paid in a lump sum within 90 days following the first business day of the seventh month following the Participant’s Separation from Service.

 

	
5.2.

	
Payment Upon Disability.  Notwithstanding anything in the Plan to the contrary, in the event a Participant becomes Disabled while the Participant is employed by or associated with the Employer, payment of the Participant’s vested Account shall be made in a lump sum payment within 90 days following the date on which the Participant becomes Disabled.  Whether a Participant is Disabled for purposes of the Plan shall be determined by the Plan Administrator in accordance with the provisions of Section 2.9.

 

  

  

  

 

	
5.3.

	
Payment Upon Death of a Participant.  Notwithstanding anything in the Plan to the contrary, a Participant’s vested Account shall be paid to the Participant’s beneficiary (designated in accordance with Section 5.4) in a lump sum payment within 90 days following the date of the Participant’s death.

 

	
5.4.

	
Beneficiary.  The Participant may name a beneficiary or beneficiaries to receive the balance of the Participant’s vested Account in the event of the Participant’s death.  To be effective, any beneficiary designation must be filed in writing with the Plan Administrator in accordance with rules and procedures adopted by the Plan Administrator for that purpose.  A Participant may revoke an existing beneficiary designation by filing another written beneficiary designation with the Plan Administrator.  The latest beneficiary designation received by the Plan Administrator during the Participant’s lifetime shall be controlling.  If no beneficiary is named by a Participant, or if the Participant survives all of his named beneficiaries and does not designate another beneficiary, the Participant’s vested Account shall be paid in the following order of precedence:

 

(a)           The Participant’s spouse; or if none

 

(b)           The Participant’s children (including adopted children) per stirpes; or if none

 

(c)           The Participant’s estate.

 

5.5.          Accelerated Distribution Alternatives.

 

	
  

	
(a)

	
Unforeseeable Emergency.  Notwithstanding anything in the Plan to the contrary, if the Plan Administrator determines that a Participant has incurred an Unforeseeable Emergency, the Participant shall, to the extent permitted by Code §409A and applicable regulations, receive in a lump sum payment of all or any portion of the Participant’s vested Account needed to satisfy the Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, but only if the Unforeseeable Emergency may not be relieved (i) through reimbursement or compensation by insurance or otherwise; (ii) by liquidation of the Participant’s assets to the extent the liquidation of such assets would not itself cause severe financial hardship; or (iii) by cessation of deferrals under the Plan.  A payment on account of an Unforeseeable Emergency shall not be in excess of the amount needed to relieve such Unforeseeable Emergency and shall be made within 90 days following the date of such Unforeseeable Emergency.

 

	
  

	
(b)

	
Other Accelerated Distributions.  Notwithstanding anything in the Plan to the contrary, a Participant’s vested Account shall be paid to the Participant in a lump sum payment within ninety (90) days of the need for payment in connection with a conflict of interest as provided in Treasury Regulation §1.409A-3(j)(4)(iii); payment of employment taxes as provided in Treasury Regulation §1.409A-3(j)(4)(vi); plan termination and liquidation pursuant to Section 7.2 and as provided in Treasury Regulation §1.409A-3(j)(4)(ix); payment of state local or foreign taxes as provided in Treasury Regulation §1.409A-3(j)(4)(xi); certain offsets as provided in Treasury Regulation §1.409A-3(j)(4)(xiii); or settlement of bona fide disputes as provided in Treasury Regulation §1.409A-3(j)(4)(xiv).

 

  

  

  

 

	
5.6.

	
Effect of Early Taxation.  Notwithstanding anything in the Plan to the contrary, if a Participant’s benefits under the Plan are includible in income pursuant to Code section 409A, such benefits shall be distributed immediately to the Participant.

 

	
5.7.

	
Permitted Delays.  Notwithstanding anything in the Plan to the contrary, any payment to a Participant under the Plan shall be delayed upon the Plan Administrator’s reasonable anticipation of one or more of the following events:

 

	
  

	
(a)

	
The Company’s deduction with respect to such payment would be eliminated by application of Code section 162(m);

 

	
  

	
(b)

	
The making of the payment would violate Federal securities laws or other applicable law; or

 

	
  

	
(c)

	
Any other event or condition prescribed under Treasury Regulation 1.409A-2(b)(7(iii);

 

provided, that any payment delayed pursuant to this Section 5.7 shall be paid in accordance with Code section 409A.

 

	
5.8.

	
Withholding of Taxes.  In connection with the Plan, the Employer, or a properly designated agent, may withhold any applicable Federal, state or local income tax and employment taxes, including Social Security taxes, at such time and in such amounts from a benefit payment under the Plan or a Participant’s wages or reduce a Participant’s Account as is necessary to comply with applicable laws and regulations.  The Employer, or a properly designated agent, shall report Plan payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

 

SECTION 6

Miscellaneous

 

	
6.1.

	
Rights Unsecured.  Any payments by a trust of benefits provided to a Participant under the Plan shall be considered payment by the Company and shall discharge the Company from any further liability under the Plan for such payments.  Any funds set aside by the Company for the purpose of meeting its obligations under the Plan, including any amounts held by a trustee, if any, shall continue for all purposes to be part of the general assets of the Company and shall be available to its general creditors in the event of the Company’s bankruptcy or insolvency.  The Company’s obligation under this Plan shall be that of an unfunded and unsecured promise to pay money in the future.

 

  

  

  

 

The Company may, but is not required to, establish and maintain one or more grantor trust(s) to hold assets to be used for payment of benefits under the Plan.  Any trust established by the Company for purposes of paying benefits under this Plan, and the taxation of any assets held in such trust on behalf of Participants, shall be subject to the requirements of Code §409A, including (a) the rules pertaining to offshore funding set forth in Code §409A(b)(1), (b) the transfers of assets for the benefit of covered employees (as defined in Code §409A(b)(3)(d)(ii)) when any defined benefit plan of the Company is in a restricted period, and (c) the restriction of assets in connection with a change in the Company’s financial health under Code §409A(b)(2).  The Company’s obligations under the Plan may be satisfied with assets of the Trust, if any, distributed pursuant to the terms thereof, and any such distribution shall reduce the Company’s obligations under the Plan.

 

	
6.2.

	
No Enlargement of Rights.  Establishment of the Plan shall not be construed to give any Employee the right to be retained by the Employer or to any benefits not specifically provided by the Plan.  Any liability of the Company to any Participant, former Participant, or Participant’s beneficiary with respect to a right to payment under the Plan shall be based solely upon contractual obligations created by the Plan.

 

	
6.3.

	
Interests Not Transferable.  Except as to withholding of any tax under the laws of the United States or any state or locality and the provisions of Section 5.8, no benefit payable at any time under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, or any other encumbrance of any kind or to any attachment, garnishment, or other legal process of any kind.  Any attempt by a person (including a Participant or a Participant’s beneficiary) to anticipate, alienate, sell, transfer, assign, pledge, or otherwise encumber any benefits under the Plan, whether currently or thereafter payable, shall be void.  If any person shall attempt to, or shall alienate, sell, transfer, assign, pledge or otherwise encumber such person’s benefits under the Plan, or if by any reasons of such person’s bankruptcy or other event happening at any time, such benefits would devolve upon any other person or would not be enjoyed by the person entitled thereto under the Plan, then the Plan Administrator, in the Plan Administrator’s sole discretion, may terminate the interest in any such benefits of the person otherwise entitled thereto under the Plan and may hold or apply such benefits in such manner as the Plan Administrator may deem proper.

 

	
6.4.

	
Forfeitures and Unclaimed Amounts.  Unclaimed amounts shall consist of the amounts in the Account of a Participant that cannot be distributed because of the Plan Administrator’s inability, after a reasonable search, to locate a Participant or the Participant’s beneficiary, as applicable, within a period of two (2) years after the distribution date upon which the payment of benefits became due.  Unclaimed amounts shall be forfeited at the end of such two-year period.  These forfeitures will reduce the obligations of the Company, if any, under the Plan.  After an unclaimed amount has been forfeited, the Participant or beneficiary, as applicable, shall have no further right to amounts in the Participant’s Account.

 

	
6.5.

	
Controlling Law.  The law of the state of Minnesota shall be controlling in all matters relating to the Plan to the extent not preempted by Federal Law.

 

  

  

  

 

	
6.6.

	
Words and Headings.  Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context.  Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.

 

	
6.7.

	
Action by the Company.  Except as otherwise specifically provided herein, any action required of or permitted to be taken by the Company under the Plan shall be by resolution of the Committee, unless reserved to the Company’s Board of Directors.

 

	
6.8.

	
No Fiduciary Relationship.  Nothing contained in this Plan, and no action taken pursuant to its provisions by either the Company or the Participants shall create, or be construed to create a fiduciary relationship between the Company and the Participant, a designated beneficiary, other beneficiaries of the Participant, or any other person.

 

	
6.9.

	
Claims Procedures.

 

	
  

	
(a)

	
Initial Review.  Any person (hereinafter referred to as a “Claimant”) who believes that he or she is being denied a benefit to which he or she may be entitled under the Plan may file a written request for such benefit with the Plan Administrator.  Such written request must set forth the Claimant’s claim and must be addressed to the Plan Administrator, at the Company’s principal place of business.  Upon receipt of a claim, the Plan Administrator shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall deliver a reply within ninety (90) days.  If special circumstances (such as for a hearing) require a longer period, the Plan Administrator may extend the reply period for an additional ninety (90) days so long as the Plan Administrator notifies the Claimant in writing, prior to the expiration of the ninety-day period, of the reasons for an extension of time.  If the claim is denied in whole or in part, the Plan Administrator shall issue a written determination, using language calculated to be understood by the Claimant, setting forth:

 

	
  

	
(1)

	
The specific reason or reasons for such denial;

 

	
  

	
(2)

	
The specific reference to pertinent provisions of the Plan upon which such denial is based;

 

	
  

	
(3)

	
A description of any additional material or information necessary for the Claimant to perfect the Claimant’s claim and an explanation why such material or such information is necessary; and

 

	
  

	
(4)

	
Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review, including the time limits for requesting such a review and the Claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

 

  

  

  

 

	
  

	
(b)

	
Review of Denial.  Within sixty (60) days after the receipt by the Claimant of the written determination described above, the Claimant may request in writing, that the Plan Administrator review the initial claim determination.  The request must be addressed to the Plan Administrator, at the Company’s principal place of business.  The Claimant or the Claimant’s duly authorized representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claims for benefits and may submit issues and comments in writing for consideration by the Plan Administrator.  The review will take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

If the claimant does not request a review of the Plan Administrator’s determination within such sixty-day period, the Claimant shall be barred and estopped from challenging the Plan Administrator’s determination.  If the Claimant does file a request for review, his request must include a description of the issues and evidence he deems relevant.  Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim.

 

Within sixty (60) days after the Plan Administrator’s receipt of a request for review, the Plan Administrator will render a decision.  After considering all materials presented by the Claimant, the Plan Administrator will render a written determination, written in a manner calculated to be understood by the Claimant setting forth:

 

	
  

	
(1)

	
The specific reasons for the adverse determination;

 

	
  

	
(2)

	
The specific references to the pertinent provisions of the Plan on which the decision is based;

 

	
  

	
(3)

	
A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and

 

	
  

	
(4)

	
A statement describing any voluntary appeal procedures offered by the Plan and the Claimant’s right to obtain the information about such procedures, as well as a statement of the Claimant’s right to bring an action under ERISA section 502(a).

 

If special circumstances require that the sixty-day time period be extended, the Plan Administrator will so notify the Claimant in writing before the end of the sixty-day period and will render the decision as soon as practicable, but no later than one hundred twenty days after receipt of the request for review.

 

  

  

  

 

	
  

	
(c)

	
Finality of Determinations; Exhaustion of Remedies. To the extent permitted by law, decisions reached under the claims procedures set forth in this Section 6.9 shall be final and binding on all parties. No legal action for benefits under the Plan shall be brought unless and until the Claimant has exhausted his remedies under this Section 6.9.  In any such legal action, the Claimant may only present evidence and theories which the Claimant presented during the claims procedure. Any claims which the Claimant does not in good faith pursue through the review stage of the procedure shall be treated as having been irrevocably waived.  Judicial review of a Claimant’s denied claim shall be limited to a determination of whether the denial was an abuse of discretion based on the evidence and theories the Claimant presented during the claims procedure.

 

	
  

	
(d)

	
Limitations Period.  Any suit or legal action initiated by a Claimant under the Plan must be brought by the Claimant no later than one year following a final decision on the claim for benefits by the Plan Administrator.  The one-year limitation on suits for benefits will apply in any forum where a Claimant initiates such suit or legal action.

 

	
  

	
(e)

	
Disability Claims.  Claims for disability benefits shall be determined under DOL Regulation section 2560.503-1 which is hereby incorporated by reference.

 

	
6.10.

	
Notice.  Any notice required or permitted to be given under the provisions of the Plan shall be in writing, and shall be signed by the party giving or making the same.  If such notice, consent or demand is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, addressed to such party’s last known address as shown on the records of the Company.  Notices to the Plan Administrator should be sent in care of the Company at the Company’s principal place of business.  The date of such mailing shall be deemed the date of notice.  Either party may change the address to which notice is to be sent by giving notice of the change of address in the manner set forth above.

 

	
6.11.

	
No Guarantee of Benefits.  Nothing contained in the Plan shall constitute a guarantee by the Company or any other person or entity that the assets of the Company will be sufficient to pay any benefits hereunder.

 

	
6.12.

	
Incapacity of Recipient.  If any person entitled to a distribution under the Plan is deemed by the Plan Administrator to be incapable of personally receiving and giving a valid receipt for such payment, then, unless and until a claim for such payment shall have been made by a duly appointed guardian or other legal representative of such person, the Plan Administrator may provide for such payment or any part thereof to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person.  Any such payment shall be a payment for the account of such person and a complete discharge of any liability of the Company and the Plan with respect to the payment.

 

  

  

  

 

	
6.13.

	
Corporate Successors.  The Plan and the obligations of the Company under the Plan shall become the responsibility of any successor to the Company by reason of a transfer or sale of substantially all of the assets of the Company or by the merger or consolidation of the Company into or with any other corporation or other entity.

 

	
6.14.

	
Severability.  In the event any provision of the Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted.

 

	
6.15.

	
Indemnification.  To the extent not covered by insurance, the Company shall indemnify the Plan Administrator, each employee, officer, director, and agent of the Company, and all persons formerly serving in such capacities, against any and all liabilities or expenses, including all legal fees relating thereto, arising in connection with the exercise of their duties and responsibilities with respect to the Plan, provided however that the Company shall not indemnify any person for liabilities or expenses due to that person’s own gross negligence or willful misconduct.

 

SECTION 7

Amendment and Termination

 

	
7.1

	
Amendment or Termination.  The Company reserves the right to modify, amend or terminate the Plan when, in the sole discretion of the Company, such amendment or termination is advisable.

 

	
7.2

	
Effect of Amendment or Termination.  No amendment or termination of the Plan shall reduce or eliminate any vested balance in a Participant’s Account accrued through the date of such amendment or termination.  However, an amendment may freeze or limit future deferrals or credits of benefits under the Plan on and after the date of such amendment.  Upon termination of the Plan, distribution of Plan benefits shall be made to Participants and beneficiaries in the manner and at the time described in Section 5, unless the Company determines in its sole discretion that all such amounts shall be distributed upon termination in accordance with the requirements under Code section 409A.  Upon termination of the Plan, no further deferrals of Compensation or crediting of Employer Contributions shall be permitted; provided, however, earnings, gains and losses shall continue to be credited to each Participant’s Account balance in accordance with Section 4 until the vested Account balances are fully distributed.

 

IN WITNESS WHEREOF, Otter Tail Corporation has caused this Plan to be executed by its duly authorized officers this 29th day of June, 2012.

 

	 	OTTER TAIL CORPORATION
	 	 	 
	 	By	George Koeck
	 	 	 
	 	Its	Sr. Vice PresidentEmployment Agreement

 Exhibit 10.1 

 
 

 
 EXECUTIVE EMPLOYMENT AGREEMENT 

THIS EMPLOYMENT AGREEMENT and an ancillary agreement to be effective simultaneously herewith entitled “Confidentiality,
Non-Competition and Non-Solicitation Agreement” (the “Confidentiality Agreement”), a copy of which is attached hereto as Attachment A, and incorporated herein by reference for all purposes, (this agreement and the Confidentiality
Agreement being hereinafter collectively referred to as “this Agreement”) is entered into effective as of August 20, 2012 (the “Effective Date”), by and between Powell Industries, Inc. and its affiliates (the
“Company”) and Michael A. Lucas (“Executive”). 
 WHEREAS, the Company desires to employ the
Executive as President & Chief Executive Officer of the Company from and after the Effective Date until such date as his employment shall end pursuant to the terms and conditions contained herein; and 

WHEREAS, Executive desires to be employed by the Company in such position pursuant to the terms and conditions contained herein;

 NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 

 

	I.	EMPLOYMENT TERM. 

 The
term of this Agreement shall commence on the Effective Date and expire at the earlier of: 
 a. The last day of
the month in which the Executive reaches age 65, in which case, unless the parties agree otherwise, Executive’s employment shall continue at will and shall be terminable by either party, for any reason, in which event the executive shall be
entitled to the severance benefits provided for under Section V.B; or 
 b. The date Executive’s employment
terminates subject to the provisions of this Agreement regarding termination, resignation or retirement. 
 Executive and the
Company acknowledge that the employment relationship provided herein may be terminated at any time, upon written notice to the other party for any reason, at the option of either the Company or Executive. However, as provided in this Agreement,
Executive may be entitled to certain severance benefits depending upon the circumstances of Executive’s termination of employment. The period Executive is employed by the Company under this Agreement is referred to herein as the
“Employment Term.” 
  

	II.	CERTAIN DEFINITIONS 

 A.
“Accrued Rights” shall mean: 
 1. Executive’s earned, but unpaid compensation, to include
base salary, vehicle allowance, short term incentive and long term incentive compensation through the date of termination; 
 2. Reimbursement, within sixty (60) days following submission by Executive to the Company of appropriate supporting documentation, for any unreimbursed reasonable business expenses properly incurred
by Executive in the performance of Executive’s duties in accordance with the Company’s expense reimbursement policy prior to the date of Executive’s termination, provided claims for such reimbursement (accompanied by appropriate
supporting documentation) are submitted to the Company within ninety (90) days following the date such expenses were incurred and within thirty (30) days following Executive’s termination; and 

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

 B. “Cause” shall mean: 

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

2. Executive’s dishonesty, theft, embezzlement or fraud with respect to the business, property, reputation or affairs
of the Company; 
 3. Executive’s willful violation of the Company’s Business Code of Conduct and
Business Ethics and/or any other of the Company’s employment, personnel, safety or other policies as now exist or as may hereafter be amended; 
 4. Executive’s having committed any material violation of any federal or state law regulating securities (without having relied on the advice of the Company’s attorney or outside auditor) or
having been the subject of any final order, judicial or administrative, obtained or issued by the Securities and Exchange Commission, or any regulatory authority having jurisdiction over the Company’s securities for any securities violation
involving fraud, including, without limitation, any such order consented to by Executive in which findings of facts or any legal conclusions establishing liability are neither admitted nor denied; 

5. Executive’s willful and continued failure to devote substantially all of his business time to the Company’s
business affairs (excluding failures due to illness, incapacity, vacations, incidental civic activities and incidental personal time); or 
 6. Executive’s unauthorized disclosure of confidential information of the Company that is materially injurious to the Company. 

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

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

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

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

1. any “person” (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any affiliate, or any corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the Company), acquires “beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 35% or more of the
combined voting power of the Company’s then outstanding securities; provided, however, that if the Company engages in a merger or consolidation in which the Company or surviving entity in such merger or consolidation becomes a subsidiary of
another entity, then references to the Company’s then outstanding securities shall be deemed to refer to the outstanding securities of such parent entity; 

  
 Page 2 of 21

 2. a change in the composition of the Board, as a result of which fewer than
a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (i) are directors of the Company as of the Effective Date, or (ii) are elected, or nominated for election, to the Board
with the affirmative votes of at least two-thirds of the Incumbent Directors at the time of such election or nomination, but Incumbent Director shall not include an individual whose election or nomination occurs as a result of either (1) an
actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or (2) an actual or threatened solicitation of proxies or consents by or on behalf of a person other than the
Board of Directors of the Company; 
 3. the consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity (or if the surviving entity is or shall become a subsidiary of another entity, then such parent entity) more than 50% of the combined voting power of the voting securities of the Company (or such surviving entity
or parent entity, as the case may be) outstanding immediately after such merger or consolidation; 
 4. the
stockholders of the Company approve a plan of complete liquidation of the Company; or 
 5. the sale or
disposition (other than a pledge or similar encumbrance) by the Company of all or substantially all of the assets of the Company other than to a subsidiary or subsidiaries of the Company. 

D. “Date of Termination” shall mean the date the Notice of Termination is given unless such Notice of Termination is by
Executive in which event the Date of Termination shall not be less than 30 days following the date the Notice of Termination is given. Further, a Notice of Termination given by Executive due to a Good Reason event that is corrected by the Company
before the Date of Termination shall be void. 
 E. “Disability” shall mean that Executive: (i) is unable
to perform the essential functions of Executive’s job title and duties by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less
than twelve (12) months, provided that Executive or his representative has provided the Company with certification of such disability from a licensed physician or other medical services provider acceptable to the Company in its sole discretion;
(ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three months under an accident and health plan or disability insurance policy covering employees of the Company; or (iii) is determined by the Social Security Administration to be disabled. 

F. “Good Reason” shall mean: 
 1. a material reduction in Executive’s authority, duties or responsibilities or the assignment to Executive of duties or responsibilities inconsistent in any material respect from those of Executive
in effect immediately prior to the change; 
 2. a material reduction of Executive’s compensation and
benefits (determined as of the action or determined cumulatively over time) , including, without limitation, annual base salary, targeted short-term incentive compensation, targeted long-term incentive compensation, and equity incentive
opportunities, from those in effect immediately prior to the change; 
 3. the Company fails to obtain a written
agreement from any successor or assigns of the Company to assume and perform this Agreement as provided in Section VI.I hereof; 
 4. the Company requires Executive, without Executive’s consent, to be based at any office located more than 50 miles from the Company’s offices to which Executive was based immediately prior to
the Change of Control, except for travel reasonably required in the performance of Executive’s duties; or 

  
 Page 3 of 21

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

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

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

For purposes of this Agreement, “Good Reason” shall be construed to refer to Executive’s positions, duties,
and responsibilities in the position or positions in which Executive was serving before any event as described in subparagraphs (1) through (5) above, which shall not include titles or positions with subsidiaries and affiliates of the
Company that are held primarily for administrative convenience. 
 “Good Reason” shall also include any
of the foregoing acts or omissions by a successor in interest to the Company as referenced in Sections II.C(3), (4) or (5) above. 
 G. “Notice of Termination” shall mean a written notice delivered to the other party indicating the specific termination provision in this Agreement relied upon for termination of
Executive’s employment which shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated. For the purpose, termination of
Executive’s employment shall be interpreted consistent with the meaning of the term “Separation from Service” in Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable
regulation authority. 
 H. “Poor Performance” shall mean Executive’s willful and continued failure to
perform substantially the duties of Executive’s position after a written demand for substantial performance is delivered to him which specifically identifies the nature of such unacceptable performance, and which is not cured by Executive
within a reasonable period, not to exceed sixty (60) days. For purposes of the definition in of “Poor Performance” as used herein, no act, or failure to act, on Executive’s part shall be deemed “willful” unless done, or
omitted to be done, by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best interest of the Company. 
 I. “Protected Period” shall mean the 36-month period beginning on the effective date of a Change of Control. 
 J. “Retirement” shall mean Executive has reached 62 years of age (“normal retirement”) or age 60 with at least five (5) years of active service (“early
retirement”); provided, however that Executive cannot be required to retire and must consent in writing to any Retirement. 

K. “Severance Period” shall mean the time period during which the Executive receives salary continuation benefits
following a termination of employment by the Company for Poor Performance as described in Section V.C Without Cause or Resignation by Executive for Good Reason either prior to a Change in Control as described Section V.D or after a Change in Control
as described in Section V.E. 
 L. “Targeted STIC” shall mean the targeted value of Executive’s annual
Short Term Incentive Compensation opportunity for the year in which the Date of Termination occurs, or the target value in place prior to a material reduction in compensation, or the fiscal year immediately preceding a Change of Control whichever is
a greater amount. 

  
 Page 4 of 21

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

 

	III.	POSITION. 

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

	IV.	COMPENSATION. 

 A.
Base Salary. The Company shall pay Executive a base salary at the annual rate of $590,000 payable in accordance with the Company’s payroll practices for similarly situated executives (the “Base Salary”). Executive’s Base
Salary shall be subject to review annually by and at the sole discretion of the Compensation Committee of the Board (the “Compensation Committee”). 
 B. Short Term Incentive Compensation Award. For each fiscal year (“Fiscal Year”) of the Company during the Employment Term, Executive shall be given the opportunity to earn an annual
Short Term Incentive Compensation Award (the “STIC Award”). Executive’s annual Short Term Incentive Compensation opportunity for each Fiscal Year ending during the Employment Term shall be set by the Compensation Committee, in its
sole discretion. The actual STIC Award payable to Executive with respect to a Fiscal Year shall be dependent upon the achievement of performance objectives established by the Compensation Committee for such Fiscal Year and may be greater or less
than the Short Term Incentive Compensation opportunity depending on performance objective results. The Compensation Committee shall also have the sole right to determine whether Executive may be entitled to a discretionary bonus at any time and to
determine the criteria to be considered in making such decision. Except as otherwise provided in this Agreement, the payment of STIC Award shall be at the same time as Short Term Incentive Compensation Awards are paid to other similar executives of
the Company. 
 C. Long Term Incentive Compensation Award. During the Employment Term, Executive shall be shall be given
the opportunity to earn an annual Long Term Incentive Compensation Award (the “Target LTIC Award”) under the Company’s Equity Incentive Plan (the “Equity Plan”), as modified, amended or replaced from

  
 Page 5 of 21

 
time to time. Executive’s annual Targeted Long Term Incentive Compensation Award for each Fiscal Year during the Employment Term shall be set by the Compensation Committee, in its sole
discretion. The actual LTIC Award payable to Executive with respect to a Fiscal Year shall be dependent upon the achievement of performance objectives established by the Compensation Committee for such Fiscal Year and may be greater or less than the
Target Long Term Incentive Compensation opportunity depending on performance objective results. Except as otherwise provided in this Agreement, the payment of LTIC Award shall be at the same time as Long Term Incentive Compensation Awards are paid
to other similar executives of the Company. 
 D. Employee Benefits. During the Employment Term, Executive shall be
eligible to participate in the Company’s employee benefit plans as in effect from time to time (collectively, “Employee Benefits”) on the same basis as such employee benefit plans are generally made available to other comparable
executives of the Company. 
 E. Vacation. Executive shall be entitled to four (4) weeks of annual vacation leave
for each Fiscal Year during which Executive is employed (prorated for Executive’s initial year, if not a full year). Such leave shall be administered in accordance with the Company’s vacation policy. 

F. Automobile Allowance. During the Employment Term, Executive shall be entitled to an automobile allowance of $2,000 per month
paid in accordance with the Company’s normal payroll practices. 
 G. Business Expenses. During the Employment Term,
reasonable business expenses incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with the Company’s expense reimbursement policy. 

 

	V.	TERMINATION OF EMPLOYMENT. 

Executive shall not have a “termination of employment” for purposes of this Agreement unless such termination constitutes a
“separation from service” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and the applicable Treasury Regulations thereunder (the “Code”). Notwithstanding any other provision of this Agreement,
the provisions of this Section V shall exclusively govern Executive’s rights upon termination of employment with the Company and its affiliates. 
 A. By the Company for Cause or Resignation by Executive Without Good Reason. 
 1. The Employment Term and Executive’s employment hereunder may be terminated by the Company for Cause or by Executive’s resignation without Good Reason. 

2. If Executive’s employment is terminated by the Company for Cause, or if Executive resigns without Good Reason,
then, subject to the further terms of this Agreement, Executive shall be entitled to receive: 
 a. The Accrued
Rights (refer to Section II.A) 
 B. Retirement, Disability or Death. 

1. The Employment Term and Executive’s employment hereunder shall terminate upon Executive’s Retirement,
Disability or Death; provided, however, that if Executive retires under circumstances that would constitute “Good Reason”, Executive shall be deemed to have terminated for “Good Reason” and be entitled to the applicable rights
and benefits provided in this agreement. 
 2. Upon termination of Executive’s employment hereunder for
either Retirement, Disability or Death, then Executive or Executive’s estate (as the case may be) shall be entitled to receive the following: 
 a. The Accrued Rights (refer to Section II.A); and 

  
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 b. A prorated portion of the Targeted STIC for the current Fiscal Year,
prorated based on the percentage of the current Fiscal Year that shall have elapsed through the date of termination; and 
 c. With respect to any outstanding equity-based awards, whether “time-based” or “performance-based” vesting (including, but not limited to, any unvested options, restricted stock,
restricted stock units, and performance share units) such outstanding awards shall immediately vest; and 
 d. In
the event of termination for Disability or Death, an amount, paid on the first business day of each month, equal to 100% of the applicable monthly COBRA premium under the Company’s group health plan, continued for the lesser of (i) twelve
(12) months or (ii) until such COBRA coverage for Executive terminates. 
 C. By the Company for Poor
Performance. 
 1. The Employment Term and Executive’s employment hereunder may be terminated by the
Company for Poor Performance. 
 2. If Executive’s Employment is terminated by the Company for Poor
Performance then Executive shall be entitled to receive from the Company the following: 
 a. The Accrued Rights
(refer to Section II.A); 
 b. Continued payment of Executive’s Termination Base Salary for twelve
(12) months (the “Severance Period”) following the date of such termination, payable in accordance with the Company’s normal payroll practices as in effect on the date of termination; 

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

d. An amount, paid on the first business day of each month equal to one hundred percent (100%) of the applicable
COBRA premium under the Company’s group health plan, continued for the lesser of (1) twelve (12) months from the date of termination of Executive’s employment; or (2) the date on which Executive qualifies for health
insurance as a result of employment by or association with a subsequent employer. 
 D. By the Company Without Cause and not
for Poor Performance or Resignation by Executive for Good Reason Prior to a Change in Control. 
 1. The
Employment Term and Executive’s employment hereunder may be terminated by the Company without Cause or by Executive’s resignation for Good Reason. 
 2. If Executive’s employment is terminated by the Company without Cause (and other than by reason of Executive’s death or Disability) or if Executive resigns for Good Reason, then Executive
shall be entitled to receive from the Company the following: 
 a. The Accrued Rights (refer to Section II.A);

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

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

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

e. An amount, paid on the first business day of each month, equal to 100% of the applicable monthly COBRA premium under
the Company’s group health plan, continued for the lesser of (i) eighteen (18) months from the date of termination of Executive’s employment or (ii) the date on which Executive qualifies for health insurance as a result of
employment by or association with a subsequent employer.; 
 f. Outplacement services for twelve (12) months
from the termination date or until Executive obtains substantially comparable employment (as determined by the Company), whichever is shorter. Such outplacement services shall be commensurate with Executive’s position and reasonable in amount,
but not to exceed $25,000; and 
 g. Notwithstanding anything in this Agreement to the contrary, if Executive is
a “disqualified individual” (as defined in Section 280G(c) of the Code), and the payments and benefits provided for in this Section V.D of this Agreement, together with any other payments and benefits which Executive has the right to
receive from the Company or any other person, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the payments and benefits provided for in this Agreement shall be either (a) reduced (but
not below zero) so that the present value of such total amounts and benefits received by Executive from the Company and/or such person(s) will be $1.00 less than three (3) times Executive’s “base amount” (as defined in
Section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by Executive shall be subject to the excise tax imposed by Section 4999 of the Code or (b) paid in full, whichever produces the better
“net after-tax position” to Executive (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes). The reduction of payments and benefits hereunder, if applicable, shall be made by
reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent
necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order. The determination as to whether any such reduction in the amount of the payments and
benefits provided hereunder is necessary shall be made by the Company in good faith. If a reduced payment or benefit is made or provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits from
the Company (or its affiliates) used in determining if a “parachute payment” exists, exceeds $1.00 less than three (3) times Executive’s base amount, then Executive shall immediately repay such excess to the Company upon
notification that an overpayment has been made. Nothing in this paragraph shall require the Company to be responsible for, or have any liability or obligation with respect to, Executive’s excise tax liabilities under Section 4999 of the
Code. 
 E. By the Company Without Cause and Not for Poor Performance or Resignation by Executive for Good Reason During the
Protected Period Following a Change in Control. 
 1. Upon the effective date of a Change in Control during
the Employment Term, all of Executive’s unvested incentive, performance and equity-based awards (including, but not limited to, any unvested options, restricted stock, performance, and phantom share units under the Company’s equity
incentive plan or any other equity plan subsequently adopted by the Company) granted to Executive after the Effective Date shall vest in full. 

  
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 2. If Executive’s employment is terminated by the Company without Cause
(and other than by reason of Poor Performance or Executive’s death or Disability) or if Executive resigns for Good Reason during the Protected Period immediately following a Change in Control, then Executive shall be entitled to receive from
the Company (in lieu of any other severance payments or benefits under this Agreement), the following: 
 a. The
Accrued Rights (refer to Section II.A); 
 b. Continued payment of Executive’s Termination Base Salary for
thirty-six (36) months (“Severance Period”) following the date of such termination, payable in accordance with the Company’s normal payroll practices as in effect on the date of termination; 

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

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

e. An amount, paid on the first business day of each month, equal to 100% of the applicable monthly COBRA premium under
the Company’s group health plan, continued for the lesser of (i) eighteen (18) months from the date of termination of Executive’s employment or (ii) the date on which Executive qualifies for health insurance as a result of
employment by or association with a subsequent employer; 
 f. Outplacement services for twelve (12) months
from Executive’s termination date or until Executive obtains substantially comparable employment (as determined by the Company), whichever is shorter. Such outplacement services shall be commensurate with Executive’s position and
reasonable in amount, but not to exceed $25,000; and 
 g. Benefits paid to Executive pursuant to this Section
V.E of this Agreement shall be grossed-up by the Company to cover (1) any federal excise tax due by that Executive on account of these benefit payments and (2) any federal income and employment taxes due on federal excise tax. 

Notwithstanding anything in this Agreement to the contrary, if within the 6-month period immediately prior to the effective date of a
Change in Control, Executive’s employment with the Company is (i) terminated by the Company without Cause (and other than by reason of Poor Performance or Executive’s death or Disability) or (ii) Executive resigns for Good
Reason, then Executive shall be deemed to have had his employment with the Company terminated during the Protected Period. He therefore shall be entitled to an additional cash payment (i.e., additional to the payment he would have already
been entitled to receive pursuant to Sections V.D.2.b and c of this Agreement) equal to the positive difference between the value of his benefits under Sections V.D.2.b and c and the value of his benefits under Sections V.E.2.b, c and g. 

F. Notice of Termination. Any purported termination of employment by the Company or by Executive (other than due to
Executive’s death) shall be communicated by written Notice of Termination to the other party hereto in accordance with the notice provisions hereof. With respect to any termination of employment by Executive, such notice of termination shall be
communicated to the Company at least thirty (30) days prior to such termination. 
 G. Officer/Board Resignation.
Upon termination of Executive’s employment for any reason, Executive shall be deemed hereby to have resigned, effective as of the date of such termination and to the extent applicable, from the Board (and any committees thereof) and as an
officer of the Company and the board of directors (and any committees thereof) and as an officer of any and all of the Company’s affiliates. As a condition to receipt of the severance benefits described herein, Executive agrees to provide
written confirmation of such resignations to the Company. 

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

I. Compliance with IRC Section 409A. 
 1. Notwithstanding anything in this Agreement to the contrary, if, at the time of Executive’s termination of employment with the Company and its affiliates, Executive is a “specified
employee,” as defined in Section 409A of the Code, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to avoid the additional tax
under Section 409A of the Code, then the Company will defer the payment or the commencement of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) until the date
that is six months following Executive’s termination of employment with the Company (or the earliest date as is permitted under Section 409A of the Code). Any payment amounts deferred pursuant to this Section will be accumulated and paid
to Executive (without interest) in a lump sum and the balance of any remaining payments due Executive will be paid monthly or at such times as otherwise provided herein. 

2. Any reimbursement of any costs and expenses by the Company to Executive under this Agreement shall be made by the
Company in no event later than the close of Executive’s taxable year following the taxable year in which the cost or expense is incurred by Executive. The expenses incurred by Executive in any calendar year that are eligible for reimbursement
under this Agreement shall not affect the expenses incurred by Executive in any other calendar year that are eligible for reimbursement hereunder and Executive’s right to receive any reimbursement hereunder shall not be subject to liquidation
or exchange for any other benefit. 
 3. Each payment that Executive may receive under this Agreement shall be
treated as a “separate payment” for purposes of Section 409A of the Code. 

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

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

	VI.	MISCELLANEOUS. 

 A.
Agreement Ancillary to Other Agreements. This Agreement is ancillary to and part of other agreements between the Company and Executive including, the Confidentiality Agreement and the Company’s agreements to: (i) disclose, and to
continue to disclose its Confidential Information and Trade Secrets to Executive; (ii) provide initial and continued training, education and development to Executive; (iii) provide Executive with Confidential Information and Trade Secrets
about, and the opportunity to develop relationships with, Company’s employees, Customers and Suppliers, and employees and agents of its Customers and Suppliers. 
 B. Governing Law/Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to conflict of laws principles thereof. Each party to
this Agreement hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts in Houston, Texas, for the purposes of any proceeding arising out of or based upon this Agreement. 

C. Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination,
enforcement, interpretation or validity thereof shall be determined by arbitration in Houston, Harris County, Texas before one arbitrator. The arbitration shall be administered by the American Arbitration Association pursuant to its rules for the
resolution of employment disputes, and the following provisions: 
 1. Unless otherwise ordered by the
arbitrator, limited discovery consisting of one (1) deposition of each party and each expert; not more than fifteen (15) requests for production of documents; and not more than ten (10) interrogatories. 

2. Subject to applicable law, the arbitrator may award attorneys’ fees and the costs of arbitration to the prevailing
party. 
 3. Anything herein to the contrary notwithstanding, either party shall have the right to seek and
obtain injunctive relief to prevent a threatened breach of this Agreement, including the Confidentiality Agreement. 
 D.
Other Agreements. 
 1. The Confidentiality Agreement attached hereto as Attachment A is an integral part
of this Agreement, and this Agreement shall not become effective unless and until Executive has executed both this Agreement and the Confidentiality Agreement. A default under or breach of the Confidentiality Agreement shall constitute a breach of
this Agreement. In addition to any and all other remedies available to Company, in the event of a breach of or default under this Agreement, or in the event that the Company obtains any form of equitable relief, order or injunction, whether
temporary or permanent, for the enforcement of any of the provisions of this Agreement or the Confidentiality Agreement, the Company shall be entitled to recover, and the Executive (or his estate) shall be obligated to repay and return to the
Company, upon written demand therefore, an amount equal to all severance or other benefits paid to, or on behalf of, the Executive (or his estate) pursuant to the provisions of this Agreement (other than the Accrued Rights) on or after the date of
termination of Executive’s employment. 
 2. In the event of a conflict between the rights and benefits
granted by this agreement, and those granted under any other incentive, stock option, stock grant or similar plan or agreement (with the exception of the “Executive Severance Protection Plan” referred to below), Executive shall be entitled
to the rights and benefits described in this agreement. 
 E. Prior Agreements. The terms of this Agreement, the
Confidentiality Agreement referred to herein, and the letter of offer dated July 30, 2012 contain the entire understanding and agreement of the parties with respect to the employment of Executive by the Company and the termination of such
employment. 

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

G. Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. 
 H. Assignment. Neither this Agreement nor any of Executive’s rights and duties hereunder, shall be assignable or delegable by Executive. Any purported assignment or delegation by Executive in
violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement may be assigned by the Company to a person or entity which is an affiliate or a successor in interest to substantially all of the business
operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity. 

I. Successor Agreement. At, or simultaneously with, a Change of Control (as described in this Agreement), the Company will require
any successor to all or substantially all of the business and/or assets of the Company (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to expressly assume and agree, in writing, to perform this Agreement in
the same manner and to the same extent that the Company would be required to perform it if no succession had taken place. Failure of the successor to so assume this Agreement shall constitute “Good Reason as defined in Section I.F of this
Agreement. 
 J. Notices. For the purpose of this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given on the earlier of (i) the date that such notice is delivered by hand or overnight courier or (ii) three (3) days after it has been mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt. 
  

			
	IF TO THE COMPANY:	  	 Powell Industries, Inc.

Attention: Chief Human Resources Officer
 8550
Mosley Road
 Houston, Texas 77075

		
	IF TO EXECUTIVE:	  	 Michael A. Lucas
 1329
Saint William Drive
 Libertyville, IL 60048

 K. Prior Employment. The Company has employed Executive for Executive’s general skills,
management abilities and experience in the Company’s Business (as defined in the Confidentiality Agreement referred to herein). Executive acknowledges that Executive has been specifically instructed not to bring, disclose or use in any fashion
any confidential information, trade secrets, proprietary information, data or technology, nor any confidential pricing information, belonging to any prior employer. In no event is Executive authorized to use or disclose any such information to the
Company or any of its employees. 
 L. Executive’s Representations. Executive hereby represents to the Company that
(i) all confidential information, trade secrets or proprietary information, data or technology, belonging to any prior employer, including those that might have been contained on Executive’s personal computer, cell phone or other
electronic communications or storage device have been returned and/or deleted in accordance with any policy of or agreement with Executive’s prior employer and (ii) the execution and delivery of this Agreement by Executive and the Company
and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound.

  
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 M. Reimbursement of Legal Expenses. The Company shall reimburse Executive for
reasonable and customary fees charged by Executive’s attorney to provide legal counsel review and defense concerning this Agreement, not exceed $10,000. 
 N. Cooperation. Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events
occurring during Executive’s employment hereunder. Executive shall be entitled to reimbursement for reasonable and customary expenses incurred for purposes of cooperating in any action or proceeding pursuant to this Section. This provision
shall survive any termination of this Agreement. 
 O. Indemnification. Executive shall be indemnified by the Company
against liability as an officer and director of the Company and any subsidiary or affiliate of the Company to the maximum extent permitted by the Company’s bylaws by applicable law or by any indemnity agreement heretofore or hereafter executed
between the Company and Executive. Executive’s rights under this Section shall continue so long as Executive maybe subject to such liability, whether or not this Agreement may have terminated prior thereto. The Company will insure Executive,
for the duration of his employment with the Company and thereafter with respect to his acts and omissions occurring during such employment, under a contract of director and officer liability insurance to the same extent as such insurance insures
members of the Board. 
 P. Withholding of Taxes. The Company may withhold from any amounts or benefits payable under
this Agreement all taxes it may be required to withhold pursuant to any applicable law or regulation. 
 Q. Counterparts.
This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 
 R. Survival. The provisions of this Agreement, together with the provisions of the Confidentiality, Non-Competition and Non-Solicitation Agreement, attached and part of this Agreement as Schedule
A, shall each survive the termination of Executive’s employment, regardless of how such termination is caused. 

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

	
	BY EXECUTIVE: 
	
	/s/ Michael A. Lucas
	Michael A. Lucas
	
	Date: August 1, 2012

  

	
	BY POWELL INDUSTRIES, INC.:
	
	/s/ Thomas W. Powell
	 Thomas W. Powell
 Chairman
of the Board

	
	Date: August 3, 2012

  
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 ATTACHMENT A 

 
 

 
 CONFIDENTIALITY, NON-COMPETITION AND 

NON-SOLICITATION AGREEMENT 
 This Confidentiality, Non-Competition and Non-Solicitation Agreement (“this Agreement”) is entered into between Powell Industries, Inc., on behalf of itself, and any and all of its subsidiaries,
affiliates or successors (all of whom are hereinafter collectively referred to as “Company”) and Michael A. Lucas (“Executive”) in connection with and ancillary to an Executive Employment Agreement (the “Employment
Agreement”) being entered into between the Company and Executive of even date herewith. 
 I. Nondisclosure of Confidential Information
and Trade Secrets 
 A. Company’s Agreements. During the course of Executive’s employment by the Company,
the Company agrees: (i) to provide Executive with specialized training and continuing training and development regarding its products, services, methods, systems and operations; (ii) to provide Executive with access to its Confidential
Information and Trade Secrets (as defined herein); and (iii) to provide Executive with Confidential Information and Trade Secrets about, and the opportunity to develop close relationships with the Company’s management personnel, employees,
Customers (as defined herein), Suppliers (as defined herein) and the employees, agents and representatives of Customers and Suppliers. 
 B. Company’s Business. Company is engaged in the highly competitive business of the design, manufacture and packaging of equipment and systems for the distribution, control, generation and
management of electrical and other power sources (all of which is hereinafter collectively referred to as the “Company’s Business”). Executive acknowledges that because of the highly competitive nature of the Company’s Business,
the use and protection of the Company’s Confidential Information and Trade Secrets as defined in this Agreement is critical to the Company’s continued successful operation and business and is an essential element of this Agreement.

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

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

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

 3. All Customer contact information, which includes information about the identity and location of individuals
with decision-making authority and the particular preferences, needs or requirements of the Customer, or such individual, with respect to any of the products, goods, services or equipment which comprise any part of the Company’s Business, and
all information about the particular needs or requirements of Customers based on geographical, economic or other factors; 
 4. Financial information of any kind about Customers, including sales and purchase histories, trend information about the growth or shrinking of a particular Customer’s needs, purchases or
requirements; profit margins or markups, as well as all information about the costs and expenses which the Company incurs to provide products or services to its Customers; 

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

6. All Supplier contact information, which includes information about the identify and location of individuals with
decision-making authority and the particular capabilities, capacities, expertise, prices and/or schedules of such Suppliers; 
 7. All of the Company’s non-public business, expansion, marketing, development, financial or budgeting plans, strategies, forecasts or proposals; 

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

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

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

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

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

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

  
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 II. Intellectual Property and Work Product. 

A. If Executive creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time
during Executive’s employment by the Company and within the scope of such employment and/or with the use of any the Company resources (“Company Works”), Executive shall promptly and fully disclose same to the Company and hereby
irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair
competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company. 
 B. Executive agrees to keep and maintain adequate and current written records (in the form of notes, sketches, drawings, and any other form or media requested by the Company) of all Company Works. The
records will be available to and remain the sole property and intellectual property of the Company at all times. 
 C. During
the Employment Term, Executive shall take all requested actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist
the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason to secure
Executive’s signature on any document for this purpose, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and in
Executive’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing. 
 D. Executive shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential,
proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Executive hereby indemnifies, holds harmless and agrees to defend the Company
and its officers, directors, partners, employees, agents and representatives from any breach of the foregoing covenant. Executive shall comply with all relevant policies and guidelines of the Company, including regarding the protection of
confidential information and intellectual property and potential conflicts of interest. Executive acknowledges that the Company may amend any such policies and guidelines from time to time, and that Executive remains at all times bound by their most
current version. 
 III. Non-Competition and Non-Solicitation of Customers 

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

 

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

  

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

  
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 B. Non-Solicitation. 

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

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

 

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

2. During the Restricted Period, Executive will not, directly or indirectly, solicit or encourage to cease to work with
the Company or its affiliates any consultant then under contract with the Company or its affiliates. 
 3. It is
expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 3 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory
and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. 
 IV. Company Property 
 Executive also agrees that all
(i) correspondence, proposals, notes, reports, memoranda, records and files; (ii) plans, specifications, drawings, blueprints, and designs; (iii), training, service or other manuals; (iv) Customer or personnel lists or files,
including mailing or contact lists; (v) computer software, programs, disks or files; (vi) tools, materials or equipment; (vii) photographs, photostats, negatives, undeveloped film; (viii) tape or electronic recordings
(ix) information contained on any electronic storage or communications device used by Executive during Executive’s employment with the Company, including those furnished by the Company and those owned by Executive, and (x) any other
documents or programs, whether compiled by Executive or other Executives of the Company, or its contractors, vendors or consultants, and those which were made available to Executive while employed at the Company, which contain any Confidential
Information and Trade Secrets or concern or describe any part of the Company’s Business, Executive’s employment or the Company’s or Executive’s dealings, transactions or communications with any Customers (all of which is
hereinafter collectively referred to as Company Information), are and shall remain the sole and exclusive property of the Company. Executive agrees that this includes any Company Information contained on or within any personal computer, blackberry,
cell phone, iPad, or any other telephonic or electronic communication or data storage device, including those owned by Executive which were used during Executive’s employment with the Company (all of which are hereinafter collectively called
Electronic Devices). At any time upon the Company’s request, and without request upon termination of Executive’s employment, however such termination is caused, Executive will deliver to the Company any files, records, notes or other
documents which were used during Executive’s employment with the Company or which contain any Company Information. Executive will not keep in Executive’s possession nor disclose nor deliver to anyone else any Company Information whether in
electronic, paper or any other format. 
 V. Rights and Remedies Upon Breach 

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

  
 Page 18 of 21

 
obtain injunctive or other equitable relief of any kind, Executive hereby acknowledging and agreeing that any such breach or threatened breach will cause irreparable injury to the Company and
that monetary damages will not provide an adequate remedy to the Company; (iii) to require Executive to account for and pay over to the Company all compensation, profits, monies, or other benefits derived or received by Executive as a result of
any act or transaction constituting a breach of this Agreement. 
 B. Executive agrees and stipulates that in any action or
claim brought by Executive or in any action or claim brought against Executive involving the provisions of this Agreement, Executive hereby expressly waives any claim or defense that the non-competition, non-solicitation and non-disclosure covenants
contained in this Agreement are unenforceable, void or voidable, for any reason, including, but not limited to, fraud, misrepresentation, illegality, failure of consideration, illusory contract, mistake, or any other legal defense as to the validity
or enforceability of this Agreement. 
 C. In addition to any and all other remedies available to Company, in the event of a
breach of or default under this Agreement, or in the event that the Company obtains a judgment, which becomes final after the expiration of time for all appeals, that Executive has violated any of the provisions of Section II or Section III of this
Attachment A, the Company shall be entitled to recover, and the Executive (or his estate) shall be obligated to repay and return to the Company, upon written demand therefore, an amount equal to all severance or other benefits paid to, or on behalf
of, the Executive (or his estate) pursuant to the provisions of the Employment Agreement (other than the Accrued Rights) on or after the date of termination of Executive’s employment. 
 VI. General Provisions 
 A. Employment Agreement. The Employment
Agreement is an integral part of this Agreement, and this Agreement is an integral part of the Employment Agreement. A breach of or default under this Agreement shall constitute a material breach of the Employment Agreement; provided, however, that
none of the notice requirements of the Employment Agreement shall be applicable to any actual breach of this Agreement. 
 B.
Other Agreements. To the extent that Executive has heretofore entered into an agreement with the Company containing confidentiality, non disclosure, non competition and/or non-solicitation provisions, this Agreement shall constitute an
amendment, modification and continuation of all such agreements and obligations, which shall be deemed to be modified as provided herein. No modification of or amendment to this Agreement, nor any waiver of rights under this Agreement, shall be
effective unless it is in writing and signed by both Executive and the Company. Any subsequent change or changes in Executive’s duties, salary or compensation will not affect the validity or scope of this Agreement. 

C. Agreement Ancillary to Other Agreements. This Agreement is ancillary to and part of other agreements between the Company and
the Executive, including the Employment Agreement and the Company’s agreements to: (i) disclose, and to continue to disclose its Confidential Information and Trade Secrets to Executive; (ii) provide initial and continued training,
education and development to Executive; (iii) provide Executive with Confidential Information and Trade Secrets about, and the opportunity to develop close relationships with the Company’s management personnel, employees, Customers,
Suppliers and the employee’s agents and representative of Customers and Suppliers. 
 D. Severability. If one or
more of the provisions in this Agreement are held to be void or unenforceable in whole or in part, the remaining provisions will continue in full force and effect. Executive further agrees that in the event the length of time, the geographic area or
definition of business activity as set forth herein, is deemed unreasonable, or otherwise unenforceable, in any court proceedings, the Executive and the Court may reform, modify or reduce such restrictions such that they are reasonable and
enforceable. 
 E. “At Will” and Termination. This Agreement does not alter in any way the at-will nature of
employment between Executive and the Company, which may be terminated by the Company or by Executive in accordance with the terms of Executive Employment Agreement of even date herewith. 

  
 Page 19 of 21

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

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

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

  
 Page 20 of 21

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

 

	
	BY EXECUTIVE: 
	
	/s/ Michael A. Lucas
	Michael A. Lucas
	
	Date: August 1, 2012

  

	
	BY POWELL INDUSTRIES, INC.:
	
	/s/ Thomas w. Powell
	Thomas W. Powell
	Chairman of the Board
	
	Date: August 3, 2012

  
 Page 21 of 21

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