Exhibit 10.1
CHANGE OF CONTROL SEVERANCE AGREEMENT
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THIS CHANGE OF CONTROL SEVERANCE AGREEMENT ("Agreement") is made
effective as of May 15, 2006 (the "Effective Date") by and between SOUTHWEST
WATER COMPANY, a Delaware corporation (the "Company") and MARK A. SWATEK
("Executive").
WHEREAS, Executive is employed as an executive officer or key employee
of the Company;
WHEREAS, the Company believes it to be in the best interests of its
stockholders to attract, retain and motivate key executive officers and
employees and to ensure continuity of management;
WHEREAS, the Company recognizes that the possibility of a change of
control of the Company may result in the departure of key executives or
employees to the detriment of the Company and its stockholders; and
WHEREAS, in order to induce Executive to remain in its employ, the
Company hereby agrees that as of the Effective Date, Executive shall be entitled
to receive the change of control benefits set forth below.
NOW, THEREFORE, in consideration of Executive's continued employment
as an executive officer or key employee of the Company and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:
1. Term of Agreement.
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(a) Original Term and Extension. Subject to earlier termination
as set forth in Section 1(b), this Agreement shall commence on the Effective
Date and shall continue in effect until the third anniversary of the Effective
Date; provided, however, that the term of this Agreement shall automatically be
extended for one or more additional terms of three years each (whether or not
one or more Change of Control (as defined below) have occurred) unless, not
later than 90 days prior to the last day of the then existing term, the Company
shall have given notice to Executive that it does not wish to extend this
Agreement. Notwithstanding the foregoing, if a Change of Control occurs during
the original or any extended term of this Agreement, the term of this Agreement
shall automatically continue in effect for the duration of the Protective Period
(as defined below) and any attempt to have this Agreement terminate prior to
such time shall be of no force or effect.
(b) Earlier Termination. Notwithstanding the provisions of
section 1(a), the term of this Agreement shall terminate upon the earlier of (i)
the date as of which Executive ceases to be an executive officer or key employee
of the Company and such cessation of position is not subject to Section 3 hereof
or (ii) the expiration of the Protective Period (as defined below), as
applicable.
2. Certain Definitions.
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(a) Cause. "Cause" shall mean, and the Company shall be entitled
to terminate the employment of Executive for:
(i) fraud, misappropriation or embezzlement of money or
property by Executive;
(ii) willful and continued failure of Executive to
substantially perform Executive's duties with the Company (other than any such
failure resulting from incapacity of Executive due to physical or mental
illness), which failure is not remedied within thirty (30) days after a written
demand for substantial performance is delivered to Executive by the Chief
Executive Officer of the Company or the Compensation and Organization Committee
of the Board, which demand specifically identifies the manner in which Executive
has not substantially performed Executive's duties; or
(iii) willful engagement by Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise.
For purposes of this subparagraph, no act, or failure to act, on
Executive's part shall be considered "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.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of the
Compensation and Organization Committee finding that in the good faith opinion
of the Compensation and Organization Committee, Executive was guilty of conduct
set forth in this subparagraph and specifying the particulars thereof in detail.
(b) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) the acquisition, directly or indirectly, by any "person"
or "group" (as those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") and the rules
thereunder) of "beneficial ownership" (as determined pursuant to Rule 13d-3
under the Exchange Act) of securities entitled to vote generally in the election
of directors ("voting securities") of the Company that represent more than 50%
of the combined voting power of the Company's then outstanding voting
securities, other than:
(A) an acquisition by a trustee or other fiduciary
holding securities under any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the Company or by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any person controlled by the Company;
(B) an acquisition of voting securities by the Company
or a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of the stock of
the Company; or
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(C) an acquisition of voting securities pursuant to a
transaction described in clause (iii) below that would not be a Change of
Control under clause (iii).
Notwithstanding the foregoing, neither of the following events shall
constitute an "acquisition" by any person or group for purposes of this clause
(i): (x) a change in the voting power of the Company's voting securities based
on the relative trading values of the Company's then outstanding securities as
determined pursuant to the Company's Articles of Incorporation or (y) an
acquisition of the Company's securities by the Company which, either alone or in
combination only with the other event, causes the Company's voting securities
beneficially owned by a person or group to represent more than 50% of the
combined voting power of the Company's then outstanding voting securities;
provided, however, that if a person or group shall become the beneficial owner
of more than 50% of the combined voting power of the Company's then outstanding
voting securities by reason of share acquisitions by the Company as described
above and shall, after such share acquisitions by the Company, become the
beneficial owner of any additional voting securities of the Company, then such
acquisition shall constitute a Change of Control; or
(ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board; or
(iii) the consummation by the Company (whether directly
involving the Company or indirectly involving the Company through one or more
intermediaries) of (x) a merger, consolidation, reorganization, or business
combination, (y) a sale or other disposition of all or substantially all of the
Company's assets or (z) the acquisition of assets or stock of another entity, in
each case, other than a transaction which results in the Company's voting
securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly,
all or substantially all of the Company's assets or otherwise succeeds to the
business of the Company (the Company or such person, the "Successor Entity")
directly or indirectly, of more than 50% of the combined voting power of the
Successor Entity's outstanding voting securities immediately after the
transaction; or
(iv) a liquidation or dissolution of the Company.
For purposes of clause (i) above, the calculation of voting power
shall be made as if the date of the acquisition were a record date for a vote of
the Company's stockholders, and for purposes of clause (iii) above, the
calculation of voting power shall be made as if the date of the consummation of
the transaction were a record date for a vote of the Company's stockholders.
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(c) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor code.
(d) Covenant Period. "Covenant Period" shall mean the twenty-four
(24) months following the Date of Termination where such termination is an
Involuntary Termination of Employment or a termination of employment by
Executive for Good Reason.
(e) Date of Termination. "Date of Termination" shall mean the
date specified in the Notice of Termination (as defined below) as being the
effective date of the termination of Executive's employment with the Company,
provided that such date shall not be less than 30 days following the date the
Notice of Termination is delivered.
(f) Disability. "Disability" shall mean a physical or mental
incapacity as a result of which Executive becomes unable to continue the proper
performance of Executive's duties hereunder for six consecutive calendar months
or for shorter periods aggregating 180 business days in any 12 month period, but
only to the extent that such definition does not violate the Americans with
Disabilities Act.
(g) Good Reason. "Good Reason" shall mean, with respect to any
termination by Executive of Executive's employment with the Company, any of the
following which occurs during the Protective Period (as defined below), without
the express written consent of Executive, unless such circumstances are cured
prior to the Date of Termination:
(i) The assignment to Executive by the Company of duties
materially inconsistent with Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change of Control of the Company,
or a material change in Executive's title or offices as in effect immediately
prior to a Change of Control of the Company, except in connection with the
termination of Executive's employment for Cause, death or Disability or by
Executive other than for Good Reason;
(ii) A material reduction in Executive's base salary as in
effect at the time of a Change of Control of the Company, unless such reduction
is on a basis not materially less favorable to Executive relative to other
employees;
(iii) Any failure by the Company to continue in effect any
material benefit plan or arrangement in which Executive is participating at the
time of a Change of Control of the Company, unless (a) an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan or arrangement, or (b) such failure is on a basis not
materially less favorable to Executive, both in terms of the amount of benefits
provided and the level of Executive's participation, relative to other
participants;
(iv) Any failure by the Company to continue in effect any
bonus or incentive plan or arrangement in which Executive is participating at
the time of a Change of Control of the Company, unless (a) an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan or arrangement, or (b) such failure is on a basis
not materially less favorable to Executive, both in terms of the amount of
benefits provided and the level of Executive's participation, relative to other
participants;
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(v) Any requirement by the Company that Executive be based
anywhere other than within fifty (50) miles of Executive's office location as of
the date of a Change of Control, except for required travel by Executive on the
Company's business to an extent substantially consistent with Executive's
business travel obligations at the time of a Change of Control of the Company;
(vi) Any failure by the Company to provide Executive with
the number of paid vacation days to which Executive is entitled at the time of a
Change of Control of the Company;
(vii) Any material breach by the Company of any provision of
this Agreement;
(viii) Any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or
(ix) Any purported termination by the Company of Executive's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements set forth herein, and for purposes of this Agreement, no such
purported termination shall be effective.
(h) Involuntary Termination of Employment. "Involuntary
Termination of Employment" shall mean any termination of Executive's employment
by the Company and its subsidiaries, other than a termination for Cause or due
to death or Disability.
(i) Notice of Termination. "Notice of Termination" shall mean a
written notice delivered by the party effecting the termination of Executive's
employment to the other party. The notice shall state the specific termination
provision in this Agreement relied upon for the termination of Executive's
employment, 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 and shall state the date upon which such termination
shall be effective.
(j) Protective Period. "Protective Period" shall mean the six (6)
months preceding the effective date of a Change of Control and the twenty-four
(24) months following the effective date of a Change of Control.
(k) Termination Base Salary. "Termination Base Salary" shall mean
Executive's base salary at the rate in effect at the time the Notice of
Termination is given or, if a greater amount, Executive's base salary at the
rate in effect immediately prior to the Change of Control.
3. Change of Control Severance Plan.
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Upon the occurrence, during a Protective Period, of (a) Executive's
voluntary termination of employment for Good Reason or (b) an Involuntary
Termination of Employment of Executive, Executive shall be entitled to receive
the following compensation and benefits, subject to Executive's compliance with
Sections 6 and 7:
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(a) Salary Due Prior to Termination. The Company shall pay to
Executive when otherwise due Executive's then base salary through the Date of
Termination, along with credit for any vacation earned but not taken and any
earned and awarded, but unpaid bonus amount. Such payment shall be within five
days after the Date of Termination.
(b) Severance Pay. The Company shall pay to Executive, as
severance pay, an amount equal to 2.99 times the sum of (i) Executive's
Termination Base Salary and (ii) the average aggregate annual bonus paid by the
Company to Executive for the three (3) full calendar years preceding the date of
Change of Control (the "Change of Control Payment"). If Executive has not been
employed by the Company for three (3) full calendar years preceding the date of
Change of Control, the Change of Control Payment, with respect to part (ii) of
this clause above, shall be computed based on the average aggregate annual bonus
paid by the Company to Executive for the full term of Executive's employment
with the Company. The Change of Control Payment shall be paid in cash in a
single lump sum within fifteen days after the Date of Termination, except as
provided for in Section 5 below.
4. Acceleration of Option Vesting Upon a Change of Control.
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Notwithstanding the provisions of the Company's equity compensation
plans or of any particular option grant, all unvested options granted under any
equity compensation plan of the Company (or assumed by the Company) and held by
Executive as of the effective date of a Change of Control of the Company shall
vest and become immediately exercisable upon the effective date of the Change of
Control of the Company.
5. Limitation on Payments.
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If the severance and other benefits provided for in this Agreement or
otherwise payable to Executive constitute "excess parachute payments" within the
meaning of Section 280G of the Code, but for this Section, then Executive's
Change of Control Payments and other severance benefits under this Agreement
shall be reduced to such lesser amount as would result in no portion of such
severance benefits being classified as excess parachute payments under Section
2806 of the Code.
6. Non-Compete and Confidentiality Covenants.
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(a) Non-Compete. As an inducement for the Company to enter into
this Agreement, Executive agrees that during the Covenant Period, Executive
shall not, directly or indirectly in any geographic area where the Company
currently operates (i) engage without the prior express written consent of the
Company, in any business or activity, whether as an employee, consultant,
partner, principal, agent, representative, stockholder (except as a holder of
less than 2% of the combined voting power of the outstanding stock of a publicly
held company) or in any other individual, corporate or representative capacity,
or render any services or provide any advice to any business, activity, person
or entity, if Executive knows or reasonably should know that such business,
activity, service, person or entity, directly or indirectly, competes in any
material manner with the Business, or (ii) meaningfully assist, help or
otherwise support, without the prior express written consent of the Company, any
person, business, corporation, partnership or other entity or activity, whether
as an employee, consultant, partner, principal, agent, representative,
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stockholder (other than in the capacity as a stockholder of less than 2% of the
combined voting power of the outstanding shares of stock of a publicly held
company) or in any other individual, corporate or representative capacity, to
create, commence or otherwise initiate, or to develop, enhance or otherwise
further, any business or activity if Executive knows or reasonably should know
that such business or activity, directly or indirectly competes in any material
manner with the Business. For purposes of this Section 6, the term "Business"
shall refer to the business of the Company as presently conducted or as
conducted on the Date of Termination. As of the date of this Agreement, the
business of the Company, generally, involves the ownership, operation, billing,
collection, maintenance, construction management, servicing and management of
entities in the water or wastewater industry and water and wastewater utilities.
(b) Non-Solicitation. As an additional inducement for the Company
to enter into this Agreement, Executive agrees that during the Covenant Period,
Executive shall not, directly or indirectly (i) with respect to the Business,
take any action to solicit or divert any business (or potential business) or
clients or customers (or potential clients or potential customers) away from the
Company who it comes in contact with or are involved in the Business, (ii)
induce customers, potential customers, clients, potential clients, suppliers,
agents or other persons under contract or otherwise associated or doing business
with respect to the Business with the Company to terminate, reduce or alter any
such association or business with respect to the Business with or from the
Company, and/or (iii) knowingly induce any person in the employment of the
Company to (A) terminate such employment, (B) accept employment, or enter into
any consulting arrangement, with anyone other than the Company, and/or (C)
interfere with the customers, suppliers, or clients of the Company in any manner
or the business of the Company.
(c) Confidentiality. Throughout the Covenant Period, Executive
shall not, directly or indirectly, disclose or make available to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, any Confidential Information (as defined below). Executive agrees
that, upon termination of Executive's employment with the Company, all
Confidential Information in Executive's possession that is in writing or other
tangible form (together with all copies or duplicates thereof, including
computer files) shall be returned to the Company and shall not be retained by
Executive or furnished to any third party, in any form except as provided
herein; provided, however, that Executive shall not be obligated to treat as
confidential, or return to the Company copies of any Confidential Information
that (i) was publicly known at the time of disclosure to Executive, (ii) becomes
publicly known or available thereafter other than by any means in violation of
this Agreement or any other duty owed to Company by any person or entity, or
(iii) is lawfully disclosed to Executive by a third party. As used in this
Agreement, the term "Confidential Information" means: information disclosed to
Executive or known by Executive as a consequence of or through Executive's
relationship with the Company, about the customers, employees, business methods,
operations, public relations, contracts, organization, procedures, finances,
customer lists, rates and prospects of the Company and its affiliates.
(d) Remedies. Executive agrees and acknowledges that Executive's
right to receive any of the benefits set forth in Sections 3 and 4 (to the
extent Executive is otherwise entitled to such payments) is conditioned upon
Executive's compliance with the covenants in this Section 6, and all benefits
granted to Executive under this Agreement shall terminate immediately upon
Executive's breach of any covenant in this Section 6 and Executive shall be
responsible for refunding to the Company the benefits previously received under
this Agreement.
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(e) Understanding of Covenants. Executive represents that he (i)
is familiar with the foregoing covenants not to compete and not to solicit, and
(ii) is fully aware of his obligations hereunder, including, without limitation,
the reasonableness of the length of time, scope and geographic coverage of these
covenants.
7. Additional Condition to Payment.
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The Company's obligations to make the Change of Control Payments and
to provide any other benefits under Sections 3 and 4 shall be contingent upon
Executive's execution (and, if applicable, non-revocation) of a general release
of claims against the Company and any related parties, in the form attached as
Exhibit A; provided, however, that in the event of a change in law affecting the
breadth or efficacy of the release, the Company may modify Exhibit A as
necessary to have the same effect as Exhibit A would have had, but for the
change in law. Executive understands that he will not be entitled to any
payments under this agreement should he fail to execute or should he revoke such
release.
8. Indemnity.
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In any situation where under applicable law the Company has the power
to indemnify, advance expenses to and defend Executive in respect of any
judgments, fines, settlements, loss, cost or expense (including attorneys' fees)
of any nature related to or arising out of Executive's activities as an agent,
employee, officer or director of the Company or in any other capacity on behalf
of or at the request of the Company, the Company shall promptly on written
request, indemnify Executive, advance expenses to Executive and defend Executive
to the fullest extent permitted by applicable law, including but not limited to
making such findings and determinations and taking any and all such actions as
the Company may, under applicable law, be permitted to have the discretion to
take so as to effectuate such indemnification, advancement or defense. Such
agreement by the Company shall not be deemed to impair any other obligation of
the Company respecting Executive's indemnification or defense otherwise arising
out of this or any other agreement or promise of the Company or under any
statute.
9. Arbitration; Dispute Resolution, etc.
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(a) Executive and the Company each agrees that any dispute or
controversy arising out of, relating to, or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach, or
termination thereof (any such occurrence, a "Dispute") shall be settled by
arbitration to be held in Los Angeles County, California, in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association (the "Rules"). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.
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(b) The arbitrator shall apply California law to the merits of
any Dispute, without reference to rules of conflict of law. The arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. The Company and Executive each
hereby expressly consents to the personal jurisdiction of the state and federal
courts located in California for any action or proceeding arising from or
relating to this Agreement and/or relating to any arbitration in which the
parties are participants.
(c) The Company and Executive shall each pay one-half of the
costs and expenses of such arbitration, and shall separately pay its counsel
fees and expenses.
(d) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 9, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION
WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH, OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE COMPANY/EXECUTIVE
RELATIONSHIP.
(e) THE COMPANY AGREES THAT BY SIGNING THIS AGREEMENT, THE
COMPANY AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF COMPANY'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
COMPANY/EXECUTIVE RELATIONSHIP.
10. Code Section 409A.
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(a) Short-Term Deferral Exemption. This Agreement is not intended
to provide for any deferral of compensation subject to Code Section 409A and,
accordingly, the Change of Control Payment is to be paid not later than the
later of: (i) the 15th day of the third month following Executive's first
taxable year in which such severance benefit is no longer subject to a
substantial risk of forfeiture, and (ii) the 15th day of the third month
following first taxable year of the Company in which such severance benefit is
no longer subject to substantial risk of forfeiture, as determined in accordance
with Code Section 409A and any Treasury Regulations and other guidance issued
thereunder. The date determined under this subsection is referred to as the
"Short-Term Deferral Date."
(b) Compliance with Code Section 409A. Notwithstanding anything
to the contrary in the Agreement, in the event that the Change of Control
Payment is not actually or constructively received by Executive on or before the
Short-Term Deferral Date, to the extent such Change of Control Payment
constitutes a deferral of compensation subject to Code Section 409A, then: (i)
subject to clause (ii), such Change of Control Payment shall be paid upon
Executive's "separation from service," as defined in Code Section
409A(a)(2)(A)(i), with respect to the Company, and (ii) if Executive is a
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"specified employee," as defined in Code Section 409A(a)(2)(B)(i), with respect
to the Company, such Change of Control Payment shall be paid upon the date which
is six months after the date of Executive's "separation from service" (or, if
earlier, the date of Executive's death) in accordance with Code Section
409A(a)(2)(B)(i) and any Treasury Regulations or other guidance issued
thereunder. In the event that the Change of Control Payment is subject to this
subsection, such Change of Control Payment shall be paid not later than 60 days
following the payment date determined under this subsection, and shall be made
subject to Section 6(d) and Section 7.
11. Miscellaneous.
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(a) Mitigation. Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise nor, except as provided in Section 4(a), shall the amount of any
payment or benefit provided for in this Agreement be reduced by any compensation
earned or benefit received by Executive as the result of employment by another
the Company or self-employment, by retirement benefits, by offset against any
amount claimed to be owed by Executive to the Company, or otherwise.
(b) Modification. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Executive and such officer as may be designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California without
regard to its conflicts of law principles. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Except as expressly provided in this Agreement, any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The section headings contained in
this Agreement are for convenience only, and shall not affect the interpretation
of this Agreement.
(c) Successors; Binding Agreement.
(i) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets as stock of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Executive to terminate Executive's employment
and receive compensation from the Company in the same amount and on the same
terms to which Executive would be entitled hereunder if Executive terminates
Executive's employment for Good Reason within the Protective Period, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
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(ii) This Agreement shall inure to the benefit of and be
enforceable by Executive and Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amount would still be payable to
Executive hereunder had Executive continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee or, if there is no
such designee, to Executive's estate.
(d) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
(e) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(f) Entire Agreement. Except as set forth in clause (g) below,
this Agreement sets forth the entire agreement of the parties hereto in respect
of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto in respect of the subject matter contained herein. Any of
Executive's rights hereunder shall be in addition to any rights Executive may
otherwise have under benefit plans or agreements of the Company to which
Executive is a party or in which Executive is a participant, including, but not
limited to, any Company sponsored employee benefit plans and stock options
plans. In the event any provision of this Agreement shall conflict with the
provisions of any other agreement to which Executive and the Company are
parties, the provisions of this Agreement shall control.
(g) Termination of Prior Agreements. This Agreement is effective
as of the Effective Date. The Prior Agreement and any other prior severance or
change of control agreement between Executive and any of the Company, or
predecessors to any of the Company, or any subsidiary of the Company are hereby
expressly terminated as of the Effective Date. Executive hereby terminates and
waives any and all rights, title and interest Executive may have under the Prior
Agreement.
(h) Governing Law. This Agreement is made and is to be governed
by and construed under the laws of the State of California.
(i) Notice. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
delivered by United States certified or registered mail (return receipt
requested, postage prepaid) or by courier guaranteeing overnight delivery or by
hand delivery (with signed receipt required), addressed to the respective
addresses set forth below, and such notice or communication shall be deemed to
have been duly given two days after deposit in the mail, one day after deposit
with such overnight carrier or upon delivery with hand delivery. The addresses
set forth below may be changed in writing in accordance herewith.
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Corporation: Southwest Water Company
One Wilshire Building
624 South Grand Avenue
Suite 2900
Los Angeles, California 90017
Attention: Human Resources
Executive: Mark A. Swatek
At last address on file with the Company
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
COMPANY
SOUTHWEST WATER COMPANY,
a Delaware corporation
By: /s/ Maureen Kindel
---------------------------------------
Its: Director
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EXECUTIVE
/s/ Mark Swatek
---------------------------------------------
MARK A. SWATEK
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EXHIBIT A
FORM OF GENERAL RELEASE
-----------------------
GENERAL RELEASE
---------------
THIS GENERAL RELEASE ("Agreement") is entered into by and between
______________ ("Executive") and Southwest Water Company, a Delaware corporation
(the "Company") as of _______, 200__ (the "Effective Date").
Recitals
--------
WHEREAS, Executive is currently employed by the Company as
_______________;
WHEREAS, the Company and Executive desire to terminate their
employment relationship in accordance with the terms of that certain Change of
Control Severance Agreement dated __________________, 200__, by and between
Executive and Company (the "Severance Agreement"); and
WHEREAS, Executive's receipt of the benefits set forth in the
Severance Agreement are conditioned upon Executive's execution and delivery of
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth below, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties expressly, knowingly
and voluntarily agree as follows:
1. Release of the Company and Related Persons.
(a) General Release. In consideration for the Company's payments
and other benefits specified in the Severance Agreement, Executive hereby
releases and forever discharges the Company and its respective parents,
subsidiaries, predecessors, successors, heirs, estates and each of their
associates, owners, stockholders, members, assigns, employees, agents,
directors, officers, partners, lawyers, and all persons acting by, through,
under, or in concert with them, or any of them (collectively the "Releasees") of
and from any and all manner of action or actions, causes or causes of action, in
law or in equity, suits, debts, liens, contracts, agreements, promises,
liabilities, claims, demands, damages, losses, costs or expenses, of any nature
whatsoever, known or unknown, fixed or contingent (hereinafter called "Claims"),
which Executive now has or may hereafter have against the Releasees by reason of
any and all acts, omissions, events or facts occurring or existing prior to the
date hereof. This release includes, but is not limited to, any and all alleged
claims based on Title VII of the Civil Rights Act of 1964, the Civil Rights Act
of 1866, the Age Discrimination in Employment Act (including the Older Workers
Benefit Protection Act), the Equal Pay Act, the Americans with Disabilities Act,
the California Fair Employment and Housing Act, the California Labor Code, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974,
the Family and Medical Leave Act of 1993 or any common law, public policy,
contract (whether oral or written, express or implied) or tort law, or any other
local, state or federal law, regulation or ordinance having any bearing
whatsoever on the terms and conditions of Executive's employment and the
cessation thereof. The foregoing release, together with subparagraph (c) of this
Section 1, shall hereinafter be referred to as the "General Release".
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(b) Release of Unknown Claims. Executive acknowledges that he is
familiar with the provisions of California Civil Code section 1542, which
provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH, IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Executive, being aware of said code section, hereby expressly waives any rights
he may have thereunder, as well as under any other statutes or common law
principles of similar effect.
(c) Older Worker's Benefit Protection Act. Executive agrees and
expressly acknowledges that this General Release includes a waiver and release
of all claims which Executive has or may have under the Age Discrimination in
Employment Act of 1967, as amended, 29 U.S.C. ss. 621, et seq. ("ADEA"). The
following terms and conditions apply to and are part of the waiver and release
of the ADEA claims under this Agreement:
(i) That this General Release is written in a manner
calculated to be understood by Executive.
(ii) The waiver and release of claims under the ADEA
contained in this General Release do not cover rights or claims that may arise
after the date on which Executive signs this General Release.
(iii) This General Release provides for consideration in
addition to anything of value to which Executive is already entitled.
(iv) Executive is advised to consult an attorney before
signing this General Release.
(v) Executive is granted twenty-one (21) days after
Executive is presented with this General Release to decide whether or not to
sign this General Release. If Executive executes this General Release prior to
the expiration of such period, Executive does so voluntarily and after having
had the opportunity to consult with an attorney.
(vi) Executive will have the right to revoke the General
Release within seven (7) days of signing this Agreement. In the event the
General Release is revoked, this General Release will be null and void in its
entirety, and Executive will not receive any of the payments provided for in the
Severance Agreement.
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(vii) If Executive wishes to revoke the General Release, he
shall deliver written notice stating his intent to revoke the General Release to
________________ on or before 5:00 p.m. on the Seventh (7th) Day after the
Effective Date.
(d) No Assignment of Claims. Executive represents and warrants to
the Releasees that there has been no assignment or other transfer of any
interest in any Claim which Executive may have against the Releasees, or any of
them, and Executive agrees to indemnify and hold the Releasees harmless from any
liability, claims, demands, damages, costs, expenses and attorneys' fees
incurred as a result of any person asserting any such assignment or transfer of
any rights or Claims under any such assignment or transfer from such party.
(e) No Suits or Actions. If Executive hereafter commences, joins
in, or in any manner seeks relief through any suit arising out of, based upon,
or relating to any of the Claims, or in any manner asserts any of the Claims
against the Releasees, then he will pay to the Releasees against whom any such
Claim is asserted, in addition to any other damages caused thereby, all
attorneys' fees incurred by such Releasees in defending or otherwise responding
to such Claim. This provision, however, shall not apply to claims relating to
the interpretation of this Agreement, or to the alleged breach of this
Agreement. Such claims will be governed by Section 9 of the Severance Agreement.
2. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
3. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives, heirs,
successors, assigns, related entities, directors, officers, employees,
stockholders and agents to the full extent permitted by law.
4. Severability. If any clause or provision in this Agreement is
found to be void, invalid, or unenforceable, it shall be severed from the
remaining provisions and clauses which shall remain in full force and effect.
5. Waiver. A waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by that same party.
6. Governing Law. This Agreement shall be governed by the laws of
the state of California applicable to agreements made and to be wholly performed
in such state.
7. Headings. The section headings contained in this Agreement are
for convenience and reference purposes only and shall not affect in any way the
meaning and interpretation of this Agreement.
8. Notices. All notices, requests, demands and other communications
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been duly given, made and
received on the date when delivered by hand delivery with receipt acknowledged
or upon the third day after deposit in the United States mail, registered or
certified with postage prepaid, return receipt requested, addressed as set forth
below or to such other address as either party may have furnished to the other
party:
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(a) If to Company: Southwest Water Company
One Wilshire Building
624 South Grand Avenue
Suite 2900
Los Angeles, California 90017
Attention: _____________
(b) If to Executive: _________________________
_________________________
_________________________
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
SOUTHWEST WATER COMPANY,
a Delaware corporation
By:
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Its:
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Executive
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