Exhibit 10.4
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS CHANGE OF CONTROL SEVERANCE AGREEMENT ("Agreement") is made effective
as of April 28, 2006 (the "Effective Date") by and between Southwest Water
Company, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxx
("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;
WHEREAS, the Company and Executive are parties to that certain Severance
Compensation Agreement dated as of August 5, 1999 (the "Prior Agreement") and
the Company and Executive desire to terminate the Prior
Agreement and institute this Agreement;
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.
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.
(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 Change of Control Payment Period (as defined below),
as applicable.
2. Certain Definitions.
(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 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:
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(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
(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
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(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.
(c) Change of Control Payment Period. "Change of Control Payment Period"
shall mean the period of twenty-four (24) months after the Date of Termination
of Executive, where such Termination is an Involuntary Termination of Employment
or a termination of employment by Executive for Good Reason.
(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor code.
(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:
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(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;
(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.
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(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 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.
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:
(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.
(c) Other Benefits. Executive shall be entitled to the benefits set
forth in Section 4.
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4. Acceleration of Option Vesting Upon a Change of Control.
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.
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.
(a) Non-Compete. As an inducement for the Company to enter into this
Agreement, Executive agrees that during the Change of Control Payment 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,
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.
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(b) Non-Solicitation. As an additional inducement for the Company to
enter into this Agreement, Executive agrees that for the Change of Control
Payment 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 Change of Control Payment 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.
(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.
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7. Additional Condition to Payment.
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.
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.
(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.
(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 10, 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.
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(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.
(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 "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.
(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.
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(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.
(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.
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(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.
Corporation: Executive
Southwest Water Company Xxxxxxx X. Xxxxx
One Wilshire Building 0000 Xxxxxxx Xxxxx
000 Xxxxx Xxxxx Xxxxxx Xxxx Xxxxxx, XX 00000
Suite 2900
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Human Resources
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
COMPANY
SOUTHWEST WATER CORPORATION,
a Delaware corporation
By
---------------------------
Its:
EXECUTIVE
------------------------------
Name:
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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.
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:
(1) That this General Release is written in a manner calculated to be
understood by Executive.
(2) 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.
(3) This General Release provides for consideration in addition to
anything of value to which Executive is already entitled.
(4) Executive is advised to consult an attorney before signing this
General Release.
(5) 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.
(6) 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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(7) 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
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: _____________
(b) If to Executive: ______________________
______________________
______________________
[Signature page follows]
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The parties hereto have executed this Agreement as of the date first set
forth above.
SOUTHWEST WATER COMPANY,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Its: V.P. Human Resources
Executive
/s/ Xxxxxxx X. Xxxxx
-----------------------------
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