I
EXHIBIT 10(c)
AMERICAN WATER WORKS COMPANY, INC.
Change in Control Agreement for
The "Executive" (See Summary on Page 17)
AMERICAN WATER WORKS COMPANY, INC.
Change in Control Agreement for
The "Executive" (See Summary on Page 17)
Page
1. Definitions 2
2. Term of Agreement 6
3. Extension of Term Upon Change in Control 6
4. Entitlement to Severance Benefit 7
5. Confidentiality; Cooperation with Regard to Litigation;
Non- disparagement 9
6. Non-solicitation 11
7. Remedies 11
8. Resolution of Disputes 11
9. Effect of Agreement on Other Benefits 11
10. Not an Employment Agreement 12
11. Excise Tax Gross-Up 12
12. Assignability; Binding Nature 14
13. Representation 14
14. Entire Agreement 14
15. Amendment or Waiver 15
16. Severability 15
17. Survivorship 15
18. Beneficiaries/References 15
19. Governing Law/Jurisdiction 15
20. Notices 15
21. Headings 16
22. Counterparts 16
23. Summary 17
CHANGE IN CONTROL AGREEMENT
AGREEMENT, made and entered into as of the 1st day of January, 2000
by and between American Water Works Company, Inc., a Delaware
corporation (together with its successors and assigns, the
"Company"), and (the "Executive").
W I T N E S S E T H:
WHEREAS, Executive is an employee of the Company serving in an
executive capacity; and
WHEREAS, the Board of Directors of the Company (the "Board")
believes it is necessary and desirable that the Company be able to
rely upon Executive to continue serving in his position in the event
of a pending or actual change in control of the Company.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Company and Executive (individually a "Party" and together the
"Parties") agree as follows:
1. Definitions
(a)"Base Salary" shall mean Executive's annual base salary.
(b)"Cause" shall exist if:
(i) Executive willfully and materially breaches any provision
of Sections 5 or 6 of this Agreement;
(ii) Executive is convicted of, or pleads nolo contendere to,
a felony;
(iii) Executive's willful failure to attempt in good faith to
perform the duties of Executive's employment after receipt
of written notice from the Board and an opportunity
to cure such failure; or
iv) Executive's willful failure to attempt in good faith to
follow any legal and proper Board directive, after
receipt of written notice from the Board and a
reasonable opportunity to cure such non-adherence or
failure to act.
For purposes of this Agreement, an act or failure to act on
Executive's part shall be considered "willful" if it was done or
omitted to be done by him not in good faith, and shall not include
any act or failure to act resulting from any incapacity of
Executive. A termination for Cause shall not take effect unless the
provisions of this paragraph are complied with. Executive shall be
given written notice by the Company of its intention to terminate
him for Cause, such notice (A) to state in detail the particular act
or acts or failure or failures to act that constitute the grounds on
which the proposed termination for Cause is based and (B) to be
given within 15 days of the Company's learning of such act or acts
or failure or failures to act. Executive shall have 20 days after
the date that such written notice has been given to Executive in
which to cure such conduct, to the extent such cure is possible. If
Executive fails to cure such conduct, Executive shall then be
entitled to a hearing before the Board at which Executive is
entitled to appear. Such hearing shall be held within 25 days of
such notice to Executive, provided Executive requests such hearing
within 10 days of receipt of the written notice from the Company of
the intention to terminate him for Cause. If, within five days
following such hearing, Executive is furnished written notice by the
Board confirming that, in its judgment, grounds for Cause on the
basis of the original notice exist, Executive shall thereupon be
terminated for Cause; provided that if Executive has commenced an
expedited arbitration in the manner prescribed below and in
accordance with Section 8 within 15 days after his receipt of the
written notice from the Board, disputing the Board's determination
that Cause exists, Executive shall not be deemed to have been
terminated for Cause in accordance with the provisions hereof unless
and until the arbitrator shall have determined otherwise. If
Executive or his representative either fails to file a demand for
arbitration in accordance with Section 8 and pay the requisite fees
to commence that arbitration within 15 days of receiving the final
notice from the Board or fails to diligently pursue that arbitration
proceeding, the Board's finding of Cause shall be conclusively
presumed to be accurate.
(c) A "Change in Control" shall be deemed to have occurred if:
(i)any Person other than (A) the Company or any Xxxx Family Member,
(B) any trustee or other fiduciary holding securities under any
employee benefit plan of the Company, or (C) any company owned,
directly or indirectly, by the stockholders of the Company
immediately prior to the occurrence with respect to which the
evaluation is being made in substantially the same proportions as
their ownership of the common stock of the Company, becomes the
Beneficial Owner (except that a Person shall be deemed to be the
Beneficial Owner of all shares that any such Person has the right to
acquire pursuant to any agreement or arrangement or upon exercise of
conversion rights, warrants or options or otherwise, without regard
to the sixty day period referred to in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company or any
Significant Subsidiary (as defined below), representing 35% of the
combined voting power of the Company's or such subsidiary's then
outstanding securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this paragraph) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the two-year period or whose election or nomination for
election was previously so approved but excluding for this purpose
any such new director whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of an individual, corporation,
partnership, group, associate or other entity or Person other than
the Board, cease for any reason to constitute at least a majority of
the Board;
(iii) the consummation of a merger or consolidation of the Company
or any subsidiary owning directly or indirectly all or substantially
all of the consolidated assets of the Company (a "Significant
Subsidiary") with any other entity, other than a merger or
consolidation which would result in the voting securities of the
Company or a Significant Subsidiary outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving or
resulting entity) more than 50% of the combined voting power of the
surviving or resulting entity outstanding immediately after such
merger or consolidation;
(iv) the stockholders of the Company approve a plan or agreement for
the sale or disposition of all or substantially all of the
consolidated assets of the Company (other than such a sale or
disposition immediately after which such assets will be owned
directly or indirectly by the Company's stockholders in
substantially the same proportions as their ownership of the
Company's common stock immediately prior to such sale or
disposition) in which case the Board shall determine the effective
date of the Change in Control resulting therefrom, or
(v) any Triggering Event occurs for purposes of the Rights
Agreement.
For purposes of this definition:
(A) The term "Beneficial Owner" shall have the meaning ascribed to
such term in Rule 13d-3 under the Exchange Act (including any
successor to such Rule).
(B) The term "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor act thereto.
(C) The term "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, including "group" as defined in Section 13(d)
thereof.
(d)"Confidential Information" shall have the meaning set forth in
Section 5 below.
(e) "Code" shall have the meaning set forth in Section 11 below.
(f) "Disability" shall mean disability as that term is defined in
the Company's long-term disability plan.
(g) "Effective Date" shall have the meaning set forth in Section 2
below.
(h) "Excise Tax" shall have the meaning set forth in Section 11
below.
(i) "Good Reason" shall mean a termination of Executive's employment
at his initiative following the occurrence, without Executive's
written consent, of one or more of the following events (except as a
result of a prior termination):
(i) the assignment of any duties or responsibilities inconsistent
in any material and adverse respect with Executive's position or
which represent a material diminution of Executive's duties or
responsibilities;
(ii) a decrease in Executive's annual Base Salary or target annual
incentive award opportunity;
(iii) any failure to secure the agreement of any successor
corporation or other entity to the Company to fully assume the
Company's obligations to Executive under this Agreement;
(iv) a relocation of Executive's principal place of employment to a
location that increases the distance the Executive is required to
commute from his primary residence immediately prior to the Change
in Control, by more than 50 miles;
(v) any significant increase (as compared to the amount of travel
conducted by Executive prior to the Change in Control) in the amount
of travel necessary for Executive to perform his job
responsibilities hereunder; or
(vi) any material unremedied breach by the Company of the terms and
conditions of Executive's employment, including without limitation,
the terms and conditions of any employment agreement.
(j) "Gross-Up Payment" shall have the meaning set forth in Section
11 below.
(k) "Independent Advisors" shall have the meaning set forth in
Section 11 below.
(l) "Original Term" shall have the meaning set forth in Section 2
below.
(m) "Renewal Term" shall have the meaning set forth in Section 2
below.
(n) "Rights Agreement" shall mean that certain Rights Agreement by
and between American Water Works Company, Inc. and BankBoston N.A.,
dated as of February 18, 1999, as amended from time to time.
(o) "Severance Period" shall mean the period of 18 months following
the termination of Executive's employment.
(p) "Subsidiary" shall have the meaning set forth in Section 5
below.
(q) "Term" shall have the meaning set forth in Section 2 below.
(r) "Total Payments" shall have the meaning set forth in Section 11
below.
(s)"Triggering Event" shall have the meaning ascribed to it in the
Rights Agreement.
(t) "Xxxx Family Member" shall mean any of the following (either
individually or in combination): Xxxxxx X. Xxxx, Xxxxxxx Xxxx, Xxxx
X. Xxxx, Xxxxx Xxxx Xxxxxxxxxx, Xxxxx Xxxx, Xxxxx Xxxx, Xxxx Xxxx
IV, Xxxxx Xxxxxx and their respective spouses, siblings,
descendants, or controlled legal entities.
2. Term of Agreement
The term of this Agreement shall commence on the date of this
Agreement (the "Effective Date") and end on the third anniversary of
such date (the "Original Term"). The Original Term shall be
automatically renewed for successive one-year terms (the "Renewal
Terms") unless at least 180 days prior to the expiration of the
Original Term or any Renewal Term, either Party notifies the other
Party in writing that he or it is electing to terminate this
Agreement at the expiration of the then current Term. "Term" shall
mean the Original Term and all Renewal Terms.
3. Extension of Term Upon Change in Control
If a Change in Control shall have occurred during the Term,
notwithstanding any other provision of Section 2, the Term shall not
expire earlier than three years after such Change in Control.
4. Entitlement to Severance Benefit
(a) Severance Benefit. In the event Executive's employment with the
Company is involuntarily terminated by the Company without Cause
(other than due to death or Disability), or voluntarily by Executive
for Good Reason, in either case within three years after a Change in
Control has occurred (or any such termination in contemplation of
such Change in Control), Executive shall be entitled to receive:
(i) Base Salary through the date of termination of Executive's
employment, which shall be paid in a cash lump sum not later than 15
days following Executive's termination of employment;
(ii) an amount equal to a multiple (see summary on page 17) times
the sum of (A) Executive's Base Salary at the annualized rate in
effect on the date of termination of Executive's employment (or in
the event a reduction in Base Salary is a basis for Executive's
termination of employment for Good Reason, then the Base Salary in
effect immediately prior to such reduction), and (B) Executive's
target annual incentive opportunity for the year in which the
termination of employment occurs, such amount payable in a cash lump
sum promptly (but in no event later than 15 days) following
Executive's termination of employment;
(iii) pro rata annual incentive award for the year in which
termination occurs assuming that Executive would have received his
target annual incentive for such year, payable in a cash lump sum
promptly (but in no event later than 15 days) following Executive's
termination of employment;
(iv) elimination of all restrictions on any restricted or deferred
stock awards outstanding at the time of termination of employment;
(v) immediate vesting of all outstanding stock options and the right
to exercise such stock options for 18 months or the remainder of the
exercise period, if less;
(vi) additional age and service credit of a number of (see summary
on page 17) months for purposes of calculating both Executive's
eligibility for, and the amount of, his supplemental retirement
benefits and retiree medical benefits, immediate vesting of all such
benefits, and the Board's approval of any applicable early
retirement;
(vii) settlement of all deferred compensation arrangements in
accordance with any then applicable deferred compensation plan
and/or applicable deferral election form duly executed by Executive;
(viii) continued participation in all medical, health and life
insurance plans at the same benefit level at which Executive was
participating on the date of termination of Executive's employment
until the earlier of:
(A) a number of (see summary on page 17) months following the
termination of Executive's employment;
(B) the date, or dates, Executive receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such
coverage and benefits to be determined on a coverage-by-coverage, or
benefit-by-benefit, basis); provided that (1) if Executive is
precluded from continuing his participation in any employee benefit
plan or program as provided in this clause (viii) of this Section
4(a), Executive shall receive cash payments equal on an after-tax
basis to the cost to Executive of obtaining the benefits provided
under the plan or program in which he is unable to participate for
the period specified in this clause (viii) of this Section 4(a), (2)
such cost shall be deemed to be the lowest reasonable cost that
would be incurred by Executive in obtaining such benefit
himself/herself on an individual basis, and (3) payment of such
amounts shall be made quarterly in advance; or
(C) upon Executive's death (provided that this subsection (B) shall
not operate to diminish or eliminate the rights of Executive's
spouse or other beneficiaries to any benefit to which they would
otherwise be entitled pursuant to any Company plan or program);
(ix) continued indemnification in accordance with Company's charter
and by-laws as in effect on the date of the Change in Control or on
the date of the Executive's termination, whichever provides the
greater protection to the Executive;
(x) notwithstanding Sections 4(a)(vi) and (viii) hereof, if the
Executive is, or would be if still employed, eligible to retire at
any time during which the Executive is entitled to benefits under
Section 4(a)(viii), the Company shall provide the Executive and if
applicable the Executive's spouse with retiree medical benefits at
least equal to those that would be provided under the Company's
applicable retiree medical plan if that plan remained unamended for
the remainder of the life of the Executive and if applicable the
Executive's spouse. For purposes of this Section 4(a)(x), "retire"
shall mean a termination of service by reason of which the Executive
is entitled to immediate commencement of benefits under the Pension
Plan for Employees of American Water Works Company, Inc. and its
Designated Subsidiaries, or any successor plan; and
(xi) other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company.
For purposes of this Section 4(a), a termination in contemplation of
a Change in Control means a termination within 12 months prior to an
actual Change in Control at the request or direction of a Person who
enters, or has entered, into an agreement the consummation of which
would cause a Change in Control. A termination by the Executive for
Good Reason shall not constitute a termination in contemplation of a
Change in Control unless the actions giving rise to Good Reason were
taken at the direction of a Person who has entered into an agreement
the consummation of which would cause a Change in Control.
(b) No Mitigation; No Offset In the event of any termination of
employment under this Section 4, Executive shall be under no
obligation to seek other employment; amounts due Executive under
this Agreement shall not be offset by any remuneration attributable
to any subsequent employment that Executive may obtain.
(c) Nature of Payments Any amounts due under this Section 4 are in
the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty.
(d) Exclusivity of Severance Payments Upon termination of
Executive's employment during the Term, Executive shall not be
entitled to any severance payments or severance benefits from the
Company or any payments by the Company on account of any claim by
Executive of wrongful termination, including claims under any
federal, state or local human and civil rights or labor laws, other
than the payments and benefits provided in this Section 4.
(e) Release of Employment Claims As a condition to receipt of the
termination payments and benefits provided for in this Section 4,
Executive agrees to execute a release agreement, in a form
reasonably satisfactory to the Company, releasing any and all claims
arising out of Executive's employment (other than enforcement of
this Agreement or any indemnity right to which Executive may be
entitled, Executive's rights under any of the Company's incentive
compensation and employee benefit plans and programs to which
Executive is entitled under this Agreement or under the terms of any
such plan or program, and any claim for any tort for personal injury
not arising out of or related to the termination of Executive's
employment).
5. Confidentiality; Cooperation with Regard to Litigation; Non-
disparagement.
(a) During the Term and thereafter, Executive shall not, without the
Company's prior written consent, disclose to anyone (except in good
faith in the ordinary course of business to a person who will be
advised by Executive to keep such information confidential) or make
use of any Confidential Information except in the performance of his
duties hereunder or when required to do so by legal process, by any
governmental agency having supervisory authority over the business
of the Company or by any administrative or legislative body
(including a committee thereof) that requires him to divulge,
disclose or make accessible such information. In the event that
Executive is so ordered, he shall give the Company prompt written
notice to allow the Company the opportunity to object to or
otherwise resist such order.
(b) During the Term and thereafter, Executive shall not disclose the
existence or contents of this Agreement beyond what is disclosed in
the proxy statement or documents filed with the government unless
and to the extent such disclosure is required by law, by a
governmental agency, or in a document required by law to be filed
with a governmental agency or in connection with enforcement of
Executive's rights under this Agreement. In the event that
disclosure is so required, Executive shall give prompt written
notice to the Company to allow the Company the opportunity to
object to or otherwise resist such requirement. This restriction
shall not apply to such disclosure by Executive to members of his
immediate family, his tax, legal or financial advisors, any lender,
or tax authorities, or to potential future employers to the extent
necessary, each of whom shall be advised not to disclose such
information.
(c) "Confidential Information" shall mean all information concerning
the business of the Company or any Subsidiary relating to any of
their products, product development, trade secrets, customers,
suppliers, finances, and business plans and strategies. Excluded
from the definition of Confidential Information is information (i)
that is or becomes part of the public domain, other than through the
breach of this Agreement by Executive or (ii) regarding the
Company's business or industry properly acquired by Executive in
the course of his career as an executive in the Company's industry
and independent of Executive's employment by the Company. For this
purpose, information known or available generally within the trade
or industry of the Company or any Subsidiary shall be deemed to be
known or available to the public.
(d) "Subsidiary" shall mean any corporation controlled directly or
indirectly by the Company.
(e) Executive agrees to cooperate with the Company, during the Term
and thereafter (including following Executive's termination of
employment for any reason), by making himself/herself reasonably
available to testify on behalf of the Company or any Subsidiary in
any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist the Company, or any
Subsidiary, in any such action, suit, or proceeding, by providing
information and meeting and consulting with the Board or its
representatives or counsel, or representatives or counsel to the
Company, or any Subsidiary as requested; provided, however that the
same does not materially interfere with his then current
professional activities. The Company agrees to reimburse Executive,
on an after-tax basis, for all expenses actually incurred in
connection with his provision of testimony or assistance.
(f) Executive agrees that, during the Term and thereafter (including
following Executive's termination of employment for any reason) he
will not make statements or representations, or otherwise
communicate, directly or indirectly, in writing, orally, or
otherwise, or take any action which may, directly or indirectly,
disparage or be damaging to the Company or any Subsidiary or their
respective officers, directors, employees, advisors, businesses or
reputations. Notwithstanding the foregoing, nothing in this
Agreement shall preclude Executive from making truthful statements
or disclosures that are required by applicable law, regulation or
legal process.
6 Non-solicitation
During the period beginning with Effective Date and ending 18 months
following the termination of Executive's employment, Executive shall
not induce employees of the Company or any Subsidiary to terminate
their employment. During such period, Executive shall not hire,
either directly or through any employee, agent or representative,
any employee of the Company or any Subsidiary or any person who was
employed by the Company or any Subsidiary within 180 days of such
hiring.
7. Remedies
In addition to whatever other rights and remedies the Company may
have at equity or in law, if Executive breaches any of the
provisions contained in Sections 5 or 6 above, the Company (a) shall
have the right to immediately terminate all payments and benefits
due under this Agreement and (b) shall have the right to seek
injunctive relief. Executive acknowledges that such a breach would
cause irreparable injury and that money damages would not provide an
adequate remedy for the Company; provided, however, the foregoing
shall not prevent Executive from contesting the issuance of any such
injunction on the ground that no violation or threatened violation
of Sections 5 or 6 has occurred.
8. Resolution of Disputes
Any controversy or claim arising out of or relating to this
Agreement or any breach or asserted breach hereof or questioning the
validity and binding effect hereof arising under or in connection
with this Agreement, other than seeking injunctive relief under
Section 7, shall be resolved by binding arbitration, to be held at
the American Arbitration Association's office closest to the
Company's principal offices in accordance with the rules and
procedures of the American Arbitration Association or any other
mutually agreed location. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. Pending the resolution of any arbitration or court
proceeding, the Company shall continue payment of all amounts and
benefits due Executive under this Agreement. Executive shall be
entitled to reimbursement of reasonable costs and expenses of any
arbitration or court proceeding (including reasonable fees and
disbursements of counsel) as follows: (a) if the dispute arises
prior to a Change in Control, Executive must prevail in the
litigation or dispute, and (b) if the dispute arises after a Change
in Control, Executive shall be reimbursed so long as no
determination is made that Executive's litigation assertions or
defenses were asserted in bad faith or frivolous.
9. Effect of Agreement on Other Benefits
Except as specifically provided in this Agreement, the existence of
this Agreement shall not be interpreted to preclude, prohibit or
restrict Executive's participation in any other employee benefit or
other plans or programs in which he currently participates or for
which he may become eligible under the terms of each plan or program
after the date of this Agreement.
10. Not an Employment Agreement
This Agreement is not, and nothing herein shall be deemed to create,
a contract of employment between Executive and the Company. The
Company may terminate Executive's employment at any time, subject to
the terms of any employment agreement between the Company and
Executive that may then be in effect.
11.Excise Tax Gross-Up
If Executive becomes entitled to one or more payments (with a
"payment" including, without limitation, the vesting of an option or
other non-cash benefit or property), whether pursuant to the terms
of this Agreement or any other plan, arrangement, or agreement with
the Company or any affiliated company (the "Total Payments"), which
are or become subject to the tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (or any
similar tax that may hereafter be imposed) (the "Excise Tax"), the
Company shall pay to Executive at the time specified below an
additional amount (the "Gross-Up Payment") (which shall include,
without limitation, reimbursement for any penalties and interest
that may accrue in respect of such Excise Tax) such that the net
amount retained by Executive, after reduction for any Excise Tax
(including any penalties or interest thereon) on the Total Payments
and any federal, state and local income or employment tax and Excise
Tax on the Gross-Up Payment provided for by this Section 11, but
before reduction for any federal, state, or local income or
employment tax on the Total Payments, shall be equal to the sum of
(a) the Total Payments, and (b) an amount equal to the product of
any deductions disallowed for federal, state, or local income tax
purposes because of the inclusion of the Gross-Up Payment in
Executive's adjusted gross income multiplied by the highest
applicable marginal rate of federal, state, or local income
taxation, respectively, for the calendar year in which the Gross-Up
Payment is to be made. For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amount
of such Excise Tax:
(a) The Total Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all
"excess parachute payments" within the meaning of Section 280G(b)(1)
of the Code shall be treated as subject to the Excise Tax, unless,
and except to the extent that, in the written opinion of independent
compensation consultants, counsel or auditors of nationally
recognized standing ("Independent Advisors") selected by the Company
and reasonably acceptable to Executive, the Total Payments (in whole
or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code or are otherwise not
subject to the Excise Tax;
(b) The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (i) the
total amount of the Total Payments or (ii) the total amount of
excess parachute payments within the meaning of Section 280G(b)(1)
of the Code (after applying clause (a) above); and
(c) The value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Independent Advisors in
accordance with the principles of Sections 280G(d)(3) and (4) of the
Code.
For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed (i) to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made; (ii) to pay any
applicable state and local income taxes at the highest marginal rate
of taxation for the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes
if paid in such year (determined without regard to limitations on
deductions based upon the amount of Executive's adjusted gross
income); and (iii) to have otherwise allowable deductions for
federal, state, and local income tax purposes at least equal to
those disallowed because of the inclusion of the Gross-Up Payment in
Executive's adjusted gross income. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-Up Payment is made,
Executive shall repay to the Company at the time that the amount of
such reduction in Excise Tax is finally determined (but, if
previously paid to the taxing authorities, not prior to the time the
amount of such reduction is refunded to Executive or otherwise
realized as a benefit by the Executive) the portion of the Gross-Up
Payment that would not have been paid if such Excise Tax had been
applied in initially calculating the Gross-Up Payment, plus interest
on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time the Gross-Up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest and
penalties payable with respect to such excess) at the time that the
amount of such excess is finally determined.
The Gross-Up Payment provided for above shall be paid on the 30th
day (or such earlier date as the Excise Tax becomes due and payable
to the taxing authorities) after it has been determined that the
Total Payments (or any portion thereof) are subject to the Excise
Tax; provided, however, that if the amount of such Gross-Up Payment
or portion thereof cannot be finally determined on or before such
day, the Company shall pay to Executive on such day an estimate, as
determined by the Independent Advisors, of the minimum amount of
such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code), as soon as the amount thereof can be determined. In the
event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to Executive, payable on the fifth
day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). If more than one
Gross-Up Payment is made, the amount of each Gross-Up Payment shall
be computed so as not to duplicate any prior Gross-Up Payment. The
Company shall have the right to control all proceedings with the
Internal Revenue Service that may arise in connection with the
determination and assessment of any Excise Tax and, at its sole
option, the Company may pursue or forego any and all administrative
appeals, proceedings, hearings, and conferences with any taxing
authority in respect of such Excise Tax (including any interest or
penalties thereon); provided, however, that the Company's control
over any such proceedings shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder, and Executive
shall be entitled to settle or contest any other issue raised by the
Internal Revenue Service or any other taxing authority. Executive
shall cooperate with the Company in any proceedings relating to the
determination and assessment of any Excise Tax and shall not take
any position or action that would materially increase the amount of
any Gross-Up Payment hereunder.
12. Assignability; Binding Nature
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of
Executive) and permitted assigns. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the
Company except that such rights or obligations may be assigned or
transferred in connection with the sale or transfer of all or
substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all
of the assets of the Company and such assignee or transferee assumes
the liabilities, obligations and duties of the Company, as contained
in this Agreement, either contractually or as a matter of law. The
Company further agrees that, in the event of a sale or transfer of
assets as described in the preceding sentence, it shall take
whatever action it legally can to cause such assignee or transferee
to expressly assume the Company's liabilities, obligations and
duties hereunder. No rights or obligations of Executive under this
Agreement may be assigned or transferred by Executive other than his
rights to compensation and benefits, which may be transferred only
by will or operation of law, except as provided in Section 18 below.
13. Representation
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of
its obligations under this Agreement will not violate any agreement
between it and any other person, firm or organization.
14. Entire Agreement
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.
15. Amendment or Waiver
No provision in this Agreement may be amended unless such amendment
is agreed to in writing and signed by Executive and an authorized
officer of the Company. No waiver by either Party of any breach by
the other Party of any condition or provision contained in this
Agreement to be performed by such other Party shall be deemed a
waiver of a similar or dissimilar condition or provision at the same
or any prior or subsequent time. Any waiver must be in writing and
signed by Executive or an authorized officer of the Company, as the
case may be.
16. Severability
In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect to
the fullest extent permitted by law.
17. Survivorship
The respective rights and obligations of the Parties hereunder shall
survive any termination of Executive's employment to the extent
necessary to preserve such rights and obligations.
18. Beneficiaries/References
Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries
to receive any compensation or benefit payable hereunder following
Executive's death by giving the Company written notice thereof. In
the event of Executive's death or a judicial determination of his
incompetence, references in this Agreement to Executive shall be
deemed, where appropriate, to refer to his beneficiary, estate or
other legal representative.
19. Governing Law/Jurisdiction
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New Jersey without
reference to principles of conflict of laws. Subject to Section 8,
the Company and Executive hereby consent to the jurisdiction of any
or all of the following courts for purposes of resolving any dispute
under this Agreement: (i) the United States District Court for New
Jersey or (ii) any of the courts of the State of New Jersey. The
Company and Executive further agree that any service of process or
notice requirements in any such proceeding shall be satisfied if the
rules of such court relating thereto have been substantially
satisfied. The Company and Executive hereby waive, to the fullest
extent permitted by applicable law, any objection which it or he may
now or hereafter have to such jurisdiction and any defense of
inconvenient forum.
20. Notices
Any notice given to a Party shall be in writing and shall be deemed
to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested, duly
addressed to the Party concerned at the address indicated below or
to such changed address as such Party may subsequently give such
notice of:
If to the Company:
American Water WorksCompany, Inc.
0000 Xxxxxx Xxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
If to Executive: Executive's Home Address
21. Headings
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
22. Counterparts
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
AMERICAN WATER WORKS
COMPANY, INC.
By:
Name:
Title:
Executive
Agreement between Agreement Agreement
The registrant and Section Section
The "Executive" 4(a) (ii) 4 (a) (vi)
Lump Sum Retirement
Executive Multiple Benefit
Months
President and CEO of Registrant 3 36
Vice President and CFO of Registrant 2 24
General Counsel and Secretary of Registrant 2 24
Treasurer of Registrant 1.5 18
Comptroller of Registrant 1.5 18
Subsidiary Presidents 2 24
Subsidiary Senior Vice President 2 24
Subsidiary Vice President- Human Resources 1.5 18
