EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS IS AN EMPLOYMENT AGREEMENT (the "Agreement"), dated May 5,
1999, between American Water Works Company, Inc., a Delaware corporation
(the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇ (the "Employee").
Intending to be legally bound, the parties agree as follows:
1. Position. The Company engages the Employee, and the Employee
agrees to serve, as the Company's Chief Financial Officer. The Employee
will perform such duties as are customarily associated with that office,
and as may be assigned to the Employee by the Company's President and Chief
Executive Officer.
2. Exclusive Services. The Employee will diligently devote her
entire time, effort and attention to the affairs of the Company and to the
successful development of its business. Without the Company's advance
written consent, the Employee will not render business services to others
or engage in any other activity that would materially interfere with the
performance of the Employee's duties under this Agreement. Nevertheless,
as long as the following activities do not interfere with the Employee's
obligations to the Company, the Employee may: (a) serve as a director,
officer or trustee of any trade association or of any civic, educational or
charitable organization; (b) acquire securities of any entity solely as an
investment so long as the Employee remains a passive investor in that
entity and that entity does not, directly or indirectly, compete with the
Company; and (c) with the prior consent of the Company's Board of
Directors, serve as director of any corporation that does not, directly or
indirectly, compete with the Company.
3. Term of Employment. The Employee's employment pursuant to
this Agreement shall begin on May 25, 1999 or such earlier time the Company
and Employee may agree, (the "Commencement Date"). This Agreement, except
for the Employee's rights under Section 5, and except for Sections 6, 7, 8,
9, 11 and 13, all of which will survive the termination of this Agreement,
will end on the second anniversary of the Commencement Date, unless sooner
terminated in accordance with the terms of this Agreement.
4. Compensation and Benefits.
4.1. Compensation.
(a) Base Salary. The Employee will be paid a base
salary from the Commencement Date through the first anniversary of the
Commencement Date at a rate of $300,000 per annum payable at the same time
as other management employees of the Company receive their regular
compensation. Thereafter, the rate of the Employee's base salary will be
reviewed in accordance with the Company's regular executive management
compensation review practices and may be increased, but not decreased,
during the then remaining term of this Agreement.
(b) Signing Bonus. In addition to the Employee's base
salary, the Company will pay the Employee on the first to occur of the
Commencement Date or the 30th day following the date of this Agreement,
$150,000 in cash in consideration of her entering into this Agreement.
(c) Incentive Plans. The Employee shall be entitled
to participate in the Company's Annual Incentive Plan and in the Company's
Long-Term Performance-Based Incentive Plan. The Employee's participation
in and award under the Company's Annual Incentive Plan shall be prorated
for the number of months between the Commencement Date and the end of the
1999 calendar year. The Employee's target payout under the Annual
Incentive Plan is 20% of a $369,200 mid-point (or currently $73,840). The
Employee's participation in the Company's Long-Term Performance-Based
Incentive Plan will begin on the Commencement Date. The Employee's target
payout under the Long-Term Performance-Based Incentive Plan cycle beginning
January 1, 2000 is 30% of a $369,200 mid-point (or currently $110,760). The
Employee's target payouts under the Long-Term Performance-Based Incentive
Plan three-year cycles which are in effect on the Commencement Date will be
30% of the Plan mid-points that were in effect when each cycle began, and
each actual payout will be prorated for the number of days of each Plan
cycle during which the Employee is employed by the Company, starting on the
Commencement Date. The actual amount awarded to the Employee under the
Annual Incentive Plan and under the Company's Long-Term Performance-Based
Incentive Plan, and redeterminations of mid-points under each plan, will be
determined in accordance with the terms of each plan. All amendments of
the Annual Incentive Plan and the Long-Term Performance-Based Incentive
Plan, including those, if any, that vary the percentages and midpoints
specified in this Section 4.1, will apply to the Employee's participation
in those plans.
4.2. Employee Benefits. The Employee will be entitled to
participate in the Company's employee benefit plans that are generally
available to the Company's executive management. These include the
Company's Pension Plan, Supplemental Retirement Plan, Supplemental
Executive Retirement Plan (as soon as Company Board approval is obtained),
group health coverage, periodic medical examination program, Employee Stock
Ownership Plan and 401(k) plan. The Employee shall also be entitled to
receive financial planning services and to use a Company-owned automobile
in accordance with current Company policies governing those benefits.
4.3. Reimbursement of Expenses. The Company will reimburse
the Employee in accordance with the Company's expense reimbursement policy
as in effect from time to time for expenses reasonably and properly
incurred by her in performing her duties.
5. Termination.
5.1. Termination for Cause. The Company may terminate the
Employee's employment, and the Company's obligations under this Agreement,
at any time for Cause (as defined below) by giving notice to the Employee.
Such termination will be effective as of the date of that notice and the
obligations of the Company under this Agreement shall terminate on that
date other than the obligation to pay to the Employee annual base salary
earned and accrued
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through the date of termination plus the amount of any compensation
previously deferred by the Employee, to the extent theretofore unpaid (to
the extent that such payment is consistent with the terms of any plan or
arrangement relating to such deferral).
In this Agreement, "Cause" means: (a) the Employee's conviction
of a felony; or (b) the Employee's willful, insubordinate and continued
failure to substantially perform her duties under this Agreement (other
than due to physical or mental illness) after receiving at least 30 days'
written notice of her specific failure to perform her duties; or (c) the
Employee's willfully and knowingly taking any action that is materially
injurious to the Company or any of its affiliated companies or any of their
business reputations, or that brings them into disrepute; or (d) a good
faith determination by the Company's Board of Directors that there is
substantial evidence that the Employee has committed fraud,
misappropriation or embezzlement against the Company; or (e) the Employee's
conduct that results in a suit by a former employer against the Company or
her that restrains her or the Company's performance under this Agreement;
or (f) the Employee's breach of this Agreement.
5.2. Termination Arising from Disability. The Company or the
Employee may terminate her employment under this Agreement due to the
Employee's Disability. If the Employee resigns or is terminated by the
Company due to the Employee's Disability, the Employee shall be entitled to
receive: (a) all base salary earned and accrued to the date of termination
or resignation; (b) the amount of any compensation previously deferred by
the Employee, to the extent theretofore unpaid (to the extent that such
payment is consistent with the terms of any plan or arrangement relating to
such deferral); and (c) any other benefits payable under the Company's then
current disability policy, if any. However, all other obligations of the
Company under this Agreement shall terminate as of the date of the
Employee's termination or resignation.
In this Agreement, "Disability" means any physical or mental
impairment that substantially limits the Employee from performing the
essential functions of her duties with or without reasonable accommodation
under this Agreement and that (x) has continued for a period of 60
consecutive days, or for a period of 120 days whether or not consecutive,
during any 360-day period; or (y) is expected to be highly likely to
persist for 120 consecutive days or to continue for the foreseeable future.
Any question as to the existence, extent, duration or potentiality of the
Employee's Disability shall be made by a qualified, independent physician
selected by the Company, whose determination shall be final and conclusive
for all purposes of this Agreement.
5.3. Termination other than for Cause.
(a) If the Company terminates the Employee's employment
other than for Cause or Disability or if the Employee terminates her
employment for "Good Reason" (as defined below), the Employee shall be
entitled to receive (a) all base salary earned and accrued to the date of
death, plus (b) any compensation previously deferred by the Employee to the
extent then unpaid (to the extent that such payment is consistent with the
terms of any plan or arrangement relating to such deferral), plus (c) an
amount equal to two times her then current
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base salary if such termination occurs before the first anniversary of the
Commencement Date and one year's base salary if such termination occurs
after the first anniversary of the Commencement Date, plus (d) an amount
equal to the maximum percentage award to which the Employee is then
entitled under the Company's Annual Incentive Plan and in the Company's
Long-Term Performance-Based Incentive Plan (at the then current percentage
of the then current midpoint under each plan), prorated for the period from
the date each plan cycle began to the date of termination.
(b) The amount provided for in clauses 5.3(c) and (d)
above shall be payable in equal monthly installments over the twelve months
following termination of the Employee's employment under this Section 5.3,
but the Company's obligation to pay such amounts is conditioned on the
Employee's continuing compliance with Sections 6, 7 and 11 of this
Agreement, and the employee having delivered to the Company a full release
from all liability arising out of such termination. The payments provided
for in this Section 5.3 will be the Employee's sole and exclusive remedy
for a termination arising under this Section.
(c) As used in this Section 5.3, Good Reason shall mean
any of the following: (i) the assignment to the Employee by the Company,
without the Employee's express written approval, of duties inconsistent
with the Employee's position, duties, responsibilities, titles, offices or
status with the Company; (ii) a reduction by the Company, not consistent
with the Company's general salary practice for Employees, in the Employee's
base salary as in effect on the date of this Agreement or as the same is
increased from time to time during the term of this Agreement; (iii) the
Company's failure to review in accordance with the Company's general salary
practice for executives the Employee's base salary; (iv) the Company's
failure to continue in effect any benefit plan or arrangement in which the
Employee is participating except for Company-wide modifications, or the
taking of any action by the Company which would adversely affect the
Employee's participation in and/or materially reduce the Employee's
benefits under any such benefit plan or arrangement or which would deprive
the Employee of any material fringe benefit enjoyed by the Employee, except
for Company-wide modifications.
5.4. Termination Arising from Death. In the event that the
Employee dies, the Employee's estate shall be entitled to receive: (a) all
base salary earned and accrued to the date of death plus any compensation
previously deferred by the Employee, to the extent theretofore unpaid (to
the extent that such payment is consistent with the terms of any plan or
arrangement relating to such deferral); and (b) any other benefits then
payable under the terms of any benefit provided to the Employee pursuant to
Section 4.2 "Employee Benefits", but all other obligations of the Company
under this Agreement shall terminate as of the date of death.
5.5. No Obligation to Mitigate Damages. The Employee shall not
be required to mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or otherwise. The amount
of any payment provided to the Employee under this Agreement shall not be
reduced by any compensation earned by the Employee as the result of
employment by another employer after the termination of her Employment
under this Agreement.
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6. Confidential Information; Developments. The Employee
acknowledges that her employment by the Company will, throughout the
duration of this Agreement, bring her into close contact with many
confidential affairs of the Company. These confidential affairs include
(but are not limited to) information about markets, key personnel,
operational methods, proprietary intellectual property, plans for future
developments, and other information not readily available to the public.
The Employee also further acknowledges that the services to be performed
under this Agreement are of a special, unique, unusual, extraordinary and
intellectual character. In recognition of these factors, the Employee
covenants and agrees that, both during and after the term of this
Agreement:
(a) she will keep secret all confidential affairs of the
Company known to her that are not otherwise in the public domain and will
not use them for her personal benefit or publish or disclose them to anyone
outside of the Company, wherever located, except with the Company's prior
written consent; and
(b) she will deliver promptly to the Company on termination
of her employment by the Company, or at any other time the Company may so
request, all memoranda, notes, records, reports and other documents (and
all copies thereof) relating to the business of the Company that she
obtained while employed by, or otherwise serving or acting on behalf of,
the Company and that she may then possess or have under her control; and
(c) she will make full and prompt disclosure to the Company
of all compilations, studies, inventions, improvements, discoveries,
methods, developments, systems, software, and works of authorship, whether
patentable or not, that are created, made, conceived or reduced to practice
by the Employee or under her direction or jointly with others during her
employment by the Company, whether or not during normal working hours or on
the premises of the Company (all of which are collectively referred to in
this Agreement as "Developments"); and
(d) she agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all her right,
title and interest in and to all Developments and all related patents,
patent applications, copyrights and copyright applications; and
(e) she agrees to cooperate fully with the Company, both
during and after her employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in
the United States and foreign countries) relating to Developments.
7. Restrictive Covenant.
7.1. Covenant. During the term of this Agreement and for a
period of one year after the termination of the Employee's employment under
this Agreement, the Employee will not, directly or indirectly, without the
prior written consent of the Company:
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(a) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, consultant, or in any other
capacity whatsoever (other than as the holder of not more than five percent
of the total outstanding stock of a publicly held company), engage, or be
employed by, or permit her name to be used in connection with, any
enterprise (whether governmental or privately or publicly owned) engaged in
the business of treating, purifying or supplying water or in treating waste
water (or providing services in connection with any of the foregoing) that
has gross revenues exceeding $2.5 million within the United States; or
(b) recruit any employee of the Company or solicit or
induce, or attempt to solicit or induce, any employee of the Company to
terminate his or her employment with, or otherwise cease his or her
relationship with, the Company; or
(c) solicit, divert or take away, or attempt to solicit,
divert or to take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or accounts, of
the Company that were contacted, solicited or served by the Employee while
employed by the Company.
7.2. Defamatory Statements. Following the termination of
Employee's employment with the Company, regardless of the reason therefor,
Employee shall not make any defamatory statements that would in any way be
injurious or detrimental to the business, customer relations or image of
the Company or of any officer, director or affiliate of the Company with
which Employee was associated.
8. Specific Remedy. The restrictions contained in Sections 6
and 7 are necessary for the protection of the business and goodwill of the
Company and are considered by the Employee to be reasonable for that
purpose. The Employee agrees that any breach or threatened breach of
Sections 6 and 7 will cause the Company substantial and irreparable injury
for which money damages will be inadequate. The Employee also agrees that
the Company may advise any person who employs or considers employing, the
Employee after the termination of this Agreement of the Employee's
obligations under this Agreement.
9. Independence, Severability and Non-Exclusivity. All of the
rights and remedies enumerated in Section 8 are in addition to and not in
lieu of any other rights and remedies available to the Company under law or
in equity and shall survive termination of this Agreement. If any of the
provisions of this Agreement are determined to be invalid or unenforceable,
that will not affect the remainder of this Agreement, which will be given
full effect without regard to the invalid portions. If any part of Section
6 or Section 7 is held to be unenforceable by a competent tribunal because
of its duration, scope or the area covered thereby, the parties agree that
the court making that determination will have the power to reduce the
duration, scope or area (and those provisions will be deemed to be amended
by the parties) to the extent necessary to make those provisions
enforceable and such determination shall not bar or in any way affect the
Company's right to relief in the court of any other jurisdiction as to
failures to observe such provisions in such other jurisdiction (the
provisions of Section 6 and Section 7 as they relate to each jurisdiction
being, for this purpose, severable into independent provisions).
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10. Notices. All notices under this Agreement shall be given in
writing by personal delivery or by registered or certified mail addressed
to the Company at its principal place of business and to the Employee at
the Employee's residence address as then listed in the Company's records.
11. Return of Company Property. On the termination of the
Employee's employment under this Agreement at any time, the Employee will
promptly return to the Company all of its property then in the Employee's
possession.
12. Other Agreements. The Employee represents that, except for
her agreement with her prior employer (▇▇▇▇ Atlantic Corp. or one of its
subsidiaries) to keep confidential and not to disclose non-public
information acquired in the course of her prior employment, she is not
bound by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or confidential
or proprietary information in the course of her employment with the
Company. The Employee represents that she is not bound by the terms of any
agreement with any previous employer or other party to refrain from
competing, directly or indirectly, with the business of such previous
employer or any other party.
13. General.
13.1. Governing Law; Jurisdiction; Venue. This Agreement
shall be governed by, and construed and enforced in accordance with, the
laws of New Jersey, without giving effect to conflicts of laws principles
of that state that might refer such interpretations to the laws of a
different state or jurisdiction. The Employee irrevocably submits to the
jurisdiction of any state court of New Jersey having jurisdiction or any
Federal court having jurisdiction in the city of Philadelphia, PA over any
suit, action or proceeding arising out of or relating to this Agreement;
the Employee hereby waives, to the fullest extent permitted by law, any
objection that she may now or hereafter have to such jurisdiction or to the
venue of any such suit, action or proceeding brought in such a court and
any claim that such suit, action or proceeding has been brought in an
inconvenient forum.
13.2. Captions. The section headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13.3. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the subject
matter of this Agreement, and supersedes all prior agreements, arrangements
and understandings, written or oral, between the parties.
13.4. No Other Representations. No representation, promise
or inducement has been made by any party to this Agreement that is not
embodied in this Agreement, and no party shall be bound by or liable for
any alleged representation, promise or inducement not so set forth.
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13.5. Successors and Assigns. This Agreement shall inure to
the benefit of and shall be binding upon the Company and the Employee and
their respective heirs, executors, personal representatives, successors and
assigns.
13.6. Amendments; Waivers. This Agreement may not be
amended, modified, superseded, canceled, renewed or extended, and the terms
or covenants hereof may not be waived, except by a written instrument
executed by the parties to this Agreement or, in the case of a waiver, by
the party waiving compliance. The failure of any party to require
performance of any provision of, or to exercise any right under, this
Agreement shall not affect the right of that party at a later time to
enforce that provision or exercise that right. No waiver of any term of
this Agreement, whether by conduct or otherwise, will be deemed to be, or
construed as, a further or continuing waiver of that or any other breach.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
AMERICAN WATER WORKS COMPANY, INC.
By: J. ▇▇▇▇▇ ▇▇▇▇
President and Chief Executive Officer
▇▇▇▇▇ ▇. ▇▇▇▇
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SECOND AMENDMENT TO CONSULTING AGREEMENT
This is the Second Amendment to the Consulting Agreement dated May 7,
1998 by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, an individual whose mailing
address is ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Consultant")
and American Water Works Company, Inc. (the "Company"), a Delaware
corporation.
BACKGROUND
Consultant and the Company entered into a consulting agreement dated
May 7, 1998. Consultant has provided the consulting and advisory services
requested to date by the Company. Consultant and the Company have agreed
to extend the term of the consulting agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties
agree to amend Section 2 of the Agreement in its entirety as follows:
2. Term. The term of this Agreement shall commence on May 7, 1998
and shall continue for a period of 24 months. The term of this Agreement
may be extended thereafter by mutual agreement of Consultant and the Board.
IN WITNESS WHEREOF, the undersigned have executed this Amendment.
AMERICAN WATER WORKS COMPANY, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇
Chairman of the Board of Directors
CONSULTANT:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Dated: May 6, 1999