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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 27, 1998
American States Water Company
Southern California Water Company
(Exact name of registrants as specified in their charter)
American States Water Company
California 333-47647 95-4676679
(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
Southern California Water Company
California 000-01121 95-1243678
(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
630 East Foothill Boulevard, San Dimas, California 91773-9016
(Address of Principal Executive Offices) (Zip Code)
Registrants' telephone number including area code: (909) 394-3600
(Former name or former address, if changed since last report.)
Not applicable.
Item 5. Other Events.
We are filing this Current Report as a combined report
for American States Water Company ("AWR") and its wholly owned
subsidiary, Southern California Water Company ("SCW"). Unless
otherwise indicated, all references to "Company", "our" or
"we" are references to AWR and SCW collectively.
On October 29, 1998, the Administrative Law Judge ("ALJ")
assigned to SCW's six pending water rate increase applications
issued his proposed decision that, among other things,
recommended adoption of a settlement agreement previously
signed by all parties and proposed a return on equity of 10%.
We anticipate that the final order will be issued by the
California Public Utilities Commission ("CPUC") prior to year-
end, with new rates effective January 1, 1999. The final
order could differ materially from the decision proposed by
the ALJ.
This Current Report summarizes certain risks of our
business that may affect our future financial results. We
also periodically file with the Securities and Exchange
Commission documents that include more information on these
risks. It is important for investors to read these documents.
Litigation
SCW has recently been sued in five water-quality related
lawsuits:
- a suit filed on April 24, 1997 alleging personal injury and
property damage as a result of the sale of water from wells located
in an area of the San Gabriel Valley that has been designated a
federal superfund site
- a suit filed on November 3, 1997 alleging personal injury and
property damage as a result of the sale of water; few our systems
are located in the geographical area covered by this suit
- a suit filed on January 8, 1998 alleging personal injury and
property damage as a result of the delivery of contaminated water
in SCW's Arden-Cordova service area
- a suit filed in April 1998 alleging personal injury and
property damage as a result of the delivery of contaminated water
in SCW's Arden-Cordova service area
- a suit filed on July 30, 1998 alleging personal injury and
property damage as a result of the sale of water from wells located
in an area of the San Gabriel Valley that has been designated a
superfund site
In March 1998, the CPUC issued an order instituting
investigation (the "OII") as a result of these types of suits being
filed against water utilities in California. The CPUC is seeking
to determine:
- whether existing standards and policies regarding drinking
water quality adequately protect the public health
- whether water utilities are following existing standards
With the exception of the lawsuit filed in July 1998, the
lawsuits have been stayed pending the outcome of the OII. We
anticipate that the CPUC will issue a report of its initial
findings in January 1999. We are unable to predict the nature of
the CPUC's findings or the outcome of the lawsuits. An adverse
outcome in this type of litigation is, however, likely to be
material.
The CPUC has authorized a memorandum account for legal
expenses incurred by SCW in the San Gabriel Valley and Arden-
Cordova water quality lawsuits. Under the memorandum account
procedure, SCW may recover litigation costs from ratepayers to the
extent authorized by the CPUC. The CPUC has not yet authorized SCW
to recover any of its litigation costs.
Environmental Regulation
We are subject to increasingly stringent environmental
regulations that will result in increasing capital and operating
costs. These regulations include:
- the 1996 amendments to the Safe Drinking Water Act that
require increased testing and treatment of water to reduce
specified contaminants to minimum containment levels
- interim regulations expected to be adopted before the end of
1998 requiring increased surface-water treatment to decrease the
risk of microbial contamination; these regulations will affect
SCW's five surface water treatment plants
- additional regulation of disinfection/disinfection byproducts
expected to be adopted before the end of 1998; these regulations
will potentially affect two of SCW's systems
- additional regulations expected to be adopted before the end
of 1998 requiring disinfection of certain groundwater systems;
these regulations will potentially impact several of SCW's systems
using groundwater supplies
- potential regulation of radon and arsenic
- new California requirements to fluoridate public water systems
serving over 10,000 customers
We may be able to recover costs incurred to comply with these
regulations through the ratemaking process for our regulated
systems. We may also be able to recover certain of these costs
under our contractual arrangements with municipalities. In certain
circumstances, we may recover costs from parties responsible or
potentially responsible for contamination.
Rates and Regulation
SCW is subject to regulation by the CPUC. AWR is not directly
subject to CPUC regulation. The CPUC may, however, regulate
transactions between SCW and AWR, including the manner in which
overhead costs are allocated between SCW and AWR and the pricing of
services rendered by SCW to AWR.
SCW's revenues depend substantially on the rates that it is
permitted to charge its customers. SCW may increase rates in
three ways:
- by filing for a general rate increase
- by filing for recovery of certain expenses
- by filing an "advice letter" for certain plant additions,
thereby increasing rate base
In addition, SCW recovers certain supply costs through a
balancing account mechanism. Supply costs include the cost of
purchased water and power and groundwater production assessments.
The balancing account mechanism is intended to insulate SCW's
earnings from changes in supply costs that are beyond SCW's
control. The balancing account is not, however, designed to
insulate SCW's earnings against changes in supply mix. As a
result, SCW may not recover increased costs due to increased use of
purchased water through the balancing account mechanism. In
addition, balancing account adjustments, if authorized by the CPUC,
may result in either increases or decreases in revenues
attributable to supply costs incurred in prior periods, depending
upon whether there has been an undercollection or overcollection of
supply costs.
There are also a number of matters pending before the CPUC
that may affect our future financial results. These matters
include:
- applications filed by SCW to increase rates in six of its 16
rate-making jurisdictions; the ALJ assigned to this matter has
proposed a return on equity of 10%; the final order could provide
for a return on equity that is materially different than that
proposed by the ALJ
- an application filed by SCW for permission to recover certain
costs of SCW's participation in the coastal aqueduct extension of
the state water project
- the OII
- new guidelines under consideration by the CPUC for the
acquisition and merger of water utilities and for privatization
transactions
Adequacy of Water Supplies
The adequacy of water supplies varies from year to year
depending upon a variety of factors, including
- rainfall
- the amount of water stored in reservoirs
- the amount used by our customers and others
- water quality, and
- legal limitations on use.
As a result of heavier than normal rainfall in the winter of
1997-1998, most of California's reservoirs are near capacity and
the outlook for water supply in the near term is generally
favorable. Population growth and increases in the amount of water
used have, however, increased limitations on use to prevent
overdrafting of groundwater basins. The import of water from the
Colorado River, one of our important sources of supply, is expected
to decrease in future years due to the requirements of the Central
Arizona Project. We also have in recent years taken wells out of
service due to water quality problems.
Water shortages affect us in several ways:
- they adversely affect supply mix by causing us to rely on more
expensive purchased water
- they adversely affect operating costs
- they may result in an increase in capital expenditures for
building pipelines to connect to alternative sources of supplies
and reservoirs and other facilities to conserve or reclaim water
We may be able to recover increased operating and construction
costs for our regulated systems through the ratemaking process. We
may also be able to recover certain of these costs under the terms
of our contractual agreements with municipalities.
In certain circumstances, we may recover these costs from
third parties that may be responsible, or potentially responsible,
for groundwater contamination. We are currently in negotiations
with GenCorp Aerojet regarding costs associated with the cleanup of
the groundwater supply for our Arden-Cordova System and for the
increased costs of purchasing water and developing new sources of
groundwater supply. We are also negotiating with two potentially
responsible parties on matters relating to the clean-up and
purchase of replacement water in the Charnock Basin located in the
cities of Santa Monica and Culver City. The Charnock Basin is in
SCW's service territory.
Water Quality
SCW has detected ammonium perchlorate and nitrosodimethylemine
in amounts in excess of certain state or federal limits in wells
serving its Arden-Cordova system. Both substances are byproducts
from the production of rocket fuel. SCW has taken wells out of
service, increased monitoring of other wells and drilled new wells
in the area. In addition, SCW is constructing a new pipeline to
the City of Folsom's water system in order to obtain an alternative
source of supply for its Arden-Cordova customers. GenCorp Aerojet
has reimbursed SCW for certain of these costs. Negotiations with
GenCorp Aerojet are continuing with respect to other costs.
The compound methyl tertiary butyl ether has been detected in
the Charnock Basin. SCW has taken two wells out of service in this
area and is purchasing more expensive groundwater from the
Metropolitan Water District to replace the water supply formerly
obtained from these wells. SCW is negotiating with two of the
potentially responsible parties for recovery of its increased
costs.
SCW has recently been sued on water quality issues. In
addition, we are subject to increasing regulation relating to water
quality matters.
Weather
Our business may be affected by weather in a variety of ways.
For instance:
- water volumes sold decrease during wet weather
- water volumes sold decrease during cold weather
- water volumes sold may also decrease during drought conditions
if mandatory rationing is imposed
- we may be required to purchase more expensive water and to use
less groundwater during drought conditions
- kilowatt-hour sales of electricity decrease if winters are
warmer than normal or summers are cooler than normal
- maintenance and capital expenditures decrease during periods
of inclement weather
- adverse weather conditions may result in damage to our water
and electric systems resulting in increased repair and capital
replacement costs, loss of sales and loss of water from broken
reservoirs and mains
Weather patterns in California are inherently uncertain. It
is therefore difficult to predict from year to year the impact of
weather on our financial results.
Unregulated Activities
AWR was formed on July 1, 1998 for the purpose of, among other
things, operating and maintaining municipally-owned water systems
and providing billing, meter reading and other services for
municipalities and special water districts and making investments
in subsidiaries and other entities. These activities present
different risks than CPUC-regulated activities. AWR does not have
extensive experience in engaging in these types of activities and
must compete with other private parties with more experience and
greater capital resources. It must also compete with special water
districts and other government agencies that may have a lower cost
of funds and other competitive advantages afforded governmental
entities.
AWR's ability to earn a profit on these activities will depend
upon a variety of factors, including
- its ability to obtain contracts in a competitive marketplace
- its ability to price its services at a level sufficient to
enable it to earn a profit
- its ability to recover the costs of obtaining contracts in a
competitive marketplace
- the cost of developing the privatization market in California
- its ability to operate in a cost effective matter
- its ability to negotiate contracts containing favorable terms
Our unregulated activities are not currently profitable. As a
result, our unregulated activities cannot currently be financed
from AWR's earnings. Under California law, SCW is not permitted to
issue securities to finance unregulated activities. Our unregulated
activities must therefore be financed directly by AWR or its
unregulated subsidiaries or from dividends received by AWR from
SCW. To the extent that AWR's activities are financed from
dividends from SCW, the funds available for the payment of
dividends to AWR's shareholders will be reduced.
Potential Year 2000 Risks
We are currently addressing the effect of the Year 2000
("Y2K") issue on our reporting systems and operations. We are also
assessing operational risks related to our suppliers and vendors
and developing contingency plans in order to mitigate this risk.
We have not currently experienced significant costs with respect to
addressing these issues. We anticipate completion of our internal
remediation and testing program by December, 1998 and completion of
our assessment of risks related to our suppliers and vendors and
our operational contingency plan by March, 1999.
The primary business risk associated with Y2K is our ability
to continue to treat, transport and distribute water to our
customers without interruption. Our operations could be
significantly impacted if
- we are unable to resolve or fail to identify all Y2K problems
prior to January 1, 2000
- any of our critical suppliers and vendors, such as suppliers
of chemicals for water treatment or electric utilities, are unable
to resolve or fail to identify all Y2K problems affecting our
business prior to January 1, 2000
- we are unable to mitigate or fail to address all operational
risks in our contingency plans
Capital Expenditures
We anticipate spending approximately $47.3 million on capital
expenditures during the next 12 months. We anticipate that
approximately 45 to 60% of these funds will come from developers
and other external sources. The price and terms of this funding
will depend upon conditions in the capital markets at the time
funds are needed.
We anticipate that capital expenditures will continue to
increase due to a variety of factors, including:
- the need to replace aging infrastructure
- the need to comply with increasingly stringent environmental
requirements
- the need to address potential water shortage problems
- the need to address water quality problems
Capital expenditures may also increase if AWR is successful in
its privatization efforts since many municipalities view
privatization as a means to finance needed capital improvements.
Economic Conditions
Our ability to finance capital expenditures, unregulated
activities and other matters will depend upon general economic
conditions and conditions in the capital markets. Conditions in
the capital markets are currently uncertain. We are unable to
predict to what extent this uncertainty may impact our access to
capital or financing costs or our ability to compete in the
privatization market.
Interest rates have recently been declining. Declining
interest rates are generally believed to be favorable for utilities
because of their high capital costs. On the other hand, SCW's
authorized rate of return may be reduced because of lower interest
rates. As a result, funds available for the payment of dividends
may be reduced.
Sales may also be adversely affected by unfavorable economic
conditions if business activity and employment are reduced.
Condemnation
Under California law, a governmental agency may acquire public
utility property through the power of eminent domain, also know as
condemnation. Although we have not had any of our systems
condemned during the past three years, the potential for
condemnation nevertheless remains.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibits
3.01 Amended and Restated Articles of
Incorporation of American States
Water Company
3.02 Bylaws of American States Water Company
10.01 Change-in-Control Agreement dated as of
October 27, 1998 among American States Water
Company, Southern California Water Company and
Floyd E. Wicks
10.02 Change-in-Control Agreement dated as of
October 27, 1998 among American States Water
Company, Southern California Water Company and
McClellan Harris III
10.03 Change-in-Control Agreement dated as of
October 27, 1998 among American
States Water Company, Southern California
Water Company and Joel A. Dickson
10.04 Change-in-Control Agreement dated as of
October 27, 1998 between Southern California
Water Company and Joseph F. Young
10.05 Change-in-Control Agreement dated as of
October 27, 1998 between Southern California
Water Company and Donald K. Saddoris
10.06 Change-in-Control Agreement dated as of
October 27, 1998 between Southern California
Water Company and Randell J. Vogel
10.07 Change-in-Control Agreement dated as of
October 27, 1998 between Southern California
Water Company and James B. Gallagher
10.08 Change-in-Control Agreement dated as of
October 27, 1998 between Southern California
Water Company and Denise L. Kruger
10.09 Change-in-Control Agreement dated as of
October 27, 1998 between Southern California
Water Company and Susan L. Conway
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN STATES WATER COMPANY
and its subsidiary
SOUTHERN CALIFORNIA WATER COMPANY
/s/ McClellan Harris III
---------------------------------
By: McClellan Harris III
Vice President - Finance,
Chief Financial Officer,
Treasurer and Secretary
DATED: October 30, 1998
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
AMERICAN STATES WATER COMPANY
ARTICLE I
The name of this Corporation is American States Water
Company.
ARTICLE II
The purpose of this Corporation is to engage in any
lawful act or activity for which a corporation may be organized
under the General Corporation Law of California other than the
banking business, the trust company business or the practice of a
profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
The name and address of this Corporation's initial
agent for service of process is McClellan Harris III, 630 East
Foothill Boulevard, San Dimas, California 91773.
ARTICLE IV
This Corporation is authorized to issue three classes
of stock to be designated, respectively, "New Preferred Shares",
"Preferred Shares", and "Common Shares". The total number of
shares which this Corporation is authorized to issue is
30,233,200; 150,000 shares are to be New Preferred Shares with
no par value and a stated value of $100 per share and an
aggregate stated value of $15,000,000; 83,200 shares are to be
Preferred Shares with a par value of $25 per share and an
aggregate par value of $2,080,000; and 30,000,000 shares are to
be Common Shares, no par value with a stated value of $2.50 per
share and an aggregate stated value of $75,000,000.
A statement of the preferences, privileges and
restrictions granted to or imposed upon the respective classes or
series of shares and/or upon the holders thereof is as follows:
(1) Subject to the provisions of this Article IV, New
Preferred Shares of any particular series shall be
entitled to such voting rights, if any, as may be
specified for shares of such series in the certificate
of determination of preferences of such series filed as
provided below; all Preferred Shares shall be entitled
to voting rights on the basis of one vote per share;
and all Common Shares shall be entitled to voting
rights on the basis of one-tenth of one vote per share.
(2) New Preferred Shares may be issued from time to
time in one or more series. Each such series shall be
so designated as to distinguish it from other series of
New Preferred Shares and from series of Preferred
Shares. Such designation may include an appropriate
reference to the dividend rate and/or any other
characteristics of such series. The Board of Directors
is hereby authorized, within the limits of, but to the
extent authorized by applicable law and within the
limitations and restrictions, if any, stated in this
Article IV, to fix or alter, from time to time, the
dividend rights, dividend rate, conversion rights,
voting rights, right and terms of redemption (including
sinking fund provisions), redemption price or prices,
and liquidation preferences, or any of them, of any
wholly unissued series of New Preferred Shares, and to
fix the number of shares constituting any such unissued
series, by a resolution or resolutions adopted by the
Board of Directors in exercise of the authority hereby
granted.
(3) The Preferred Shares may be issued from time to
time in any number of series. One such series shall
(i) be and hereby is designated the "4 1/4% Series", (ii)
consist of 32,000 shares, (iii) be entitled to
dividends as provided in Paragraph (4) hereof at the
rate of 4 1/4% per annum of the par value thereof, and
(iv) be redeemable in the manner and otherwise upon the
conditions provided in Paragraph (6) hereof by payment
of a redemption price equal to the par value thereof
and unpaid dividends accrued thereon to and including
the date fixed for such redemption and a premium of
$1.50 per share. Another such series of Preferred
Shares shall (i) be and hereby is designated as the "4%
Series", (ii) consist of 32,000 shares, (iii) be
entitled to dividends as provided in Paragraph (4)
hereof at the rate of 4% per annum of the par value
thereof, and (iv) be redeemable in the manner and
otherwise upon the conditions provided in Paragraph (6)
hereof by payment of a redemption price equal to the
par value thereof and unpaid dividends accrued thereon
to and including the date fixed for such redemption and
a premium of $2 per share. Except as to the foregoing
particulars no distinction shall exist between any of
the Preferred Shares or any series thereof, and all
Preferred Shares, regardless of series, shall be of
equal rank and priority.
(4) The holders of the outstanding shares of the
several and respective series of Preferred Shares shall
be entitled to receive, out of any funds legally
available therefor, dividends at the respective rates
for the shares of said series, payable in cash
quarterly on the first days of March, June, September
and December in each year when and as declared by the
Board of Directors of this Corporation. Such dividends
shall accrue on each such share from the date of its
original issuance and shall accrue from day to day
whether or not earned or declared. Such dividends
shall be cumulative so that if such dividends in
respect of any quarterly dividend period at the
respective rates fixed therefor shall not have been
paid on, or declared and set apart for, all Preferred
Shares of each series at the time outstanding, the
deficiency shall be fully paid on or declared or set
apart for such shares before any dividend or other
distribution shall be paid upon or declared or set
apart for the Common Shares. No such dividend shall be
declared or paid upon or set apart for any outstanding
shares of any one of said series unless at the same
time such dividends on all outstanding Preferred Shares
of all of said series shall be declared and paid in
full or set apart for such payment.
(5) In the event of the liquidation, dissolution or
winding up of this Corporation, whether voluntary or
involuntary, the holders of the shares of the several
and respective series of Preferred Shares shall be
entitled to receive out of the assets of this
Corporation, whether such assets are capital or surplus
of any nature, an amount equal to the par value thereof
plus all unpaid dividends accrued thereon to the date
that such amount is made available for distribution to
the holders thereof, and no more, or ratably from
available assets if such assets are insufficient to
permit payment to said holders of their full
preferential amount aforesaid. Such amount shall be
paid upon said shares, or shall be set apart for such
payment, before any distribution is made or set apart
for any Common Shares in any such liquidation,
dissolution or winding up. A consolidation or merger
of this Corporation with or into any other corporation
or corporations shall not be deemed to be a
liquidation, dissolution or winding up within the
meaning of this Paragraph (5).
(6) This Corporation, at the option of its Board of
Directors, may at any time or from time to time redeem
the whole or any part of the outstanding shares of any
one or more series of the Preferred Shares by paying in
cash therefor the amount payable upon the redemption
thereof (such amount being hereinafter referred to as
the "redemption price"). In case of the redemption of
a part only of the outstanding shares of any series of
Preferred Shares, this Corporation shall designate by
lot, in such manner as the Board of Directors may
determine, the shares to be redeemed. At least thirty
(30) days' previous notice by mail, postage prepaid,
shall be given to the holders of record of the shares
to be redeemed, such notice to be addressed to each
such shareholder at his post office address as shown by
the records of this Corporation at the opening of
business on the day of mailing such notice. If on or
before the date fixed for redemption and specified in
such notice funds necessary for such redemption shall
have been set aside at the place designated in said
notice so as to be and continue available therefor,
then notwithstanding that the certificates evidencing
any shares called for such redemption shall not have
been surrendered, the dividends with respect to the
shares so called for redemption shall cease to accrue
after the said date fixed for redemption and all rights
with respect to such shares shall forthwith after said
date cease and determine except only the right of the
holders thereof to receive payment of the redemption
price, without interest, upon surrender of their
certificates representing the redeemed shares. In case
less than all the shares represented by any such
surrendered certificate shall have been redeemed, a new
certificate shall be issued for the unredeemed shares.
Subject to the provisions hereof, the Board of
Directors shall have authority to prescribe from time
to time the manner in which the Preferred Shares shall
be redeemed.
(7) If at any time four (4) quarterly dividends
(whether or not consecutive) which have accrued on the
outstanding Preferred Shares pursuant to Paragraph (4)
hereof shall be in arrears, then at the annual meeting
of shareholders next following the fourth such
quarterly dividend default, or, if such next annual
meeting is not to be held within sixty (60) days
following such default, at a special meeting of
shareholders called for the purpose on the written
request of the holders of not less than ten percent
(10%) of the then outstanding Preferred Shares, the
holders of said outstanding Preferred Shares shall be
entitled, voting separately as a class (regardless of
series), to elect the smallest number of directors of
this Corporation which shall constitute a majority of
the authorized number of such directors and the holders
of the New Preferred Shares and the holders of the
Common Shares, in accordance with their respective
voting rights, shall be entitled to elect the remaining
number of such authorized directors; which voting
rights by said respective classes of shares shall
continue until, but only until, all dividends which
shall have accrued for any period under said Paragraph
(4) upon the outstanding Preferred Shares shall have
been paid or set apart for payment. At all meetings of
shareholders held for the purpose of electing directors
during such time as the holders of the Preferred Shares
have the right, voting separately as a class, to elect
directors pursuant to this Paragraph (7), the presence
in person or by proxy of the holders of a majority of
the outstanding Preferred Shares (regardless of
series), shall be required to constitute a quorum of
such class for the election of directors, and the
presence in person or by proxy of the holders of a
majority of the other outstanding shares entitled to
vote at such meeting, as a separate class or classes in
accordance with their respective voting rights, shall
be required to constitute a quorum of such class for
the election of directors; provided, however, that the
absence of a quorum of the holders of outstanding
shares of either such class or classes shall not
prevent the election at any such meeting, or
adjournment thereof, of directors by the other such
class or classes if the necessary quorum of such other
class or classes is present in person or by proxy at
such meeting or adjournment; and provided further that
in the event that at such meeting or adjournment such a
quorum of the holders of classes other than the
Preferred Shares is present and such quorum of the
holders of the Preferred Shares is not present, then an
election of the directors elected at such meeting or
adjournment by the holders of classes other than the
Preferred Shares shall not be effective and any
directors so elected by such holders of classes other
than the Preferred Shares shall not assume office until
the holders of the Preferred Shares, with such a quorum
present, shall elect the directors they are entitled to
elect. In the event of an election of directors by
holders of Preferred Shares pursuant to this Paragraph
(7), the term of office as directors of all persons who
are directors of this Corporation at the time of the
accrual under this Paragraph (7) of the right of the
holders of the Preferred Shares to elect directors
shall terminate when the holders of the outstanding
Preferred Shares shall have so elected directors. In
case any vacancy shall occur among the directors
elected as aforesaid by the holders of the Preferred
Shares, or among the directors elected as aforesaid by
the holders of classes other than the Preferred Shares,
during any period for which a majority of the directors
shall have been so elected by the holders of the
Preferred Shares, such vacancy shall be filled by the
vote of a majority of the remaining directors who were
so elected by the holders of the Preferred Shares or by
the holders of classes other than the Preferred Shares,
as the case may be.
(8) Without the approval of the holders of at least
two-thirds of the outstanding Preferred Shares, given
in person or by proxy, either by written consent or by
vote as provided by law, this Corporation shall not
(i) alter or amend the preferences, voting powers
or other special rights or the qualifications,
limitations and restrictions imposed in favor of any of
the Preferred Shares so as adversely to affect any of
the Preferred Shares then outstanding; or
(ii) authorize or issue any shares of any class, or any
securities convertible into shares of any class,
ranking prior to the Preferred Shares as to dividends
or assets; or
(iii) reclassify any shares of any class ranking
junior to or on a parity with the Preferred Shares into
shares of any other class ranking prior to the
Preferred Shares; or
(iv) issue any shares of any class ranking on a parity
with the Preferred Shares, unless in either case (a)
the aggregate of the par or stated value of the Common
Shares to be outstanding immediately after such issue,
plus the surplus of this Corporation, all determined in
accordance with accepted accounting practice, shall be
at least equal to the par or stated value of all shares
which rank prior to the Common Shares and which are to
be outstanding immediately after such issue; (b) the
net earnings of this Corporation, computed in
accordance with accepted accounting practice (but after
provision for all taxes based upon or measured by
income, and after annual interest charges adjusted by
provision for amortization of bond discount and expense
or of premium on indebtedness, and also after deduction
of depreciation as reported in the accounts of this
Corporation as filed with the Public Utilities
Commission of the State of California or other public
authority of said State having jurisdiction to
establish or approve the system of accounts of this
Corporation), for a period of 12 consecutive calendar
months out of the 15 calendar months immediately
preceding the date of such issue shall have been at
least equal to twice the aggregate of the annual
dividend requirements on all shares of this Corporation
which rank prior to the Common Shares and which are to
be outstanding immediately after such issue, and (c)
the net earnings of this Corporation, computed as above
(but before interest charges as aforesaid and after
deduction for depreciation and provision for all taxes
as provided above), for said 12 months period, shall
have been at least equal to one and one-half times the
aggregate of all such interest charges and the annual
dividend requirements on all shares of this Corporation
which rank prior to the Common Shares and which are to
be outstanding immediately after such issue.
(9) Without the approval of the holders of a majority
of the outstanding Preferred Shares, given in person or
by proxy, by written consent or by vote as provided by
law, this Corporation shall not (i) issue, assume, or
guarantee any unsecured notes or obligations unless
immediately thereafter the total principal amount of
the unsecured indebtedness of this Corporation shall be
less than 10% of the aggregate of the total principal
amount of outstanding bonds or other securities
representing secured indebtedness issued, assumed or
guaranteed by this Corporation, plus its stated capital
and surplus; provided, however, that the foregoing
provisions of this Paragraph (9) shall not apply to any
such notes or obligations which (a) represent
liabilities incurred in the ordinary course of business
or for construction or acquisition of capital assets or
represent tax liability or liability incurred or
accrued on account of customers' deposits, or (b) are
issued to extend, renew, redeem or refund outstanding
indebtedness of this Corporation in principal amount
not less than the principal amount of such notes or
obligations, or are issued to redeem or refund then
outstanding Preferred Shares which have an aggregate
par or stated value at least equal to the aggregate
principal amount of such notes or obligations, or (ii)
sell, convey, lease or otherwise dispose of all or
substantially all of its assets, property or business,
or consolidate or merge with or into any other
corporation.
(10) The approval of the holders of outstanding
Preferred Shares which in any case may be required by
the foregoing Paragraphs (8) and (9) for the taking of
any action referred to in any of said paragraphs shall
be in addition to any such approval of shareholders of
this Corporation as may at the time be required by the
laws of the State of California with respect to such
action and no such action shall be taken without
compliance with such laws of said State as are in
effect at the time of taking of any such action.
(11) For the purposes of Paragraphs (8)(iv) and (9)(i)
hereof, the certificate or opinion of any independent
certified or public accountant of recognized standing
(who may be the accountant regularly retained by this
Corporation), selected in good faith by the Board of
Directors, shall be conclusive with respect to all
questions of fact therein required to be determined.
(12) Subject to the dividend preferences provided
for herein for all shares of each other class at the
time outstanding and to the restrictions set forth
above and in this Paragraph (12), the Common Shares
shall be entitled to receive dividends when and as
declared by the Board of Directors out of any funds of
this Corporation legally available therefor. After
payment of the full preferential amounts hereinabove
provided for all shares of each other class outstanding
at the time of any liquidation, dissolution or winding
up of this Corporation, whether voluntary or
involuntary, all then remaining assets of this
Corporation available for distribution to its
shareholders shall be distributed ratably upon the
Common Shares. No dividend shall be declared on the
Common Shares which, after giving effect to such
declaration, would reduce the Common Stock Equity of
this Corporation as of the end of the calendar month
last preceding that in which such dividend was declared
to an amount less than 25% of the Total Capitalization
of this Corporation as of the end of said last
preceding month, except that any such dividend may be
declared (a) which would reduce such Common Stock
Equity to less than 25% but not less than 20% of such
Total Capitalization if the amount of such dividend
plus all dividends on the Common Shares declared during
the 12 months period terminating at the end of such
last preceding calendar month shall not exceed 75% of
the net income of this Corporation applicable to its
Common Shares for such period, or (b) which would
reduce such Common Stock Equity to less than 20% of
such Total Capitalization if the amount of such
dividend plus all dividends on the Common Shares
declared during said 12 months period shall not exceed
50% of the net income of this Corporation applicable to
its Common Shares for such period; provided, however,
that the foregoing restrictions of this sentence shall
not apply to, nor in any way restrict, (a) the payment
of any dividend on the Common Shares which is payable
in shares of stock of this Corporation, or (b) any
reclassification, subdivision, split-up or combination
of the Common Shares, or (c) any transfer between the
capital and surplus accounts of this Corporation in
connection with any such reclassification,
subdivisions, split-up or combination or payment of
dividend in shares of stock of this Corporation.
Common Stock Equity as herein used shall mean the
aggregate of (i) par value or stated capital of all
outstanding Common Shares, and (ii) the surplus
(including capital surplus, paid-in surplus and earned
surplus) as shown by the books of this Corporation
after giving effect to the declaration of the proposed
dividend, and (iii) premium on Common Shares; less the
remaining balance of the amount of organization
expenses, as shown on said books. Total Capitalization
as herein used shall mean the aggregate of (i) Common
Stock Equity, (ii) premium on and the par value or
stated capital of all outstanding shares of this
Corporation of any and all classes having preferences
over the Common Shares as to dividends or assets, and
(iii) the principal amount of all outstanding debt
maturing more than 12 months after the close of said 12
months period, all as shown by the books of this
Corporation; less the remaining balance of organization
expenses, as shown on said books. Net Income as herein
used shall be determined in accordance with accepted
accounting practice (but after provision for all taxes
based upon or measured by income, and after annual
interest charges adjusted by provision for amortization
of bond discount and expense or of premium on
indebtedness, and also after deduction of depreciation
for said 12 months period as reported in the accounts
of this Corporation as filed with the Public Utilities
Commission of the State of California or other public
authority of said state having jurisdiction to
establish or approve the system of accounts of this
Corporation). Net Income applicable to Common Shares
as herein used shall mean net income after deduction
therefrom of all dividends payable for the period
involved on all outstanding shares of any and all
classes of this Corporation having preference over the
Common Shares as to dividends or assets.
(13) No Preferred Shares of this Corporation which
have been reacquired in any manner by this Corporation
after the original issue thereof shall ever again be
reissued and all such shares so reacquired shall upon
such reacquisition cease to be a part of the authorized
shares of this Corporation.
(14) Unless such action has been approved by the
affirmative vote of at least a majority of the
Continuing Directors (as defined below), without the
approval of Common Shares, Preferred Shares and, unless
otherwise provided in the certificate of determination
for any series of New Preferred Shares, the New
Preferred Shares representing in the aggregate at least
66 2/3% of the combined voting power of this
Corporation's outstanding Common Shares, Preferred
Shares and the New Preferred Shares, voting together as
a single class, this Corporation shall not
(i) subject to subparagraph (iii)
below, sell, convey, lease or otherwise
dispose of all or substantially all of its
assets, property or business;
(ii) approve the sale, conveyance,
lease or other disposition by any subsidiary
of this Corporation of all or substantially
all of such subsidiary's assets, property or
business;
(iii) sell, transfer, convey or
otherwise dispose of more than a majority
of the outstanding capital stock of any
subsidiary of the Corporation, if such
subsidiary holds assets accounting for 50%
or more of the Corporation's consolidated
assets, other than to an entity the majority
of the voting power of the capital stock or
other equity interest of which is owned and
controlled by this Corporation;
(iv) consolidate or merge with or
into any other corporation or other business
entity, except if, immediately after such
consolidation or merger, the shareholders
of this Corporation immediately prior to such
consolidation or merger will own more than
60% of the voting power of the outstanding
capital stock or other equity interest of
or in the surviving entity; or
(v) approve the consolidation or
merger of any subsidiary of this Corporation,
if such subsidiary holds assets accounting
for 50% or more of the Corporation's
consolidated assets, with or into any other
corporation or other business entity.
For purposes of this paragraph (14) of Article IV, the
term "Continuing Directors" shall mean any member of
the Board of Directors of the Corporation (while such
person is a member of the Board) who (i) is not an
Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring
Person or of any such Affiliate or Associate, and (ii)
either (A) was a member of the Board of Directors prior
to the time any person became an Acquiring Person, or
(B) became a member of the Board of Directors
subsequent to the time any person became an Acquiring
Person, if such person's nomination for election, or re-
election, to the Board was recommended, or approved, by
a majority of the Continuing Directors then in office.
For purposes of the foregoing definition, (i)
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act,
as in effect as of the date hereof; (ii) "Acquiring
Person" shall mean any person or entity which, alone or
together with all Affiliates and Associates of such
person or entity, shall be the beneficial owner of 20%
or more of the Corporation's voting stock, but shall
not include (1) an Exempt Person or (2) any person or
entity who or which acquires 20% or more of the
Corporation's voting stock in connection with a
transaction or series of transactions approved prior to
such transaction or transactions by the Board of
Directors of the Corporation; provided that no person
or entity shall become an Acquiring Person solely as a
result of a reduction in the number of shares of the
Corporation's voting stock outstanding, unless and
until such person or entity shall thereafter become the
beneficial owner of additional shares constituting 1%
or more of the general voting power of the Corporation.
"Exempt Person" shall mean the Corporation, any
majority-owned subsidiary of the Corporation, and any
employee benefit plan or employee stock plan of the
Corporation, or any trust or other entity organized,
established or holding Common Shares by, for or
pursuant to, the terms of any such plan.
(15) Another series of Preferred Shares shall have the
following terms and provisions:
(i) Designation. The designation of said series
shall be "Preferred Shares, 5% Series".
(ii) Number of Shares. The authorized number of
shares constituting said Preferred Shares, 5% Series,
shall be 19,200 shares.
(iii) Dividend Rate. The dividend rate of said
Preferred Shares, 5% Series, shall be, per share, 5%
per annum of the share par value.
(iv) Optional Redemption. The redemption prices
of the shares of said series, when redeemed by this
Corporation at the option of its Board of Directors,
shall be an amount per share equal to the par value
thereof and unpaid dividends accrued thereon to and
including the date fixed for redemption, plus a premium
of $.25 per share.
(v) Sinking Fund for Mandatory Purchases or
Redemptions.
(a) So long as any of the Preferred
Shares, 5% Series, shall be outstanding,
this Corporation, as a sinking fund for the
purchase or redemption thereof (hereinafter called
the "Sinking Fund"), shall set aside in cash out
of any moneys legally available therefor, after
full payment or provision for payment of dividends
on all outstanding Preferred Shares of all series
and all other shares of this Corporation ranking
prior to or on a parity with the Preferred Shares
for all prior periods through the end of the last
preceding quarterly dividend period for such
Preferred Shares and such other shares, on
September 5 of each year (hereinafter called the
"Sinking Fund payment date"), a sum equal to two
percent (2%) of the aggregate par value of the
total number of Preferred Shares, 5% Series,
theretofore issued. If on any Sinking Fund
payment date the funds of this Corporation legally
available therefor shall be insufficient to
discharge in full the Sinking Fund requirement
then accrued, funds to the extent legally
available for such purpose shall be set aside for
the Sinking Fund. Such Sinking Fund requirements
shall be cumulative so that if for any year or
years such requirements shall not be fully
discharged as they accrue, funds legally available
therefor, after such payment or provision for
dividends, for each fiscal year thereafter shall
be applied thereto until such requirements are
fully discharged.
(b) This Corporation at its option
shall be entitled to use as a credit against its
Sinking Fund requirement for any year, in an
amount equal to the par value thereof, Preferred
Shares, 5% Series, which this Corporation shall
have theretofore acquired by purchase or
redemption, otherwise than through the operation
of the Sinking Fund, and for which credit shall
not therefore have been taken against any Sinking
Fund requirement.
(c) On or before the 60th day next
following each Sinking Fund payment date, the cash
in the Sinking Fund shall be used to acquire
Preferred Shares, 5% Series, by purchase, at a
price or prices not exceeding the par value
thereof, or by redemption at the par value thereof
in the manner provided in Paragraph 6 of Article
IV of the Articles of Incorporation of this
Corporation, in each case plus an additional
amount equal to accrued dividends thereon to the
date of such purchase or redemption, which
additional amount shall be paid from general funds
of this Corporation legally available therefor and
not from the Sinking Fund, or by both such
purchase and such redemption. Upon retirement of
all Preferred Shares, 5% Series, any cash
remaining in the Sinking Fund in excess of that
required to complete payment for any shares
purchased or agreed to be purchased, or to redeem
shares called for redemption through the operation
of the Sinking Fund, shall become a part of the
general funds of this Corporation.
ARTICLE V
The liability of the directors of this Corporation
for monetary damages shall be eliminated to the fullest extent
permissible under California law.
This Corporation is authorized to provide
indemnification of agents (as defined in Section 317 of the
California Corporations Code) through bylaw provisions,
agreements with agents, vote of shareholders or disinterested
directors, or otherwise, in excess of the indemnification
otherwise permitted by Section 317 of the California Corporations
Code, subject only to the applicable limits set forth in Section
204 of the California Corporations Code.
ARTICLE VI
Notwithstanding any contrary provision of these
Articles of Incorporation, any amendment or repeal of paragraph
(14) of Article IV, this Article VI or any amendment to these
Articles of Incorporation providing for a classified board shall
require the affirmative vote of shares representing not less than
66 2/3% of the combined voting power of the outstanding Common
Shares, Preferred Shares and, unless otherwise provided in the
certificate of determination, the New Preferred Shares, voting
together as a single class.
Notwithstanding any contrary provision of these
Articles of Incorporation, and except as otherwise expressly
provided in the California Corporations Code, none of the
following provisions of the Bylaws of the Company may be amended
or repealed, except by a majority of the Board or by the
shareholders upon the affirmative vote of shares representing at
least 66 2/3% of the combined voting power of the outstanding
Common Shares, Preferred Shares and, unless otherwise provided in
the certificate of determination for any series of New Preferred
Shares, the New Preferred Shares, voting together as a single
class: (a) Section 2 of Article II, (b) Section 15 of Article II,
and (c) Section 2 of Article III.
ARTICLE VII
In the event that the authorized number of directors
shall be fixed with at least six (6) but less than nine (9)
during any period of time that the Common Shares are listed on
the New York Stock Exchange, the Board of Directors shall be
divided into two classes, designated Class I and Class II. Each
class shall consist of one-half of the directors or as close an
approximation as possible. The initial term of office of the
directors of Class I shall commence on the date that the Common
Shares are listed on the New York Stock Exchange and shall expire
at the annual meeting to be held during fiscal year 1999 and the
initial term of office of the directors of Class II shall
commence on the date that the Common Shares are listed on the New
York Stock Exchange and shall expire at the annual meeting to be
held during fiscal year 2000. At each subsequent annual meeting,
each of the successors to the directors of the class whose term
shall have expired at such annual meeting shall be elected for a
term running until the second annual meeting next succeeding his
or her election and until his or her successor shall have been
duly elected and qualified, unless the Common Shares are no
longer listed on the New York Stock Exchange.
In the event that the authorized number of directors
shall be fixed at nine (9) or more during any period of time that
the Common Shares are listed on the New York Stock Exchange, the
Board of Directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall
consist of one-third of the directors or as close an
approximation as possible. At each subsequent annual meeting,
each of the successors to the directors of the class whose term
shall have expired at such annual meeting shall be elected for a
term running until the third annual meeting next succeeding his
or her election until his or her successor shall have been duly
elected and qualified, unless the Common Shares are no longer
listed on the New York Stock Exchange.
Notwithstanding the rule that the classes shall be as
nearly equal in number of directors as possible, in the event of
any change in the authorized number of directors, each director
then continuing to serve as such shall nevertheless continue as a
director of the class of which he or she is a member until the
expiration of his or her current term, or his or her prior death,
resignation or removal.
At each annual election, the directors chosen to
succeed those whose terms then expire shall be of the same class
as the directors they succeed, unless, by reason of any
intervening changes in the authorized number of directors, the
Board of Directors shall designate one or more directorships
whose term then expires as directorships of another class in
order more nearly to achieve equality of number of directors
among the classes.
The effective date of the amendment adding this Article
VII shall be that date the Common Shares are first listed on the
New York Stock Exchange.
BYLAWS
for the regulation, except
as otherwise provided by statute or
its Articles of Incorporation,
of
AMERICAN STATES WATER COMPANY
(a California corporation)
ARTICLE I. Offices.
Section 1. PRINCIPAL EXECUTIVE OFFICE. The
corporation's principal executive office shall be fixed and
located at such place as the Board of Directors (herein called
the "Board") shall determine. The Board is granted full power
and authority to change said principal executive office from one
location to another.
Section 2. OTHER OFFICES. Branch or subordinate
offices may be established at any time by the Board at any place
or places.
ARTICLE II. Shareholders.
Section 1. PLACE OF MEETINGS. Meetings of
shareholders shall be held either at the principal executive
office of the corporation or at any other place within or without
the State of California which may be designated either by the
Board or by the written consent of all persons entitled to vote
thereat given either before or after the meeting and filed with
the Secretary.
Section 2. SPECIAL MEETINGS. Special meetings of the
shareholders may be called at any time by the Board, the Chairman
of the Board, the President or by the holders of shares entitled
to cast not less than ten percent of the votes at such meeting.
Upon request in writing to the Chairman of the Board, the
President, any Vice President or the Secretary by any person
(other than the Board) entitled to call a special meeting of
shareholders, the officer forthwith shall cause notice to be
given to the shareholders entitled to vote that a meeting will be
held at a time requested by the person or persons calling the
meeting, not less than thirty-five nor more than sixty days after
the receipt of the request. Such request shall be made in
accordance with applicable law and these Bylaws. If the notice
is not given within twenty days after receipt of the request, the
persons entitled to call the meeting may give the notice.
Section 3. ANNUAL MEETINGS. The annual meetings of
shareholders shall be held on such date and at such time as may
be fixed by the Board. At such meetings, directors shall be
elected and any other proper business may be transacted in
accordance with applicable law and these Bylaws.
Section 4. NOTICE OF ANNUAL OR SPECIAL MEETINGS.
Written notice of each annual or special meeting of shareholders
shall be given not less than ten nor more than sixty days before
the date of the meeting to each shareholder entitled to vote
thereat. Such notice shall state the place, date and hour of the
meeting and (i) in the case of a special meeting, the general
nature of the business to be transacted, and no other business
may be transacted, or (ii) in the case of the annual meeting,
those matters which the Board, at the time of the mailing of the
notice, intends to present for action by the shareholders, but,
subject to the provisions of applicable law and these Bylaws, any
proper matter may be presented at the meeting for such action.
The notice of any meeting at which directors are to be elected
shall include the names of nominees intended at the time of the
notice to be presented by management for election.
Notice of a shareholders' meeting shall be given either
personally or by mail or by other means of written communication,
addressed to the shareholder at the address of such shareholder
appearing on the books of the corporation or given by the
shareholder to the corporation for the purpose of notice, or, if
no such address appears or is given, at the place where the
principal executive office of the corporation is located or by
publication at least once in a newspaper of general circulation
in the county in which the principal executive office is located.
Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage
prepaid. Any other written notice shall be deemed to have been
given at the time it is personally delivered to the recipient or
is delivered to a common carrier for transmission, or actually
transmitted by the person giving the notice by electronic means,
to the recipient.
Section 5. QUORUM. A majority of the shares entitled
to vote, represented in person or by proxy, shall constitute a
quorum at any meeting of shareholders. If a quorum is present,
the affirmative vote of a majority of the shares represented and
voting at the meeting (which shares voting affirmatively also
constitute at least a majority of the required quorum) shall be
the act of the shareholders, unless the vote of a greater number
or voting by classes is required by law or by the Articles,
except as provided in the following sentence. The shareholders
present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave
less than a quorum, if any action taken (other than adjournment)
is approved by at least a majority of the shares required to
constitute a quorum.
Section 6. ADJOURNED MEETINGS AND NOTICE THEREOF. Any
shareholders' meeting, whether or not a quorum is present, may be
adjourned from time to time by the vote of shareholders entitled
to exercise a majority of the voting power represented either in
person or by proxy, but in the absence of a quorum (except as
provided in Section 5 of this Article) no other business may be
transacted at such meeting.
It shall not be necessary to give any notice of the
time and place of the adjourned meeting or of the business to be
transacted thereat, other than by announcement at the meeting at
which such adjournment is taken; provided, however, when any
shareholders' meeting is adjourned for more than forty-five days
or, if after adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given
as in the case of an original meeting.
Section 7. VOTING. The shareholders entitled to
notice of any meeting or to vote at such meeting shall be only
persons in whose name shares stand on the stock records of the
corporation on the record date determined in accordance with
Section 8 of this Article.
Subject to the following sentence and to the provisions
of Section 708 of the California General Corporation Law, every
shareholder entitled to vote at any election of directors may
cumulate such shareholder's votes and give one candidate a number
of votes equal to the number of directors to be elected
multiplied by the number of votes to which the shareholder's
shares are entitled, or distribute the shareholder's votes on the
same principle among as many candidates as the shareholder thinks
fit. No shareholder shall be entitled to cumulate votes for any
candidate or candidates pursuant to the preceding sentence unless
such candidate or candidates' names have been placed in
nomination prior to the voting and the shareholder has given
notice at the meeting prior to the voting of the shareholder's
intention to cumulate the shareholder's votes. If any one
shareholder has given such notice, all shareholders may cumulate
their votes for candidates in nomination.
Elections need not be by ballot; provided, however,
that all elections for directors must be by ballot upon demand
made by a shareholder at the meeting and before the voting
begins.
In any election of directors, the candidates receiving
the highest number of votes of the shares entitled to be voted
for them up to the number of directors to be elected by such
shares are elected.
Voting shall in all cases be subject to the provisions
of Chapter 7 of the California General Corporation Law, and to
the following provisions:
(a) Subject to clause (g), shares held by an
administrator, executor, guardian, conservator or custodian may
be voted by such holder either in person or by proxy, without a
transfer of such shares into the holder's name; and shares
standing in the name of a trustee may be voted by the trustee,
either in person or by proxy, but no trustee shall be entitled to
vote shares held by such trustee without a transfer of such
shares into the trustee's name.
(b) Shares standing in the name of a receiver may be
voted by such receiver, and shares held by or under the control
of a receiver may be voted by such receiver without the transfer
thereof into the receiver's name if authority to do so is
contained in the order of the court by which such receiver was
appointed.
(c) Subject to the provisions of Section 705 of the
California General Corporation Law and except where otherwise
agreed in writing between the parties, a shareholder whose shares
are pledged shall be entitled to vote such shares until the
shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so
transferred.
(d) Shares standing in the name of a minor may be
voted and the corporation may treat all rights incident thereto
as exercisable by the minor, in person or by proxy, whether or
not the corporation has notice, actual or constructive, of the
nonage, unless a guardian of the minor's property has been
appointed and written notice of such appointment given to the
corporation.
(e) Shares outstanding in the name of another
corporation, domestic or foreign, may be voted by such officer,
agent or proxyholder as the bylaws of such other corporation may
prescribe or, in the absence of such provision, as the board of
directors of such other corporation may determine or, in the
absence of such determination, by the chairman of the board,
president or any vice president of such other corporation, or by
any other person authorized to do so by the chairman of the
board, president or any vice president of such other corporation.
Shares which are purported to be voted or any proxy purported to
be executed in the name of a corporation (whether or not any
title of the person signing is indicated) shall be presumed to be
voted or the proxy executed in accordance with the provisions of
this clause, unless the contrary is shown.
(f) Shares of the corporation owned by any subsidiary
shall not be entitled to vote on any matter.
(g) Shares held by the corporation in a fiduciary
capacity, and shares of the issuing corporation held in a
fiduciary capacity by any subsidiary, shall not be entitled to
vote on any matter, except to the extent that the settlor or
beneficial owner possesses and exercises a right to vote or to
give the corporation binding instructions as to how to vote such
shares.
(h) If shares stand of record in the names of two or
more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, husband and wife as community
property, tenants by the entirety, voting trustees, persons
entitled to vote under a shareholder voting agreement or
otherwise, or if two or more persons (including proxyholders)
have the same fiduciary relationship respecting the same shares,
unless the Secretary of the corporation is given written notice
to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is
so provided, their acts with respect to voting shall have the
following effect:
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the
majority so voting binds all;
(iii) If more than one vote, but the vote
is evenly split on any particular matter each faction may
vote the securities in question proportionately.
If the instrument is so filed or the registration of the shares
shows that any such tenancy is held in unequal interests, a
majority or even split for the purpose of this Section shall be a
majority or even split in interest.
Section 8. RECORD DATE. The Board may fix, in
advance, a record date for the determination of the shareholders
entitled to notice of any meeting or to vote or entitled to
receive payment of any dividend or other distribution, or any
allotment of rights, or to exercise rights in respect of any
other lawful action. The record date so fixed shall be not more
than sixty days nor less than ten days prior to the date of the
meeting nor more than sixty days prior to any other action. When
a record date is so fixed, only shareholders of record on that
date are entitled to notice of and to vote at the meeting or to
receive the dividend, distribution, or allotment of rights, or to
exercise of the rights, as the case may be, notwithstanding any
transfer of shares on the books of the corporation after the
record date. A determination of shareholders of record entitled
to notice of or to vote at a meeting of shareholders shall apply
to any adjournment of the meeting unless the Board fixes a new
record date for the adjourned meeting. The Board shall fix a new
record date if the meeting is adjourned for more than forty-five
days.
If no record date is fixed by the Board, the record
date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which
notice is given or, if notice is waived, at the close of business
on the business day next preceding the day on which the meeting
is held. The record date for determining shareholders for any
purpose other than set forth in this Section 8 or Section 10 of
this Article shall be at the close of business on the day on
which the Board adopts the resolution relating thereto, or the
sixtieth day prior to the date of such other action, whichever is
later.
Section 9. CONSENT OF ABSENTEES. The transactions of
any meeting of shareholders, however called and noticed, and
wherever held, are as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present either in
person or by proxy, and if, either before or after the meeting,
each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice or a consent to the
holding of the meeting or an approval of the minutes thereof.
All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall constitute a waiver of
notice of and presence at such meeting, except when the person
objects, at the beginning of the meeting, to the transactions of
any business because the meeting is not lawfully called or
convened and except that attendance at a meeting is not waiver of
any right to object to the consideration of matters required by
the California General Corporation Law to be included in the
notice but not so included, if such objection is expressly made
at the meeting. Neither the business to be transacted at nor the
purpose of any regular or special meeting of shareholders need to
be specified in any written waiver of notice, consent to the
holding of the meeting or approval of the minutes thereof, except
as provided in Section 601(f) of the California General
Corporation Law.
Section 10. ACTION WITHOUT MEETING. Subject to
Section 603 of the California General Corporation Law, any action
which, under any provision of the California General Corporation
Law, may be taken at any annual or special meeting of
shareholders, may be taken without a meeting and without prior
notice if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding shares
having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted.
Unless a record date for voting purposes be fixed as provided in
Section 8 of this Article, the record date for determining
shareholders entitled to give consent pursuant to this Section
10, when no prior action by the Board has been taken, shall be
the day on which the first written consent is given.
Section 11. PROXIES. Every person entitled to vote
shares has the right to do so either in person or by one or more
persons authorized by a written proxy executed by such
shareholder and filed with the Secretary. Any proxy duly
executed is not revoked and continues in full force and effect
until revoked by the person executing it prior to the vote
pursuant thereto by a writing delivered to the corporation
stating that the proxy is revoked or by a subsequent proxy
executed by the person executing the prior proxy and presented to
the meeting, or by attendance at the meeting and voting in person
by the person executing the proxy; provided, however, that no
proxy shall be valid after the expiration of eleven months from
the date of its execution unless otherwise provided in the proxy.
Section 12. INSPECTORS OF ELECTION. In advance of any
meeting of shareholders, the Board may appoint inspectors of
election to act at such meeting and any adjournment thereof. If
inspectors of election be not so appointed, or if any persons so
appointed fail to appear or refuse to act, the chairman of any
such meeting may, and on the request of any shareholder or
shareholder's proxy shall, make such appointment at the meeting.
The number of inspectors shall be either one or three. If
appointed at a meeting on the request of one or more shareholders
or proxies, the majority of shares present shall determine
whether one or three inspectors are to appointed.
The duties of such inspectors shall be as prescribed by
Section 707(b) of the California General Corporation Law and
shall include: determining the number of shares outstanding and
the voting power of each; determining the shares represented at
the meeting; determining the existence of a quorum; determining
the authenticity, validity and effect of proxies; receiving
votes, ballots or consents; hearing and determining all
challenges and questions in any way arising in connection with
the right to vote; counting and tabulating all votes or consents;
determining when the polls shall close; determining the result;
and doing such acts as may be proper to conduct the election or
vote with fairness to all shareholders. If there are three
inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or
certificate of all.
Section 13. CONDUCT OF MEETING. The Chairman of the
Board shall preside as chairman at all meetings of the
shareholders. The chairman shall conduct each such meeting in a
businesslike and fair manner, but shall not be obligated to
follow any technical, formal or parliamentary rules or principles
of procedure. The chairman's rulings on procedural matters shall
be conclusive and binding on all shareholders, unless at the time
of a ruling a request for a vote is made to the shareholders
holding shares entitled to vote and which are represented in
person or by proxy at the meeting, in which case the decision of
a majority of such shares shall be conclusive and binding on all
shareholders. Without limiting the generality of the foregoing,
the chairman shall have all of the powers usually vested in the
chairman of a meeting of shareholders.
Section 14. QUALIFICATIONS OF DIRECTORS. Only persons
who are nominated in accordance with the procedures set forth in
these Bylaws shall be qualified to serve as directors.
Nominations of persons for election to the Board may be made at a
meeting of shareholders (a) by or at the direction of the Board
or (b) by any shareholder of the corporation who is a shareholder
of record at the time of giving of notice provided for in this
Bylaw, who shall be entitled to vote for the election of
directors at the meeting and who complies with the notice
procedures set forth in this Bylaw.
Nominations by shareholders shall be made pursuant to
timely notice in writing to the Secretary. To be timely as to an
annual meeting, a shareholder's notice must be received at the
principal executive officers of the corporation not less than 75
days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that if the
date of the annual meeting is changed by more than 30 days from
such anniversary date, notice by the shareholder to be timely
must be so received not later than the close of business on the
10th day following the earlier of the day on which notice of the
date of the meeting was mailed to shareholders or public
disclosure of such date was made. To be timely as to a special
meeting at which directors are to be elected, a shareholder's
notice must be received not later than the close of business on
the 10th day following the earlier of the day on which notice of
the date of the meeting was mailed to shareholders or public
disclosure of such date was made. Such shareholder's notice
shall set forth (a) as to each person whom the shareholder
proposes to nominate for election or reelection as a director all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected);
(b) as to the shareholder giving the notice (i) the name and
address, as they appear on the corporation's books, of such
shareholder and (ii) the class and number of shares of the
corporation which are beneficially owned by such shareholder and
also which are owned of record by such shareholder; and (c) as to
the beneficial owner, if any, on whose behalf the nomination is
made, (i) the name and address of such person and (ii) the class
and number of shares of the corporation which are beneficially
owned by such person. At the request of the Board, any person
nominated by the Board for election as a director shall furnish
to the Secretary that information required to be set forth in the
shareholder's notice of nomination which pertains to the nominee.
No person shall be qualified to serve as a director of
the corporation unless nominated in accordance with the
procedures set forth in this Bylaw. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting
that a nomination was not made in accordance with the procedures
prescribed by these Bylaws, and if the Chairman should so
determine, that the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of this Bylaw, a
shareholder shall also comply with all applicable requirements of
the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder with respect to the matters set forth
in this Bylaw.
Section 15. PROPER BUSINESS FOR SHAREHOLDER MEETINGS.
At a meeting of the shareholders, only such business shall be
proper as shall be brought before the meeting (a) pursuant to the
corporation's notice of meeting, (b) by or at the direction of
the Board or (c) by any shareholder of the corporation who is a
shareholder of record at the time of giving of the notice
provided for in this Bylaw, who shall be entitled to vote at such
meeting and who complies with the notice procedures set forth in
this Bylaw.
For business to be properly brought before a meeting by
a shareholder pursuant to clause (c) of the first paragraph of
this Bylaw, the shareholder must have given timely notice thereof
in writing to the Secretary. To be timely as to an annual
meeting of shareholders, a shareholder's notice must be received
at the principal executive offices of the corporation not less
than 75 days nor more than 90 days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that
if the date of the meeting is changed by more than 30 days from
such anniversary date, notice by the shareholder to be timely
must be received no later than the close of business on the 10th
day following the earlier of the day on which notice of the date
of the meeting was mailed to shareholders or public disclosure of
such date was made. To be timely as to a special meeting of
shareholders, a shareholder's notice must be received not later
than the call of the meeting by the Board, the Chairman of the
Board or the President, or the date of receipt of a valid request
by a person (other than the Board) that the special meeting be
called. Such shareholder's notice shall set forth as to each
matter the shareholder proposes to bring before the meeting (a) a
brief description of such matter and the reasons for proposing
such matters(s) at the meeting, (b) the name and address, as they
appear on the corporation's books, of the shareholder proposing
such business, and the name and address of the beneficial owner,
if any, on whose behalf the proposal is made, (c) the class and
number of shares of the corporation which are owned beneficially
and of record by such shareholder of record and by the beneficial
owner, if any, on whose behalf the proposal is made and (d) any
material interest of such shareholder of record and the
beneficial owner, if any, on whose behalf the proposal is made in
such proposal.
Notwithstanding anything in these Bylaws to the
contrary, no business shall be proper at a meeting unless brought
before it in accordance with the procedures set forth in this
Bylaw. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting and in accordance with the
procedures prescribed by these Bylaws, and if the Chairman should
so determine, that any such business not properly brought before
the meeting shall not be transacted. Notwithstanding the
foregoing provisions of this Bylaw, a shareholder shall also
comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this Bylaw.
ARTICLE III. Directors.
Section 1. POWERS. Subject to limitations of the
Articles, of these Bylaws and of the California General
Corporation Law relating to action required to be approved by the
shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board.
Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the Board shall
have the following powers in addition to the other powers
enumerated in these Bylaws:
(a) To select and remove all the other officers,
agents and employees of the corporation, prescribe the powers and
duties for them as may not be inconsistent with law, the Articles
or these Bylaws, fix their compensation and require from them
security for faithful service.
(b) To conduct, manage and control the affairs and
business of the corporation and to make such rules and
regulations therefor not inconsistent with law, the Articles or
these Bylaws, as they may deem best.
(c) To adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the
form of such seal and of such certificates from time to time, as
they may deem best.
(d) To authorize the issuance of shares of stock of
the corporation from time to time, upon such terms and for such
consideration as may be lawful.
(e) To borrow money and incur indebtedness for the
purposes of the corporation, and to cause to be executed and
delivered therefor, in the corporate name, promissory notes,
bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations or other evidences of debt and securities
therefor.
Section 2. NUMBER OF DIRECTORS. The authorized number
of directors shall be not less than five nor more than nine until
changed by amendment of the Articles or by a Bylaw duly adopted
by the shareholders amending this Section 2. The exact number of
directors shall be fixed, within the limits specified, by the
Board from time to time in a resolution adopted by a majority of
the directors. The exact number of directors shall be seven
until changed as provided in this Section 2.
Section 3. ELECTION AND TERM OF OFFICE. Except as
otherwise provided in the Articles, the directors shall be
elected at each annual meeting of the shareholders, but if any
such annual meeting is not held or the directors are not elected
thereat, the directors may be elected at any special meeting of
shareholders held for that purpose. Each director shall hold
office until the next annual meeting and until a successor has
been elected and qualified.
Section 4. VACANCIES. Any director may resign
effective upon giving written notice to the Chairman of the
Board, the President, the Secretary or the Board, unless the
notice specifies a later time for the effectiveness of such
resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation
becomes effective.
Vacancies in the Board, except those existing as a
result of a removal of a director, may be filled by a majority of
the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold
office until the next annual meeting and until such director's
successor has been elected and qualified.
A vacancy or vacancies in the Board shall be deemed to
exist in case of the death, resignation or removal of any
director, or if the authorized number of directors be increased,
or if the shareholders fail, at any annual or special meeting of
shareholders at which any director or directors are elected, to
elect the full authorized number of directors to be voted for at
that meeting.
The Board may declare vacant the office of a director
who has been declared of unsound mind by an order of court or
convicted of a felony.
The shareholders, subject to applicable law and these
Bylaws, may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. Any such
election by written consent, other than to fill a vacancy created
by removal, requires the consent of a majority of the outstanding
shares entitled to vote. Any such election by written consent to
fill a vacancy created by removal requires unanimous consent.
No reduction of the authorized number of directors
shall have the effect of removing any director prior to the
expiration of the director's term of office.
Section 5. PLACE OF MEETING. Regular or special
meetings of the Board shall be held at any place within or
without the State of California which has been designated from
time to time by the Board. In the absence of such designation,
regular meetings shall be held at the principal executive office
of the corporation.
Section 6. REGULAR MEETINGS. Immediately following
each annual meeting of shareholders, the Board shall hold a
regular meeting for the purpose of organization, election of
officers and the transaction of other business.
Other regular meetings of the Board shall be held
without call on such dates and at such times as may be fixed by
the Board. Call and notice of all regular meetings of the Board
are hereby dispensed with.
Section 7. SPECIAL MEETINGS. Special meetings of the
Board for any purpose or purposes may be called at any time by
the Chairman of the Board, the President, any Vice President, the
Secretary or by any two directors.
Special meetings of the Board shall be held upon four
days' written notice or forty-eight hours' notice given
personally or by telephone, telegraph, telex, or other similar
means of communication. Any such notice shall be addressed or
delivered to each director at such director's address as it is
shown upon the records of the corporation or as may have been
given to the corporation by the director for purposes of notice
or, if such address is not shown on such records or is not
readily ascertainable, at the place in which the meetings of the
directors are regularly held.
Notice by mail shall be deemed to have been given at
the time a written notice is deposited in the United States
mails, postage prepaid. Any other written notice shall be deemed
to have been given at the time it is personally delivered to the
recipient or is delivered to a common carrier for transmission,
or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed
to have been given at the time it is communicated, in person or
by telephone or wireless, to the recipient or to a person at the
office of the recipient who the person giving the notice has
reason to believe will promptly communicate it to the recipient.
Section 8. QUORUM. A majority of the authorized
number of directors constitutes a quorum of the Board for the
transaction of business, except to adjourn as provided in
Section 11 of this Article. Every act or decision done or made
by a majority of the directors present at a meeting duly held at
which a quorum is present shall be regarded as the act of the
Board, unless a greater number be required by law or by the
Articles. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of
directors, if any action taken is approved by at least a majority
of the required quorum for such meeting.
Section 9. PARTICIPATION IN MEETINGS BY CONFERENCE
TELEPHONE. Members of the Board may participate in a meeting
through use of conference telephone or similar communications
equipment, so long as all members participating in such meeting
can hear one another.
Section 10. WAIVER OF NOTICE. Notice of a meeting
need not be given to any director who signs a waiver of notice or
consent to holding the meeting or an approval of the minutes
thereof, whether before or after the meeting, or who attends the
meeting without protesting, prior thereto or at its commencement,
the lack of notice to such director. All such waivers, consents
and approvals shall be filed with the corporate records or made a
part of the minutes of the meetings.
Section 11. ADJOURNMENT. A majority of the directors
present, whether or not a quorum is present, may adjourn any
directors' meeting to another time and place. Notice of the time
and place of holding an adjourned meeting need not be given to
absent directors if the time and place be fixed at the meeting
adjourned, except as provided in the next sentence. If the
meeting is adjourned for more than twenty-four hours, notice of
any adjournment to another time or place shall be given prior to
the time of the adjourned meeting to the directors who were not
present at the time of the adjournment.
Section 12. FEES AND COMPENSATION. Directors and
members of committees may receive such compensation, if any, for
their services, and such reimbursement for expenses, as may be
fixed or determined by the Board.
Section 13. ACTION WITHOUT MEETING. Any action
required or permitted to be taken by the Board may be taken
without a meeting if all members of the Board shall individually
or collectively consent in writing to such action. Such consent
or consents shall have the same effect as a unanimous vote of the
Board and shall be filed with the minutes of the proceedings of
the Board.
Section 14. RIGHTS OF INSPECTION. Every director
shall have the absolute right at any reasonable time to inspect
and copy all books, records and documents of every kind and to
inspect the physical properties of the corporation and also of
its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or
attorney and includes the right to copy and obtain extracts.
Section 15. COMMITTEES. The Board may appoint one or
more committees, each consisting of two or more directors, and
delegate to such committees any of the authority of the Board
except with respect to:
(a) The approval of any action for which the
California General Corporation Law also requires
shareholders' approval or approval of the outstanding
shares;
(b) The filling of vacancies on the Board or on any
committee;
(c) The fixing of compensation of the directors for
service on the Board or on any committee;
(d) The amendment or repeal of bylaws or the adoption
of new bylaws;
(e) The amendment or repeal of any resolution of the
Board which by its express terms is not so amendable or
repealable;
(f) A distribution to the shareholders of the
corporation except at a rate or in a periodic amount or
within a price range determined by the Board; or
(g) The appointment of other committees of the Board
or the members thereof.
Any such committee must be designated, and the members
or alternate members thereof appointed, by resolution adopted by
a majority of the authorized number of directors and any such
committee may be designated an Executive Committee or by such
other name as the Board shall specify. Alternative members of a
committee may replace any absent member at any meeting of the
committee. The Board shall have the power to prescribe the
manner in which proceedings of any such committee shall be
conducted. In the absence of any such prescription, such
committee shall have the power to prescribe the manner in which
its proceedings shall be conducted. Unless the Board or such
committee shall otherwise provide, the regular and special
meetings and other actions of any such committee shall be
governed by the provisions of this Article applicable to meetings
and actions of the Board. Minutes shall be kept of each meeting
of each committee.
ARTICLE IV. Officers.
Section 1. OFFICERS. The officers of the corporation
shall be a President, a Secretary and a Chief Financial Officer.
The corporation may also have, at the discretion of the Board, a
Chairman of the Board, an Executive Vice President, a Senior Vice
President, one or more Vice Presidents, a Treasurer, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such
other officers as may be elected or appointed in accordance with
the provisions of Section 3 of this Article.
Section 2. ELECTION. The officers of the corporation,
except such officers as may be elected or appointed in accordance
with the provisions of Section 3 or Section 5 of this Article,
shall be chosen annually by, and shall serve at the pleasure of,
the Board, and shall hold their respective offices until their
resignation, removal, or other disqualification from service, or
until their respective successors shall be elected.
Section 3. SUBORDINATE OFFICERS. The Board may elect,
and may empower the Chairman of the Board, if there be such an
officer, or the President, to appoint such other officers as the
business of the corporation may require, each of whom shall hold
office for such period, have such authority and perform such
duties as are provided in these Bylaws or as the Board may from
time to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may
be removed, either with or without cause, by the Board at any
time or, except in the case of an officer chosen by the Board, by
an officer upon whom such power of removal may be conferred by
the Board. Any such removal shall be without prejudice to the
rights, if any, of the officer under any contract of employment
of the officer.
Any officer may resign at any time by giving written
notice to the corporation, but without prejudice to the rights,
if any, of the corporation under any contract to which the
officer is a party. Any such resignation shall take effect at
the date of the receipt of such notice or at any later time
specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
Section 5. VACANCIES. A vacancy in any office because
of death, resignation, removal, disqualification or any other
cause shall be filled in the manner prescribed in these Bylaws
for regular election or appointment to such office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the
Board, if there shall be such an officer, shall be the Chief
Executive Officer of the corporation unless, in its sole
discretion, the Board should elect the President to be such. The
Chief Executive Officer is the general manager and chief
executive officer of the corporation and has, subject to the
control of the Board, general supervision, direction and control
of the business and officers of the corporation. The Chairman of
the Board, if there shall be such an officer, shall, if present,
preside at all meetings of the shareholders and the Board and
exercise and perform such other powers and duties as may be from
time to time assigned by the Board.
Section 7. PRESIDENT. Subject to such powers, if any,
as may be given to the Chairman of the Board, if there be such an
officer, the President shall have the general powers and duties
of management usually vested in the office of the president of a
corporation and such other powers and duties as may be prescribed
by the Board or the Chief Executive Officer, if other than the
President. In the absence of the Chairman of the Board, or if
there be none, the President shall preside at all meetings of the
shareholders and the Board. In the absence or disability of the
Chief Executive Officer, if other than the President, the
President shall perform all the duties of the Chief Executive
Officer and, when so acting, shall have all of the powers of, and
be subject to all the restrictions upon, the Chief Executive
Officer.
Section 8. VICE PRESIDENTS. The Executive Vice
President and Senior Vice President, if any, and other Vice
Presidents shall have (subject to the authority of the Board)
such powers and perform such duties as from time to time
determined by the Chief Executive Officer. In the absence or
disability of the President, the Vice Presidents, in the
following order, shall perform all the duties of the President
and, when so acing, shall have all the powers of, and be subject
to all the restrictions upon, the President: the Executive Vice
President, if any, the Senior Vice President, if any, and the
Vice Presidents in the order of their rank as fixed by the Board,
or if not ranked, the Vice President designated by the Board.
The Vice President shall have such other powers and perform such
other duties as from time to time may be prescribed for them,
respectively, by the Board.
Section 9. SECRETARY. The Secretary shall keep or
cause to be kept, at the principal executive office and such
other place as the Board may order, a book of minutes of all
meetings of shareholders, the Board and its committees, with the
time and place of holding, whether regular or special, how
authorized, the notice thereof given, the names of those present
at Board and committee meetings, the number of shares present or
represented at shareholders' meetings, and the proceedings
thereof. The Secretary shall keep, or cause to be kept, a copy
of the Bylaws of the corporation at the principal executive
office or business office in accordance with Section 213 of the
California General Corporation Law.
The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the corporation's
transfer agent or registrar, if one be appointed, a share
register, or a duplicate share register, showing the names of the
shareholders and their addresses, the number of classes of shares
held by each, the number and date of certificates issued for the
same, and the number and date of cancellation of every
certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice
of all meetings of the shareholders and of the Board and any
committees thereof required by these Bylaws or by law to be
given, shall keep the seal of the corporation in safe custody,
and shall have such other powers and perform such other duties as
may be prescribed by the Board.
Section 10. CHIEF FINANCIAL OFFICER. The Chief
Financial Officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct accounts of the properties
and business transactions of the corporation, and shall send or
cause to be sent to the shareholders of the corporation such
financial statements and reports as are by law or these Bylaws
required to be sent to them. The books of account shall at all
times be open to inspection by any director.
The Chief Financial Officer shall deposit all monies
and other valuables in the name and to the credit of the
corporation with such depositaries as may be designated by the
Board. The Chief Financial Officer shall disburse the funds of
the corporation as may be ordered by the Board, shall render to
the President and the directors, whenever they request it, an
account of all transactions as Chief Financial Officer and of the
financial condition of the corporation, and shall have such other
powers and perform such other duties as may be prescribed by the
Board.
ARTICLE V. Other Provisions.
Section 1. INSPECTION OF CORPORATE RECORDS.
(a) A shareholder or shareholders holding at least
five percent in the aggregate of the outstanding voting shares of
the corporation or who hold at least one percent of such voting
shares and have filed a Schedule 14B with the United States
Securities and Exchange Commission relating to the election of
directors of the corporation shall have the absolute right to do
either or both of the following:
(i) Inspect and copy the record of
shareholders' names and addresses and shareholders during
usual business hours upon five business days' prior written
demand upon the corporation; or
(ii) Obtain from the transfer agent, if any,
for the corporation, upon five business days' prior written
demand and upon the tender of its usual charges for such a
list (the amount of which charges shall be stated to the
shareholder by the transfer agent upon request), a list of
the shareholders' names and addresses who are entitled to
vote for the election of directors and their shareholdings,
as of the most recent complied or as of the date specified
by the shareholder subsequent to the date of demand.
(b) The record of shareholders shall also be open to
inspection and copying by any shareholder or holder of a voting
trust certificate at any time during usual business hours upon
written demand on the corporation, for a purpose reasonably
related to such holder's interest as a shareholder or holder of a
voting trust certificate.
(c) The accounting books and records and minutes of
proceedings of the shareholders and the Board and committees of
the Board shall be open to inspection upon written demand on the
corporation of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours,
for a purpose reasonably related to such holder's interests as a
shareholder or as a holder of such voting trust certificate.
(d) Any inspection and copying under this Article may
be made in person or by agent or attorney.
Section 2. INSPECTION OF BYLAWS. The corporation
shall keep in its principal executive office in the State of
California, or if its principal executive office is not in such
State at its principal business office in such state, the
original or copy of these Bylaws as amended to date, which shall
be open to inspection by shareholders at all reasonable times
during office hours. If the principal executive office of the
corporation is located outside the State of California and the
corporation has no principal business office in such state, it
shall upon the written request of any shareholder furnish to such
shareholder a copy of these Bylaws as amended to date.
Section 3. ENDORSEMENT OF DOCUMENTS, CONTRACTS.
Subject to the provisions of applicable law, any note, mortgage,
evidence of indebtedness, contract, share certificate, conveyance
or other instrument in writing and any assignment or endorsements
thereof executed or entered into between the corporation and any
other person, when signed by the Chairman of the Board, the
President or any Vice President and the Secretary, any Assistant
Secretary, the Chief Financial Officer, the Treasurer or any
Assistant Treasurer of the corporation, shall be valid and
binding on the corporation in the absence of actual knowledge on
the part of the other person that the signing officers had no
authority to execute the same. Any such instruments may be
signed by any other person or persons and in such manner as from
time to time shall be determined by the Board, and, unless so
authorized by the Board, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or
engagement or to pledge its credit or to render it liable for any
purpose or amount.
Section 4. CERTIFICATES OF STOCK. Every holder of
shares of the corporation shall be entitled to have a certificate
signed in the name of the corporation by the Chairman of the
Board, the President or a Vice President and by the Chief
Financial Officer, the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, certifying the number of
shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may
be facsimile. If any officer, transfer agent or registrar who
has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if such person were an
officer, transfer agent or registrar at the date of issue.
Certificates for shares may be issued prior to full
payment under such restrictions and for such purposes as the
Board may provide; provided, however, that on any certificate
issued to represent any partly paid shares, the total amount of
the consideration to be paid therefor and the amount paid thereon
shall be stated.
Except as provided in this Section, no new certificate
for shares shall be issued in lieu of an old one unless the
latter is surrendered and cancelled at the same time. The Board
may, however, if any certificate for shares is alleged to have
been lost, stolen or destroyed, authorize the issuance of a new
certificate in lieu thereof, and the corporation may require that
the corporation be given a bond or other adequate security
sufficient to indemnify it against any claim that may be made
against it (including expense or liability) on account of the
alleged loss, theft or destruction of such certificate or the
issuance of such new certificate.
Section 5. REPRESENTATION OF SHARES OF OTHER
CORPORATIONS. The Chief Executive Officer, the President or any
other officer or officers authorized by the Board or the Chief
Executive Officer are each authorized to vote, represent and
exercise on behalf of the corporation all rights incident to any
and all shares of any other corporation or corporations standing
in the name of the corporation. The authority herein granted may
be exercised either by any such officer in person or by any other
person authorized so to do by proxy or power of attorney duly
executed by said officer.
Section 6. STOCK PURCHASE PLANS. The corporation may
adopt and carry out a stock purchase plan or agreement or stock
option plan or agreement providing for the issue and sale for
such consideration as may be fixed of its unissued shares, or of
issued shares acquired or to be acquired, to one or more of the
employees or directors of the corporation or of a subsidiary or
to a trustee on their behalf and for the payment for such shares
in installments or at one time, and may provide for aiding any
such persons in paying for such shares by compensation for
services rendered, promissory notes or otherwise.
Any such stock purchase plan or agreement or stock
option plan or agreement may include, among other features, the
fixing of eligibility for participation therein, the class and
price of shares to be issued or sold under the plan or agreement,
the number of shares which may be subscribed for, the method of
payment therefor, the reservation of title until full payment
therefor, the effect of the termination of employment, an option
or obligation on the part of the corporation, to repurchase the
shares upon termination of employment, restrictions upon transfer
of the shares, the time limits of and termination of the plan,
and any other matters, not in violation of applicable law, as may
be included in the plan as approved or authorized by the Board or
any committee of the Board.
Section 7. CONSTRUCTION AND DEFINITIONS. Unless the
context otherwise requires, the general provisions, rules of
construction and definitions contained in the General Provisions
of the California Corporations Code and in the California General
Corporation Law shall govern the construction of these Bylaws.
ARTICLE VI. Indemnification.
Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Each person who was or is a party or is threatened
to be made a party or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she is or was a director or officer of the
corporation, or of any predecessor corporation, or is or was a
director or officer who is or was serving at the request of the
corporation as a director, officer, employee or other agent of
another corporation, a partnership, joint venture, trust or other
enterprise (including service with respect to
corporation-sponsored employee benefit plans), whether the basis
of such proceeding is alleged action or inaction in an official
capacity as a director or officer or in any other capacity while
serving as a director or officer, shall, subject to the terms of
any agreement between the corporation and such person, be
indemnified and held harmless by the corporation to the fullest
extent permissible under California law and the corporation's
Articles, against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) actually and reasonably
incurred or suffered by such person in connection therewith;
provided, however, that amounts paid in settlement of a
proceeding shall be payable only if the settlement is approved in
writing by the corporation. Such indemnification shall continue
as to a person who has ceased to be a director or officer for
acts performed while a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators.
Notwithstanding the foregoing, the corporation shall indemnify
any such person in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part
thereof) was authorized by the Board of the corporation. The
right to indemnification conferred in this Article shall include
the right to be paid by the corporation the expenses incurred in
defending any proceeding in advance of final disposition to the
fullest extent permitted by law; provided, however, that the
payment under this Article of such expenses in advance of the
final disposition of a proceedings shall be conditioned upon the
delivery to the corporation of a written request for such advance
and of an undertaking by or on behalf of the director or officer
to repay all amounts so advanced if it shall be ultimately
determined that such director or officer is not entitled to be
indemnified.
(b) Notwithstanding the foregoing or any other
provisions under this Article, the corporation shall not be
liable under this Article to indemnify a director or officer
against expenses, liabilities or losses incurred or suffered in
connection with, or make any advances with respect to, any
proceeding against a director or officer: (i) as to which the
corporation is prohibited by applicable law from paying as an
indemnity; (ii) with respect to expenses of defense or
investigation, if such expenses were or are incurred without the
corporation's consent (which consent may not be unreasonably
withheld); (iii) for which payment is actually made to the
director or officer under a valid and collectible insurance
policy maintained by the corporation, except in respect of any
excess beyond the amount of payment under such insurance;
(iv) for which payment is actually made to the director or
officer under an indemnity by the corporation otherwise than
pursuant to this Bylaw Article, except in respect of any excess
beyond the amount of payment under such indemnity; (v) based upon
or attributable to the director or officer gaining in fact any
personal profit or advantage to which he or she was not legally
entitled; (vi) for an accounting of profits made from the
purchase or sale by the director or officer of securities of the
corporation pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law; or
(vii) based upon acts or omissions involving intentional
misconduct or a knowing and culpable violation of law.
Section 2. INDEMNIFICATION OF EMPLOYEES AND AGENTS. A
person who was or is a party or is threatened to be made a party
to or is involved in any proceeding by reason of the fact that he
or she is or was an employee or agent of the corporation or is or
was an employee or agent of the corporation who is or was serving
at the request of the corporation as an employee or agent of
another enterprise, including service with respect to
corporation-sponsored employee benefits plans, whether the basis
of such action is alleged action or inaction in an official
capacity or in any other capacity while serving as an employee or
agent, may, upon appropriate action by the corporation and
subject to the terms of any agreement between the corporation and
such person, be indemnified and held harmless by the corporation
up to the fullest extent permitted by California law and the
corporation's Articles, against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes
or penalties and amounts paid or to be paid in settlement)
actually and reasonably incurred or suffered by such person in
connection therewith.
Section 3. RIGHT OF DIRECTORS AND OFFICERS TO BRING
SUIT. If a claim under Section 1 of this Article is not paid by
the corporation or on its behalf within 90 days after a written
claim has been received by the corporation, the claimant may at
any time thereafter bring suit against the corporation to recover
the unpaid amount of the claim, and, if successful in whole or in
part, the claimant also shall be entitled to be paid the expense
of prosecuting such claim.
Section 4. SUCCESSFUL DEFENSE. Notwithstanding any
other provision of this Article, to the extent that a director or
officer has been successful on the merits or otherwise (including
the dismissal of a proceeding without prejudice or the settlement
with the written consent of the corporation of a proceeding
without admission of liability) in defense of any proceeding
referred to in Section 1 or in defense of any claim, issue or
matter therein, such director or officer shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred in connection therewith.
Section 5. INDEMNITY AGREEMENTS. The corporation may
enter into agreements with any director, officer, employee or
agent of the corporation providing for indemnification to the
fullest extent permissible under applicable law and the
corporation's Articles.
Section 6. SUBROGATION. In the event of payment by
the corporation of a claim under Section 1 of this Article, the
corporation shall be subrogated to the extent of such payment to
all of the rights of recovery of the indemnified person, who
shall execute all papers required and shall do everything that
may be necessary or appropriate to secure such rights, including
the execution of such documents necessary or appropriate to
enable the corporation effectively to bring suit to enforce such
rights.
Section 7. NON-EXCLUSIVITY RIGHTS. The right to
indemnification provided by this Article shall not be exclusive
of any other right which any person may have or hereafter acquire
under any statute, bylaw, agreement, vote of shareholders or
disinterested directors or otherwise.
Section 8. INSURANCE. The corporation may maintain
insurance, at its expense, to protect itself and any director,
officer, employee or agent of the corporation or another
corporation, a partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not
the corporation would have the power to indemnify such person
against such expense, liability or loss under California law.
Section 9. EXPENSES AS A WITNESS. To the extent that
any director, officer or employee of the corporation is by reason
of such position a witness in any action, suit or proceeding, he
or she will be indemnified against all costs and expenses
actually and reasonably incurred by him or her or on his or her
behalf in connection therewith.
Section 10. NONAPPLICABILITY TO FIDUCIARIES OF
EMPLOYEE BENEFIT PLANS. This Article does not apply to any
proceeding against any trustee, investment manager or other
fiduciary of an employee benefit plan in such person's capacity
as such, even though such person may also be an agent of the
corporation. The corporation shall have power to indemnify such
trustee, investment manager or other fiduciary to the extent
permitted by subdivision (f) of Section 207 of the California
General Corporation Law.
Section 11. SEPARABILITY. Each and every paragraph,
sentence, term and provision of this Article is separate and
distinct so that if any paragraph, sentence, term or provision
shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or
enforceability of any other paragraph, sentence, term or
provision hereof. To the extent required, any paragraph,
sentence, term or provision of this Article may be modified by a
court of competent jurisdiction to preserve its validity and to
provide the claimant with, subject to the limitations set forth
in this Article and any agreement between the corporation and the
claimant, the broadest possible indemnification permitted under
applicable law.
Section 12. EFFECT OF REPEAL OR MODIFICATION. Any
repeal or modification of this Article shall not adversely affect
any right of indemnification of a director, officer, employee or
agent of the corporation existing at the time of such repeal or
modification with respect to any action or omission occurring
prior to such repeal or modification.
ARTICLE VII. Emergency Provisions.
Section 1. GENERAL. The provisions of this Article
shall be operative only during a national emergency declared by
the President of the United States or the person performing the
President's functions, or in the event of a nuclear, atomic or
other attack on the United States or a disaster making it
impossible or impracticable for the corporation to conduct its
business without recourse to the provisions of this Article.
Said provisions in such event shall override all other Bylaws of
the corporation in conflict with any provisions of this Article,
and shall remain operative so long as it remains impossible or
impracticable to continue the business of the corporation
otherwise, but thereafter shall be inoperative; provided that all
actions taken in good faith pursuant to such provisions shall
thereafter remain in full force and effect unless and until
revoked by action taken pursuant to the provisions of the Bylaws
other than those contained in this Article.
Section 2. UNAVAILABLE DIRECTORS. All directors of
the corporation who are not available to perform their duties as
directors by reason of physical or mental incapacity or for any
other reason or who are unwilling to perform their duties or
whose whereabouts are unknown shall automatically cease to be
directors, with like effect as if such persons had resigned as
directors, so long as such unavailability continues.
Section 3. AUTHORIZED NUMBER OF DIRECTORS. The
authorized number of directors shall be the number of directors
remaining after eliminating those who have ceased to be directors
pursuant to Section 2, or the minimum number required by law,
whichever number is greater.
Section 4. QUORUM. The number of directors necessary
to constitute a quorum shall be one-third of the authorized
number of directors as specified in the foregoing Section, or
other minimum number as, pursuant to the law or lawful decree
then in force, it is possible for the Bylaws of a corporation to
specify.
Section 5. CREATION OF EMERGENCY COMMITTEE. In the
event the number of directors remaining after eliminating those
who have ceased to be directors pursuant to Section 2 is less
than the minimum number of authorized directors required by law,
then until the appointment of additional directors to make up
such required minimum, all the powers and authorities which the
Board could by law delegate, including all powers and authorities
which the Board could delegate to a committee, shall be
automatically vested in an emergency committee, and the emergency
committee shall thereafter manage the affairs of the corporation
pursuant to such powers and authorities and shall have all other
powers and authorities as may by law or lawful decree be
conferred on any person or body of persons during a period of
emergency.
Section 6. CONSTITUTION OF EMERGENCY COMMITTEE. The
emergency committee shall consist of all the directors remaining
after eliminating those who have ceased to be directors pursuant
to Section 2, provided that such remaining directors are not less
than three in number. In the event such remaining directors are
less than three in number the emergency committee shall consist
of three persons, who shall be the remaining director or
directors and either one or two officers or employees of the
corporation as the remaining director or directors may in writing
designate. If there is no remaining director, the emergency
committee shall consist of the three most senior officers of the
corporation who are available to serve, and if and to the extent
that officers are not available, the most senior employees of the
corporation. Seniority shall be determined in accordance with
any designation of seniority in the minutes of the proceedings of
the Board, and in the absence of such designation, shall be
determined by rate of remuneration. In the event that there are
no remaining directors and no officers or employees of the
corporation available, the emergency committee shall consist of
three persons designated in writing by the shareholder owning the
largest number of shares of record as of the date of the last
record date.
Section 7. POWERS OF EMERGENCY COMMITTEE. The
emergency committee, once appointed, shall govern its own
procedures and shall have power to increase the number of members
thereof beyond the original number, and in the event of a vacancy
or vacancies therein, arising at any time, the remaining member
or members of the emergency committee shall have the power to
fill such vacancy or vacancies. In the event at any time after
its appointment all members of the emergency committee shall die
or resign or become unavailable to act for any reason whatsoever,
a new emergency committee shall be appointed in accordance with
the foregoing provisions of this Article.
Section 8. DIRECTORS BECOMING AVAILABLE. Any person
who has ceased to be a director pursuant to the provisions of
Section 2 and who thereafter becomes available to serve as a
director shall automatically become a member of the emergency
committee.
Section 9. ELECTION OF BOARD OF DIRECTORS. The
emergency committee, shall, as soon after its appointment as is
practicable, take all requisite action to secure the election of
a board of directors, and upon such election, all the powers and
authorities of the emergency committee shall cease.
Section 10. TERMINATION OF EMERGENCY COMMITTEE. In
the event, after the appointment of an emergency committee, a
sufficient number of persons who ceased to be directors pursuant
to Section 2 become available to serve as directors, so that if
they had not ceased to be directors as aforesaid, there would be
enough directors to constitute the minimum number of directors
required by law, then all such persons shall automatically be
deemed to be reappointed as directors and the powers and
authorities of the emergency committee shall be at an end.
ARTICLE VIII. Amendments.
Subject to the Articles of Incorporation, these Bylaws
may be amended or repealed either by approval of the outstanding
shares (as defined in Section 152 of the California General
Corporation Law) or by the approval of the Board; provided,
however, that after the issuance of shares, a bylaw specifying or
changing a fixed number of directors or the maximum or minimum
number or changing from a fixed to a variable number of directors
or vice versa may only be adopted by approval of the outstanding
shares and a bylaw reducing the fixed number or the minimum
number of directors to a number less than five shall be subject
to the provisions of Section 212(a) of the California General
Corporation Law.
EXHIBIT 10.01
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement") is
dated as of October 27, 1998, and is entered into by and among
Floyd E. Wicks (the "Executive"), American States Water Company
(the "Company") and its wholly owned subsidiary, Southern
California Water Company, a California corporation ("SCW").
RECITALS
The Company considers it essential to the best interest
of the Company and its shareholders that the Executive be
encouraged to remain with the Company and SCW and continue to
devote full attention to the Company's business notwithstanding
the possibility, threat or occurrence of a Change in Control (as
defined in Section 3). The Company believes that it is in the
best interest of the Company and its shareholders to reinforce
and encourage the continued attention and dedication of the
Executive and to diminish inevitable distractions arising from
the possibility of a Change in Control. Accordingly, to assure
the Company that it will have the Executive's undivided attention
and services notwithstanding the possibility, threat or
occurrence of a Change in Control, and to induce the Executive to
remain in the employ of the Company and SCW, and for other good
and valuable consideration, the Board of Directors of the Company
and SCW has, at the recommendation of the Company's Compensation
Committee, caused the Company and SCW to enter into this
Agreement.
TERMS AND CONDITIONS
The Executive, the Company and SCW hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3) occurs
on or before the expiration date of this Agreement and while the
Executive is still an employee of the Company or SCW, then this
Agreement will continue in effect for two years from the date of
such Change in Control and, if the Executive's employment with
the Company or SCW is terminated within such two-year period,
this Agreement shall thereafter continue in effect until all of
the obligations of the Company and SCW under this Agreement shall
have been fulfilled. If no Change in Control occurs on or before
December 31, 2000, this Agreement shall expire; provided, however
that this Agreement shall be automatically extended for an
additional two years to December 31, 2002 if (i) a plan or
agreement for a Change in Control has been approved by the Board
of Directors of the Company or SCW on or before the expiration
date, or (ii) the Company and SCW have not delivered to you or
you shall have not delivered to the Company and SCW written
notice at least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement shall
continue to be automatically extended for an additional two-year
period and each succeeding two-year period if a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or SCW or the Company, SCW or you have
failed to give notice by the time and in the manner described in
this Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first date
during the term of this Agreement on which a Change in Control
(as defined in Section 3) occurs; provided, however, that if a
Change in Control occurs and if the Executive's employment with
the Company or SCW is terminated after approval by the Board of
Directors of the Company or SCW of a plan or agreement for a
Change in Control but prior to the date on which the Change in
Control occurs, the "Change in Control Date" shall mean the date
immediately preceding the date of such termination.
3. Change in Control
A "Change in Control" shall mean any of the following
events:
(a) the dissolution or liquidation of either the
Company or SCW, unless its business is continued by another entity
in which holders of the Company's voting securities immediately
before the event own, either directly or indirectly, more than 50%
of the continuing entity's voting securities immediately after the
event;
(b) any sale, lease, exchange or other transfer (in one
or a series of transactions) of all or substantially all of the
assets of either the Company or SCW, unless its business is continued
by another entity in which holders of the Company's voting
securities immediately before the event own, either directly or
indirectly, more than 50% of the continuing entity's voting
securities immediately after the event;
(c) any reorganization or merger of the Company or SCW,
unless the holders of the Company's voting securities immediately
before the event own, either directly or indirectly, more than 50% of
the continuing or surviving entity's voting securities
immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities of
the Company or SCW, unless the holders of the Company's voting
securities immediately before the event own, either directly or
indirectly, more than 50% of the acquirer's voting securities
immediately after the acquisition; or
(e) a change of one-half or more of the members of the
Board of Directors of the Company or SCW within a twelve-month
period, unless the election or nomination for election by
shareholders of new directors within such period constituting a
majority of the applicable Board was approved by the vote of at
least [two-thirds] of the directors then still in office who were
in office at the beginning of the twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control Date
and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment shall
terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during the
Effective Period, the Company or SCW may give the Executive
written notice of their intention to terminate the Executive's
employment. In such event, the Executive's employment with the
Company or SCW shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of his or her duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive
from his or her duties with the Company or SCW on a full-time
basis for [180] consecutive business days as a result of a
physical or mental condition which prevents the Executive from
performing the Executive's normal duties of employment and which
is (i) determined to be total and permanent by a physician
selected by the Company or SCW or their insurers and acceptable
to the Executive or the Executive's legal representative and/or
(ii) entitles the Executive to the payment of long-term
disability benefits from the Company's or SCW's long-term
disability plan commencing no later than the Disability Effective
Date.
(b) Cause: The Company or SCW may terminate the
Executive's employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company or SCW
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services to
the Company or SCW where such failure amounts to gross
neglect or gross misconduct of the Executive's responsibility
and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or other
crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be terminated
by the Executive during the Effective Period for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as in effect on the
Change in Control Date, or any other action by the Company
or SCW which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company or SCW, as the case may be, promptly after
receipt of notice thereof given by the Executive;
(ii) any failure by the Company or SCW to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination of the
Executive's employment by the Company or SCW for Cause or
Disability, the death of the Executive, or the termination of
the Executive's employment by the Executive other than for Good
Reason;
(iii) reduction by the Company or SCW in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company or SCW
(including the elimination of benefit plans without providing
substitutes therefore or the reduction of the Executive's
benefits thereunder) that would substantially diminish the
aggregate value of the Executive's incentive awards and other
fringe benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control Date;
(v) the Company's or SCW's requiring the Executive
to be based at any office or location which increases the
distance from the Executive's home to the office location by
more than [35] miles from the distance in effect as of the
Change in Control Date;
(vi) any failure by the Company or SCW to comply with
and satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If the
Company or SCW shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or the
Executive shall terminate employment for Good Reason during the
Effective Period, the Company and SCW agrees, subject to Section
8, to make the payments and provide the benefits described below:
(i) The Company and/or SCW shall pay to the Executive
in a cash lump sum within 10 days from the date of the
Executive's termination of employment an amount equal
to the product of (A) and (B), where (A) is three and (B)
is the Executive's annual base salary at the highest of
the rate in effect at any time during the three years
preceding the date of termination.
(ii) The Company and/or SCW shall also pay to the
Executive in a cash lump sum within 10 days from the date of
termination an amount equal to the sum of (A) the Executive's
base salary through the date of termination, plus (B) any
compensation previously deferred by the Executive (together
with any accrued earnings or interest thereon), plus (C) any
accrued vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company and/or SCW shall also pay to the
Executive in a cash lump sum within 10 days from the date of
termination an amount equal to the excess of (A) over (B),
where (A) is equal to the single sum actuarial equivalent of
what would be the Executive's accrued benefits under the terms
of the Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement plan
providing additional pension benefits, (hereinafter together
referred to as the "Pension Plan") at the time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the Executive
were credited with an additional two years of continuous service
after the termination of Executive's employment with the
Company or SCW at the Executive's highest annual rate of
compensation covered by such Pension Plan within the three years
preceding the date of the termination of the Executive's
employment with the Company or SCW and (B) is equal to the
single sum actuarial equivalent of the Executive's accrued
benefits under the Pension Plan at the time of the Executive's
termination of employment. The payment under this paragraph
(iii) shall not extinguish any rights the Executive has to
benefits under the Pension Plan. For purposes of this paragraph,
"actuarial equivalent" shall be determined using the actuarial
assumptions used under the Pension Plan for determining the
actuarial equivalence of different annuity forms of benefits. In
no event shall the additional two years of continuous service
referred to above cause the Executive to be deemed to be older
than the Executive's actual age for any purpose under this
Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy,
the Company and SCW shall continue to provide welfare benefits
and fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's employment
had not been terminated (in accordance with the most favorable
plans, practices, programs or policies of the Company and its
affiliates applicable generally to other peer executives and
their families immediately preceding the date of the Executive's
termination of employment); provided, however, that if the
Executive becomes employed by another employer and is eligible
to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for any retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained
employed until two years after the date of termination of
employment and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's
family shall be given the right provided in Section 4980B of
the Internal Revenue Code of 1986 (the "Code") to elect to
continue benefits in all group medical plans. In the event
that the Executive's participation in any of the plans, programs,
practices or policies of the Company or SCW referred to in this
subsection is barred by the terms of such plans, programs,
practices or policies, the Company and/or SCW shall provide the
Executive with benefits substantially similar to those which the
Executive would be entitled as a participant in such plans,
programs, practices or policies. At the end of the period of
coverage, the Executive shall have the option to have assigned to
the Executive, at no cost and with no apportionment of prepaid
premiums, any assignable insurance policy owned by the Company
or SCW and relating specifically to the Executive.
(v) The Company and/or SCW shall enable the
Executive to purchase, at the end of the Effective Period, the
automobile, if any, provided by the Company and/or SCW for the
Executive's use at the time of the Executive's termination of
employment at the wholesale value of such automobile at such
time, as shown in the current addition of the National Auto
Research Publication Blue Book. At the Executive's election,
the Executive may retain any existing club memberships of the
Executive purchased by the Company or SCW upon reimbursement
to the Company or SCW, as the case may be, of any membership
costs paid by the Company or SCW.
(vi) To the extent not theretofore paid or provided, the
Company and/or SCW shall timely pay or provide the Executive
any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under
any plan, program, policy, practice, contract or agreement
of the Company and its affiliates (such other amounts and
benefits being hereinafter referred to as "Other Benefits")
in accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is
terminated by reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c) Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company, SCW or another
entity or person, would constitute "parachute payments"
within the meaning of Section 280G of the Code, then such
payments or benefits shall be modified to the extent
necessary so that no portion of such benefits or payments
shall subject the Executive to any excise tax under
Section 4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the Company
or SCW.
(d) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company, SCW or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and SCW and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
(c) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company, SCW or
another entity or person, would not be deductible by the
Company or SCW due to limitations imposed by Section 162(m)
of the Code, then such payments or benefits shall be
deferred to the extent necessary until such time as such
payments would be deductible under Section 162(m) of the
Code. Either the Company, SCW or the Executive may request
a determination as to whether any payments would be subject
to limitations on deductibility under Section 162(m) of the
Code and, of so requested, such determination shall be made
by independent legal counsel selected by the Company or SCW
and approved by the Executive. Payment may be delayed
pending any such determination, provided that the Executive
shall be entitled to interest on any delayed payment at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code. [The Executive shall also be
entitled to interest on any payments deferred as a result of
the limitations on deductibility under Section 162(m) of the
Code at the applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The obligation of the Company and SCW to make the
payments provided for in this Agreement and otherwise to
perform their obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or SCW may have
against the Executive or others. [In no event shall the
Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to
the Executive under any of the provisions of this Agreement
and, except as provided in Section 6(a)(iv), such amounts
shall not be reduced whether or not Executive obtains other
employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company, SCW and their successors and assigns.
(c) The Company and SCW will require any successor
(whether direct or indirect, by purchase, merger, consolidation
oo otherwise) to all or substantially all of their business
and/or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent
that the Company or SCW would be required to perform it
if no such succession had taken place. As used in this
Agreement, the "Company" shall mean the Company as
defined and any successor to its business and/or assets
which assumes and agrees to perform this Agreement by
operation of law, or otherwise, and "SCW" shall mean SCW
as defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the essence
in determining whether any payments are due to the Executive
under this Agreement, the Executive may submit any claim for
payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company or SCW
regarding the interpretation of this Agreement and the claim is
finally denied by the Company or SCW in whole or in part,
such claim may be filed in writing with an arbitrator of
the Executive's choice who is selected by the method
described in the next three sentences. The first step of
the selection shall consist of the Executive submitting a
list of five potential arbitrators to the Company and
SCW. Each of the five arbitrators must be either (1) a
member of the National Academy of Arbitrators located in
the State of California or (2) a retired California
Superior Court or Appellate Court judge. Within two
weeks after receipt of the list, the Company and SCW
shall select one of the five arbitrators as the
arbitrator for the dispute in question. If the Company
and SCW fail to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company or SCW has breached this Agreement, he
or she shall order the Company or SCW, as the case may
be, to immediately take the necessary steps to remedy
the breach. The award of the arbitrator shall be final
and binding upon the parties. The award may be enforced
in any appropriate court as soon as possible after it is
rendered. If an action is brought to confirm the award,
the Company, SCW and the Executive agree that no appeal
shall be taken by either party from any decision rendered
in such action.
(e) The Company and SCW will be considered the
prevailing party in a dispute if the arbitrator determines that
neither the Company nor SCW has breached this Agreement.
Otherwise, the Executive will be considered the
prevailing party. In the event that the Company and SCW
are the prevailing party, the fee of the arbitrator and
all necessary expenses of the hearing (excluding any
attorneys' fees incurred by the Company or SCW) including
stenographic reporter, if employed, shall be paid by the
Executive. In the event that Executive is the prevailing
party, the fee of the arbitrator and all necessary
expenses of the hearing (including all attorneys' fees
incurred by the Executive), including the fees of a
stenographic reporter if employed, shall be paid by the
Company and SCW.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive: __________________________
__________________________
__________________________
If to the Company: American States Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
If to SCW: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company and SCW may withhold required federal,
state, local or foreign taxes from any amounts payable under
this Agreement.
18. No Waiver
The Executive's, the Company's or SCW's failure to
insist upon strict compliance with any provision of this
Agreement or the failure to assert any right the Executive,
the Company or SCW may have under this Agreement, including,
without limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive, the Company and SCW acknowledge
that, except as may otherwise be provided under any other
written agreement between the Executive, the Company and
SCW, the employment of the Executive by the Company and SCW
prior to the Change in Control Date is "at will" and, prior
to the Change in Control Date, the Executive's employment
may be terminated by either the Executive or the Company or
SCW, as the case may be, at any time, in which case the
Executive shall have no further rights under this Agreement.
From and after the Change in Control Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
21. Joint and Several Liability
The obligation of the Company and SCW to make payments
hereunder shall be joint and several.
22. Allocation of Payments
As between the Company and SCW, any payments to be made
by the Company and/ SCW hereunder shall be allocated between
the Company and SCW on the same basis as the payment of
salary and benefits of the Executive were allocated between
the Company and SCW immediately prior to the Change in
Control Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day
and year first written above in Los Angeles, California.
AMERICAN STATES WATER COMPANY
By /s/ McClellan Harris III
------------------------------
Title Vice President - Finance,
Chief Financial Officer,
Treasurer and Corporate Secretary
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ McClellan Harris III
------------------------------
Title Vice President - Finance,
Chief Financial Officer,
Treasurer and Corporate Secretary
EXECUTIVE
/s/ Floyd E. Wicks
----------------------------
EXHIBIT 10.02
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement")
is dated as of October 27, 1998, and is entered into by and
among McClellan Harris III (the "Executive"), American
States Water Company (the "Company") and its wholly owned
subsidiary, Southern California Water Company, a California
corporation ("SCW").
RECITALS
The Company considers it essential to the best
interest of the Company and its shareholders that the
Executive be encouraged to remain with the Company and SCW
and continue to devote full attention to the Company's
business notwithstanding the possibility, threat or
occurrence of a Change in Control (as defined in Section 3).
The Company believes that it is in the best interest of the
Company and its shareholders to reinforce and encourage the
continued attention and dedication of the Executive and to
diminish inevitable distractions arising from the
possibility of a Change in Control. Accordingly, to assure
the Company that it will have the Executive's undivided
attention and services notwithstanding the possibility,
threat or occurrence of a Change in Control, and to induce
the Executive to remain in the employ of the Company and
SCW, and for other good and valuable consideration, the
Board of Directors of the Company and SCW has, at the
recommendation of the Company's Compensation Committee,
caused the Company and SCW to enter into this Agreement.
TERMS AND CONDITIONS
The Executive, the Company and SCW hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3) occurs
on or before the expiration date of this Agreement and while the
Executive is still an employee of the Company or SCW, then this
Agreement will continue in effect for two years from the date of
such Change in Control and, if the Executive's employment with
the Company or SCW is terminated within such two-year period,
this Agreement shall thereafter continue in effect until all of
the obligations of the Company and SCW under this Agreement shall
have been fulfilled. If no Change in Control occurs on or before
December 31, 2000, this Agreement shall expire; provided, however
that this Agreement shall be automatically extended for an
additional two years to December 31, 2002 if (i) a plan or
agreement for a Change in Control has been approved by the Board
of Directors of the Company or SCW on or before the expiration
date, or (ii) the Company and SCW have not delivered to you or
you shall have not delivered to the Company and SCW written
notice at least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement shall
continue to be automatically extended for an additional two-year
period and each succeeding two-year period if a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or SCW or the Company, SCW or you have
failed to give notice by the time and in the manner described in
this Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first date
during the term of this Agreement on which a Change in Control
(as defined in Section 3) occurs; provided, however, that if a
Change in Control occurs and if the Executive's employment with
the Company or SCW is terminated after approval by the Board of
Directors of the Company or SCW of a plan or agreement for a
Change in Control but prior to the date on which the Change in
Control occurs, the "Change in Control Date" shall mean the date
immediately preceding the date of such termination.
3. Change in Control
A "Change in Control" shall mean any of the following
events:
(a) the dissolution or liquidation of either the
Company or SCW, unless its business is continued by another entity
in which holders of the Company's voting securities immediately
before the event own, either directly or indirectly, more than 50%
of the continuing entity's voting securities immediately after the
event;
(b) any sale, lease, exchange or other transfer (in one
or a series of transactions) of all or substantially all of the
assets of either the Company or SCW, unless its business is continued
by another entity in which holders of the Company's voting
securities immediately before the event own, either directly or
indirectly, more than 50% of the continuing entity's voting
securities immediately after the event;
(c) any reorganization or merger of the Company or SCW,
unless the holders of the Company's voting securities immediately
before the event own, either directly or indirectly, more than 50% of
the continuing or surviving entity's voting securities
immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities of
the Company or SCW, unless the holders of the Company's voting
securities immediately before the event own, either directly or
indirectly, more than 50% of the acquirer's voting securities
immediately after the acquisition; or
(e) a change of one-half or more of the members of the
Board of Directors of the Company or SCW within a twelve-month
period, unless the election or nomination for election by
shareholders of new directors within such period constituting a
majority of the applicable Board was approved by the vote of at
least [two-thirds] of the directors then still in office who were
in office at the beginning of the twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control Date
and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment shall
terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during the
Effective Period, the Company or SCW may give the Executive
written notice of their intention to terminate the Executive's
employment. In such event, the Executive's employment with the
Company or SCW shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of his or her duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive
from his or her duties with the Company or SCW on a full-time
basis for [180] consecutive business days as a result of a
physical or mental condition which prevents the Executive from
performing the Executive's normal duties of employment and which
is (i) determined to be total and permanent by a physician
selected by the Company or SCW or their insurers and acceptable
to the Executive or the Executive's legal representative and/or
(ii) entitles the Executive to the payment of long-term
disability benefits from the Company's or SCW's long-term
disability plan commencing no later than the Disability Effective
Date.
(b) Cause: The Company or SCW may terminate the
Executive's employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company or SCW
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services to
the Company or SCW where such failure amounts to gross
neglect or gross misconduct of the Executive's responsibility
and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or other
crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be terminated
by the Executive during the Effective Period for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as in effect on the
Change in Control Date, or any other action by the Company
or SCW which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company or SCW, as the case may be, promptly after
receipt of notice thereof given by the Executive;
(ii) any failure by the Company or SCW to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination of the
Executive's employment by the Company or SCW for Cause or
Disability, the death of the Executive, or the termination of
the Executive's employment by the Executive other than for Good
Reason;
(iii) reduction by the Company or SCW in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company or SCW
(including the elimination of benefit plans without providing
substitutes therefore or the reduction of the Executive's
benefits thereunder) that would substantially diminish the
aggregate value of the Executive's incentive awards and other
fringe benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control Date;
(v) the Company's or SCW's requiring the Executive
to be based at any office or location which increases the
distance from the Executive's home to the office location by
more than [35] miles from the distance in effect as of the
Change in Control Date;
(vi) any failure by the Company or SCW to comply with
and satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If the
Company or SCW shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or the
Executive shall terminate employment for Good Reason during the
Effective Period, the Company and SCW agrees, subject to Section
8, to make the payments and provide the benefits described below:
(i) The Company and/or SCW shall pay to the Executive
in a cash lump sum within 10 days from the date of the
Executive's termination of employment an amount equal
to the product of (A) and (B), where (A) is three and (B)
is the Executive's annual base salary at the highest of
the rate in effect at any time during the three years
preceding the date of termination.
(ii) The Company and/or SCW shall also pay to the
Executive in a cash lump sum within 10 days from the date of
termination an amount equal to the sum of (A) the Executive's
base salary through the date of termination, plus (B) any
compensation previously deferred by the Executive (together
with any accrued earnings or interest thereon), plus (C) any
accrued vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company and/or SCW shall also pay to the
Executive in a cash lump sum within 10 days from the date of
termination an amount equal to the excess of (A) over (B),
where (A) is equal to the single sum actuarial equivalent of
what would be the Executive's accrued benefits under the terms
of the Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement plan
providing additional pension benefits, (hereinafter together
referred to as the "Pension Plan") at the time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the Executive
were credited with an additional two years of continuous service
after the termination of Executive's employment with the
Company or SCW at the Executive's highest annual rate of
compensation covered by such Pension Plan within the three years
preceding the date of the termination of the Executive's
employment with the Company or SCW and (B) is equal to the
single sum actuarial equivalent of the Executive's accrued
benefits under the Pension Plan at the time of the Executive's
termination of employment. The payment under this paragraph
(iii) shall not extinguish any rights the Executive has to
benefits under the Pension Plan. For purposes of this paragraph,
"actuarial equivalent" shall be determined using the actuarial
assumptions used under the Pension Plan for determining the
actuarial equivalence of different annuity forms of benefits. In
no event shall the additional two years of continuous service
referred to above cause the Executive to be deemed to be older
than the Executive's actual age for any purpose under this
Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy,
the Company and SCW shall continue to provide welfare benefits
and fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's employment
had not been terminated (in accordance with the most favorable
plans, practices, programs or policies of the Company and its
affiliates applicable generally to other peer executives and
their families immediately preceding the date of the Executive's
termination of employment); provided, however, that if the
Executive becomes employed by another employer and is eligible
to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for any retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained
employed until two years after the date of termination of
employment and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's
family shall be given the right provided in Section 4980B of
the Internal Revenue Code of 1986 (the "Code") to elect to
continue benefits in all group medical plans. In the event
that the Executive's participation in any of the plans, programs,
practices or policies of the Company or SCW referred to in this
subsection is barred by the terms of such plans, programs,
practices or policies, the Company and/or SCW shall provide the
Executive with benefits substantially similar to those which the
Executive would be entitled as a participant in such plans,
programs, practices or policies. At the end of the period of
coverage, the Executive shall have the option to have assigned to
the Executive, at no cost and with no apportionment of prepaid
premiums, any assignable insurance policy owned by the Company
or SCW and relating specifically to the Executive.
(v) The Company and/or SCW shall enable the
Executive to purchase, at the end of the Effective Period, the
automobile, if any, provided by the Company and/or SCW for the
Executive's use at the time of the Executive's termination of
employment at the wholesale value of such automobile at such
time, as shown in the current addition of the National Auto
Research Publication Blue Book. At the Executive's election,
the Executive may retain any existing club memberships of the
Executive purchased by the Company or SCW upon reimbursement
to the Company or SCW, as the case may be, of any membership
costs paid by the Company or SCW.
(vi) To the extent not theretofore paid or provided, the
Company and/or SCW shall timely pay or provide the Executive
any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under
any plan, program, policy, practice, contract or agreement
of the Company and its affiliates (such other amounts and
benefits being hereinafter referred to as "Other Benefits")
in accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is
terminated by reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c) Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company, SCW or another
entity or person, would constitute "parachute payments"
within the meaning of Section 280G of the Code, then such
payments or benefits shall be modified to the extent
necessary so that no portion of such benefits or payments
shall subject the Executive to any excise tax under
Section 4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the Company
or SCW.
(d) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company, SCW or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and SCW and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
(c) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company, SCW or
another entity or person, would not be deductible by the
Company or SCW due to limitations imposed by Section 162(m)
of the Code, then such payments or benefits shall be
deferred to the extent necessary until such time as such
payments would be deductible under Section 162(m) of the
Code. Either the Company, SCW or the Executive may request
a determination as to whether any payments would be subject
to limitations on deductibility under Section 162(m) of the
Code and, of so requested, such determination shall be made
by independent legal counsel selected by the Company or SCW
and approved by the Executive. Payment may be delayed
pending any such determination, provided that the Executive
shall be entitled to interest on any delayed payment at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code. [The Executive shall also be
entitled to interest on any payments deferred as a result of
the limitations on deductibility under Section 162(m) of the
Code at the applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The obligation of the Company and SCW to make the
payments provided for in this Agreement and otherwise to
perform their obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or SCW may have
against the Executive or others. [In no event shall the
Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to
the Executive under any of the provisions of this Agreement
and, except as provided in Section 6(a)(iv), such amounts
shall not be reduced whether or not Executive obtains other
employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company, SCW and their successors and assigns.
(c) The Company and SCW will require any successor
(whether direct or indirect, by purchase, merger, consolidation
oo otherwise) to all or substantially all of their business
and/or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent
that the Company or SCW would be required to perform it
if no such succession had taken place. As used in this
Agreement, the "Company" shall mean the Company as
defined and any successor to its business and/or assets
which assumes and agrees to perform this Agreement by
operation of law, or otherwise, and "SCW" shall mean SCW
as defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the essence
in determining whether any payments are due to the Executive
under this Agreement, the Executive may submit any claim for
payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company or SCW
regarding the interpretation of this Agreement and the claim is
finally denied by the Company or SCW in whole or in part,
such claim may be filed in writing with an arbitrator of
the Executive's choice who is selected by the method
described in the next three sentences. The first step of
the selection shall consist of the Executive submitting a
list of five potential arbitrators to the Company and
SCW. Each of the five arbitrators must be either (1) a
member of the National Academy of Arbitrators located in
the State of California or (2) a retired California
Superior Court or Appellate Court judge. Within two
weeks after receipt of the list, the Company and SCW
shall select one of the five arbitrators as the
arbitrator for the dispute in question. If the Company
and SCW fail to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company or SCW has breached this Agreement, he
or she shall order the Company or SCW, as the case may
be, to immediately take the necessary steps to remedy
the breach. The award of the arbitrator shall be final
and binding upon the parties. The award may be enforced
in any appropriate court as soon as possible after it is
rendered. If an action is brought to confirm the award,
the Company, SCW and the Executive agree that no appeal
shall be taken by either party from any decision rendered
in such action.
(e) The Company and SCW will be considered the
prevailing party in a dispute if the arbitrator determines that
neither the Company nor SCW has breached this Agreement.
Otherwise, the Executive will be considered the
prevailing party. In the event that the Company and SCW
are the prevailing party, the fee of the arbitrator and
all necessary expenses of the hearing (excluding any
attorneys' fees incurred by the Company or SCW) including
stenographic reporter, if employed, shall be paid by the
Executive. In the event that Executive is the prevailing
party, the fee of the arbitrator and all necessary
expenses of the hearing (including all attorneys' fees
incurred by the Executive), including the fees of a
stenographic reporter if employed, shall be paid by the
Company and SCW.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive: __________________________
__________________________
__________________________
If to the Company: American States Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
If to SCW: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company and SCW may withhold required federal,
state, local or foreign taxes from any amounts payable under
this Agreement.
18. No Waiver
The Executive's, the Company's or SCW's failure to
insist upon strict compliance with any provision of this
Agreement or the failure to assert any right the Executive,
the Company or SCW may have under this Agreement, including,
without limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive, the Company and SCW acknowledge
that, except as may otherwise be provided under any other
written agreement between the Executive, the Company and
SCW, the employment of the Executive by the Company and SCW
prior to the Change in Control Date is "at will" and, prior
to the Change in Control Date, the Executive's employment
may be terminated by either the Executive or the Company or
SCW, as the case may be, at any time, in which case the
Executive shall have no further rights under this Agreement.
From and after the Change in Control Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
21. Joint and Several Liability
The obligation of the Company and SCW to make payments
hereunder shall be joint and several.
22. Allocation of Payments
As between the Company and SCW, any payments to be made
by the Company and/ SCW hereunder shall be allocated between
the Company and SCW on the same basis as the payment of
salary and benefits of the Executive were allocated between
the Company and SCW immediately prior to the Change in
Control Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day
and year first written above in Los Angeles, California.
AMERICAN STATES WATER COMPANY
By /s/ Floyd E. Wicks
------------------------------
Title President and Chief
Executive Officer
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ Floyd E. Wicks
------------------------------
Title President and Chief
Executive Officer
EXECUTIVE
/s/ McClellan Harris III
-----------------------------------
EXHIBIT 10.03
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement")
is dated as of October 27, 1998, and is entered into by and
among Joel A. Dickson (the "Executive"), American States
Water Company (the "Company") and its wholly owned
subsidiary, Southern California Water Company, a California
corporation ("SCW").
RECITALS
The Company considers it essential to the best
interest of the Company and its shareholders that the
Executive be encouraged to remain with the Company and SCW
and continue to devote full attention to the Company's
business notwithstanding the possibility, threat or
occurrence of a Change in Control (as defined in Section 3).
The Company believes that it is in the best interest of the
Company and its shareholders to reinforce and encourage the
continued attention and dedication of the Executive and to
diminish inevitable distractions arising from the
possibility of a Change in Control. Accordingly, to assure
the Company that it will have the Executive's undivided
attention and services notwithstanding the possibility,
threat or occurrence of a Change in Control, and to induce
the Executive to remain in the employ of the Company and
SCW, and for other good and valuable consideration, the
Board of Directors of the Company and SCW has, at the
recommendation of the Company's Compensation Committee,
caused the Company and SCW to enter into this Agreement.
TERMS AND CONDITIONS
The Executive, the Company and SCW hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3) occurs
on or before the expiration date of this Agreement and while the
Executive is still an employee of the Company or SCW, then this
Agreement will continue in effect for two years from the date of
such Change in Control and, if the Executive's employment with
the Company or SCW is terminated within such two-year period,
this Agreement shall thereafter continue in effect until all of
the obligations of the Company and SCW under this Agreement shall
have been fulfilled. If no Change in Control occurs on or before
December 31, 2000, this Agreement shall expire; provided, however
that this Agreement shall be automatically extended for an
additional two years to December 31, 2002 if (i) a plan or
agreement for a Change in Control has been approved by the Board
of Directors of the Company or SCW on or before the expiration
date, or (ii) the Company and SCW have not delivered to you or
you shall have not delivered to the Company and SCW written
notice at least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement shall
continue to be automatically extended for an additional two-year
period and each succeeding two-year period if a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or SCW or the Company, SCW or you have
failed to give notice by the time and in the manner described in
this Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first date
during the term of this Agreement on which a Change in Control
(as defined in Section 3) occurs; provided, however, that if a
Change in Control occurs and if the Executive's employment with
the Company or SCW is terminated after approval by the Board of
Directors of the Company or SCW of a plan or agreement for a
Change in Control but prior to the date on which the Change in
Control occurs, the "Change in Control Date" shall mean the date
immediately preceding the date of such termination.
3. Change in Control
A "Change in Control" shall mean any of the following
events:
(a) the dissolution or liquidation of either the
Company or SCW, unless its business is continued by another entity
in which holders of the Company's voting securities immediately
before the event own, either directly or indirectly, more than 50%
of the continuing entity's voting securities immediately after the
event;
(b) any sale, lease, exchange or other transfer (in one
or a series of transactions) of all or substantially all of the
assets of either the Company or SCW, unless its business is continued
by another entity in which holders of the Company's voting
securities immediately before the event own, either directly or
indirectly, more than 50% of the continuing entity's voting
securities immediately after the event;
(c) any reorganization or merger of the Company or SCW,
unless the holders of the Company's voting securities immediately
before the event own, either directly or indirectly, more than 50% of
the continuing or surviving entity's voting securities
immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities of
the Company or SCW, unless the holders of the Company's voting
securities immediately before the event own, either directly or
indirectly, more than 50% of the acquirer's voting securities
immediately after the acquisition; or
(e) a change of one-half or more of the members of the
Board of Directors of the Company or SCW within a twelve-month
period, unless the election or nomination for election by
shareholders of new directors within such period constituting a
majority of the applicable Board was approved by the vote of at
least [two-thirds] of the directors then still in office who were
in office at the beginning of the twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control Date
and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment shall
terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during the
Effective Period, the Company or SCW may give the Executive
written notice of their intention to terminate the Executive's
employment. In such event, the Executive's employment with the
Company or SCW shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of his or her duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive
from his or her duties with the Company or SCW on a full-time
basis for [180] consecutive business days as a result of a
physical or mental condition which prevents the Executive from
performing the Executive's normal duties of employment and which
is (i) determined to be total and permanent by a physician
selected by the Company or SCW or their insurers and acceptable
to the Executive or the Executive's legal representative and/or
(ii) entitles the Executive to the payment of long-term
disability benefits from the Company's or SCW's long-term
disability plan commencing no later than the Disability Effective
Date.
(b) Cause: The Company or SCW may terminate the
Executive's employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company or SCW
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services to
the Company or SCW where such failure amounts to gross
neglect or gross misconduct of the Executive's responsibility
and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or other
crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be terminated
by the Executive during the Effective Period for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as in effect on the
Change in Control Date, or any other action by the Company
or SCW which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company or SCW, as the case may be, promptly after
receipt of notice thereof given by the Executive;
(ii) any failure by the Company or SCW to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination of the
Executive's employment by the Company or SCW for Cause or
Disability, the death of the Executive, or the termination of
the Executive's employment by the Executive other than for Good
Reason;
(iii) reduction by the Company or SCW in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company or SCW
(including the elimination of benefit plans without providing
substitutes therefore or the reduction of the Executive's
benefits thereunder) that would substantially diminish the
aggregate value of the Executive's incentive awards and other
fringe benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control Date;
(v) the Company's or SCW's requiring the Executive
to be based at any office or location which increases the
distance from the Executive's home to the office location by
more than [35] miles from the distance in effect as of the
Change in Control Date;
(vi) any failure by the Company or SCW to comply with
and satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If the
Company or SCW shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or the
Executive shall terminate employment for Good Reason during the
Effective Period, the Company and SCW agrees, subject to Section
8, to make the payments and provide the benefits described below:
(i) The Company and/or SCW shall pay to the Executive
in a cash lump sum within 10 days from the date of the
Executive's termination of employment an amount equal
to the product of (A) and (B), where (A) is three and (B)
is the Executive's annual base salary at the highest of
the rate in effect at any time during the three years
preceding the date of termination.
(ii) The Company and/or SCW shall also pay to the
Executive in a cash lump sum within 10 days from the date of
termination an amount equal to the sum of (A) the Executive's
base salary through the date of termination, plus (B) any
compensation previously deferred by the Executive (together
with any accrued earnings or interest thereon), plus (C) any
accrued vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company and/or SCW shall also pay to the
Executive in a cash lump sum within 10 days from the date of
termination an amount equal to the excess of (A) over (B),
where (A) is equal to the single sum actuarial equivalent of
what would be the Executive's accrued benefits under the terms
of the Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement plan
providing additional pension benefits, (hereinafter together
referred to as the "Pension Plan") at the time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the Executive
were credited with an additional two years of continuous service
after the termination of Executive's employment with the
Company or SCW at the Executive's highest annual rate of
compensation covered by such Pension Plan within the three years
preceding the date of the termination of the Executive's
employment with the Company or SCW and (B) is equal to the
single sum actuarial equivalent of the Executive's accrued
benefits under the Pension Plan at the time of the Executive's
termination of employment. The payment under this paragraph
(iii) shall not extinguish any rights the Executive has to
benefits under the Pension Plan. For purposes of this paragraph,
"actuarial equivalent" shall be determined using the actuarial
assumptions used under the Pension Plan for determining the
actuarial equivalence of different annuity forms of benefits. In
no event shall the additional two years of continuous service
referred to above cause the Executive to be deemed to be older
than the Executive's actual age for any purpose under this
Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy,
the Company and SCW shall continue to provide welfare benefits
and fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's employment
had not been terminated (in accordance with the most favorable
plans, practices, programs or policies of the Company and its
affiliates applicable generally to other peer executives and
their families immediately preceding the date of the Executive's
termination of employment); provided, however, that if the
Executive becomes employed by another employer and is eligible
to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for any retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained
employed until two years after the date of termination of
employment and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's
family shall be given the right provided in Section 4980B of
the Internal Revenue Code of 1986 (the "Code") to elect to
continue benefits in all group medical plans. In the event
that the Executive's participation in any of the plans, programs,
practices or policies of the Company or SCW referred to in this
subsection is barred by the terms of such plans, programs,
practices or policies, the Company and/or SCW shall provide the
Executive with benefits substantially similar to those which the
Executive would be entitled as a participant in such plans,
programs, practices or policies. At the end of the period of
coverage, the Executive shall have the option to have assigned to
the Executive, at no cost and with no apportionment of prepaid
premiums, any assignable insurance policy owned by the Company
or SCW and relating specifically to the Executive.
(v) The Company and/or SCW shall enable the
Executive to purchase, at the end of the Effective Period, the
automobile, if any, provided by the Company and/or SCW for the
Executive's use at the time of the Executive's termination of
employment at the wholesale value of such automobile at such
time, as shown in the current addition of the National Auto
Research Publication Blue Book. At the Executive's election,
the Executive may retain any existing club memberships of the
Executive purchased by the Company or SCW upon reimbursement
to the Company or SCW, as the case may be, of any membership
costs paid by the Company or SCW.
(vi) To the extent not theretofore paid or provided, the
Company and/or SCW shall timely pay or provide the Executive
any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under
any plan, program, policy, practice, contract or agreement
of the Company and its affiliates (such other amounts and
benefits being hereinafter referred to as "Other Benefits")
in accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is
terminated by reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c) Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company, SCW or another
entity or person, would constitute "parachute payments"
within the meaning of Section 280G of the Code, then such
payments or benefits shall be modified to the extent
necessary so that no portion of such benefits or payments
shall subject the Executive to any excise tax under
Section 4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the Company
or SCW.
(d) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company, SCW or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and SCW and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
(c) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company, SCW or
another entity or person, would not be deductible by the
Company or SCW due to limitations imposed by Section 162(m)
of the Code, then such payments or benefits shall be
deferred to the extent necessary until such time as such
payments would be deductible under Section 162(m) of the
Code. Either the Company, SCW or the Executive may request
a determination as to whether any payments would be subject
to limitations on deductibility under Section 162(m) of the
Code and, of so requested, such determination shall be made
by independent legal counsel selected by the Company or SCW
and approved by the Executive. Payment may be delayed
pending any such determination, provided that the Executive
shall be entitled to interest on any delayed payment at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code. [The Executive shall also be
entitled to interest on any payments deferred as a result of
the limitations on deductibility under Section 162(m) of the
Code at the applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The obligation of the Company and SCW to make the
payments provided for in this Agreement and otherwise to
perform their obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or SCW may have
against the Executive or others. [In no event shall the
Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to
the Executive under any of the provisions of this Agreement
and, except as provided in Section 6(a)(iv), such amounts
shall not be reduced whether or not Executive obtains other
employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company, SCW and their successors and assigns.
(c) The Company and SCW will require any successor
(whether direct or indirect, by purchase, merger, consolidation
oo otherwise) to all or substantially all of their business
and/or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent
that the Company or SCW would be required to perform it
if no such succession had taken place. As used in this
Agreement, the "Company" shall mean the Company as
defined and any successor to its business and/or assets
which assumes and agrees to perform this Agreement by
operation of law, or otherwise, and "SCW" shall mean SCW
as defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the essence
in determining whether any payments are due to the Executive
under this Agreement, the Executive may submit any claim for
payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company or SCW
regarding the interpretation of this Agreement and the claim is
finally denied by the Company or SCW in whole or in part,
such claim may be filed in writing with an arbitrator of
the Executive's choice who is selected by the method
described in the next three sentences. The first step of
the selection shall consist of the Executive submitting a
list of five potential arbitrators to the Company and
SCW. Each of the five arbitrators must be either (1) a
member of the National Academy of Arbitrators located in
the State of California or (2) a retired California
Superior Court or Appellate Court judge. Within two
weeks after receipt of the list, the Company and SCW
shall select one of the five arbitrators as the
arbitrator for the dispute in question. If the Company
and SCW fail to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company or SCW has breached this Agreement, he
or she shall order the Company or SCW, as the case may
be, to immediately take the necessary steps to remedy
the breach. The award of the arbitrator shall be final
and binding upon the parties. The award may be enforced
in any appropriate court as soon as possible after it is
rendered. If an action is brought to confirm the award,
the Company, SCW and the Executive agree that no appeal
shall be taken by either party from any decision rendered
in such action.
(e) The Company and SCW will be considered the
prevailing party in a dispute if the arbitrator determines that
neither the Company nor SCW has breached this Agreement.
Otherwise, the Executive will be considered the
prevailing party. In the event that the Company and SCW
are the prevailing party, the fee of the arbitrator and
all necessary expenses of the hearing (excluding any
attorneys' fees incurred by the Company or SCW) including
stenographic reporter, if employed, shall be paid by the
Executive. In the event that Executive is the prevailing
party, the fee of the arbitrator and all necessary
expenses of the hearing (including all attorneys' fees
incurred by the Executive), including the fees of a
stenographic reporter if employed, shall be paid by the
Company and SCW.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive: __________________________
__________________________
__________________________
If to the Company: American States Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
If to SCW: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company and SCW may withhold required federal,
state, local or foreign taxes from any amounts payable under
this Agreement.
18. No Waiver
The Executive's, the Company's or SCW's failure to
insist upon strict compliance with any provision of this
Agreement or the failure to assert any right the Executive,
the Company or SCW may have under this Agreement, including,
without limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive, the Company and SCW acknowledge
that, except as may otherwise be provided under any other
written agreement between the Executive, the Company and
SCW, the employment of the Executive by the Company and SCW
prior to the Change in Control Date is "at will" and, prior
to the Change in Control Date, the Executive's employment
may be terminated by either the Executive or the Company or
SCW, as the case may be, at any time, in which case the
Executive shall have no further rights under this Agreement.
From and after the Change in Control Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
21. Joint and Several Liability
The obligation of the Company and SCW to make payments
hereunder shall be joint and several.
22. Allocation of Payments
As between the Company and SCW, any payments to be made
by the Company and/ SCW hereunder shall be allocated between
the Company and SCW on the same basis as the payment of
salary and benefits of the Executive were allocated between
the Company and SCW immediately prior to the Change in
Control Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day
and year first written above in Los Angeles, California.
AMERICAN STATES WATER COMPANY
By /s/ Floyd E. Wicks
------------------------------
Title President and Chief
Executive Officer
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ Floyd E. Wicks
-------------------------------
Title President and Chief
Executive Officer
EXECUTIVE
/s/ Joel A. Dickson
------------------------------------
EXHIBIT 10.04
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement")
is dated as of October 27, 1998, and is entered into by and
between Joseph F. Young (the "Executive") and Southern
California Water Company, a California corporation (the
"Company").
RECITALS
The Company considers it essential to the best
interest of the Company and its shareholders that the
Executive be encouraged to remain with the Company and
continue to devote full attention to the Company's business
notwithstanding the possibility, threat or occurrence of a
Change in Control (as defined in Section 3). The Company
believes that it is in the best interest of the Company and
its shareholders to reinforce and encourage the continued
attention and dedication of the Executive and to diminish
inevitable distractions arising from the possibility of a
Change in Control. Accordingly, to assure the Company that
it will have the Executive's undivided attention and
services notwithstanding the possibility, threat or
occurrence of a Change in Control, and to induce the
Executive to remain in the employ of the Company, and for
other good and valuable consideration, the Board of
Directors of the Company has, at the recommendation of its
Compensation Committee, caused the Company to enter into
this Agreement.
TERMS AND CONDITIONS
The Executive and the Company hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3)
occurs on or before the expiration date of this Agreement
and while the Executive is still an employee of the Company,
then this Agreement will continue in effect for two years
from the date of such Change in Control and, if the
Executive's employment with the Company is terminated within
such two-year period, this Agreement shall thereafter
continue in effect until all of the obligations of the
Company under this Agreement shall have been fulfilled. If
no Change in Control occurs on or before December 31, 2000,
this Agreement shall expire; provided, however that this
Agreement shall be automatically extended for an additional
two years to December 31, 2002 if (i) a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or American States Water Company, a
California corporation ("AWR"), on or before the expiration
date, or (ii) the Company has not delivered to you or you
shall have not delivered to the Company written notice at
least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement
shall continue to be automatically extended for an
additional two-year period and each succeeding two-year
period if a plan or agreement for a Change in Control has
been approved by the Board of Directors of the Company or
AWR or the Company or the Executive fails to give the
notices by the time and in the manner described in this
Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first
date during the term of this Agreement on which a Change in
Control (as defined in Section 3) occurs; provided, however,
that if a Change in Control occurs and if the Executive's
employment with the Company is terminated after approval by
the Board of Directors of the Company or AWR of a plan or
agreement for a Change in Control but prior to the date on
which the Change in Control occurs, the "Change in Control
Date" shall mean the date immediately preceding the date of
such termination.
3. Change in Control
A "Change in Control" shall mean any of the
following events:
(a) the dissolution or liquidation of either the
Company or AWR, unless its business is continued by another
entity in which holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing entity's voting securities immediately
after the event;
(b) any sale, lease, exchange or other transfer (in
one or a series of transactions) of all or substantially all
of the assets of either the Company or AWR, unless its business
is continued by another entity in which holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the continuing entity's
voting securities immediately after the event;
(c) any reorganization or merger of the Company or AWR,
unless the holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing or surviving entity's voting
securities immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities
of the Company or AWR, unless the holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the acquirer's voting
securities immediately after the acquisition; or
(e) a change of one-half or more of the members
of the Board of Directors of the Company or AWR within a
twelve-month period, unless the election or nomination for
election by shareholders of new directors within such period
constituting a majority of the applicable Board was approved
by the vote of at least [two-thirds] of the directors then
still in office who were in office at the beginning of the
twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control
Date and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment
shall terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during
the Effective Period, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with
the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to
full-time performance of his or her duties. For purposes of
this Agreement, "Disability" shall mean the absence of the
Executive from his or her duties with the Company on a
full-time basis for [180] consecutive business days as a
result of a physical or mental condition which prevents the
Executive from performing the Executive's normal duties of
employment and which is (i) determined to be total and
permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's
legal representative and/or (ii) entitles the Executive to
the payment of long-term disability benefits from the
Company's or AWR's long-term disability plan commencing no
later than the Disability Effective Date.
(b) Cause: The Company may terminate the Executive's
employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services
to the Company where such failure amounts to gross
neglect or gross misconduct of the Executive's
responsibility and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or
other crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be
terminated by the Executive during the Effective Period for
Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in
effect on the Change in Control Date, or any other action by
the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination
of the Executive's employment by the Company for Cause or
Disability, the death of the Executive, or the termination
of the Executive's employment by the Executive other than
for Good Reason;
(iii) reduction by the Company in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company (including
the elimination of benefit plans without providing substitutes
therefore or the reduction of the Executive's benefits
thereunder) that would substantially diminish the aggregate
value of the Executive's incentive awards and other fringe
benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control
Date;
(v) the Company's requiring the Executive to be
based at any office or location which increases the distance
from the Executive's home to the office location by more than
[35] miles from the distance in effect as of the Change in
Control Date;
(vi) any failure by the Company to comply with and
satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If
the Company shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or
the Executive shall terminate employment for Good Reason
during the Effective Period, the Company agrees, subject to
Section 8, to make the payments and provide the benefits
described below:
(i) The Company shall pay to the Executive in a
cash lump sum within 10 days from the date of the Executive's
termination of employment an amount equal to the product of
(A) and (B), where (A) is two and (B) is the Executive's
annual base salary at the highest of the rate in effect at
any time during the three years preceding the date of
termination.
(ii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the sum of (A) Executive's base salary
through the date of termination, plus (B) any compensation
previously deferred by the Executive (together with any
accrued earnings or interest thereon), plus (C) any accrued
vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the excess of (A) over (B), where (A) is
equal to the single sum actuarial equivalent of what would
be the Executive's accrued benefits under the terms of the
Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement
plan providing additional pension benefits, (hereinafter
together referred to as the "Pension Plan") at time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the
Executive were credited with an additional two years of
continuous service after the termination of Executive's
employment with the Company at the Executive's highest
annual rate of compensation covered by such Pension Plan
within the three years preceding the date of the termination
of the Executive's employment with the Company and (B) is
equal to the single sum actuarial equivalent of the
Executive's accrued benefits under the Pension Plan at the
time of the Executive's termination of employment. The
payment under this paragraph (iii) shall not extinguish any
rights the Executive has to benefits under the Pension Plan.
For purposes of this paragraph, "actuarial equivalent" shall
be determined using the actuarial assumptions used under the
Pension Plan for determining the actuarial equivalence of
different annuity forms of benefits. In no event shall the
additional two years of continuous service referred to above
cause the Executive to be deemed to be older than the
Executive's actual age for any purpose under this Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy,
the Company shall continue to provide welfare benefits and
fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's
employment had not been terminated (in accordance with the
most favorable plans, practices, programs or policies of the
Company and its affiliates applicable generally to other
peer executives and their families immediately preceding the
date of the Executive's termination of employment);
provided, however, that if the Executive becomes employed by
another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for any retiree benefits pursuant
to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed
until two years after the date of termination of employment
and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's family
shall be given the right provided in Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"), to
elect to continue benefits in all group medical plans. In
the event that the Executive's participation in any of the
plans, programs, practices or policies of the Company
referred to in this subsection is barred by the terms of
such plans, programs, practices or policies, the Company
shall provide the Executive with benefits substantially
similar to those which the Executive would be entitled as a
participant in such plans, programs, practices or policies.
At the end of the period of coverage, the Executive shall
have the option to have assigned to the Executive, at no
cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company and
relating specifically to the Executive.
(v) The Company shall enable the Executive to purchase,
at the end of the Effective Period, the automobile, if any,
provided by the Company for the Executive's use at the
time of the Executive's termination of employment at the
wholesale value of such automobile at such time, as shown
in the current addition of the National Auto Research
Publication Blue Book. At the Executive's election, the
Executive may retain any existing club memberships of the
Executive purchased by the Company upon reimbursement to
the Company of any membership costs paid by the Company.
(vi) To the extent not theretofore paid or provided, the
Company shall timely pay or provide the Executive any other
amounts or benefits required to be paid or provided or which
the Executive is eligible to receive under any plan,
program, policy, practice, contract or agreement of the
Company and its affiliates (such other amounts and benefits
being hereinafter referred to as "Other Benefits") in
accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is terminated by
reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c)Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company or another entity or
person, would constitute "parachute payments" within the
meaning of Section 280G of the Code, then such payments
or benefits shall be modified to the extent necessary so
that no portion of such benefits or payments shall
subject the Executive to any excise tax under Section
4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the
Company.
(c) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and approved by the Executive.
Payment may be delayed pending any such determination,
provided that the Executive shall be entitled to interest on
any delayed payment at the applicable Federal Rate provided
for in Section 7872(f)(2)(A) of the Code.
(d) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company or another
entity or person, would not be deductible by the Company due
to limitations imposed by Section 162(m) of the Code, then
such payments or benefits shall be deferred to the extent
necessary until such time as such payments would be
deductible under Section 162(m) of the Code. Either the
Company or the Executive may request a determination as to
whether any payments would be subject to limitations on
deductibility under Section 162(m) of the Code and, if so
requested, such determination shall be made by independent
legal counsel selected by the Company and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
[The Executive shall also be entitled to interest on any
payments deferred as a result of the limitations on
deductibility under Section 162(m) of the Code at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or
others. [In no event shall the Executive be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and, except as provided
in Section 6(a)(iv), such amounts shall not be reduced
whether or not Executive obtains other employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly 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. As
used in this Agreement, the "Company" shall mean the
Company as defined and any successor to its business
and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the
essence in determining whether any payments are due to the
Executive under this Agreement, the Executive may submit any claim
for payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company regarding the
interpretation of this Agreement and the claim is finally
denied by the Company in whole or in part, such claim may
be filed in writing with an arbitrator of the Executive's
choice who is selected by the method described in the
next three sentences. The first step of the selection
shall consist of the Executive submitting a list of five
potential arbitrators to the Company. Each of the five
arbitrators must be either (1) a member of the National
Academy of Arbitrators located in the State of California
or (2) a retired California Superior Court or Appellate
Court judge. Within two weeks after receipt of the list,
the Company shall select one of the five arbitrators as
the arbitrator for the dispute in question. If the
Company fails to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company has breached this Agreement, he or she
shall order the Company to immediately take the necessary
steps to remedy the breach. The award of the arbitrator
shall be final and binding upon the parties. The award
may be enforced in any appropriate court as soon as
possible after it is rendered. If an action is brought
to confirm the award, both the Company and the Executive
agree that no appeal shall be taken by either party from
any decision rendered in such action.
(e) The Company will be considered the prevailing party
in a dispute if the arbitrator determines that the Company has
not breached this Agreement. Otherwise, the Executive
will be considered the prevailing party. In the event
that the Company is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing
(excluding any attorneys' fees incurred by the Company)
including stenographic reporter, if employed, shall be
paid by the Executive. In the event that Executive is
the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (including all
attorneys' fees incurred by the Executive), including the
fees of a stenographic reporter if employed, shall be
paid by the Company.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive:__________________________
__________________________
__________________________
__________________________
If to the Company: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company may withhold required federal, state,
local or foreign taxes from any amounts payable under this
Agreement.
18. No Waiver
The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement
or the failure to assert any right the Executive or the
Company may have under this Agreement, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the
employment of the Executive by the Company prior to the
Change in Control Date is "at will" and, prior to the Change
in Control Date, the Executive's employment may be
terminated by either the Executive or the Company at any
time, in which case the Executive shall have no further
rights under this Agreement. From and after the Change in
Control Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject
matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and delivered
as of the day and year first written above in Los Angeles,
California.
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ Floyd E. Wicks
-----------------------------
Title President and Chief
Executive Officer
EXECUTIVE
/s/ Joseph F. Young
-----------------------------------
EXHIBIT 10.05
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement")
is dated as of October 27, 1998, and is entered into by and
between Donald K. Saddoris (the "Executive") and Southern
California Water Company, a California corporation (the
"Company").
RECITALS
The Company considers it essential to the best
interest of the Company and its shareholders that the
Executive be encouraged to remain with the Company and
continue to devote full attention to the Company's business
notwithstanding the possibility, threat or occurrence of a
Change in Control (as defined in Section 3). The Company
believes that it is in the best interest of the Company and
its shareholders to reinforce and encourage the continued
attention and dedication of the Executive and to diminish
inevitable distractions arising from the possibility of a
Change in Control. Accordingly, to assure the Company that
it will have the Executive's undivided attention and
services notwithstanding the possibility, threat or
occurrence of a Change in Control, and to induce the
Executive to remain in the employ of the Company, and for
other good and valuable consideration, the Board of
Directors of the Company has, at the recommendation of its
Compensation Committee, caused the Company to enter into
this Agreement.
TERMS AND CONDITIONS
The Executive and the Company hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3)
occurs on or before the expiration date of this Agreement
and while the Executive is still an employee of the Company,
then this Agreement will continue in effect for two years
from the date of such Change in Control and, if the
Executive's employment with the Company is terminated within
such two-year period, this Agreement shall thereafter
continue in effect until all of the obligations of the
Company under this Agreement shall have been fulfilled. If
no Change in Control occurs on or before December 31, 2000,
this Agreement shall expire; provided, however that this
Agreement shall be automatically extended for an additional
two years to December 31, 2002 if (i) a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or American States Water Company, a
California corporation ("AWR"), on or before the expiration
date, or (ii) the Company has not delivered to you or you
shall have not delivered to the Company written notice at
least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement
shall continue to be automatically extended for an
additional two-year period and each succeeding two-year
period if a plan or agreement for a Change in Control has
been approved by the Board of Directors of the Company or
AWR or the Company or the Executive fails to give the
notices by the time and in the manner described in this
Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first
date during the term of this Agreement on which a Change in
Control (as defined in Section 3) occurs; provided, however,
that if a Change in Control occurs and if the Executive's
employment with the Company is terminated after approval by
the Board of Directors of the Company or AWR of a plan or
agreement for a Change in Control but prior to the date on
which the Change in Control occurs, the "Change in Control
Date" shall mean the date immediately preceding the date of
such termination.
3. Change in Control
A "Change in Control" shall mean any of the
following events:
(a) the dissolution or liquidation of either the
Company or AWR, unless its business is continued by another
entity in which holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing entity's voting securities immediately
after the event;
(b) any sale, lease, exchange or other transfer (in
one or a series of transactions) of all or substantially all
of the assets of either the Company or AWR, unless its business
is continued by another entity in which holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the continuing entity's
voting securities immediately after the event;
(c) any reorganization or merger of the Company or AWR,
unless the holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing or surviving entity's voting
securities immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities
of the Company or AWR, unless the holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the acquirer's voting
securities immediately after the acquisition; or
(e) a change of one-half or more of the members
of the Board of Directors of the Company or AWR within a
twelve-month period, unless the election or nomination for
election by shareholders of new directors within such period
constituting a majority of the applicable Board was approved
by the vote of at least [two-thirds] of the directors then
still in office who were in office at the beginning of the
twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control
Date and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment
shall terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during
the Effective Period, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with
the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to
full-time performance of his or her duties. For purposes of
this Agreement, "Disability" shall mean the absence of the
Executive from his or her duties with the Company on a
full-time basis for [180] consecutive business days as a
result of a physical or mental condition which prevents the
Executive from performing the Executive's normal duties of
employment and which is (i) determined to be total and
permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's
legal representative and/or (ii) entitles the Executive to
the payment of long-term disability benefits from the
Company's or AWR's long-term disability plan commencing no
later than the Disability Effective Date.
(b) Cause: The Company may terminate the Executive's
employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services
to the Company where such failure amounts to gross
neglect or gross misconduct of the Executive's
responsibility and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or
other crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be
terminated by the Executive during the Effective Period for
Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in
effect on the Change in Control Date, or any other action by
the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination
of the Executive's employment by the Company for Cause or
Disability, the death of the Executive, or the termination
of the Executive's employment by the Executive other than
for Good Reason;
(iii) reduction by the Company in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company (including
the elimination of benefit plans without providing substitutes
therefore or the reduction of the Executive's benefits
thereunder) that would substantially diminish the aggregate
value of the Executive's incentive awards and other fringe
benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control
Date;
(v) the Company's requiring the Executive to be
based at any office or location which increases the distance
from the Executive's home to the office location by more than
[35] miles from the distance in effect as of the Change in
Control Date;
(vi) any failure by the Company to comply with and
satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If
the Company shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or
the Executive shall terminate employment for Good Reason
during the Effective Period, the Company agrees, subject to
Section 8, to make the payments and provide the benefits
described below:
(i) The Company shall pay to the Executive in a
cash lump sum within 10 days from the date of the Executive's
termination of employment an amount equal to the product of
(A) and (B), where (A) is two and (B) is the Executive's
annual base salary at the highest of the rate in effect at
any time during the three years preceding the date of
termination.
(ii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the sum of (A) Executive's base salary
through the date of termination, plus (B) any compensation
previously deferred by the Executive (together with any
accrued earnings or interest thereon), plus (C) any accrued
vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the excess of (A) over (B), where (A) is
equal to the single sum actuarial equivalent of what would
be the Executive's accrued benefits under the terms of the
Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement
plan providing additional pension benefits, (hereinafter
together referred to as the "Pension Plan") at time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the
Executive were credited with an additional two years of
continuous service after the termination of Executive's
employment with the Company at the Executive's highest
annual rate of compensation covered by such Pension Plan
within the three years preceding the date of the termination
of the Executive's employment with the Company and (B) is
equal to the single sum actuarial equivalent of the
Executive's accrued benefits under the Pension Plan at the
time of the Executive's termination of employment. The
payment under this paragraph (iii) shall not extinguish any
rights the Executive has to benefits under the Pension Plan.
For purposes of this paragraph, "actuarial equivalent" shall
be determined using the actuarial assumptions used under the
Pension Plan for determining the actuarial equivalence of
different annuity forms of benefits. In no event shall the
additional two years of continuous service referred to above
cause the Executive to be deemed to be older than the
Executive's actual age for any purpose under this Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy,
the Company shall continue to provide welfare benefits and
fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's
employment had not been terminated (in accordance with the
most favorable plans, practices, programs or policies of the
Company and its affiliates applicable generally to other
peer executives and their families immediately preceding the
date of the Executive's termination of employment);
provided, however, that if the Executive becomes employed by
another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for any retiree benefits pursuant
to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed
until two years after the date of termination of employment
and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's family
shall be given the right provided in Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"), to
elect to continue benefits in all group medical plans. In
the event that the Executive's participation in any of the
plans, programs, practices or policies of the Company
referred to in this subsection is barred by the terms of
such plans, programs, practices or policies, the Company
shall provide the Executive with benefits substantially
similar to those which the Executive would be entitled as a
participant in such plans, programs, practices or policies.
At the end of the period of coverage, the Executive shall
have the option to have assigned to the Executive, at no
cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company and
relating specifically to the Executive.
(v) The Company shall enable the Executive to purchase,
at the end of the Effective Period, the automobile, if any,
provided by the Company for the Executive's use at the
time of the Executive's termination of employment at the
wholesale value of such automobile at such time, as shown
in the current addition of the National Auto Research
Publication Blue Book. At the Executive's election, the
Executive may retain any existing club memberships of the
Executive purchased by the Company upon reimbursement to
the Company of any membership costs paid by the Company.
(vi) To the extent not theretofore paid or provided, the
Company shall timely pay or provide the Executive any other
amounts or benefits required to be paid or provided or which
the Executive is eligible to receive under any plan,
program, policy, practice, contract or agreement of the
Company and its affiliates (such other amounts and benefits
being hereinafter referred to as "Other Benefits") in
accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is terminated by
reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c)Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company or another entity or
person, would constitute "parachute payments" within the
meaning of Section 280G of the Code, then such payments
or benefits shall be modified to the extent necessary so
that no portion of such benefits or payments shall
subject the Executive to any excise tax under Section
4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the
Company.
(c) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and approved by the Executive.
Payment may be delayed pending any such determination,
provided that the Executive shall be entitled to interest on
any delayed payment at the applicable Federal Rate provided
for in Section 7872(f)(2)(A) of the Code.
(d) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company or another
entity or person, would not be deductible by the Company due
to limitations imposed by Section 162(m) of the Code, then
such payments or benefits shall be deferred to the extent
necessary until such time as such payments would be
deductible under Section 162(m) of the Code. Either the
Company or the Executive may request a determination as to
whether any payments would be subject to limitations on
deductibility under Section 162(m) of the Code and, if so
requested, such determination shall be made by independent
legal counsel selected by the Company and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
[The Executive shall also be entitled to interest on any
payments deferred as a result of the limitations on
deductibility under Section 162(m) of the Code at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or
others. [In no event shall the Executive be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and, except as provided
in Section 6(a)(iv), such amounts shall not be reduced
whether or not Executive obtains other employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly 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. As
used in this Agreement, the "Company" shall mean the
Company as defined and any successor to its business
and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the
essence in determining whether any payments are due to the
Executive under this Agreement, the Executive may submit any claim
for payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company regarding the
interpretation of this Agreement and the claim is finally
denied by the Company in whole or in part, such claim may
be filed in writing with an arbitrator of the Executive's
choice who is selected by the method described in the
next three sentences. The first step of the selection
shall consist of the Executive submitting a list of five
potential arbitrators to the Company. Each of the five
arbitrators must be either (1) a member of the National
Academy of Arbitrators located in the State of California
or (2) a retired California Superior Court or Appellate
Court judge. Within two weeks after receipt of the list,
the Company shall select one of the five arbitrators as
the arbitrator for the dispute in question. If the
Company fails to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company has breached this Agreement, he or she
shall order the Company to immediately take the necessary
steps to remedy the breach. The award of the arbitrator
shall be final and binding upon the parties. The award
may be enforced in any appropriate court as soon as
possible after it is rendered. If an action is brought
to confirm the award, both the Company and the Executive
agree that no appeal shall be taken by either party from
any decision rendered in such action.
(e) The Company will be considered the prevailing party
in a dispute if the arbitrator determines that the Company has
not breached this Agreement. Otherwise, the Executive
will be considered the prevailing party. In the event
that the Company is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing
(excluding any attorneys' fees incurred by the Company)
including stenographic reporter, if employed, shall be
paid by the Executive. In the event that Executive is
the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (including all
attorneys' fees incurred by the Executive), including the
fees of a stenographic reporter if employed, shall be
paid by the Company.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive:__________________________
__________________________
__________________________
__________________________
If to the Company: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company may withhold required federal, state,
local or foreign taxes from any amounts payable under this
Agreement.
18. No Waiver
The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement
or the failure to assert any right the Executive or the
Company may have under this Agreement, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the
employment of the Executive by the Company prior to the
Change in Control Date is "at will" and, prior to the Change
in Control Date, the Executive's employment may be
terminated by either the Executive or the Company at any
time, in which case the Executive shall have no further
rights under this Agreement. From and after the Change in
Control Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject
matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and delivered
as of the day and year first written above in Los Angeles,
California.
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ Floyd E. Wicks
------------------------------
Title President and Chief
Executive Officer
EXECUTIVE
/s/ Donald K. Saddoris
------------------------------------
EXHIBIT 10.06
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement")
is dated as of October 27, 1998, and is entered into by and
between Randell J. Vogel (the "Executive") and Southern
California Water Company, a California corporation (the
"Company").
RECITALS
The Company considers it essential to the best
interest of the Company and its shareholders that the
Executive be encouraged to remain with the Company and
continue to devote full attention to the Company's business
notwithstanding the possibility, threat or occurrence of a
Change in Control (as defined in Section 3). The Company
believes that it is in the best interest of the Company and
its shareholders to reinforce and encourage the continued
attention and dedication of the Executive and to diminish
inevitable distractions arising from the possibility of a
Change in Control. Accordingly, to assure the Company that
it will have the Executive's undivided attention and
services notwithstanding the possibility, threat or
occurrence of a Change in Control, and to induce the
Executive to remain in the employ of the Company, and for
other good and valuable consideration, the Board of
Directors of the Company has, at the recommendation of its
Compensation Committee, caused the Company to enter into
this Agreement.
TERMS AND CONDITIONS
The Executive and the Company hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3)
occurs on or before the expiration date of this Agreement
and while the Executive is still an employee of the Company,
then this Agreement will continue in effect for two years
from the date of such Change in Control and, if the
Executive's employment with the Company is terminated within
such two-year period, this Agreement shall thereafter
continue in effect until all of the obligations of the
Company under this Agreement shall have been fulfilled. If
no Change in Control occurs on or before December 31, 2000,
this Agreement shall expire; provided, however that this
Agreement shall be automatically extended for an additional
two years to December 31, 2002 if (i) a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or American States Water Company, a
California corporation ("AWR"), on or before the expiration
date, or (ii) the Company has not delivered to you or you
shall have not delivered to the Company written notice at
least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement
shall continue to be automatically extended for an
additional two-year period and each succeeding two-year
period if a plan or agreement for a Change in Control has
been approved by the Board of Directors of the Company or
AWR or the Company or the Executive fails to give the
notices by the time and in the manner described in this
Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first
date during the term of this Agreement on which a Change in
Control (as defined in Section 3) occurs; provided, however,
that if a Change in Control occurs and if the Executive's
employment with the Company is terminated after approval by
the Board of Directors of the Company or AWR of a plan or
agreement for a Change in Control but prior to the date on
which the Change in Control occurs, the "Change in Control
Date" shall mean the date immediately preceding the date of
such termination.
3. Change in Control
A "Change in Control" shall mean any of the
following events:
(a) the dissolution or liquidation of either the
Company or AWR, unless its business is continued by another
entity in which holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing entity's voting securities immediately
after the event;
(b) any sale, lease, exchange or other transfer (in
one or a series of transactions) of all or substantially all
of the assets of either the Company or AWR, unless its business
is continued by another entity in which holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the continuing entity's
voting securities immediately after the event;
(c) any reorganization or merger of the Company or AWR,
unless the holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing or surviving entity's voting
securities immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities
of the Company or AWR, unless the holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the acquirer's voting
securities immediately after the acquisition; or
(e) a change of one-half or more of the members
of the Board of Directors of the Company or AWR within a
twelve-month period, unless the election or nomination for
election by shareholders of new directors within such period
constituting a majority of the applicable Board was approved
by the vote of at least [two-thirds] of the directors then
still in office who were in office at the beginning of the
twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control
Date and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment
shall terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during
the Effective Period, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with
the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to
full-time performance of his or her duties. For purposes of
this Agreement, "Disability" shall mean the absence of the
Executive from his or her duties with the Company on a
full-time basis for [180] consecutive business days as a
result of a physical or mental condition which prevents the
Executive from performing the Executive's normal duties of
employment and which is (i) determined to be total and
permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's
legal representative and/or (ii) entitles the Executive to
the payment of long-term disability benefits from the
Company's or AWR's long-term disability plan commencing no
later than the Disability Effective Date.
(b) Cause: The Company may terminate the Executive's
employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services
to the Company where such failure amounts to gross
neglect or gross misconduct of the Executive's
responsibility and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or
other crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be
terminated by the Executive during the Effective Period for
Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in
effect on the Change in Control Date, or any other action by
the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination
of the Executive's employment by the Company for Cause or
Disability, the death of the Executive, or the termination
of the Executive's employment by the Executive other than
for Good Reason;
(iii) reduction by the Company in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company (including
the elimination of benefit plans without providing substitutes
therefore or the reduction of the Executive's benefits
thereunder) that would substantially diminish the aggregate
value of the Executive's incentive awards and other fringe
benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control
Date;
(v) the Company's requiring the Executive to be
based at any office or location which increases the distance
from the Executive's home to the office location by more than
[35] miles from the distance in effect as of the Change in
Control Date;
(vi) any failure by the Company to comply with and
satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If
the Company shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or
the Executive shall terminate employment for Good Reason
during the Effective Period, the Company agrees, subject to
Section 8, to make the payments and provide the benefits
described below:
(i) The Company shall pay to the Executive in a
cash lump sum within 10 days from the date of the Executive's
termination of employment an amount equal to the product of
(A) and (B), where (A) is two and (B) is the Executive's
annual base salary at the highest of the rate in effect at
any time during the three years preceding the date of
termination.
(ii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the sum of (A) Executive's base salary
through the date of termination, plus (B) any compensation
previously deferred by the Executive (together with any
accrued earnings or interest thereon), plus (C) any accrued
vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the excess of (A) over (B), where (A) is
equal to the single sum actuarial equivalent of what would
be the Executive's accrued benefits under the terms of the
Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement
plan providing additional pension benefits, (hereinafter
together referred to as the "Pension Plan") at time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the
Executive were credited with an additional two years of
continuous service after the termination of Executive's
employment with the Company at the Executive's highest
annual rate of compensation covered by such Pension Plan
within the three years preceding the date of the termination
of the Executive's employment with the Company and (B) is
equal to the single sum actuarial equivalent of the
Executive's accrued benefits under the Pension Plan at the
time of the Executive's termination of employment. The
payment under this paragraph (iii) shall not extinguish any
rights the Executive has to benefits under the Pension Plan.
For purposes of this paragraph, "actuarial equivalent" shall
be determined using the actuarial assumptions used under the
Pension Plan for determining the actuarial equivalence of
different annuity forms of benefits. In no event shall the
additional two years of continuous service referred to above
cause the Executive to be deemed to be older than the
Executive's actual age for any purpose under this Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy,
the Company shall continue to provide welfare benefits and
fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's
employment had not been terminated (in accordance with the
most favorable plans, practices, programs or policies of the
Company and its affiliates applicable generally to other
peer executives and their families immediately preceding the
date of the Executive's termination of employment);
provided, however, that if the Executive becomes employed by
another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for any retiree benefits pursuant
to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed
until two years after the date of termination of employment
and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's family
shall be given the right provided in Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"), to
elect to continue benefits in all group medical plans. In
the event that the Executive's participation in any of the
plans, programs, practices or policies of the Company
referred to in this subsection is barred by the terms of
such plans, programs, practices or policies, the Company
shall provide the Executive with benefits substantially
similar to those which the Executive would be entitled as a
participant in such plans, programs, practices or policies.
At the end of the period of coverage, the Executive shall
have the option to have assigned to the Executive, at no
cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company and
relating specifically to the Executive.
(v) The Company shall enable the Executive to purchase,
at the end of the Effective Period, the automobile, if any,
provided by the Company for the Executive's use at the
time of the Executive's termination of employment at the
wholesale value of such automobile at such time, as shown
in the current addition of the National Auto Research
Publication Blue Book. At the Executive's election, the
Executive may retain any existing club memberships of the
Executive purchased by the Company upon reimbursement to
the Company of any membership costs paid by the Company.
(vi) To the extent not theretofore paid or provided, the
Company shall timely pay or provide the Executive any other
amounts or benefits required to be paid or provided or which
the Executive is eligible to receive under any plan,
program, policy, practice, contract or agreement of the
Company and its affiliates (such other amounts and benefits
being hereinafter referred to as "Other Benefits") in
accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is terminated by
reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c)Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company or another entity or
person, would constitute "parachute payments" within the
meaning of Section 280G of the Code, then such payments
or benefits shall be modified to the extent necessary so
that no portion of such benefits or payments shall
subject the Executive to any excise tax under Section
4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the
Company.
(c) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and approved by the Executive.
Payment may be delayed pending any such determination,
provided that the Executive shall be entitled to interest on
any delayed payment at the applicable Federal Rate provided
for in Section 7872(f)(2)(A) of the Code.
(d) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company or another
entity or person, would not be deductible by the Company due
to limitations imposed by Section 162(m) of the Code, then
such payments or benefits shall be deferred to the extent
necessary until such time as such payments would be
deductible under Section 162(m) of the Code. Either the
Company or the Executive may request a determination as to
whether any payments would be subject to limitations on
deductibility under Section 162(m) of the Code and, if so
requested, such determination shall be made by independent
legal counsel selected by the Company and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
[The Executive shall also be entitled to interest on any
payments deferred as a result of the limitations on
deductibility under Section 162(m) of the Code at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or
others. [In no event shall the Executive be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and, except as provided
in Section 6(a)(iv), such amounts shall not be reduced
whether or not Executive obtains other employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly 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. As
used in this Agreement, the "Company" shall mean the
Company as defined and any successor to its business
and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the
essence in determining whether any payments are due to the
Executive under this Agreement, the Executive may submit any claim
for payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company regarding the
interpretation of this Agreement and the claim is finally
denied by the Company in whole or in part, such claim may
be filed in writing with an arbitrator of the Executive's
choice who is selected by the method described in the
next three sentences. The first step of the selection
shall consist of the Executive submitting a list of five
potential arbitrators to the Company. Each of the five
arbitrators must be either (1) a member of the National
Academy of Arbitrators located in the State of California
or (2) a retired California Superior Court or Appellate
Court judge. Within two weeks after receipt of the list,
the Company shall select one of the five arbitrators as
the arbitrator for the dispute in question. If the
Company fails to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company has breached this Agreement, he or she
shall order the Company to immediately take the necessary
steps to remedy the breach. The award of the arbitrator
shall be final and binding upon the parties. The award
may be enforced in any appropriate court as soon as
possible after it is rendered. If an action is brought
to confirm the award, both the Company and the Executive
agree that no appeal shall be taken by either party from
any decision rendered in such action.
(e) The Company will be considered the prevailing party
in a dispute if the arbitrator determines that the Company has
not breached this Agreement. Otherwise, the Executive
will be considered the prevailing party. In the event
that the Company is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing
(excluding any attorneys' fees incurred by the Company)
including stenographic reporter, if employed, shall be
paid by the Executive. In the event that Executive is
the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (including all
attorneys' fees incurred by the Executive), including the
fees of a stenographic reporter if employed, shall be
paid by the Company.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive:__________________________
__________________________
__________________________
__________________________
If to the Company: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company may withhold required federal, state,
local or foreign taxes from any amounts payable under this
Agreement.
18. No Waiver
The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement
or the failure to assert any right the Executive or the
Company may have under this Agreement, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the
employment of the Executive by the Company prior to the
Change in Control Date is "at will" and, prior to the Change
in Control Date, the Executive's employment may be
terminated by either the Executive or the Company at any
time, in which case the Executive shall have no further
rights under this Agreement. From and after the Change in
Control Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject
matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and delivered
as of the day and year first written above in Los Angeles,
California.
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ Floyd E. Wicks
---------------------------------
Title President and Chief
Executive Officer
EXECUTIVE
/s/ Randell J. Vogel
----------------------------------------
EXHIBIT 10.07
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement")
is dated as of October 27, 1998, and is entered into by and
between James B. Gallagher (the "Executive") and Southern
California Water Company, a California corporation (the
"Company").
RECITALS
The Company considers it essential to the best
interest of the Company and its shareholders that the
Executive be encouraged to remain with the Company and
continue to devote full attention to the Company's business
notwithstanding the possibility, threat or occurrence of a
Change in Control (as defined in Section 3). The Company
believes that it is in the best interest of the Company and
its shareholders to reinforce and encourage the continued
attention and dedication of the Executive and to diminish
inevitable distractions arising from the possibility of a
Change in Control. Accordingly, to assure the Company that
it will have the Executive's undivided attention and
services notwithstanding the possibility, threat or
occurrence of a Change in Control, and to induce the
Executive to remain in the employ of the Company, and for
other good and valuable consideration, the Board of
Directors of the Company has, at the recommendation of its
Compensation Committee, caused the Company to enter into
this Agreement.
TERMS AND CONDITIONS
The Executive and the Company hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3)
occurs on or before the expiration date of this Agreement
and while the Executive is still an employee of the Company,
then this Agreement will continue in effect for two years
from the date of such Change in Control and, if the
Executive's employment with the Company is terminated within
such two-year period, this Agreement shall thereafter
continue in effect until all of the obligations of the
Company under this Agreement shall have been fulfilled. If
no Change in Control occurs on or before December 31, 2000,
this Agreement shall expire; provided, however that this
Agreement shall be automatically extended for an additional
two years to December 31, 2002 if (i) a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or American States Water Company, a
California corporation ("AWR"), on or before the expiration
date, or (ii) the Company has not delivered to you or you
shall have not delivered to the Company written notice at
least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement
shall continue to be automatically extended for an
additional two-year period and each succeeding two-year
period if a plan or agreement for a Change in Control has
been approved by the Board of Directors of the Company or
AWR or the Company or the Executive fails to give the
notices by the time and in the manner described in this
Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first
date during the term of this Agreement on which a Change in
Control (as defined in Section 3) occurs; provided, however,
that if a Change in Control occurs and if the Executive's
employment with the Company is terminated after approval by
the Board of Directors of the Company or AWR of a plan or
agreement for a Change in Control but prior to the date on
which the Change in Control occurs, the "Change in Control
Date" shall mean the date immediately preceding the date of
such termination.
3. Change in Control
A "Change in Control" shall mean any of the
following events:
(a) the dissolution or liquidation of either the
Company or AWR, unless its business is continued by another
entity in which holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing entity's voting securities immediately
after the event;
(b) any sale, lease, exchange or other transfer (in
one or a series of transactions) of all or substantially all
of the assets of either the Company or AWR, unless its business
is continued by another entity in which holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the continuing entity's
voting securities immediately after the event;
(c) any reorganization or merger of the Company or AWR,
unless the holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing or surviving entity's voting
securities immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities
of the Company or AWR, unless the holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the acquirer's voting
securities immediately after the acquisition; or
(e) a change of one-half or more of the members
of the Board of Directors of the Company or AWR within a
twelve-month period, unless the election or nomination for
election by shareholders of new directors within such period
constituting a majority of the applicable Board was approved
by the vote of at least [two-thirds] of the directors then
still in office who were in office at the beginning of the
twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control
Date and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment
shall terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during
the Effective Period, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with
the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to
full-time performance of his or her duties. For purposes of
this Agreement, "Disability" shall mean the absence of the
Executive from his or her duties with the Company on a
full-time basis for [180] consecutive business days as a
result of a physical or mental condition which prevents the
Executive from performing the Executive's normal duties of
employment and which is (i) determined to be total and
permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's
legal representative and/or (ii) entitles the Executive to
the payment of long-term disability benefits from the
Company's or AWR's long-term disability plan commencing no
later than the Disability Effective Date.
(b) Cause: The Company may terminate the Executive's
employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services
to the Company where such failure amounts to gross
neglect or gross misconduct of the Executive's
responsibility and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or
other crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be
terminated by the Executive during the Effective Period for
Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in
effect on the Change in Control Date, or any other action by
the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination
of the Executive's employment by the Company for Cause or
Disability, the death of the Executive, or the termination
of the Executive's employment by the Executive other than
for Good Reason;
(iii) reduction by the Company in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company (including
the elimination of benefit plans without providing substitutes
therefore or the reduction of the Executive's benefits
thereunder) that would substantially diminish the aggregate
value of the Executive's incentive awards and other fringe
benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control
Date;
(v) the Company's requiring the Executive to be
based at any office or location which increases the distance
from the Executive's home to the office location by more than
[35] miles from the distance in effect as of the Change in
Control Date;
(vi) any failure by the Company to comply with and
satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If
the Company shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or
the Executive shall terminate employment for Good Reason
during the Effective Period, the Company agrees, subject to
Section 8, to make the payments and provide the benefits
described below:
(i) The Company shall pay to the Executive in a
cash lump sum within 10 days from the date of the Executive's
termination of employment an amount equal to the product of
(A) and (B), where (A) is two and (B) is the Executive's
annual base salary at the highest of the rate in effect at
any time during the three years preceding the date of
termination.
(ii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the sum of (A) Executive's base salary
through the date of termination, plus (B) any compensation
previously deferred by the Executive (together with any
accrued earnings or interest thereon), plus (C) any accrued
vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the excess of (A) over (B), where (A) is
equal to the single sum actuarial equivalent of what would
be the Executive's accrued benefits under the terms of the
Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement
plan providing additional pension benefits, (hereinafter
together referred to as the "Pension Plan") at time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the
Executive were credited with an additional two years of
continuous service after the termination of Executive's
employment with the Company at the Executive's highest
annual rate of compensation covered by such Pension Plan
within the three years preceding the date of the termination
of the Executive's employment with the Company and (B) is
equal to the single sum actuarial equivalent of the
Executive's accrued benefits under the Pension Plan at the
time of the Executive's termination of employment. The
payment under this paragraph (iii) shall not extinguish any
rights the Executive has to benefits under the Pension Plan.
For purposes of this paragraph, "actuarial equivalent" shall
be determined using the actuarial assumptions used under the
Pension Plan for determining the actuarial equivalence of
different annuity forms of benefits. In no event shall the
additional two years of continuous service referred to above
cause the Executive to be deemed to be older than the
Executive's actual age for any purpose under this Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy,
the Company shall continue to provide welfare benefits and
fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's
employment had not been terminated (in accordance with the
most favorable plans, practices, programs or policies of the
Company and its affiliates applicable generally to other
peer executives and their families immediately preceding the
date of the Executive's termination of employment);
provided, however, that if the Executive becomes employed by
another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for any retiree benefits pursuant
to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed
until two years after the date of termination of employment
and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's family
shall be given the right provided in Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"), to
elect to continue benefits in all group medical plans. In
the event that the Executive's participation in any of the
plans, programs, practices or policies of the Company
referred to in this subsection is barred by the terms of
such plans, programs, practices or policies, the Company
shall provide the Executive with benefits substantially
similar to those which the Executive would be entitled as a
participant in such plans, programs, practices or policies.
At the end of the period of coverage, the Executive shall
have the option to have assigned to the Executive, at no
cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company and
relating specifically to the Executive.
(v) The Company shall enable the Executive to purchase,
at the end of the Effective Period, the automobile, if any,
provided by the Company for the Executive's use at the
time of the Executive's termination of employment at the
wholesale value of such automobile at such time, as shown
in the current addition of the National Auto Research
Publication Blue Book. At the Executive's election, the
Executive may retain any existing club memberships of the
Executive purchased by the Company upon reimbursement to
the Company of any membership costs paid by the Company.
(vi) To the extent not theretofore paid or provided, the
Company shall timely pay or provide the Executive any other
amounts or benefits required to be paid or provided or which
the Executive is eligible to receive under any plan,
program, policy, practice, contract or agreement of the
Company and its affiliates (such other amounts and benefits
being hereinafter referred to as "Other Benefits") in
accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is terminated by
reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c)Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company or another entity or
person, would constitute "parachute payments" within the
meaning of Section 280G of the Code, then such payments
or benefits shall be modified to the extent necessary so
that no portion of such benefits or payments shall
subject the Executive to any excise tax under Section
4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the
Company.
(c) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and approved by the Executive.
Payment may be delayed pending any such determination,
provided that the Executive shall be entitled to interest on
any delayed payment at the applicable Federal Rate provided
for in Section 7872(f)(2)(A) of the Code.
(d) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company or another
entity or person, would not be deductible by the Company due
to limitations imposed by Section 162(m) of the Code, then
such payments or benefits shall be deferred to the extent
necessary until such time as such payments would be
deductible under Section 162(m) of the Code. Either the
Company or the Executive may request a determination as to
whether any payments would be subject to limitations on
deductibility under Section 162(m) of the Code and, if so
requested, such determination shall be made by independent
legal counsel selected by the Company and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
[The Executive shall also be entitled to interest on any
payments deferred as a result of the limitations on
deductibility under Section 162(m) of the Code at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or
others. [In no event shall the Executive be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and, except as provided
in Section 6(a)(iv), such amounts shall not be reduced
whether or not Executive obtains other employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly 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. As
used in this Agreement, the "Company" shall mean the
Company as defined and any successor to its business
and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the
essence in determining whether any payments are due to the
Executive under this Agreement, the Executive may submit any claim
for payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company regarding the
interpretation of this Agreement and the claim is finally
denied by the Company in whole or in part, such claim may
be filed in writing with an arbitrator of the Executive's
choice who is selected by the method described in the
next three sentences. The first step of the selection
shall consist of the Executive submitting a list of five
potential arbitrators to the Company. Each of the five
arbitrators must be either (1) a member of the National
Academy of Arbitrators located in the State of California
or (2) a retired California Superior Court or Appellate
Court judge. Within two weeks after receipt of the list,
the Company shall select one of the five arbitrators as
the arbitrator for the dispute in question. If the
Company fails to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company has breached this Agreement, he or she
shall order the Company to immediately take the necessary
steps to remedy the breach. The award of the arbitrator
shall be final and binding upon the parties. The award
may be enforced in any appropriate court as soon as
possible after it is rendered. If an action is brought
to confirm the award, both the Company and the Executive
agree that no appeal shall be taken by either party from
any decision rendered in such action.
(e) The Company will be considered the prevailing party
in a dispute if the arbitrator determines that the Company has
not breached this Agreement. Otherwise, the Executive
will be considered the prevailing party. In the event
that the Company is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing
(excluding any attorneys' fees incurred by the Company)
including stenographic reporter, if employed, shall be
paid by the Executive. In the event that Executive is
the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (including all
attorneys' fees incurred by the Executive), including the
fees of a stenographic reporter if employed, shall be
paid by the Company.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive:__________________________
__________________________
__________________________
__________________________
If to the Company: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company may withhold required federal, state,
local or foreign taxes from any amounts payable under this
Agreement.
18. No Waiver
The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement
or the failure to assert any right the Executive or the
Company may have under this Agreement, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the
employment of the Executive by the Company prior to the
Change in Control Date is "at will" and, prior to the Change
in Control Date, the Executive's employment may be
terminated by either the Executive or the Company at any
time, in which case the Executive shall have no further
rights under this Agreement. From and after the Change in
Control Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject
matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and delivered
as of the day and year first written above in Los Angeles,
California.
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ Floyd E. Wicks
-----------------------------------
Title President and Chief
Executive Officer
EXECUTIVE
/s/ James B. Gallagher
--------------------------------------
EXHIBIT 10.08
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement")
is dated as of October 27, 1998, and is entered into by and
between Denise L. Kruger (the "Executive") and Southern
California Water Company, a California corporation (the
"Company").
RECITALS
The Company considers it essential to the best
interest of the Company and its shareholders that the
Executive be encouraged to remain with the Company and
continue to devote full attention to the Company's business
notwithstanding the possibility, threat or occurrence of a
Change in Control (as defined in Section 3). The Company
believes that it is in the best interest of the Company and
its shareholders to reinforce and encourage the continued
attention and dedication of the Executive and to diminish
inevitable distractions arising from the possibility of a
Change in Control. Accordingly, to assure the Company that
it will have the Executive's undivided attention and
services notwithstanding the possibility, threat or
occurrence of a Change in Control, and to induce the
Executive to remain in the employ of the Company, and for
other good and valuable consideration, the Board of
Directors of the Company has, at the recommendation of its
Compensation Committee, caused the Company to enter into
this Agreement.
TERMS AND CONDITIONS
The Executive and the Company hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3)
occurs on or before the expiration date of this Agreement
and while the Executive is still an employee of the Company,
then this Agreement will continue in effect for two years
from the date of such Change in Control and, if the
Executive's employment with the Company is terminated within
such two-year period, this Agreement shall thereafter
continue in effect until all of the obligations of the
Company under this Agreement shall have been fulfilled. If
no Change in Control occurs on or before December 31, 2000,
this Agreement shall expire; provided, however that this
Agreement shall be automatically extended for an additional
two years to December 31, 2002 if (i) a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or American States Water Company, a
California corporation ("AWR"), on or before the expiration
date, or (ii) the Company has not delivered to you or you
shall have not delivered to the Company written notice at
least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement
shall continue to be automatically extended for an
additional two-year period and each succeeding two-year
period if a plan or agreement for a Change in Control has
been approved by the Board of Directors of the Company or
AWR or the Company or the Executive fails to give the
notices by the time and in the manner described in this
Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first
date during the term of this Agreement on which a Change in
Control (as defined in Section 3) occurs; provided, however,
that if a Change in Control occurs and if the Executive's
employment with the Company is terminated after approval by
the Board of Directors of the Company or AWR of a plan or
agreement for a Change in Control but prior to the date on
which the Change in Control occurs, the "Change in Control
Date" shall mean the date immediately preceding the date of
such termination.
3. Change in Control
A "Change in Control" shall mean any of the
following events:
(a) the dissolution or liquidation of either the
Company or AWR, unless its business is continued by another
entity in which holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing entity's voting securities immediately
after the event;
(b) any sale, lease, exchange or other transfer (in
one or a series of transactions) of all or substantially all
of the assets of either the Company or AWR, unless its business
is continued by another entity in which holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the continuing entity's
voting securities immediately after the event;
(c) any reorganization or merger of the Company or AWR,
unless the holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing or surviving entity's voting
securities immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities
of the Company or AWR, unless the holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the acquirer's voting
securities immediately after the acquisition; or
(e) a change of one-half or more of the members
of the Board of Directors of the Company or AWR within a
twelve-month period, unless the election or nomination for
election by shareholders of new directors within such period
constituting a majority of the applicable Board was approved
by the vote of at least [two-thirds] of the directors then
still in office who were in office at the beginning of the
twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control
Date and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment
shall terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during
the Effective Period, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with
the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to
full-time performance of his or her duties. For purposes of
this Agreement, "Disability" shall mean the absence of the
Executive from his or her duties with the Company on a
full-time basis for [180] consecutive business days as a
result of a physical or mental condition which prevents the
Executive from performing the Executive's normal duties of
employment and which is (i) determined to be total and
permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's
legal representative and/or (ii) entitles the Executive to
the payment of long-term disability benefits from the
Company's or AWR's long-term disability plan commencing no
later than the Disability Effective Date.
(b) Cause: The Company may terminate the Executive's
employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services
to the Company where such failure amounts to gross
neglect or gross misconduct of the Executive's
responsibility and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or
other crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be
terminated by the Executive during the Effective Period for
Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in
effect on the Change in Control Date, or any other action by
the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination
of the Executive's employment by the Company for Cause or
Disability, the death of the Executive, or the termination
of the Executive's employment by the Executive other than
for Good Reason;
(iii) reduction by the Company in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company (including
the elimination of benefit plans without providing substitutes
therefore or the reduction of the Executive's benefits
thereunder) that would substantially diminish the aggregate
value of the Executive's incentive awards and other fringe
benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control
Date;
(v) the Company's requiring the Executive to be
based at any office or location which increases the distance
from the Executive's home to the office location by more than
[35] miles from the distance in effect as of the Change in
Control Date;
(vi) any failure by the Company to comply with and
satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If
the Company shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or
the Executive shall terminate employment for Good Reason
during the Effective Period, the Company agrees, subject to
Section 8, to make the payments and provide the benefits
described below:
(i) The Company shall pay to the Executive in a
cash lump sum within 10 days from the date of the Executive's
termination of employment an amount equal to the product of
(A) and (B), where (A) is two and (B) is the Executive's
annual base salary at the highest of the rate in effect at
any time during the three years preceding the date of
termination.
(ii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the sum of (A) Executive's base salary
through the date of termination, plus (B) any compensation
previously deferred by the Executive (together with any
accrued earnings or interest thereon), plus (C) any accrued
vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the excess of (A) over (B), where (A) is
equal to the single sum actuarial equivalent of what would
be the Executive's accrued benefits under the terms of the
Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement
plan providing additional pension benefits, (hereinafter
together referred to as the "Pension Plan") at time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the
Executive were credited with an additional two years of
continuous service after the termination of Executive's
employment with the Company at the Executive's highest
annual rate of compensation covered by such Pension Plan
within the three years preceding the date of the termination
of the Executive's employment with the Company and (B) is
equal to the single sum actuarial equivalent of the
Executive's accrued benefits under the Pension Plan at the
time of the Executive's termination of employment. The
payment under this paragraph (iii) shall not extinguish any
rights the Executive has to benefits under the Pension Plan.
For purposes of this paragraph, "actuarial equivalent" shall
be determined using the actuarial assumptions used under the
Pension Plan for determining the actuarial equivalence of
different annuity forms of benefits. In no event shall the
additional two years of continuous service referred to above
cause the Executive to be deemed to be older than the
Executive's actual age for any purpose under this Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy,
the Company shall continue to provide welfare benefits and
fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's
employment had not been terminated (in accordance with the
most favorable plans, practices, programs or policies of the
Company and its affiliates applicable generally to other
peer executives and their families immediately preceding the
date of the Executive's termination of employment);
provided, however, that if the Executive becomes employed by
another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for any retiree benefits pursuant
to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed
until two years after the date of termination of employment
and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's family
shall be given the right provided in Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"), to
elect to continue benefits in all group medical plans. In
the event that the Executive's participation in any of the
plans, programs, practices or policies of the Company
referred to in this subsection is barred by the terms of
such plans, programs, practices or policies, the Company
shall provide the Executive with benefits substantially
similar to those which the Executive would be entitled as a
participant in such plans, programs, practices or policies.
At the end of the period of coverage, the Executive shall
have the option to have assigned to the Executive, at no
cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company and
relating specifically to the Executive.
(v) The Company shall enable the Executive to purchase,
at the end of the Effective Period, the automobile, if any,
provided by the Company for the Executive's use at the
time of the Executive's termination of employment at the
wholesale value of such automobile at such time, as shown
in the current addition of the National Auto Research
Publication Blue Book. At the Executive's election, the
Executive may retain any existing club memberships of the
Executive purchased by the Company upon reimbursement to
the Company of any membership costs paid by the Company.
(vi) To the extent not theretofore paid or provided, the
Company shall timely pay or provide the Executive any other
amounts or benefits required to be paid or provided or which
the Executive is eligible to receive under any plan,
program, policy, practice, contract or agreement of the
Company and its affiliates (such other amounts and benefits
being hereinafter referred to as "Other Benefits") in
accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is terminated by
reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c)Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company or another entity or
person, would constitute "parachute payments" within the
meaning of Section 280G of the Code, then such payments
or benefits shall be modified to the extent necessary so
that no portion of such benefits or payments shall
subject the Executive to any excise tax under Section
4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the
Company.
(c) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and approved by the Executive.
Payment may be delayed pending any such determination,
provided that the Executive shall be entitled to interest on
any delayed payment at the applicable Federal Rate provided
for in Section 7872(f)(2)(A) of the Code.
(d) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company or another
entity or person, would not be deductible by the Company due
to limitations imposed by Section 162(m) of the Code, then
such payments or benefits shall be deferred to the extent
necessary until such time as such payments would be
deductible under Section 162(m) of the Code. Either the
Company or the Executive may request a determination as to
whether any payments would be subject to limitations on
deductibility under Section 162(m) of the Code and, if so
requested, such determination shall be made by independent
legal counsel selected by the Company and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
[The Executive shall also be entitled to interest on any
payments deferred as a result of the limitations on
deductibility under Section 162(m) of the Code at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or
others. [In no event shall the Executive be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and, except as provided
in Section 6(a)(iv), such amounts shall not be reduced
whether or not Executive obtains other employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly 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. As
used in this Agreement, the "Company" shall mean the
Company as defined and any successor to its business
and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the
essence in determining whether any payments are due to the
Executive under this Agreement, the Executive may submit any claim
for payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company regarding the
interpretation of this Agreement and the claim is finally
denied by the Company in whole or in part, such claim may
be filed in writing with an arbitrator of the Executive's
choice who is selected by the method described in the
next three sentences. The first step of the selection
shall consist of the Executive submitting a list of five
potential arbitrators to the Company. Each of the five
arbitrators must be either (1) a member of the National
Academy of Arbitrators located in the State of California
or (2) a retired California Superior Court or Appellate
Court judge. Within two weeks after receipt of the list,
the Company shall select one of the five arbitrators as
the arbitrator for the dispute in question. If the
Company fails to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company has breached this Agreement, he or she
shall order the Company to immediately take the necessary
steps to remedy the breach. The award of the arbitrator
shall be final and binding upon the parties. The award
may be enforced in any appropriate court as soon as
possible after it is rendered. If an action is brought
to confirm the award, both the Company and the Executive
agree that no appeal shall be taken by either party from
any decision rendered in such action.
(e) The Company will be considered the prevailing party
in a dispute if the arbitrator determines that the Company has
not breached this Agreement. Otherwise, the Executive
will be considered the prevailing party. In the event
that the Company is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing
(excluding any attorneys' fees incurred by the Company)
including stenographic reporter, if employed, shall be
paid by the Executive. In the event that Executive is
the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (including all
attorneys' fees incurred by the Executive), including the
fees of a stenographic reporter if employed, shall be
paid by the Company.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive:__________________________
__________________________
__________________________
__________________________
If to the Company: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company may withhold required federal, state,
local or foreign taxes from any amounts payable under this
Agreement.
18. No Waiver
The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement
or the failure to assert any right the Executive or the
Company may have under this Agreement, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the
employment of the Executive by the Company prior to the
Change in Control Date is "at will" and, prior to the Change
in Control Date, the Executive's employment may be
terminated by either the Executive or the Company at any
time, in which case the Executive shall have no further
rights under this Agreement. From and after the Change in
Control Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject
matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and delivered
as of the day and year first written above in Los Angeles,
California.
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ Floyd E. Wicks
----------------------------------
Title President and Chief
Executive Officer
EXECUTIVE
/s/ Denise L. Kruger
-----------------------------------------
EXHIBIT 10.09
CHANGE-IN-CONTROL AGREEMENT
This Change-in-Control Agreement (the "Agreement")
is dated as of October 27, 1998, and is entered into by and
between Susan L. Conway (the "Executive") and Southern
California Water Company, a California corporation (the
"Company").
RECITALS
The Company considers it essential to the best
interest of the Company and its shareholders that the
Executive be encouraged to remain with the Company and
continue to devote full attention to the Company's business
notwithstanding the possibility, threat or occurrence of a
Change in Control (as defined in Section 3). The Company
believes that it is in the best interest of the Company and
its shareholders to reinforce and encourage the continued
attention and dedication of the Executive and to diminish
inevitable distractions arising from the possibility of a
Change in Control. Accordingly, to assure the Company that
it will have the Executive's undivided attention and
services notwithstanding the possibility, threat or
occurrence of a Change in Control, and to induce the
Executive to remain in the employ of the Company, and for
other good and valuable consideration, the Board of
Directors of the Company has, at the recommendation of its
Compensation Committee, caused the Company to enter into
this Agreement.
TERMS AND CONDITIONS
The Executive and the Company hereby agree to the
following terms and conditions:
1. Term of Agreement
If a Change in Control (as defined in Section 3)
occurs on or before the expiration date of this Agreement
and while the Executive is still an employee of the Company,
then this Agreement will continue in effect for two years
from the date of such Change in Control and, if the
Executive's employment with the Company is terminated within
such two-year period, this Agreement shall thereafter
continue in effect until all of the obligations of the
Company under this Agreement shall have been fulfilled. If
no Change in Control occurs on or before December 31, 2000,
this Agreement shall expire; provided, however that this
Agreement shall be automatically extended for an additional
two years to December 31, 2002 if (i) a plan or agreement
for a Change in Control has been approved by the Board of
Directors of the Company or American States Water Company, a
California corporation ("AWR"), on or before the expiration
date, or (ii) the Company has not delivered to you or you
shall have not delivered to the Company written notice at
least 60 days prior to the expiration date that such
expiration date shall not be so extended. This Agreement
shall continue to be automatically extended for an
additional two-year period and each succeeding two-year
period if a plan or agreement for a Change in Control has
been approved by the Board of Directors of the Company or
AWR or the Company or the Executive fails to give the
notices by the time and in the manner described in this
Section 1.
2. Change in Control Date
The "Change in Control Date" shall mean the first
date during the term of this Agreement on which a Change in
Control (as defined in Section 3) occurs; provided, however,
that if a Change in Control occurs and if the Executive's
employment with the Company is terminated after approval by
the Board of Directors of the Company or AWR of a plan or
agreement for a Change in Control but prior to the date on
which the Change in Control occurs, the "Change in Control
Date" shall mean the date immediately preceding the date of
such termination.
3. Change in Control
A "Change in Control" shall mean any of the
following events:
(a) the dissolution or liquidation of either the
Company or AWR, unless its business is continued by another
entity in which holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing entity's voting securities immediately
after the event;
(b) any sale, lease, exchange or other transfer (in
one or a series of transactions) of all or substantially all
of the assets of either the Company or AWR, unless its business
is continued by another entity in which holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the continuing entity's
voting securities immediately after the event;
(c) any reorganization or merger of the Company or AWR,
unless the holders of AWR's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing or surviving entity's voting
securities immediately after the event;
(d) an acquisition by any person, entity or group
acting in concert of more than 50% of the voting securities
of the Company or AWR, unless the holders of AWR's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the acquirer's voting
securities immediately after the acquisition; or
(e) a change of one-half or more of the members
of the Board of Directors of the Company or AWR within a
twelve-month period, unless the election or nomination for
election by shareholders of new directors within such period
constituting a majority of the applicable Board was approved
by the vote of at least [two-thirds] of the directors then
still in office who were in office at the beginning of the
twelve-month period.
4. Effective Period
For the purpose of this Agreement, the "Effective
Period" is the period commencing on the Change in Control
Date and ending on the date this Agreement terminates.
5. Termination of Employment
(a) Death or Disability: The Executive's employment
shall terminate automatically upon the Executive's death. If the
Disability (as defined below) of the Executive occurs during
the Effective Period, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with
the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to
full-time performance of his or her duties. For purposes of
this Agreement, "Disability" shall mean the absence of the
Executive from his or her duties with the Company on a
full-time basis for [180] consecutive business days as a
result of a physical or mental condition which prevents the
Executive from performing the Executive's normal duties of
employment and which is (i) determined to be total and
permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's
legal representative and/or (ii) entitles the Executive to
the payment of long-term disability benefits from the
Company's or AWR's long-term disability plan commencing no
later than the Disability Effective Date.
(b) Cause: The Company may terminate the Executive's
employment other than for Cause or Disability during the
Effective Period as provided in Section 6(a). The Company
may also terminate the Executive's employment during the
Effective Period for Cause. For purposes of this Agreement,
"Cause" shall be limited to the following:
(i) the Executive's failure to render services
to the Company where such failure amounts to gross
neglect or gross misconduct of the Executive's
responsibility and duties,
(ii) the Executive's commission of an act of fraud
or dishonesty against the Company or any affiliate of the
Company, or
(iii) the Executive's conviction of a felony or
other crime involving moral turpitude.
(c) Good Reason: The Executive's employment may be
terminated by the Executive during the Effective Period for
Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in
effect on the Change in Control Date, or any other action by
the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to reappoint the
Executive to a position held by the Executive on the Change
in Control Date, except as a result of the termination
of the Executive's employment by the Company for Cause or
Disability, the death of the Executive, or the termination
of the Executive's employment by the Executive other than
for Good Reason;
(iii) reduction by the Company in the Executive's
base salary as in effect on the date hereof or as the same
may be increased from time-to-time;
(iv) the taking of any action by the Company (including
the elimination of benefit plans without providing substitutes
therefore or the reduction of the Executive's benefits
thereunder) that would substantially diminish the aggregate
value of the Executive's incentive awards and other fringe
benefits including the executive benefits and perquisites
from the levels in effect prior to the Change in Control
Date;
(v) the Company's requiring the Executive to be
based at any office or location which increases the distance
from the Executive's home to the office location by more than
[35] miles from the distance in effect as of the Change in
Control Date;
(vi) any failure by the Company to comply with and
satisfy Section 10(c) of this Agreement.
6. Obligations of the Company upon Termination
(a) Good Reason, Other Than for Cause or Disability: If
the Company shall terminate the Executive's employment other
than for Cause or Disability during the Effective Period, or
the Executive shall terminate employment for Good Reason
during the Effective Period, the Company agrees, subject to
Section 8, to make the payments and provide the benefits
described below:
(i) The Company shall pay to the Executive in a
cash lump sum within 10 days from the date of the Executive's
termination of employment an amount equal to the product of
(A) and (B), where (A) is two and (B) is the Executive's
annual base salary at the highest of the rate in effect at
any time during the three years preceding the date of
termination.
(ii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the sum of (A) Executive's base salary
through the date of termination, plus (B) any compensation
previously deferred by the Executive (together with any
accrued earnings or interest thereon), plus (C) any accrued
vacation pay, in each case to the extent not theretofore
paid (the amounts referred to in this paragraph (ii) are
hereinafter referred to as the "Accrued Obligations").
(iii) The Company shall also pay to the Executive in a
cash lump sum within 10 days from the date of termination an
amount equal to the excess of (A) over (B), where (A) is
equal to the single sum actuarial equivalent of what would
be the Executive's accrued benefits under the terms of the
Southern California Water Company Pension Plan (or any
successor thereto), including any supplemental retirement
plan providing additional pension benefits, (hereinafter
together referred to as the "Pension Plan") at time of the
Executive's termination of employment, without regard to
whether such benefits are "vested" thereunder, if the
Executive were credited with an additional two years of
continuous service after the termination of Executive's
employment with the Company at the Executive's highest
annual rate of compensation covered by such Pension Plan
within the three years preceding the date of the termination
of the Executive's employment with the Company and (B) is
equal to the single sum actuarial equivalent of the
Executive's accrued benefits under the Pension Plan at the
time of the Executive's termination of employment. The
payment under this paragraph (iii) shall not extinguish any
rights the Executive has to benefits under the Pension Plan.
For purposes of this paragraph, "actuarial equivalent" shall
be determined using the actuarial assumptions used under the
Pension Plan for determining the actuarial equivalence of
different annuity forms of benefits. In no event shall the
additional two years of continuous service referred to above
cause the Executive to be deemed to be older than the
Executive's actual age for any purpose under this Agreement.
(iv) For two years after the Executive's date of
termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy,
the Company shall continue to provide welfare benefits and
fringe benefits and other perquisites to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them if the Executive's
employment had not been terminated (in accordance with the
most favorable plans, practices, programs or policies of the
Company and its affiliates applicable generally to other
peer executives and their families immediately preceding the
date of the Executive's termination of employment);
provided, however, that if the Executive becomes employed by
another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for any retiree benefits pursuant
to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed
until two years after the date of termination of employment
and to have retired on the last day of such period.
Following the period of continued benefits referred to in
this subsection, the Executive and the Executive's family
shall be given the right provided in Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"), to
elect to continue benefits in all group medical plans. In
the event that the Executive's participation in any of the
plans, programs, practices or policies of the Company
referred to in this subsection is barred by the terms of
such plans, programs, practices or policies, the Company
shall provide the Executive with benefits substantially
similar to those which the Executive would be entitled as a
participant in such plans, programs, practices or policies.
At the end of the period of coverage, the Executive shall
have the option to have assigned to the Executive, at no
cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company and
relating specifically to the Executive.
(v) The Company shall enable the Executive to purchase,
at the end of the Effective Period, the automobile, if any,
provided by the Company for the Executive's use at the
time of the Executive's termination of employment at the
wholesale value of such automobile at such time, as shown
in the current addition of the National Auto Research
Publication Blue Book. At the Executive's election, the
Executive may retain any existing club memberships of the
Executive purchased by the Company upon reimbursement to
the Company of any membership costs paid by the Company.
(vi) To the extent not theretofore paid or provided, the
Company shall timely pay or provide the Executive any other
amounts or benefits required to be paid or provided or which
the Executive is eligible to receive under any plan,
program, policy, practice, contract or agreement of the
Company and its affiliates (such other amounts and benefits
being hereinafter referred to as "Other Benefits") in
accordance with the terms of such plan, program, policy,
practice, contract or agreement.
(vii) The Executive shall be entitled to
interest on any payments not paid on a timely
basis as provided in this Section 6(a) at the applicable
Federal Rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Death: If the Executive's employment is terminated by
reason of the Executive's death during the Effective
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a
cash lump sum within 10 days of the date of the
Executive's death.
(c)Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the
Effective Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to
the Executive in a cash lump sum within 30 days of the
Executive's termination of employment.
(d) Cause, Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the
Effective Period or, if the Executive voluntarily
terminates employment during the Effective Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the
Executive, other than for Accrued Obligations and any
benefits payable to Executive under a plan, policy,
practice, etc., referred to in Section 7 below. Accrued
Obligations shall be paid to the Executive in a cash lump
sum within 60 days of the Executive's termination of
employment.
7. Non-Exclusivity of Rights
Subject to Section 8, nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliates and for
which the Executive may qualify, nor, subject to Sections 8
and 19, shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates. Amounts
which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy,
practice, program, contract or agreement with the Company or
any of its affiliates at or subsequent to the date of
termination of the Executive's employment shall be payable
in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this
Agreement.
8. Limitation on Benefits
(a) Notwithstanding anything in this Agreement to the
contrary, if any payments or benefits to be made to or for the
Executive's benefit, whether pursuant to this Agreement
or otherwise, whether by the Company or another entity or
person, would constitute "parachute payments" within the
meaning of Section 280G of the Code, then such payments
or benefits shall be modified to the extent necessary so
that no portion of such benefits or payments shall
subject the Executive to any excise tax under Section
4999 of the Code.
(b) In the event the amount of any "parachute payments"
which would be payable to or for the benefit of the Executive
without regard to this Section must be modified to comply
with this Section, the Executive shall direct which
"parachute payments" are to be waived or modified;
provided, however, that no change in timing of the
payments shall be made without the consent of the
Company.
(c) Payment of amounts pursuant to this Agreement
shall not, unless directed by the Executive, be delayed
pending determination of the status of a payment as a
"parachute payment" by the Internal Revenue Service, court
or similar body of competent jurisdiction. Either the
Company or the Executive may, however, request a
determination as to whether the payment or benefit would
constitute a parachute payment and, if so requested, such
determination shall be made by an independent accounting
firm selected by the Company and approved by the Executive.
Payment may be delayed pending any such determination,
provided that the Executive shall be entitled to interest on
any delayed payment at the applicable Federal Rate provided
for in Section 7872(f)(2)(A) of the Code.
(d) Notwithstanding anything in this Agreement to
the contrary, if any payments or benefits to be made to or
for the Executive's benefit, whether pursuant to this
Agreement or otherwise, whether by the Company or another
entity or person, would not be deductible by the Company due
to limitations imposed by Section 162(m) of the Code, then
such payments or benefits shall be deferred to the extent
necessary until such time as such payments would be
deductible under Section 162(m) of the Code. Either the
Company or the Executive may request a determination as to
whether any payments would be subject to limitations on
deductibility under Section 162(m) of the Code and, if so
requested, such determination shall be made by independent
legal counsel selected by the Company and approved by the
Executive. Payment may be delayed pending any such
determination, provided that the Executive shall be entitled
to interest on any delayed payment at the applicable Federal
Rate provided for in Section 7872(f)(2)(A) of the Code.
[The Executive shall also be entitled to interest on any
payments deferred as a result of the limitations on
deductibility under Section 162(m) of the Code at the
applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code.]
9. Full Settlement
The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or
others. [In no event shall the Executive be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and, except as provided
in Section 6(a)(iv), such amounts shall not be reduced
whether or not Executive obtains other employment.]
10. Successors
(a) This Agreement is personal to the Executive and
shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly 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. As
used in this Agreement, the "Company" shall mean the
Company as defined and any successor to its business
and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Arbitration
(a) Because it is agreed that time will be of the
essence in determining whether any payments are due to the
Executive under this Agreement, the Executive may submit any claim
for payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This
right to select arbitration shall be solely that of the
Executive, and the Executive may decide whether or not to
arbitrate in his or her discretion. The "right to select
arbitration" is not mandatory on the Executive, and the
Executive may choose in lieu thereof to bring an action
in an appropriate civil court. Once an arbitration is
commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Executive only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as
follows: If the Executive disagrees with the Company regarding the
interpretation of this Agreement and the claim is finally
denied by the Company in whole or in part, such claim may
be filed in writing with an arbitrator of the Executive's
choice who is selected by the method described in the
next three sentences. The first step of the selection
shall consist of the Executive submitting a list of five
potential arbitrators to the Company. Each of the five
arbitrators must be either (1) a member of the National
Academy of Arbitrators located in the State of California
or (2) a retired California Superior Court or Appellate
Court judge. Within two weeks after receipt of the list,
the Company shall select one of the five arbitrators as
the arbitrator for the dispute in question. If the
Company fails to select an arbitrator in a timely manner,
the Executive shall then designate one of the five
arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within thirty
days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of the hearing shall be
allowed without the mutual consent of the Executive and
the Company. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of
an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing at his or her
discretion when sufficient evidence to satisfy issuance
of an award has been presented.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than thirty
days after the close of the hearing. In the event the arbitrator
finds that the Company has breached this Agreement, he or she
shall order the Company to immediately take the necessary
steps to remedy the breach. The award of the arbitrator
shall be final and binding upon the parties. The award
may be enforced in any appropriate court as soon as
possible after it is rendered. If an action is brought
to confirm the award, both the Company and the Executive
agree that no appeal shall be taken by either party from
any decision rendered in such action.
(e) The Company will be considered the prevailing party
in a dispute if the arbitrator determines that the Company has
not breached this Agreement. Otherwise, the Executive
will be considered the prevailing party. In the event
that the Company is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing
(excluding any attorneys' fees incurred by the Company)
including stenographic reporter, if employed, shall be
paid by the Executive. In the event that Executive is
the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (including all
attorneys' fees incurred by the Executive), including the
fees of a stenographic reporter if employed, shall be
paid by the Company.
12. Governing Law
The laws of California shall govern the validity
and interpretation of this Agreement, with regard to
conflicts of laws.
13. Captions
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment
This Agreement may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
15. Notices
All notices and other communications regarding
this Agreement shall be in writing and shall be hand
delivered to the other party or sent by prepaid registered
or certified mail, return receipt requested, addressed as
follows:
If to the Executive:__________________________
__________________________
__________________________
__________________________
If to the Company: Southern California Water Company
630 East Foothill Boulevard
San Dimas, CA 91773
Attn: Secretary
or to such other address as either party shall have
furnished to the other in writing. Notice and communications
shall be effective when actually received by the addressee.
16. Severability
The lack of validity or enforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
17. Withholding Taxes
The Company may withhold required federal, state,
local or foreign taxes from any amounts payable under this
Agreement.
18. No Waiver
The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement
or the failure to assert any right the Executive or the
Company may have under this Agreement, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or
right under this Agreement.
19. At-Will Employment
The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the
employment of the Executive by the Company prior to the
Change in Control Date is "at will" and, prior to the Change
in Control Date, the Executive's employment may be
terminated by either the Executive or the Company at any
time, in which case the Executive shall have no further
rights under this Agreement. From and after the Change in
Control Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject
matter hereof.
20. Counterparts
This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and delivered
as of the day and year first written above in Los Angeles,
California.
SOUTHERN CALIFORNIA WATER COMPANY
By /s/ Floyd E. Wicks
----------------------------
Title President and Chief Executive Officer
EXECUTIVE
/s/ Susan L. Conway
----------------------------