Document:

Exhibit 101

		
			EXHIBIT 10.1
		

		
			FORM OF AGREEMENT 
		

		
			THIS Agreement (the “Agreement”) made as of the  day of , ____,  is by and between, Aqua America, Inc., a Pennsylvania corporation (“Aqua America”), and _______________________ (the "Executive").
		

		
			 
		

		
			WHEREAS, effective on _________________, the Executive was [hired][promoted] to the position of _________________ with [Aqua America];  
		

		
			WHEREAS, Aqua America considers it essential to foster the employment of well-qualified, key management personnel and, in this regard, the board of directors of  Aqua America recognizes that, as is the case with many publicly-held corporations such as Aqua America, the possibility of a change of control of Aqua America may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of  Aqua America;
		

		
			WHEREAS, the board of directors of Aqua America has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of management of Aqua America and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change of control of Aqua America, although no such change is now contemplated; and
		

		
			        NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows:
		

		
			        1.Definitions.  For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires:
		

		
			(a)"Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
		

		
			(b)"Base Compensation" shall mean the Executive’s then-current base annual salary, plus the greater of the Executive’s target bonus for the year in which the Executive incurs a Termination of Employment, or the last actual bonus paid to the Executive under the Annual Cash Incentive Compensation Plan (or any successor plan maintained by Aqua America), in all capacities with Aqua America and its Subsidiaries or Affiliates.  The Executive’s Base Compensation shall be determined prior to reduction for salary deferred by the 
		

		 

		

			

		

		

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		Executive under any deferred compensation plan of Aqua America and its Subsidiaries or Affiliates, or otherwise.
		

		
			(c)  A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided,  however, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; provided,  however, that a Person shall not be deemed the "Beneficial Owner" of any security under this clause (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to clause (ii) above) or disposing of any voting securities of Aqua America; provided,  however, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. 
		

		
			(d)"Board" shall mean the board of directors of Aqua America.
		

		
			(e)"Cause" shall mean 1) misappropriation of funds, 2) habitual insobriety or substance abuse, 3) conviction of a crime involving moral turpitude, or 4) gross 
		

		 

		

			

		

		

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		negligence in the performance of duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of Aqua America or its Subsidiaries and Affiliates.
		

		
			(f)"Change in Control" shall mean:
		

		
			(i)any Person (including any individual, firm, corporation, partnership or other entity except Aqua America, any subsidiary of Aqua America, any employee benefit plan of Aqua America or of any subsidiary, or any Person or entity organized, appointed or established by Aqua America for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person, shall become the Beneficial Owner in the aggregate of 20% or more of the Common Stock of Aqua America then outstanding;
		

		
			(ii)during any twenty-four month period, individuals who at the beginning of such period constitute the Board cease for any reason to constitute a majority thereof, unless the election, or the nomination for election by Aqua America’s shareholders, of at least seventy-five percent of the directors who were not directors at the beginning of such period was approved by a vote of at least seventy-five percent of the directors in office at the time of such election or nomination who were directors at the beginning of such period; or
		

		
			(iii)there occurs a sale of 50% or more of the aggregate assets or earning power of Aqua America and its Subsidiaries, or its liquidation is approved by a majority of its shareholders or Aqua America is merged into or is merged with an unrelated entity such that following the merger the shareholders of Aqua America no longer own more than 50% of the resultant entity.
		

		
			 Notwithstanding anything in this subsection 1(f) to the contrary, a Change in Control shall not be deemed to have taken place under clause (f)(i) above if (i) such Person becomes the beneficial owner in the aggregate of 20% or more of the Common Stock of Aqua America then outstanding as a result, in the determination of a majority of those members of the Board of Directors of Aqua America in office prior to the acquisition, of an inadvertent acquisition by such Person if such Person, as soon as practicable, divests itself of a sufficient amount of its Common Stock so that it no longer owns 20% or more of the Common Stock then outstanding, or (ii) such Person becomes the beneficial owner in the aggregate of 20% or more of the Common Stock of Aqua America outstanding as a result of an acquisition of common stock by Aqua America which, by reducing the number of common stock outstanding, increases the proportionate number of shares of common stock beneficially owned by such Person to 20% or more of the shares of common stock then outstanding; provided,  however that if a Person shall 
		
		
 

		

			

		

		

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		become the beneficial owner of 20% or more of the shares of common stock then outstanding by reason of common stock purchased by Aqua America and shall, after such share purchases by Aqua America become the beneficial owner of any additional shares of common stock, then the exemption set forth in this clause shall be inapplicable. 

		
		
			(g)“Equity Compensation Plan” shall mean Aqua America’s 2009 Equity Compensation Plan, and its predecessors and successors.
		

		
			(h)"Good Reason Termination" shall mean, except as otherwise provided in the last paragraph of this subsection (h), a Termination of Employment as a result of one or more of the following events, without the Executive’s written consent to the event:
		

		
			(i)any action or inaction that constitutes a material breach by Aqua America (or any successor thereto) of this Agreement;
		

		
			(ii)a material diminution of the authority, duties or responsibilities of the Executive held immediately prior to the Change in Control;    
		

		
			(iii)a material diminution in the Executive’s base salary, which, for purposes of this Agreement, means a reduction in base salary of ten (10) percent or more that does not apply generally to all executive officers of Aqua America; or
		

		
			(iv)a material change in the geographic location at which the Executive must perform services under this Agreement, which, for purposes of this Agreement, means a requirement that the Executive be based at any office or location which is located more than fifty (50) miles from the Executive’s primary place of employment immediately prior to the Change in Control on other than on a temporary basis (less than 6 months). 
		

		
			(v)a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report, including a requirement that the Executive report to a corporate officer or employee instead of reporting directly to the board of directors of a corporation (or similar governing body with respect to an entity other than a corporation).
		

		
			(vi)a material diminution in the budget over which the Executive retains authority.
		

		
			A Termination of Employment after any of the foregoing events shall be a Good Reason Termination only if the Executive provides written notice to Aqua America of the existence of such event within ninety (90) days after the initial occurrence of such event, and Aqua America fails to remedy the event within thirty (30) days following the receipt of such notice. 
		

		

		

		 

		

			

		

		

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		(i)"Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Executive's 65th birthday.
		

		
			(j)"Subsidiary" shall mean any corporation in which Aqua America, directly or indirectly, owns at least a 50% interest or an unincorporated entity of which Aqua America, directly or indirectly, owns at least 50% of the profits or capital interests.
		

		
			(k)"Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be.
		

		
			(l)"Termination of Employment" shall mean the involuntary termination of the Executive's actual employment relationship with Aqua America and any of it Subsidiaries that actually employs the Executive.
		

		
			2.Notice of Termination.  Any Termination of Employment following a Change in Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof.  For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific provision in this Agreement relied upon,  (ii) briefly summarizes the facts and circumstances deemed to provide a basis for the Executive's Termination of Employment under the provision so indicated, and (iii) if the Termination Date is other than the date of receipt of such notice, specifies the Termination Date (which date shall not be more than 15 days after the giving of such notice for a termination other than a Good Reason Termination, or, in the event of a Good Reason Termination, not more than 15 days after the end of the cure period.)
		

		
			3.Severance Compensation upon Termination.  Subject to the provisions of Section 11 and Section 23 hereof, in the event of the Executive's involuntary Termination of Employment for any reason other than Cause or in the event of a Good Reason Termination, in either event within two years after a Change in Control, Aqua America shall pay to the Executive, upon the execution of a release in the form required by Aqua America of its terminating executives prior to the Change in Control, a single lump sum cash payment in an amount equal to ________  (__) times the Executive's Base Compensation, plus a pro-rata share of the Executive’s target bonus Executive under the Annual Cash Incentive Compensation Plan (or any successor plan maintained by Aqua America) based on the portion of the calendar year elapsed at the time of the Executive’s Termination of Employment, subject to required employment taxes and deductions.  Such payment shall be made to the Executive within 60 days following the Executive’s Termination of Employment. 
		

		

		

		 

		

			

		

		

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		4.Other Payments and Benefits.   The payment due under Section 3 hereof shall be in addition to and not in lieu of any payments or benefits, due to the Executive under any other plan, policy or program of Aqua America, and its Subsidiaries or Affiliates; provided, however, that an Executive shall not be eligible for benefits under any severance or stay-on bonus plan maintained by Aqua America, or any of its Subsidiaries or Affiliates, if the Executive is entitled to receive benefits under this Agreement as a result of a Termination of Employment within two years following a Change in Control.  In addition, if the Executive is entitled to a payment under Section 3 hereof, the Executive shall be entitled to
		

		
			(a) an amount equal to (i) ____________(__) months of the COBRA rate in effect at the Executive’s Termination of Employment, plus (ii) an additional amount which, after reduction for applicable income and employment taxes owed with respect to such additional amount, equals the income and employment taxes payable with respect to the amount described in clause (i), which shall be paid in a single lump sum at the time the benefit under Section 3 is paid; and
		

		
			(b) fully-paid executive level reasonable outplacement services from the provider or the Executive’s choice for ____ (_) months following the Termination Date. All reimbursements paid to the Executive for purposes of outplacement services shall be made or provided in accordance with Treas. Reg. §1.409A-1(b)(9)(v)(A).
		

		
			5.Trust Fund.  Aqua America sponsors an irrevocable trust fund pursuant to a trust agreement to hold assets to satisfy its obligations to the Executive under this Agreement.  Funding of such trust fund shall be subject to the discretion of Aqua America's President and Chief Operating Officer, as set forth in the agreement pursuant to which the fund has been established.   
		

		
			6.Enforcement.  
		

		
			(a)In the event that Aqua America shall fail or refuse to make payment of any amounts due the Executive under Sections 3 and 4 hereof within the respective time periods provided therein, Aqua America shall pay to the Executive, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3 or 4, as appropriate, until paid to the Executive, at the rate from time to time announced by PNC Bank, or its successor, as its "prime rate" plus 1%, each change in such rate to take effect on the effective date of the change in such prime rate.
		

		

		

		 

		

			

		

		

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		(b)It is the intent of the parties that the Executive not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder.  Accordingly, Aqua America shall pay the Executive the amount necessary to reimburse the Executive in full for all reasonable expenses (including all attorneys' fees and legal expenses) incurred by the Executive in enforcing any of the obligations of Aqua America under this Agreement within five business days following the Executive’s request for the reimbursement.
		

		
			7.No Mitigation.  The Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation earned by other employment or otherwise. 
		

		
			8.Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by Aqua America, or any of its Subsidiaries or Affiliates, and for which the Executive may qualify.  Notwithstanding any provision of this Agreement to the contrary, an Executive shall not be eligible for benefits under any severance or stay-on bonus plan maintained by Aqua America, or any of its Subsidiaries or Affiliates, if the Executive is entitled to receive benefits under this Agreement as a result of a Termination of Employment within two years following a Change in Control.  The provisions of this Agreement may require a variance from the terms and conditions of certain compensation or bonus plans under circumstances where such plans would not provide for payment thereof in order to obtain the maximum benefits for the Executive.  It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by Aqua America.
		

		
			9.No Set-Off.  Aqua America’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which Aqua America, or any of its Subsidiaries or Affiliates may have against the Executive or others.  
		

		

		

		 

		

			

		

		

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		10.Taxes.  Any payment required under this Agreement shall be subject to all requirements of the law with regard to the withholding of taxes, filing, making of reports and the like, and Aqua America shall use its best efforts to satisfy promptly all such requirements.
		

		
			    11.Certain Reduction of Payments.  
		

		
			(a)In the event that it shall be determined that any payment or distribution in the nature of compensation (within the meaning of section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would constitute an “excess parachute payment” within the meaning of section 280G of the Code, the aggregate present value of the Payments under the Agreement shall be reduced (but not below zero) to the Reduced Amount (defined below), provided that the reduction shall be made only if the Accounting Firm (described below) determines that the reduction will provide the Executive with a greater net after-tax benefit than would no reduction.  The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Payments under this Agreement without causing any Payment under this Agreement to be subject to the Excise Tax (defined below), determined in accordance with section 280G(d)(4) of the Code.  The term “Excise Tax” means the excise tax imposed under section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.  The Company shall reduce the Payments under this Agreement by first reducing Payments that are not payable in cash and then by reducing cash Payments.  Any Payment reductions made pursuant to this subsection (a) shall be nondiscretionary and made in the manner that (i) least reduces economic value to the Executive and (ii) amounts payable at different times with the same value shall be reduced pro-rata.  Only amounts payable under this Agreement shall be reduced pursuant to this subsection (b).  All determinations to be made under this subsection (b) shall be made by an independent certified public accounting firm selected by Aqua America immediately prior to the Change in Control (the “Accounting Firm”), which shall provide its determinations and any supporting calculations both to Aqua America and the Executive within 60 days of the Change in Control.  Any such determination by the Accounting Firm shall be binding upon Aqua America and the Executive.  All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this subsection (b) shall be borne solely by Aqua America.
		

		
			(b)All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by Aqua America.  Aqua America agrees to indemnify and hold harmless the Accounting Firm of and 
		

		 

		

			

		

		

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		from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm.
		

		
			12.Term of Agreement.  The term of this Agreement shall be indefinite until Aqua America notifies the Executive in writing that this Agreement will not be renewed at least sixty days prior to the proposed termination; provided, however, that (i) after a Change in Control during the term of this Agreement, this Agreement shall remain in effect until all of the obligations of the parties hereunder are satisfied or have expired, and (ii) this Agreement shall terminate if, prior to a Change in Control, the employment of the Executive with Aqua America or one or more of its Subsidiaries, as the case may be, shall terminate for any reason; provided,  however, that if a Change in Control occurs within 18 months after (a) the Executive’s termination incurred for any reason other than a voluntary resignation or retirement (a Good Reason Termination shall not be deemed voluntary) or termination for Cause or (b) the termination of this Agreement, the Executive shall be entitled to all of the terms and conditions of this Agreement as if the Executive’s termination had occurred on the date of the Change in Control.
		

		
			13.Successor Company.  Aqua America shall require any successor or successors (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business and/or assets of Aqua America, by agreement in form and substance satisfactory to the Executive, to acknowledge expressly that this Agreement is binding upon and enforceable against the successor or successors, in accordance with the terms hereof, and to become jointly and severally obligated with Aqua America to perform this Agreement in the same manner and to the same extent that Aqua America would be required to perform if no such succession or successions had taken place.  Failure of Aqua America to notify the Executive in writing as to such successorship, to provide the Executive the opportunity to review and agree to the successor's assumption of this Agreement or to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement.  As used in this Agreement, Aqua America means Aqua America and any successor or successors to its business and/or assets, jointly and severally.
		

		
			14.Notice.  All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows:
		

		

		

		 

		

			

		

		

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		If to Aqua America, to:
		

		
			Aqua America, Inc.
		

		
			762 W. Lancaster Avenue
		

		
			Bryn Mawr, PA 19010-3489
		

		
			Attention:Chairman, Executive Compensation
		

		
			 Committee
		

		
			 
		

		
			If to the Executive, to:
		

		
			____________________
		

		
			____________________
		

		
			____________________
		

		
			 
		

		
			or to such other names or addresses as Aqua America or the Executive, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section; provided, however, that if no such notice is given by Aqua America following a Change in Control, notice at the last address of Aqua America or to any successor pursuant to Section 13 hereof shall be deemed sufficient for the purposes hereof.  Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service.
		

		
			15.Governing Law.  This Agreement shall be governed by and interpreted under the laws of the Commonwealth of Pennsylvania without giving effect to any conflict of laws provisions.
		

		
			16.Contents of Agreement, Amendment and Assignment.  This Agreement supersedes all prior agreements, sets forth the entire understanding between the parties hereto with respect to the subject matter hereof, and cannot be changed, modified, extended or terminated except upon written amendment executed by the Executive and Aqua America. The provisions of this Agreement may require a variance from the terms and conditions of certain compensation or bonus plans under circumstances where such plans would not provide for payment thereof in order to obtain the maximum benefits for the Executive.  It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by Aqua America.
		

		
			17.   No Right to Continued Employment.  Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of Aqua America or any of its Subsidiaries.
		

		

		

		 

		

			

		

		

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		18.Successors and Assigns.  All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Aqua America hereunder shall not be assignable in whole or in part.
		

		
			19.Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application.
		

		
			20.Remedies Cumulative; No Waiver.  No right conferred upon the Executive by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity.  No delay or omission by the Executive in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof.
		

		
			21.Miscellaneous.  All section headings are for convenience only.  This Agreement may be executed in several counterparts, each of which is an original.  It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. 
		

		
			22.Arbitration.  In the event of any dispute under the provisions of this Agreement other than a dispute in which the sole relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in Bryn Mawr, Pennsylvania, in accordance with the National Rules for the Settlement of Employment Disputes of the American Arbitration Association, before one arbitrator who shall be an executive officer or former executive officer of a publicly traded corporation, selected by the parties.  Any award entered by the arbitrator shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction.  This arbitration provision shall be specifically enforceable.  The arbitrator shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement.  Aqua America shall be responsible for all of the fees of the American Arbitration Association and the arbitrator and any expenses relating to the conduct of the arbitration (including reasonable attorneys' fees and expenses).
		

		

		

		 

		

			

		

		

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		23.Section 409A of the Code.
		

		
			(a)Compliance. This Agreement shall be interpreted to avoid any penalty sanctions under section 409A of the Code.  If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under section 409A, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed.  For purposes of section 409A of the Code, all payments to be made upon a Termination of Employment under this Agreement may only be made upon a “separation from service” under section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments.  In no event shall the Executive, directly or indirectly, designate the calendar year of any payments to be made to him under this Agreement.  All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Treas. Reg. §1.409A-3(i)(1)(iv), including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
		

		
			 
		

		
			(b)Payment Delay.  To the maximum extent permitted under section 409A of the Code, severance payments payable under this Agreement are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any amount payable to the Executive during the six-month period following the Executive’s Termination of Employment that does not qualify within either of the foregoing exceptions and is deemed as deferred compensation subject to the requirements of section 409A of the Code, then such amount shall hereinafter be referred to as the “Excess Amount.”  If at the time of the Executive’s Termination of Employment, the Executive is a “specified employee” (as defined in section 409A of the Code and determined in the sole discretion of Aqua America  in accordance with Aqua America’s “specified employee” determination policy), then Aqua 
		
		
 

		

			

		

		

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		America shall postpone the commencement of the payment of the portion of the Excess Amount that is payable within the six-month period following the Executive’s Termination of Employment for six months following the Executive’s Termination of Employment.  The delayed Excess Amount shall be paid in a lump sum to the Executive within thirty (30) days following the date that is six (6) months following the Executive’s Termination of Employment, and any amount payable to the Executive after the expiration of such six (6) month period under this Agreement shall continue to be paid to the Executive in accordance with the terms of this Agreement.  If the Executive dies during such six-month period and prior to the payment of the portion of the Excess Amount that is required to be delayed on account of section 409A of the Code, such Excess Amount shall be paid to the personal representative of the Executive’s estate within thirty (30) days after the Executive’s death, and any amounts not delayed shall be paid to the personal representative of the Executive’s estate in accordance with the terms of this Agreement.

		
		
			IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written.
		

		
			 
		

		
			ATTEST:AQUA AMERICA, INC.
		

		
			 
		

		
			_____________________________By______________________________________
		

		
			Secretary
		

		
			EXECUTIVE
		

		
			 
		

		
			____________________________________________________________________
		

		
			Witness
		

		 

		

			

		

		

			-13-Exhibit 10.41

EMPLOYMENT AND CONFIDENTIALITY AGREEMENT

Community West Bank

 

Executive Vice President & Market President

This Employment and Confidentiality Agreement (the "Agreement") is made and entered into as of June 1, 2015 (the "Effective Date") by and among Community West Bank, NA (“Bank”) a wholly owned subsidiary of Community West Bancshares, Community West Bancshares, a California corporation (“Parent”) and William F. Filippin ("Executive").

Witnesseth

 

Whereas the Bank is a California national banking association duly organized, validly existing, and in good standing under the laws of the United States of America, with power to own property and carry on its business as it is now being conducted, with its principal place of business located at 445 Pine Street, Goleta, California 93117;

Whereas the Bank desires to avail itself of the skill, knowledge and experience of Executive in order to insure the successful management of its business;

Whereas the parties desire to enter into this Agreement;

Whereas the parties hereto desire to specify the terms of Executive's employment by the Bank and Company as controlling Executive's employment at the Bank;

Now, therefore, in consideration of the representations, warranties, and mutual covenants set forth in this Agreement, the following terms and conditions shall apply to Executive's employment with the Bank on and after the Effective Date:

1. ARTICLE 1- EMPLOYMENT AND TERM

1.1. Employment. The Bank shall employ Executive as the Bank's Executive Vice President and Market President (the "Position"), and Executive accepts such employment, in accordance with the terms and conditions set forth in this Agreement. The place of Executive's employment under this Agreement shall be in San Luis Obispo County, California, or at a location determined by the Board of Directors of the Bank (the "Board of Directors").

1.2. Term. The term of employment under this Agreement ("Initial Term") shall commence on the Effective Date and end on May 31, 2016, subject to early termination, provided in Article 4, below.  “Term” shall refer to the entire period of employment of Executive by Bank, commencing with the Effective Date, whether for the Initial Term, the Renewal Term as provided for in Section 1.3 below or whether terminated earlier as provided for in this Agreement.

1.3. Renewal. Upon the expiration of the Initial Term, Executive's employment under this Agreement shall automatically renew for a successive period of twelve (12) months ("Renewal Term"), and upon expiration of any subsequent Renewal Term shall automatically renew for a successive period of twelve (12) months; unless, at least three (3) months before the expiration of the Initial Term and any Renewal Term, as applicable, either (a) the Board provides written notice of non-renewal to Executive; or, (b) Executive provides written notice of non-renewal to Bank. Unless notice of non-renewal is provided, each party shall negotiate in good faith the terms and conditions for any Renewal Term of this Agreement.

 

1.4. Policies and Regulations. Executive shall observe, comply with and be bound by all of the policies, rules and regulations established by the Bank with respect to its executives and otherwise, all of which policies, rules and regulations are subject to change by the Bank from time to time.

2. ARTICLE 2- DUTIES OF EXECUTIVE

2.1. Powers. At all times Executive shall be empowered by and subject to the powers and authority of the Board of Directors and the Bank's shareholders. Executive shall report directly to the Bank's President and Chief Executive Officer (the "CEO").

 

2.2. Duties.

(a) Executive Vice President and Market President. Executive shall have the title of Executive Vice President and Market President of the Bank and directly or through subordinate supervision, shall take a leadership role in building, implementing, and overseeing systems, processes, workflows, and procedures to effectively grow the organization. Working closely with the CEO, the Executive is responsible for technical and operational activities on a day-to-day basis, as well as formulation of strategies and business plans to achieve the Bank's long range objectives in accordance with the Position. The Market President plays a critical role in planning, shaping, and guiding the future growth and development of the Bank. Executive agrees to render such services and perform such duties (the "Duties") in connection with all aspects of Bank's business as may be required by the Board of Directors and/or the CEO. Executive shall perform these Duties, and the Specific Duties as defined in Section 2.3, faithfully, diligently, to the best of Executive's ability and in the best interests of the Bank, consistent with the highest standards of the banking industries and in compliance with all applicable laws, rules, regulations, and policies applicable to the Bank, including, but not limited to, the Federal Deposit Insurance Act, as amended, and all regulations thereunder, and the Bank's Articles of Association and Bylaws.

 

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2.3. Specific Duties and Essential Functions. Without limiting any of Executive's Duties and obligations under Section 2.2, above, Executive agrees to undertake and perform all duties required of the Position (the "Specific Duties"), including, but are not limited to each of the following:

		·	Work closely with the President/CEO to develop and accomplish goals and strategic plans established by the Board of Directors and company executives.

		·	Provide clear directions on strategic goals, translating and prioritizing them into business and performance measures.

		·	Ensure strategic objectives are translated into tactical business plans with mechanisms for key measurements in place to monitor progress to completion.

		·	Contribute to the development of business unit strategy by providing a view on potential improvement for products or services and an assessment of the existing situation and anticipated changes in the external environment.

		·	Assist with the development and implementation plans for the operational infrastructure of credit and operational systems, processes, and personnel designed to accommodate the growth objectives of the Bank for the Northern region.  Ensure that business projects are delivered in line with directions from Management for the region.

		·	The Market President will be responsible for the profitability and growth of all banking activities, including both retail and commercial banking for the designated Northern region coordinating and supervising the lending activities of a team of commercial loan and banking relationship managers and support staff in their respective region, including business development activities, loan and deposit origination and loan portfolio management.

		·	Provides guidance on and ensures compliance with commercial and operational policies and procedures.

		·	Ensure that a proper infrastructure (building, systems, and staff complement) is maintained and developed for the Northern region.

		·	Participates in industry groups and community civic events in the Northern region to promote bank products and services that improve the quality of life in the communities we serve.

		·	Maintain knowledge of market and industry trends, competitors, and all aspects of the market.

		·	Establish and monitor key performance indicators for management of the commercial lending and operational team members.

		·	Lead, inspire and coach a team of high caliber professionals, creating succession to key roles and enhancing the Bank’s management capability.

		·	Foster a success-oriented, open, and accountable environment within the Bank.

		·	Represent the Bank with clients, prospects, investors, and business partners.

		·	Assist the CEO and the Board of Directors in accomplishing the activities to comply with the Bank's Strategic & Capital Plan.

		·	Serve as a member of the Executive Management Team

2.4. Conflict of Interests. Executive shall not directly or indirectly render any services of a business, commercial or professional nature, to any other person, firm or corporation, whether for compensation or otherwise, which create an actual or apparent conflict with the Bank's interests. Any determination as to a conflict of interest will be made by the Board of Directors in good faith.  Further, Executive shall not engage in any activity that would impair Executive's ability to act and exercise independent judgment in the best interests of Bank.

 

2.5. Exclusive Services. During employment by the Bank, Executive shall not, without the express prior written consent of the Board of Directors, engage directly or indirectly in any outside employment or consulting of any kind, whether or not Executive receives remuneration for such services. Nothing in this Section 2.5 shall prohibit Executive from providing volunteer consulting services (the "Volunteer Services") through established non-profit or charitable organizations in furtherance of such organization's purposes, so long as such Volunteer Services do not materially interfere with Executive's performance of Executive’s Duties and obligations under this Agreement.

 

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3. ARTICLE 3 - COMPENSATION. As the total consideration for the services that Executive renders under this Agreement, Executive shall be entitled to the following:

3.1. Base Salary. Effective June 1, 2015, the Bank shall pay Executive a Base Salary (“Base Salary”) of One hundred ninety five thousand ($195,000.00) per year, less income tax and other applicable withholdings. Executive’s Base Salary will be reviewed against the market every year and adjusted as warranted in the sole discretion of the Board of Directors. Base Salary shall be paid in accordance with Bank's regular payroll practices.

3.2. Annual Bonus. Executive shall be eligible to receive an annual bonus, at an amount, if any, determined by the Board of Directors, in its sole discretion. If it is determined that a Bonus will be paid Executive for any calendar year, the Bonus (the “Bonus”) will be paid at or near no later than mid- March after the close of the calendar year.  Executive acknowledges and agrees that nothing in this Agreement or the Bank's general policies shall require the Bank to pay Executive a Bonus for any year, to pay Executive a Bonus in particular amount for any year, or to pay Executive a Bonus by reason of the Bank's payment of a Bonus to any other executives of the Bank.

3.3. Equity.  Executive will be eligible to be considered for participation in the equity programs of the Company at the discretion of the Bank.

3.4. 401K Plan. Subject to Executive's compliance with the eligibility and other terms and conditions of the Bank’s 401(k) Plan (the “Plan”), Executive will be eligible to participate In the Bank's 401(k) Plan.

3.5. Bank Executive Benefits. Subject to Executive's satisfaction of any eligibility requirements, Executive shall be eligible to participate in other Bank employee benefit plans, for both Executive and family (including medical, dental, vision, prescription plan, life insurance, and short-term disability benefits) generally provided by the Bank to its senior executives. In all events, the Bank's liability to Executive shall be limited to the amount of premiums payable by the Bank to obtain the coverage(s) contemplated herein. Nothing in this Section 3.5 or any other provision of this Agreement shall prohibit the Bank from, or limit the right of the Bank to, changing or modifying the terms of any of the foregoing employee benefit plans or terminating any of such plans.

3.6. Vacation Time and Sick Days. Executive shall be entitled to vacation time of not more than four (4) weeks per year. Executive shall be entitled to accumulate up to six (6) weeks of accrued vacation, after which additional vacation will not accrue. The Bank shall not be obligated to pay or reimburse Executive at the end of any calendar year any amount for any unused vacation time. The Bank shall pay or reimburse Executive at the end of the Term or any Renewal Term after which there is no further Renewal Term, for any unused vacation time.  In addition to the forgoing vacation time, the Executive shall be entitled to up to eight (8) sick days per year.  Any sick days not used at the end of the year shall be forfeited.  The Bank shall have no obligation to pay or reimburse the Executive for unused sick days at the end of the Term or any Renewal Term after which there is no further Renewal Term.

3.7. Reimbursement for Expenses. The Bank shall reimburse Executive for any and all reasonable business expenses incurred by Executive on behalf of Bank in the performance of this Agreement, approved expenditures to be determined by the Board of Directors (the "Business Expenses"). A reimbursable Business Expense shall be of a nature qualifying it as a proper business expense deduction on the federal and state income tax returns of the Bank. Executive must be able to furnish adequate records and any other documentary evidence as may be required by Federal and State statues.  If such expenses are disallowed Executive agrees to reimburse Bank.

 

4. ARTICLE 4- TERMINATION

4.1. Termination At Will. Notwithstanding anything to the contrary herein, the Bank may terminate this Agreement at any time and for any reason, with or without cause, in accordance with the provisions of this Section 4. Except as otherwise specifically provided in this Agreement, such termination shall be effective either immediately upon receipt of notice of termination by Executive from the Bank or at such later date as the Bank may specify in the notice of termination. Notwithstanding anything in this Agreement to the contrary, the Bank shall have no obligation to continue Executive's employment under this Agreement for any period or any particular period.

4.2 Involuntary Termination or Non-Renewal; Without Cause.

(a)   If Executive’s employment is terminated under the provisions of this Agreement and such termination is not within one year following a Change in Control, Executive shall receive:

(i)     any incentive compensation earned but not yet paid, and

(ii)    reimbursement of expenses incurred  but not yet reimbursed.

(iii)   three months (3) months of Executive’s annual base salary as in effect on the date the Term of Employment ends.

 

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(b)  During the twelve (12) month period commencing upon a termination of employment under the terms of this Agreement, Executive (and, where applicable, his dependents) shall be entitled to continue participation in the group insurance health plans maintained by the Bank through “COBRA” the Consolidated Omnibus Budget Reconciliation Act of 1986 or health insurance programs with Bank contributing it’s portion of cost of premium to executive as if he were still an employee.  The foregoing notwithstanding, in the event that Executive becomes eligible for comparable group insurance coverage in connection with new employment, the coverage provided by the Bank under Section 3.5 shall terminate immediately. Any group health continuation coverage that the Bank is required to offer under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) shall commence when coverage under this Agreement terminates.

(c) Except as provided in this Agreement or required by law, all of Executive’s employee benefits and compensation shall cease on the last day on which Executive performs services as an employee of the Bank.

(d) Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Agreement (whether by seeking new employment or otherwise) and no such payment or benefit shall be reduced by earnings that Executive may receive from any other source.

(e) Non-Solicitation of Executives. Except as permitted by the prior written consent of either the President/CEO of the Bank or the Chairman of the Board of Directors, during the three month (90 days) period following the termination date, Executive shall not directly or indirectly solicit for employment or for independent contractor work any employee of the Bank, and shall not encourage any such employee to leave the employment of Bank.

(f) Non-Solicitation of Customers. During the three month (90 days)period following the termination date, Executive shall not directly: (a) solicit business from any present or potential customers of the Bank; (b) encourage any such customers to stop using the facilities or services of the Bank; or (c) encourage any such customers to use the facilities or services of any competitor of the Bank.

4.3. Termination by the Bank for Cause. The Bank may terminate this Agreement at any time for "cause" (as defined below) by giving to Executive ten (10) days prior written notice of termination.

(a) Definition of Cause. For purposes of this Section 4.3, the term "cause" means only:

(i)     conviction of or confession by Executive to theft, fraud, or embezzlement  including, but not limited to, against the Bank;

(ii)    Executive's refusal or failure, after specific written notice and demand by the Bank, to diligently perform services for the Bank as required by Article 2 hereof;

(iii)   Executive's breach or violation of any material written policy or regulation of the Bank, including, but not limited to, any written policy or regulation dealing with sexual harassment, discrimination based on age, sex, race, religion or other protected category, illicit drugs, and environmental protection matters;

(iv)   Executive's willful breach or violation of any law, rule or regulation (other than traffic violations or similar offenses);

(v)    Executive's taking of any material action which requires the prior approval of the Board of Directors without such approval; and

(vi)    Executive's breach of or failure to perform any of his fiduciary duties to the Bank or Parent or to any of the Parent’s shareholders which involves personal profit to Executive or such shareholders.

(b) Notice of Termination. If the Bank proposes to terminate this Agreement under clause (a)(i) above, this Agreement shall terminate automatically at the end of such 10-day period and the Bank shall have no further obligation to give Executive any further notice of termination. If the Bank proposes to terminate this Agreement under any of Section 4.3(a) above, this Agreement shall terminate automatically at the end of such 10-day period and the Bank shall have no further obligation to give Executive any further notice of termination unless Executive has cured, to the reasonable satisfaction of the Bank, during such 10-day period the alleged cause of termination and the Bank provides Executive written notice of its acceptance of such cure. Notwithstanding anything in this Agreement to the contrary, if the Bank proposes to terminate this Agreement for cause under this Section 4.3, so long as the Bank provides Executive a reasonable opportunity to cure any alleged cause, if the Bank is required to do so, the Bank may terminate this Agreement as of the date of the initial notice of termination and pay Executive an additional ten (10) days of severance compensation.

 

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(c) Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.3.

(d) Benefits.

(i)     Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.3, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii)    Additional Benefits. Executive shall be entitled to receive only the right to participate in the Bank's medical plan in accordance with the provisions of COBRA; provided that Executive shall be responsible for paying all applicable insurance premiums and the Bank shall have no obligation to pay any such premiums.

 

4.4. Termination by Executive on Other Event.

(a) Right to Terminate. Executive may terminate this Agreement at any time upon the occurrence of an Other Event (as defined below) by giving to the Bank sixty (60) days prior written notice of termination. Executive must deliver his notice of termination under this Section 4.4(a) within sixty (60) days after the occurrence of any Other Event specified below. Executive shall specify in reasonable detail in such notice of termination the basis for the claim that the Bank has breached or failed to perform any of its material obligations or covenants. This notice of termination must set forth in reasonable detail the facts and circumstances that support Executive's claim of right to terminate this Agreement under this Section 4.4.

(b) Definition. For purposes of this Agreement the term "Other Event" shall mean the Bank's breach or failure to perform any of its material obligations or covenants under this Agreement, and either the Bank's failure to cure such breach or failure of performance within the 15-day period specified in Section 4.4(c) below, or the continuation of such breach or failure of performance after such 15-day period without Executive's written consent.

 

(c) Right to Cure. The Bank shall have an opportunity to cure said breach or failure of performance within fifteen (15) days of Bank's receipt of written notice specifying the material breach and the opportunity for Bank to resolve said breach.

(d) Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.3.

(e) Benefits.

(i)     Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.3, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii)    Additional Benefits. Executive shall be entitled to receive the Benefits specified in Section 4.2, above, in accordance with and subject to the terms of such Section.

4.5. Termination on Death of Executive. This Agreement shall terminate automatically upon Executive's death.

(a) Compensation. The Bank shall pay to Executives’ beneficiary or beneficiaries or estate, as the case may be the compensation which has been earned through the date of termination of this Agreement under this Section 4.5.

(b) Benefits. Executives’ beneficiary or beneficiaries or estate, as the case may be, shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.6, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

4.6. Termination on Mental or Physical Disability of Executive.

(a) Right to Terminate. If Executive is found to have a Disability (as defined in Section 4.6(b) below) that renders him incapable of performing Executive's Duties and/or Specific Duties for a period of thirty (30) consecutive days, or a cumulative period of one hundred twenty (120) days in any one (1) calendar year, the Bank, acting in good faith, may terminate this Agreement as of the termination date specified in a written notice of termination delivered to Executive, except that there is no minimum Notice Period requirement.

(b) Definition of Disability. For purposes of this Agreement only, Executive shall be considered disabled and shall be considered to have a disability (a “Disability”) if Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Executive’s employer.

 

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(c) Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.6.

(d) Benefits.

(i)     Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.6, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii)    Additional Benefits. Executive shall be entitled to receive the Benefits specified in Section 4.2, above, in accordance with and subject to the terms of such Section.

(e) Dispute re Disability. If there should be a dispute between the Bank and Executive as to Executive's physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist mutually agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then by a physician or psychiatrist designated by the Santa Barbara County Medical Association.  Such physician or psychiatrist shall be instructed to make the determination in accordance with the definition of Disability set forth in Section 4.6 hereof.

4.7. Termination on Change in Control.

(a)   If, within one year following a Change of Control, Executive’s employment is terminated under the provisions of this Agreement or as a result of the Bank’s election not to extend this Agreement and the Term of Employment pursuant to this Agreement, Executive shall receive:

(i)     The sum of twelve months (12) months of the Executive’s annual Base Salary under Section 6(a) hereof as in effect on the date the Term of Employment ends,

(ii)    any incentive compensation earned but not yet paid, and

(iii)   any expenses incurred under this Agreement but not yet reimbursed.

(b)  The payment to which Executive is entitled pursuant to this Agreement shall be paid in a single installment within forty-five (45) days of his termination with no percent value or other discount or, at Executive’s option, on a deferred basis with no premium.

 

(c) During the twelve months (12) month period commencing on the date his Term of Employment ends under this Agreement, Executive (and, where applicable, his dependents) shall be entitled to continue participation in the group health insurance plans maintained by the Bank the Consolidated Omnibus Budget Reconciliation Act of 1986 under “COBRA”, or health insurance programs with Bank contributing it’s portion of cost of premium to executive as if he were still an employee of the Bank. Where applicable, Executive’s salary for purposes of such plans shall be deemed to be equal to his annual Base Salary in effect immediately prior to his termination.  The foregoing notwithstanding, in the event that Executive becomes eligible for comparable group insurance coverage in connection with new employment, the coverage provided by the Bank under this Section 4.2 shall terminate immediately. Any group health continuation coverage that the Bank is required to offer under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) shall commence when coverage under this Section 4.2 terminates.

(d) Except as provided in this Agreement or required by law, all of Executive’s employee benefits and compensation shall cease on the last day on which he performs services as an employee of the Bank.

(e) Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Agreement) (whether by seeking new employment or otherwise) and no such payment or benefit shall be reduced by earnings that Executive may receive from any other source.

(f) Notwithstanding any other provision of this Agreement, the Bank shall not be required to make any payment or property transfer to, or for the benefit of, Executive (under this Agreement or otherwise) that would be nondeductible by the Bank by reason of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or that would subject Executive to the excise tax described in Section 4999 of the Code.

 

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4.8. Clawback Right.

(a)  To the extent permitted under controlling state and federal law, if at any time, either before or after Executive’s resignation or termination (for any reason) of employment with the Bank under Section 4.2, above, or otherwise, it is determined that any of the circumstances described in this Section 4.8(b) apply, then the Bank shall have the following rights (the “Clawback Rights”):

(i)     To deem as forfeited any and all payments and benefits or other amounts to which Executive has, may have, or may claim to have, a right to receive under this Agreement;

(ii)     To recover from Executive or require Executive to reimburse the Bank for any and all payments and benefits or other amounts already paid to Executive under this Agreement, and

(iii)    To recover any amount described in this Agreement.

(b)  The Bank’s Clawback Rights shall apply in the following circumstances:

(i)     The Bank determines that during Executive’s employment with the Bank Executive engaged in conduct that would constitute “Cause” under the terms of this Agreement, or subsequently resulted in Executive’s felony conviction or entry of a guilty plea or plea of no lo contendere to a felony charge as a result of such conduct.

(ii)     In addition to any recovery triggered under this Agreement, if the Bank is required to prepare an accounting restatement due to the material noncompliance of the Bank with any financial reporting requirement under applicable law, and such restatement results in Executive have been paid an incentive payment or bonus payment larger than that which would have been due based on the accounting restatement, then the Bank shall be entitled to recover from Executive the excess of any incentive payment or bonus payment paid to Executive during the 3-year period preceding the date on which the Bank is required to prepare the accounting restatement, over the amount of the incentive payment or bonus which should have been paid based on the restated financial reports during such 3-year period.

5. ARTICLE 5- CONFIDENTIALITY AND NON-SOLICITATION

5.1. Confidentiality and Trade Secrets. Executive acknowledges that, in the course of his employment with the Bank, Executive will acquire information about the Bank's borrowers and customers, and about the terms and conditions of Bank business plans, transactions, pricing information for the purchase or sale of assets, financing and securitization arrangements, research materials, manuals, computer programs, formulas analyzing assets portfolios, techniques, data, marketing plans and tactics, technical information, lists of asset sources, the processes and practices of the Bank and related companies, information contained in electronic or computer files, financial information, salary and wage information, and other information that is designated by the Bank or its affiliates to be confidential or that Executive knows or should know is confidential information provided by third parties and that the Bank or its affiliates are obligated to keep confidential as well as other proprietary information of the Bank or its affiliates ("Confidential Information"). Executive acknowledges that all Confidential Information is and shall continue to be the exclusive property of the Bank. Executive agrees not to disclose any Confidential Information, either during the Term or thereafter, directly or indirectly, under any circumstances or by any means, to any third person or party without the prior written consent of the Bank.

5.2. Non-Solicitation of Executives. Except as permitted by the prior written consent of either the President/CEO of the Bank or the Chairman of the Board of Directors, during the twelve month period following the termination date in the event of a Change of Control, Executive shall not directly or indirectly solicit for employment or for independent contractor work any employee of the Bank, and shall not encourage any such employee to leave the employment of Bank.

5.3. Non-Solicitation of Customers. In the event of a Change in Control, during the twelve month period following the termination date, Executive shall not directly: (a) solicit business from any present or potential customers of the Bank; (b) encourage any such customers to stop using the facilities or services of the Bank; or (c) encourage any such customers to use the facilities or services of any competitor of the Bank.

5.4. Parent to Benefit from Provisions. To the extent any provisions of this Article 5 relate in any way to Confidential Information and trade secrets of the Bank or the Parent, then the obligations of Executive set forth herein shall also extend to the Parent and inure to its benefit.

 

6. ARTICLE 6- BANK'S OWNERSHIP IN EXECUTIVE'S WORK

 

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6.1. Bank's Ownership. Executive agrees that all inventions, discoveries, improvements, trade secrets, formulas, techniques, processes, and know-how, whether or not patentable, and whether or not reduced to practice, that are conceived or developed during Executive's employment with the Bank, either alone or jointly with others, or relating to the Bank or to the banking industry ("Bank's Work"), and any written record that Executive may maintain of Bank's Work, shall be owned exclusively by the Bank. Executive hereby assigns to Bank, all of Executive's right, title, and interest, if any, in such intellectual property defined as Bank's Work. Executive shall furnish to Bank any and all such records pertaining to Bank's Work, immediately upon request. Notwithstanding anything in this Section 6.1 to the contrary, any inventions, discoveries, improvements, trade secrets, formulas, techniques, processes and know-how conceived or developed by Executive solely while providing Volunteer Services (as defined in Section 2.5, above) shall not be considered Bank’s Work.

6.2. Return of Bank's Property and Materials. Upon termination of his employment with the Bank, Executive shall deliver to the Bank all Bank property and materials that are in Executive's possession or control, including Bank's Work, within five (5) calendar days.

6.3. Bank to Benefit from Provisions. To the extent any provisions of this Article 6 relate in any way to information, property, rights, projects, ventures, or inventions of the Bank, then the obligations of Executive set forth in this Article 6 shall also extend to the Bank and inure to its benefit.

7. ARTICLE 7- ARBITRATION

7.1. Obligation to Arbitrate. If any dispute, controversy or claim arises out of or relates to this Agreement, such dispute, controversy, or claim shall be settled by binding arbitration only, in accordance with the Rules of the American Arbitration Association (“AAA”) or legal principles and damages according to California Law, and shall be selected by and agreed upon by both parties. Judgment upon the arbitrator's award shall be entered in the jurisdiction thereof. The arbitrator shall determine which party is the prevailing party and shall include in the award, the prevailing party's actual attorney's fees and costs. The arbitrator shall have no authority to grant either punitive or consequential damages to any party. Nothing in this Article 7 shall prohibit or limit the right of the Bank to commence suit or other judicial proceedings seeking injunction or other equitable relief in the event of Executive's breach or threatened breach of any of his obligations under any of Sections 5 or 6 of this Agreement.

7.2. Arbitrator. If the parties cannot agree upon the selection of the arbitrator within ten (10) days of written demand upon the other, the parties shall choose from a list to be provided by the main Los Angeles office of the AAA using the strike method, with the first to strike being determined by the flip of a coin and proceeding alternatively until one arbitrator remains.

7.3. Fee Deposit. As soon as practicable after selection of the arbitrator, the arbitrator or its designated representative shall determine a reasonable estimate of anticipated fees and costs setting forth that parry's pro rata share of said fees and costs. Thereafter, each party shall, within ten (10) days of receipt of said statement, deposit said sum with the arbitrator.

7.4. Hearing Schedule. Unless the parties or the arbitrator agree otherwise, within one hundred and twenty (120) days of the selection of the arbitrator, a hearing shall be conducted at a time and a place in Santa Barbara County agreed upon by the parties.

7.5. Award. Unless the parties or the arbitrator agree otherwise, within thirty (30) days of conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining the basis for the arbitrator's award. The Award of the arbitrator shall be final, binding, and non- appealable, except as otherwise permitted by California law, and may be enforced by obtaining a final judgment in any court of competent jurisdiction.

8. ARTICLE 8- MISCELLANEOUS

8.1. Parent as a Party. Parent is a party to this Agreement solely for purpose of receiving the benefits of Sections 5, 6 and 8 hereof. Parent shall have no liability or obligation to Executive with respect to the Bank's performance or non-performance of any of its obligations under this Agreement.

8.2. Injunctive Relief. Executive hereby acknowledges and agrees that it would be difficult to fully compensate the Bank for damages for a breach or threatened breach of any of the provisions of Sections 5 or 6 hereof. Accordingly, Executive specifically agrees that the Bank and/or Parent shall be entitled to temporary and permanent injunctive relief to enforce the provisions of Sections 5 or 6 hereof and that such relief may be granted without the necessity of proving actual damages. The foregoing provision with respect to injunctive relief shall not, however, prohibit the Bank or Parent from pursuing any other rights or remedies available to the Bank or Parent for such breach or threatened breach, including, but not limited to, the recovery of damages from Executive or any third parties.

8.3. Authorized Representative of the Bank. Although Executive is an officer of the Bank, any and all actions and decisions to be taken or made by the Bank under this Agreement or with respect to the employment relationship described in this Agreement, and any and all consents, approvals and agreements permitted or required to be given or made on the part of the Bank under this Agreement, shall be made and accomplished by the Bank only through the actions taken, in writing, of its CEO or such other person or persons as the Board of Directors may from time to time designate.

 

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8.4. Tax Advice. Executive represents and warrants to the Bank that he has sought and received independent professional advice concerning the treatment of the transactions contemplated by this Agreement under the Code, the rules and regulations promulgated thereunder by the Internal Revenue Service (the “IRS”), and the income tax laws of any other applicable taxing jurisdictions, and that he is not relying upon any representation, warranty or other statement made by the Bank, its counsel or anyone acting on behalf of the Bank with respect to such treatment or the structuring of the compensation payable under this Agreement as assuring any particular income tax treatment. Executive understands and agrees that neither the Bank, its counsel nor anyone acting on behalf of the Bank has made or is making any representation, warranty or other statement with respect to such income tax treatment.

8.5. Notice. Any notice or other communication required or permitted under this Agreement shall be in writing and shall be deemed received (i) when personally delivered, or, (ii) if mailed, one (1) week after having been placed in the United States mail, registered, or certified, postage prepaid, addressed to the party to whom it is directed at the address listed below or (iii) if sent by facsimile, email or other form of electronic transmission, one (1) business day after the notice is transmitted to the facsimile number, email address or other address specified on the signature page of this Agreement, and the transmitting party either receives confirmation of transmission or does not receive notice of non-delivery.

8.6. Entire Agreement. This Agreement, including any documents expressly incorporated into it by the terms of this Agreement, constitutes the entire agreement between the parties. This Agreement supersedes and rescinds any and all prior oral and written agreements, understandings, negotiations, and discussions relating to the employment of Executive by Bank. This Agreement may not be modified, supplemented or amended by oral agreement, but only by an agreement in writing signed by Bank and Executive.

8.7. Amendment. This Agreement may be amended only in writing duly executed by all of the parties hereto. This Agreement is intended to company with Section 409A of the Code and shall be interpreted so that it is in compliance.  To the extent necessary to such compliance, any payment due under this Agreement otherwise payable by Bank may be delayed for six (6) months or such longer period of time, following the date of Executive’s termination as is necessary to fully comply with Section 409A of the Code.

8.8. Survival of Certain Provisions. Notwithstanding anything to the contrary contained herein, in the event of any termination of this Agreement, the rights and obligations of the parties under Sections 4.2, 4.3(c), 4.3(d), 4.4(d), 4.4(e), 4.5(a), 4.5(b), 4.6(c), 4.6(d), 4.6(e), 4.7 and 4.8 and Articles 5, 6, 7 and 8 hereof shall survive such termination and shall continue in full for and effect until fully performed.

8.9. Waivers. All rights and remedies of the parties hereto are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to limit or exclude any other rights or remedies which the parties hereto may have. Neither party hereto shall be deemed to waive any rights or remedies under this Agreement unless such waiver be in writing and signed by such party. No delay or omission on the part of either party hereto in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver of any right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any future occasion.

8.10. Successors and Assigns. The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation, or otherwise to all or substantially all of the business or assets of the Bank to expressly assume and agree to perform in writing this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession or assignment had taken place. This Agreement shall inure to the benefit of and be binding upon the Bank, its successors and assigns, and upon Executive and Executive's heirs, executors, administrators and legal representatives. No party to this Agreement may delegate its or their duties hereunder without the prior written consent of the other party to this Agreement.

8.11. Governing Law. This Agreement is entered into in the State of California, and California law shall in all respects govern the validity, construction, and interpretation of this Agreement.

8.12. Attorney's Fees. In any arbitration, suit or other action between the parties seeking enforcement of any of the terms and provisions of this Agreement, the prevailing party in such arbitration, suit or other action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, not limited to taxable costs, and a reasonable attorney's fees. In order for a party to change its address or other information for the purpose of this section, the party must first provide notice of that change in the manner required by this section.

8.13.   Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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8.14.  Advice of Counsel.  Before signing this Agreement, Executive either (i) consulted with and obtained advice from his independent legal counsel in respect to the legal nature and operation of this Agreement, including its impact on his rights, privileges and obligations, or (ii) freely and voluntarily decided not to have the benefit of such consultation and advice with legal counsel.

9. ARTICLE 9- RECEIPT OF AGREEMENT

9.1. Receipt of Agreement. Each of the parties hereto acknowledges that they have read this Agreement in its entirety and does hereby acknowledge receipt of a fully executed copy thereof. A fully executed copy shall be an original for all purposes, and is a duplicate original.

IN WITNESS WHEREOF, the parties hereto have caused this Employment and Confidentiality Agreement to be executed as of the Effective Date set forth above.

ACCEPTED AND AGREED:

EXECUTIVE

 

	
By:

	 	 
	
Name:

	 	 
	
Address for Notice:

	 
	  	 
	  	 
	
Telephone:

	 	 

COMMUNITY WEST BANK

A National Banking Association

	
By:

		 
	 	
 Martin E. Plourd, President & CEO

	 

Address for Notice for Community West Bank and Community West Bancshares:

445 Pine Street

Goleta, California 93317

Attention: Martin E. Plourd, President & CEO

Telephone:  (805) 692-4382

Facsimile:   (805) 692-2897

COMMUNITY WEST BANCSHARES

	
By:

	
 

	 
	 	
Martin E. Plourd, President & CEO

	 

 

 

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