Document:

EXHIBIT 10.1

 

SEPARATION AND SEVERANCE AGREEMENT

 

THIS SEPARATION AND SEVERANCE AGREEMENT by and
between Communications Systems, Inc., a Minnesota corporation (the “Company”), and Anita Kumar (the “Executive”)
is entered into and effective as of this 1st day of August, 2021 (the “Effective Date”).

 

WHEREAS, the Executive is currently serving
as the Chief Executive Officer of the Company; and

 

WHEREAS, the Company and the Executive are currently
parties to the following agreements governing the terms and conditions of employment of the Executive and that provide for certain benefits
upon the termination of the Executive under certain conditions set forth therein: (a) the Employment Agreement effective as of December
1, 2020 (the “EA”) and (b) the Change in Control Agreement effective as of December 8, 2020 (the “CIC Agreement”);
and

 

WHEREAS, the Company and the Executive have
negotiated a severance arrangement reflected herein which will replace her entitlement to the benefits under the EA and the CIC and Agreement;
and

 

WHEREAS, the Company has entered into a Securities
Purchase Agreement with Lantronix, Inc. (“Buyer”) dated as of April 28, 2021 (the “SPA”) pursuant
to which, subject to the terms and conditions set forth therein, Buyer will acquire all of the issued and outstanding stock of the Company’s
wholly owned subsidiary, Transition Networks, Inc. and the entire issued share capital of the Company’s wholly owned subsidiary,
Transition Networks Europe Limited (collectively, the “Transaction”); and

 

WHEREAS, the closing of the Transaction would
constitute a “change in control” under the CIC Agreement; and

 

WHEREAS, in connection with the Transaction,
Executive intends to accept employment with Buyer and in order to facilitate Executive’s employment with Buyer, the Company intends
to terminate Executive’s employment; and

 

WHEREAS, the Executive and the Company have
agreed to the severance as set forth herein and in connection therewith, have agreed to terminate the EA and the CIC Agreement, subject
to the closing of the Transaction on or prior to August 30, 2021 (the date of such closing being referred to as the “Closing
Date”).

 

THEREFORE, the Company and the Executive, for
good and valuable consideration as set forth herein, agree as follows:

 

1.               
Interpretation. Unless otherwise indicated, capitalized terms used herein shall have the meaning
set forth in this Agreement. 

 

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2.               
Severance Benefit. 

 

a.               
Subject to the terms and conditions set forth in this Agreement, the Company will pay to Executive
an amount (the “Severance Benefit”) equal to $469,784, less applicable tax withholding as provided in Section 3.

 

b.               
 Upon the Company’s receipt of the Release (as defined in Section 4) properly executed by Executive,
and on the condition that all rights of rescission have expired without exercise by Executive, the Company will pay the Severance Benefit
as follows: 

 

(i)       $140,000
(the “First Payment”) will be paid to Executive with the first regular Company payroll immediately following expiration
of all rights of rescission; and

(ii)       $329,784
(the “Remaining Payments”) will be paid to Executive during the Benefit Period in 24 equal installments of $13,741
every other week at the same time as the Company’s payroll is paid, beginning with the first regular Company payroll after the First
Payment is made.

 

c.               
If the Executive does not execute and deliver the Release, the Executive shall forfeit the right
to receive any payments of the Severance Benefit and thereafter the Company shall have no further obligations under this Agreement. 

 

d.               
If the Executive executes and delivers the Release and thereafter exercises any right of rescission,
at the Company’s discretion, the Executive shall forfeit the right to receive any payments of the Severance Benefit and thereafter
the Company shall have no further obligations under this Agreement.

 

e.               
Additionally, the following terms shall have the meanings set forth below:

 

“Benefit Period” means
the first full pay period of the Company beginning after the Closing Date and ending with the last day of the pay period ending closest
to the one year anniversary of the Closing Date, subject to earlier termination as set forth herein.

 

“Reason for Benefit Acceleration”
means during the Benefit Period (i) the Buyer terminates Executive’s employment without Cause (as defined below), (ii) Executive
terminates her employment with the Buyer for Good Reason (as defined below), or (iii) Executive dies.

 

3.               
Tax Withholding. To the extent required by law, the Company shall deduct and withhold from
the Severance Benefit an amount sufficient to satisfy federal, state and local withholding tax requirements on any payments made to the
Executive under this Agreement.  Determinations by the Company as to withholding shall be binding on the Executive.

 

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4.               
Release. As a condition to the payment of the Severance Benefit, the Executive shall execute
and deliver, and shall not exercise any right of rescission, a release in the form attached hereto as Exhibit A (the “Release”).

 

5.               
Termination of Severance Benefit. In the event that Executive’s employment with Buyer
is terminated (a) by Buyer for Cause or (b) by Executive, except for Good Reason, then the Company will have no obligation to make any
further payments of the Severance Benefit under this Agreement from and after the date of such termination. Upon the occurrence of a termination
of Executive’s employment as provided in this Section 5, Executive will give the Company written notice thereof no later than five
(5) business days thereafter.

 

a.               
“Cause” means (i) gross negligence or gross neglect of duties; (ii) commission
of a felony, or a gross misdemeanor involving moral turpitude that in the reasonable determination of the Board of Directors of the Buyer
is materially and demonstrably injurious to Buyer or that impairs Executive’s ability to substantially perform Executive’s
duties with Buyer; or (iii) fraud, disloyalty, dishonesty or willful violation of any law or a willful violation of a Buyer policy that,
after warning, remains a continuing violation, committed in connection with the Executive’s employment;

 

b.               
“Good Reason” means the existence of any of the following without the Executive’s
written consent:

		i.	A material diminution by Buyer in the Executive’s annual base salary;

		ii.	A material diminution in the Executive’s authority, duties or responsibilities
as in effect immediately after the Closing Date;

		iii.	A material diminution in the authority, duties or responsibilities as in effect immediately after the
Closing Date, of the person 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 Buyer’s Board of Directors, if the Executive otherwise
reported or was to otherwise directly report to the Buyer’s Board;

		iv.	A material diminution in the budget over which the Executive retains authority
as in effect after the Closing Date;

		v.	Buyer requiring the Executive to be based more
than thirty (30) miles from where the Executive’s office is located immediately prior to the Closing Date, except for required travel
on Buyer’s business, and then only to the extent substantially consistent with the business travel obligations which Executive and
Buyer agreed she would undertake on behalf of Buyer after the Closing Date; or

		vi.	any other action or inaction that constitutes a material breach by Buyer of any agreement between Buyer
and Executive.
	 	 	 

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6.               
Benefit Acceleration. Upon the occurrence of a Reason for
Benefit Acceleration, Executive or her personal representative, as the case may be, will give the Company written notice thereof no later
than fifteen (15) business days thereafter. The Company will pay the remaining amount of the Severance Benefit to Executive or her estate,
as the case may be, in one lump sum within five (5) business days after confirmation of such occurrence.

 

7.               
Other Agreements. If the Transaction is not consummated for any reason, if Executive terminates
Executive’s employment voluntarily prior to the Closing Date or if Executive does not accept employment with Buyer on the Closing
Date, this Agreement shall be null and void. Prior to the Closing Date, the Company may not terminate Executive’s employment except
for Cause other than the Company’s termination of Executive’s employment in connection with the Transaction on the day prior
to the Closing Date. Executive shall deliver a resignation letter to the Executive Chairman of the Board of Directors of the Company to
give effect to her resignation as a director of the Company as specified therein. 

 

8.               
Reimbursement. The Company will reimburse the Executive for all reasonable and documented
attorney’s fees incurred by the Executive in the negotiation, drafting, and execution of this Agreement, up to a maximum of $5,000.

 

9.               
Excess Parachute Payment. Notwithstanding anything to the contrary in this Agreement, the
payments made to the Executive hereunder shall be one dollar ($1.00) less than the amount which would cause the payments to the Executive
(including payments to the Executive which are not included in this Agreement) to be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended. Any reductions in payments under this section will come first from the First Payment
and then from the Remaining Payment, in reverse chronological order with respect to the Remaining Payments reduction.

 

10.            
409A. The intent of the Parties is that payments and benefits under the Agreement comply with
or be exempt from Section 409A of the Code (“Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement
shall be interpreted to be in compliance therewith or exempt therefrom. For purposes of Section 409A, the phrase “termination of
employment” (or other words to that effect), as used in this Agreement, shall be interpreted to mean “separation from service”
as defined under Section 409A. To the maximum extent permitted under Section 409A, the cash severance and other benefits payable under
this Agreement are intended to meet the requirements of the short-term deferral exemption under Section 409A and the “separation
pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii). For purposes of the application of Treas. Reg. § 1.409A-l(b)(4)(or
any successor provision), each payment in a series of payments to Executive will be deemed a separate payment. To the extent any cash
payment or continuing benefit payable upon Executive’s termination of employment is nonqualified deferred compensation subject to
Section 409A, then, only to the extent required by Section 409A, such payment or continuing benefit shall not commence until the date
which is six (6) months after the date of separation from service, and any previously scheduled payments shall be made in a lump sum (without
interest) on that date. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under
this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred
by Executive on account of non-compliance with Section 409A.

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11.            
Effect on EA and CIC Agreement; Termination. The Company and the Executive acknowledge and
agree that the terms of this Agreement are in compromise and full satisfaction of the rights and obligations of the parties under the
EA and CIC Agreement. This Agreement constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject
matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both
written and oral, with respect to such subject matter, including the EA and the CIC which shall be terminated on the Effective Date and
shall be of no further force and effect. 

 

12.            
Right to Consult Counsel. Executive has been advised of the Executive’s right to consult
with an attorney prior to entering into this Agreement.

 

13.            
Executive’s Heirs, etc. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
If the Executive should die while any amounts would still be payable to the Executive hereunder if the Executive had continued to live,
all such amounts, unless other provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s
designee or, if there be no such designee, to the Executive’s estate.

14.            
Notices. Any notice or communication required or permitted under the terms of this Agreement
shall be in writing and shall be delivered personally, or sent by registered or certified mail, return receipt requested, postage prepaid,
or sent by nationally recognized overnight carrier, postage prepaid, or sent by facsimile transmission to the Company at the Company’s
principal office and facsimile number in Minnetonka, Minnesota, or to the Executive at the address appearing on the books and records
of the Company. Such notice or communication shall be deemed given (a) when delivered if personally delivered; (b) five mailing days after
having been placed in the mail, if delivered by registered or certified mail; (c) the business day after having been placed with a nationally
recognized overnight carrier, if delivered by nationally recognized overnight carrier, and (d) the business day after transmittal when
transmitted with electronic confirmation of receipt, if transmitted by facsimile to the Company. Any notice given by email shall not be
considered to have been properly given but only considered as a courtesy copy of a notice that is properly given under this Section 14.
Any party may change the address or facsimile number to which notices or communications are to be sent to such party by giving notice
of such change in the manner herein provided for giving notice. Until changed by notice, the following shall be the address and facsimile
number, if any, to which notices shall be sent:

 

If to the Company, to:

Attn: Chief Financial Officer

Communications Systems, Inc.

10900 Red Circle Drive

Minnetonka, MN 55343

Fax: (952) 946-1835

 

If to the Executive to:

Anita Kumar

To the address separately provided to the Company.

 

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15.             Amendment
or Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by the Executive and such officer as may be specifically designated by the Board No waiver by
either party hereto at any time of any breach by the other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party, which are not set forth expressly in this Agreement. This Agreement constitutes
the entire agreement between the Company and the Executive as to the subject matter hereof. No rights are granted to the Executive by
virtue of this Agreement other than those specifically set forth herein.

 

16.            
Governing Law. This Agreement will be governed by the laws of the State of Minnesota without
giving effect to conflicts or choice of laws principles. Any and all legal actions, suits and proceedings arising out of our relating
to this Agreement must be brought exclusively in any Minnesota state or federal court located in Hennepin County, Minnesota.

 

17.            
Execution of Agreement. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement, and all of which, when taken together, shall be deemed to constitute one
and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective
execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Counterparts
may be delivered via facsimile, electronic mail (including .pdf or any electronic signature complying with the U.S. Federal ESIGN Act
of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly
delivered and be valid and effective for all purposes.

 

18.            
Attorneys Fees. In the event of any dispute over, relating or referring to this Agreement,
including but not limited to collections actions, breach of contract actions, declaratory judgment actions or equitable injunction actions
the prevailing party shall recover its expenses (including reasonably attorneys’ fees) from the other party.

 

19.            
Minimum Cash Balance. At any time and all times during the Benefit Period, the Company shall
maintain a cash balance equal to 100% of the amount then due as the Severance Benefit. 

 

[remainder of page intentionally left blank]

 
 

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IN WITNESS WHEREOF, the Executive and a duly
authorized representative of the Company have signed this Agreement as of the Effective Date set forth above.

 

 

	EXECUTIVE: 	 	COMPANY:	 
	 	 	 	 	 	 
	/s/ Anita Kumar	 	COMMUNICATIONS SYSTEMS, INC.	 
	Anita Kumar	 	 	 	 	 
	 	 	 By:	 	 /s/ Mark Fandrich	 	 
	 	 	 	Its:  	Chief Financial Officer	 
	 	 	 	 	 	 

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EXHIBIT A

GENERAL RELEASE OF CLAIMS

(Signed After Employment
Ends)

This General Release is provided pursuant to
and in accordance with the terms of the Separation Agreement dated the 1st day of August, 2021 between Communication Systems, Inc. (the
“Company”) and Anita Kumar (“Employee”).

1.       Release
of Claims. In consideration of the Severance (as defined in the Separation Agreement) and other valuable consideration described in
the Separation Agreement and herein, the Employee, on behalf of herself and her heirs, successors and assigns, hereby releases, agrees
not to sue, and forever discharges Communications Systems, Inc., any affiliated entities, and their respective present and former shareholders,
members, partners, officers, directors, governors, managers, employees, representatives, consultants, insurers, agents, and the successors
and assigns of each, in their individual and official capacities (collectively, “Released Parties”), of and from all claims,
demands, actions, causes of action, administrative claims, liability, damages, punitive and liquidated damages, attorneys’ fees,
costs and disbursements, individual and/or class action claims, and demands of any kind whatsoever that she has or might have against
any of them, known or unknown, in law or equity, contract or tort, however originating or existing, through the time she signs this General
Release. This General Release includes all claims the Employee could bring on her own behalf as well as those that could be brought by
any other person or organization on her behalf. Employee agrees not to voluntarily become a member of any class or voluntarily participate
in any proceeding or case in which a claim against any Released Party arises, in whole or in part, from an event that occurred before
she signed this General Release.

Without limiting the generality of the foregoing,
this Release includes but is not limited to any claims the Employee may have for wages, bonuses, commissions, penalties, deferred compensation,
paid time off; claims arising out of equity agreements, option agreements, the Employment Agreement effective December 1, 2020 and the
Change in Control Agreement effective December 8, 2020; claims for defamation, emotional distress, alleged violation of Title VII of the
Civil Rights Act, the Americans with Disabilities Act, the Employment Retirement Income Security Act of 1976, the Age Discrimination in
Employment Act as amended, the Family and Medical Leave Act, the Minnesota Human Rights Act, and any claim for discrimination, harassment
or retaliation based on protected status. This release does not waive any claims that are not waivable as a matter of law. This Release
further does not waive any claims arising out of a breach of the Separation Agreement.

The Employee has not filed any charge, complaint,
or action of any type against any Released Party, including but not limited to any claims arising at law, in equity or under the jurisdiction
of any government agency. If any claim is filed on Employee’s behalf, the Severance is in complete satisfaction of any such claim
and recovery in connection therewith.

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2.       Consideration
Period. The Employee is advised to review this General Release with an attorney of her choosing. She has twenty-one (21) days from
the date she receives this Release to consider whether to sign it.

3.       Rescission.
Employee has seven (7) days after signing this Agreement to rescind the release as to claims arising under the Age Discrimination in Employment
Act and fifteen (15) days after signing this Agreement to rescind the release as to claims arising under the Minnesota Human Rights Act.
In order to be effective, the rescission must: (i) be in writing; (ii) delivered to the Company, c/o Mark Fandrich, 10900 Red Circle Drive,
Minnetonka, MN 55343 by hand or by mail within the required period; and (iii) if delivered by mail, the rescission must be postmarked
within the statutory period, properly addressed to Mark Fandrich, Chief Financial Officer, as set forth above, and sent by certified mail
or via FedEx. This General Release will be effective upon the expiration of the fifteen (15) day period without rescission of any part
of this General Release. (the “Effective Date”). If the Employee rescinds any part of the release of claims, at the Company’s
option she may not receive the Severance Benefit described in Section 2 of the Separation Agreement.

4.       No
Other Representations. The Employee has read and understands all provisions of this General Release and provides it knowingly and
voluntarily. Employee has not relied on any statements or representations of any type other than the express terms of the Separation Agreement
and this General Release. This General Release is the result of negotiation and compromise between the parties and shall not be interpreted
against the Company for originally drafting this General Release.

5.       Breach.
In the event Employee breaches this General Release, she shall be responsible for any and all costs and attorney’s fees incurred
by the Company in enforcing the terms of this General Release.

 

I have read, understand and agree to the terms
and conditions set forth above, and sign this General Release freely, voluntarily, and with full knowledge and understanding of its meaning.

 

	 	Date:	 	, 2021	 	 	 
	 	 	 	 	 	Anita Kumar	 

 

 

    9Document

Exhibit 10.1

AMERICAN WATER WORKS COMPANY, INC.

2017 OMNIBUS EQUITY COMPENSATION PLAN 

STOCK UNIT GRANT

This STOCK UNIT GRANT, dated as of May 12, 2021 (the “Date of Grant”), is delivered by American Water Works Company, Inc. (the “Company”) to ________________ (the “Participant”). 

RECITALS 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined to grant each non-employee director of the Company on the date of the Company’s 2021 Annual Meeting of Shareholders a stock unit grant that will be converted to shares of common stock of the Company, par value $0.01 per share, (the “Company Stock”) at a later date; 
WHEREAS, the Participant is a non-employee director on the Board; and
WHEREAS, the Board has determined that the stock unit grant granted to the Participant shall be issued under the American Water Works Company, Inc. 2017 Omnibus Equity Compensation Plan (the “Plan”) and the terms and conditions of such stock unit shall be memorialized in this grant (the “Grant”).  
NOW, THEREFORE, the parties to this Grant, intending to be legally bound hereby, agree as follows: 
1.Grant of Stock Units.  Subject to the terms and conditions set forth in this Grant and the Plan, the Company hereby grants to the Participant _______  units (the “Stock Units”).  Each Stock Unit shall be a phantom right and shall be equivalent to one share of Company Stock on the applicable distribution date, as described in Paragraph 4 below. 
2.Stock Unit Account.  The Company shall establish and maintain a Stock Unit account as a bookkeeping account on its records (the “Stock Unit Account”) for the Participant and shall record in such Stock Unit Account the number of Stock Units granted to the Participant.  The Participant shall not have any interest in any fund or specific assets of the Company by reason of this grant or the Stock Unit Account established for the Participant.
3.Vesting.  The Participant shall be fully vested in the Stock Units credited to the Participant’s Stock Unit Account pursuant to this Grant on the Date of Grant.
4.Distribution.  The Stock Units shall be converted to shares of Company Stock and distributed by the Company within thirty (30) days following the earlier of (i) August 12, 2022 (the “Specified Date”) (or, if applicable, the Deferred Date, as defined in Paragraph 5 below), (ii) the Participant’s separation from service (within the meaning of section 409A of the Internal 

Revenue Code of 1986, as amended (the “Code”)) with the Company (the “Separation from Service Date”), or (iii) the date of a Change of Control (as defined below) (the “Change of Control Date”).  At the time of distribution, all Stock Units shall be converted to an equivalent number of shares of Company Stock, and the Participant shall receive a single distribution of such shares of Company Stock, which shall be issued under the Plan.  For purposes of this Grant, the term “Change of Control” shall have the same meaning as such term is defined in the Plan, except that a Change of Control shall not be deemed to have occurred for purposes of this Grant unless the event constituting the Change of Control constitutes a change in ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of section 409A of the Code and its corresponding regulations.
5.Deferrals.  The Participant may make an irrevocable election to defer the Specified Date (or further defer the Deferred Date (as defined below), if applicable) of all of the Stock Units, plus dividend equivalents earned on such Stock Units as described in Paragraph 6 below, to a later date, provided that (i) the election shall not take effect until at least twelve (12) months after the date on which the election is made, (ii) the deferred Specified Date cannot be earlier than five (5) years from the original Specified Date under Paragraph 4 (or five (5) years from the applicable Deferred Date, if a subsequent deferral of a Deferred Date is being made), and (iii) the election must be made no less than twelve (12) months prior to the date of the Specified Date (or twelve (12) months prior to the previously applicable Deferred Date, if a subsequent deferral of a Deferred Date is being made).  To defer the Specified Date, the Participant must elect to defer 100% of the Stock Units, including corresponding dividend equivalents, granted to the Participant under this Grant and complete the deferral election form provided to the Participant, in the form attached hereto as Exhibit A or as may subsequently modified in the discretion of the Board.  If the Participant desires to make a further deferral, the Participant must make such election on a separate form provided for such purpose.  Any such election shall be made in accordance with section 409A of the Code and any corresponding guidance and regulations issued under section 409A of the Code.  Notwithstanding a Participant’s election pursuant to this Paragraph, if the Separation from Service Date or Change of Control Date occurs prior to the Deferred Date, the distribution of the Participant’s Stock Units, plus corresponding dividend equivalents, will be made as a result of the occurrence of the Separation from Service Date or Change of Control Date, whichever is earlier.  If a Specified Date is delayed one or more times pursuant to this Paragraph 5, the new Specified Date shall be referred to as the “Deferred Date.”
6.Dividend Equivalents.  Until the earlier of the Specified Date (or the Deferred Date, if elected), Separation from Service Date or Change of Control Date, if any dividends are paid with respect to the shares of Company Stock, the Company shall credit to a dividend equivalent account (the “Dividend Equivalent Account”) the value of the dividends that would have been distributed if the Stock Units credited to the Participant’s Stock Unit Account as of the date of payment of any such dividend were shares of Company Stock.  At the same time that the Stock Units are converted to shares of Company Stock and distributed to the Participant, the Company shall pay to the Participant in a lump sum cash equal to the value of the dividends credited to the Participant’s Dividend Equivalent Account.  No interest shall accrue on any dividend equivalents credited to the Participant’s Dividend Equivalent Account. 

2

7.Change of Control.  Except as set forth above, the provisions set forth in the Plan applicable to a Change of Control (as defined in the Plan) shall apply to the Stock Units, and, in the event of a Change of Control, the Board may take such actions as it deems appropriate pursuant to the Plan and is consistent with the requirements of section 409A of the Code.  
8.Acknowledgment by Participant.  By accepting this Grant, the Participant acknowledges that with respect to any right to distribution pursuant to this Grant, the Participant is and shall be an unsecured general creditor of the Company without any preference as against other unsecured general creditors of the Company, and the Participant hereby covenants for himself or herself, and anyone at any time claiming through or under the Participant, not to claim any such preference, and hereby disclaims and waives any such preference which may at any time be at issue, to the fullest extent permitted by applicable law.  The Participant also hereby agrees to be bound by the terms and conditions of the Plan and this Grant.  The Participant further agrees to be bound by the determinations and decisions of the Board with respect to this Grant and the Plan and the Participant’s rights to benefits under this Grant and the Plan, and agrees that all such determinations and decisions of the Board shall be binding on the Participant, his or her beneficiaries and any other person having or claiming an interest under this Grant and the Plan on behalf of the Participant.
9.Restrictions on Issuance or Transfer of Shares of Company Stock.
(a)The obligation of the Company to deliver shares of Company Stock upon the distribution of the Stock Units shall be subject to the condition that shares of Company Stock be qualified for listing on the New York Stock Exchange or another securities exchange and be registered under the Securities Act of 1933, as amended, and that any consent or approval of any governmental regulatory body that is necessary to issue shares of Company Stock has been so obtained, and that shares of Company Stock may not be issued in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board.  The issuance of shares of Company Stock and the payment of cash to the Participant pursuant to this Grant is subject to any applicable taxes and other laws or regulations of the United States or of any state having jurisdiction thereof.
(b)As a condition to receive any shares of Company Stock upon conversion of the Stock Units, the Participant agrees:
(i)to be bound by, and to comply with, the Company’s policies and practices (as they may be in effect from time to time) regarding the restrictions or limitations on the transfer of such shares, and understands that the Participant may be restricted or prohibited at any time and from time to time from selling, transferring, pledging, donating, assigning, margining, mortgaging, hypothecating or otherwise encumbering the shares in accordance with such policies and practices, including without limitation the Company’s Insider Trading and Prohibited Transactions Policy and its Personal Securities Trading and Preclearance Practice; and
(ii)that the shares of Company Stock obtained by the Participant upon the distribution of the Stock Units shall not be transferred or disposed of by any means until 

3

the Participant owns enough shares of Company Stock, or shares underlying stock units convertible into shares of Company Stock, or time-based restricted Company Stock, to meet or exceed five (5) times the Participant’s annual cash retainer, which ownership requirement must be satisfied by the fifth (5th) anniversary of the Participant’s commencement of service as a director on the Board. 
10.Grant Subject to Plan Provisions.  This Grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  In the event of any contradiction, distinction or difference between this Grant and the terms of the Plan, the terms of the Plan will control.  Except as otherwise defined in this Grant, capitalized terms used in this Grant shall have the meanings set forth in the Plan.  This Grant is subject to the interpretations, regulations and determinations concerning the Plan established from time to time by the Board in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the shares of Company Stock, (iii) changes in capitalization of the Company, and (iv) other requirements of applicable law.  The Board shall have the authority to interpret and construe this Grant pursuant to the terms of the Plan, its decisions shall be conclusive as to any questions arising hereunder and the Participant’s acceptance of this Grant is the Participant’s agreement to be bound by the interpretations and decisions of the Board with respect to this Grant and the Plan.
11.No Rights as Shareholder.  The Participant shall not have any rights as a shareholder of the Company, including the right to any cash dividends (except with respect to the dividend equivalent rights provided in Paragraph 6), or the right to vote, with respect to any Stock Units.
12.No Rights to Continued Service.  This Grant shall not confer upon the Participant any right to be retained in the service of the Employer (as defined in the Plan) and shall not interfere in any way with the right to terminate the Participant’s service at any time.  The right to terminate at will the Participant’s service at any time for any reason is specifically reserved.
13.Assignment and Transfers.  No Stock Units or dividend equivalents awarded to the Participant under this Grant may be transferred, assigned, pledged, or encumbered by the Participant and the Stock Units and dividend equivalents shall be distributed during the lifetime of the Participant only for the benefit of the Participant.  Any attempt to transfer, assign, pledge, or encumber the Stock Units or dividend equivalents under this Grant by the Participant shall be null, void and without effect.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company.  This Grant may be assigned by the Company without the Participant’s consent.
14.Withholding.  To the extent required by applicable law, the Participant shall be required to pay to the Company, or make other arrangements satisfactory to the Company to provide for the payment of, any federal, state, local or other taxes that the Company is required to withhold with respect to the Grant, vesting or distribution of the Stock Units and dividend equivalents.  

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15.Effect on Other Benefits.  The value of shares of Company Stock and dividend equivalents distributed with respect to the Stock Units shall not be considered eligible earnings for purposes of any other plans maintained by the Employer.  Neither shall such value be considered part of the Participant’s compensation for purposes of determining or calculating other benefits that are based on compensation, such as life insurance.
16.Applicable Law.  The validity, construction, interpretation and effect of this Grant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof.
17.Notice.  Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the General Counsel at the Company’s corporate headquarters, and any notice to the Participant shall be addressed to such Participant at the current address shown on the records of the Company, or to such other address as the Participant may designate to the Company in writing.  Any notice shall be delivered by hand, sent by facsimile, e-mail or other electronic means (with confirmation of receipt to be made by any oral, electronic or written means), or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.
18.Section 409A of the Code.  
(a)This Grant is intended to comply with the requirements of section 409A of the Code and shall be interpreted and administered to avoid any penalty sanctions under section 409A of the Code.  If any distribution cannot be provided or made at the time specified herein or as elected by the Participant, then such distribution shall be provided in full at the earliest time thereafter when such sanctions cannot be imposed.  Except according to a valid election made pursuant to Paragraph 5 above, in no event may the Participant designate the calendar year of distribution.
(b)Notwithstanding any provision to the contrary in this Grant, if any of the distributions under this Grant are payable to the Participant upon separation from service (within the meaning of section 409A of the Code) from the Employer, then if at the time of the Participant’s separation from service the Participant is a “specified employee” (as such term is defined in section 409A(2)(B)(i) of the Code and its corresponding regulations) as determined by the Company (or any successor thereto) in its sole discretion in accordance with its specified employee determination policy, then all distributions to the Participant pursuant to this Grant shall be postponed for a period of six (6) months following the Participant’s separation from service from the Employer.  The postponed amounts shall be distributed to the Participant in a lump sum within thirty (30) days after the date that is six (6) months following the Participant’s separation from service from the Employer.  If the Participant dies during such six (6)-month period and prior to the distribution of the postponed amounts hereunder, the amounts delayed on account of section 409A of the Code shall be distributed to the personal representative of the Participant’s estate within sixty (60) days after the date of the Participant’s death, and any amounts not delayed shall be distributed to the personal representative of the Participant’s estate in accordance with the terms of this Grant.

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IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Grant, effective as of the Date of Grant.

AMERICAN WATER WORKS COMPANY, INC.

By:  Walter Lynch 

Its:    President and CEO

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EXHIBIT A

SUBSEQUENT DEFERRAL ELECTION FORM 

PART A. TIME OF DISTRIBUTION

I, _______________________, (the “Participant”) hereby irrevocably elect to have all of the Stock Units, plus corresponding dividend equivalents, (the “Deferred Units”) granted to me pursuant to the Stock Unit Grant, dated as of May 12, 2021, (the “Grant”) under the American Water Works Company, Inc. 2017 Omnibus Equity Compensation Plan (the “Plan”) that would have been distributed by American Water Works Company, Inc. to me on the Specified Date (as defined in the Grant), instead be distributed to me on the deferred date designated below (the “Deferred Date”), which date must be at least five (5) years later than the Specified Date, and this election is at least twelve (12) months prior to the Specified Date (to make this deferral election you must defer all of the Stock Units, plus corresponding dividend equivalents, granted to you pursuant the Grant, meaning there is no partial deferral):  

									
	Number of Stock Units, and Dividend Equivalents, to be Further Deferred 
(All Must Be Deferred)
	Original Specified Date (Election Must Be Made at Least 12 Months Prior to the Specified Date)
	Deferred Date 
(Must be a date that is at least 5 years later than the 
Original Specified Date)

	100%	August 12, 2022	

PART B.  ACKNOWLEDGMENT

I understand and expressly agree that (i) the Deferred Date for the Deferred Units shall be the date I specified in Part A above (which is a date that is at least five (5) years later than the original Specified Date), and (ii) I will not be entitled to receive distribution of the Deferred Units on an earlier date, except in the event that the Separation from Service Date (as defined in the Grant) or the Change of Control Date (as defined in the Grant) occurs prior to the Deferred Date.  I also understand and expressly agree that this deferral election is irrevocable, is being made at least twelve (12) months prior to the original Specified Date, and shall not take effect until twelve (12) months after the date on which I make this election.  I further understand and agree that the terms and conditions of the Grant and the Plan are hereby incorporated into this form.  Lastly, I understand and agree that this deferral election applies to 100% of the Stock Units, and corresponding dividend equivalents, granted to me pursuant to the Grant.

PARTICIPANT SIGNATURE

Participant: _____________________            Date: _____________        

Receipt Acknowledged:

By: __________________

Title: _________________                Date: _________________

A-1

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