DocuSign Envelope ID: 69FA0765-DC3D-4111-ABCA-45C90C87C370 CONFIDENTIAL PERSONNEL MATTER Contract # 16588H This Retention Agreement js entered into between the City and County of Denver, acting by and through its Board of Water Commissioners (“Denver Water” or the “Board”) and James 8. Lochhead, CEO/Manager of Denver Water (“Mrr. Lochhead”). Denver Water and Mr. Lochhead are sometimes referred to together as the “parties.” WHEREAS, the members of the Board are very pleased with Mr. Lochhead’s past service to Denver Water and desire that he continue employment at Denver Water for several more years. THEREFORE, the parties have executed this agreement, AGREEMENT 1 [. Denver Water shall pay to Mr. Lochhead the amount of $337,720.72 (the “Retention Benefit”) in the form of checks made out to or wire transfers to The State Life Insurance Company or its successor. The Retention Benefit payments will serve as premiums for a 10-Pay Whole Life Insurance Policy (the “Life Insurance Policy”) and a Long- term Care Benefits Continuation Rider covering Mr. Lochhead and his spouse, Abby Lochhead, and will be paid on the Retention Benefit Payment Dates set forth below and in the amounts set forth next to each such Retention Benefit Payment Date. The Retention Benefit payment payable on September 15, 2016, shall be for the first payment of the Life Insurance Policy premium and the entire premium price of the Long-term Care Benefits Continuation Rider. The Retention Benefit payments payable on September 15, 2017, September 15, 2018, September 15, 2019, and September 15, 2020, shall be for the second through fifth payments of the Life Insurance Policy premium. The Retention Benefit payment payable on January 15, 2021, shall be to fund a single premium immediate annuity (or, at the sole option of Denver Water, a premium deposit account) intended to pay the sixth through tenth payments of the Life Insurance Policy premium (and such payment shall be adjusted, at the time it is made, to include only such amount as is required to fund the single premium immediate annuity or premium deposit account for the sixth through tenth payments of the Life Insurance Policy premium), 2. RETENTION BENEFIT PAYMENT DATES. The Retention Benefit Payment Dates, and the amounts of the Retention Benefit to be paid on each Retention Benefit Payment Date, are: September 15, 2016 $196,852.72 September 15, 2017 $ 15,652.00 September 15, 2018 $15,652.00 September 15,2019 $ 15,652.00 September 15, 2020 $ 15,652.00 January 15,2021 $78,260.00 coe! Unknéwn document property ame,DocuSign Envelope ID; 69FA0765-DC3D-4111-AGCA-45C90067C370 Each payment of the Retention Benefit is made with respect to services performed prior to the applicable Retention Benefit Payment Date. The amount of the Retention Benefit payable on January 15, 2021, is subject to adjustment pursuant to the last sentence of Paragraph 1. 3 0 ATION OF EMPLOYMENT. Except as provided below in paragraph 4 with respect to a Separation from Service without Cause, if Mr. Lochhead’s employment with Denver Water terminates for any or no reason: A. Mr, Lochhead will not receive any payment(s) of the Retention Benefit that are due to be paid on Retention Benefit Payment Date(s) after the date of Mr. Lochhead’s termination of employment; and, B. Mr. Lochhead will be required to pay back to Denver Water the amount of Retention Benefit payments made to The State Life Insurance Company ot its successor on Mr. Lochhead's behalf through Mr. Lochhead’s date of termination in accordance with the following schedule: ‘Termination Date before June 17, 2017 $155,530.62 Tune 17, 2018 $137,410.55 June 17, 2019 $119,290.47 June 17, 2020 $101,170.40 January 17, 2021 $90,600.36 (such amount, the “Repayment Obligation”) In the event that the Repayment Obligation is triggered, Mr. Lochhead agrees that Denver Water may recoup all or @ portion of the Repayment Obligation from any and all sums due to Mr. Lochhead from Denver Water. Mr. Lochhead’s execution of this Retention Agreement is written authorization for Denver Water to deduct any Repayment Obligations from wages or other sums due to Mr Lochhead from Denver Water. In the event Denver Water is unable to fully recoup the Repayment Obligation from sums owed to Mr, Lochhead, Mr. Lochhead will remain financially responsible for any deficit (the “Remaining Repayment Obligation”) and agrees to repay the Remaining Repayment Obligation subject to the Promissory Note described in paragraph 6. If Mr. Lochhead’s employment with Denver Water terminates on or after January 17, 2021, there is no Repayment Obligation. 4. EPARATION FROM SERVICE WITHOUT CAUSE. In the event of a Separation from Service without Cause, paragraph 3 shall not apply and Denver Water shall pay, in the form of a check made out to or a wire transfer to The State Life Insurance Company or its successor and on or before the date of Mr. Lochhead’s Separation from Service without Cause, such amount as is necessary to fund a Premium Deposit Account intended to pay any Life Insurance Policy premiums that are unpaid as of such Separation from Service without Cause.DocuSign Envelope ID: 69FAD765-DC3D-4111-ABCA-45C90C67C370_ For purposes of this Agreement, a “Separation from Service without Cause” shall mean that Denver Water terminated Mr. Lochhead’s employment pri to January 17, 2021, for other than Cause, where “Cause” means: 5. A pm G. ASSIGNMENT AND REASSIGNMENT OF THE LIF! Mr. Lochhead’s continual or deliberate neglect in the performance of Mr. Lochhead’s material duties; Mr. Lochhead’s failure to devote substantially all of Mr. Lochhead’s working time to the business of Denver Water; Mr. Lochhead’ failure to follow the lawful directives of the Board of Water Commissioners in any material respect; Mr. Lochhead’s engaging in misconduct in connection with the performance of any of Mr, Lochhead’s duties, including, without limitation, falsifying or attempting to falsify documents, books or records of Denver Water, misappropriating or attempting to misappropriate funds or other property, or securing or attempting to secure any personal profit in connection with any transaction entered into on behalf of Denver Water; the violation by Mr. Lochhead, in any material respect, of any policy or of any code or standard of behavior or conduct generally applicable to employees of Denver Water; Mr. Lochhead’s breach of the material provisions of any non-competition, non-interference, non-disclosure, confidentiality or other similar agreement executed by Mr. Lochhead with Denver Water or other act of disloyalty to Denver Water (including, without limitation, aiding a competitor ot unauthorized disclosure of confidential information); or, Mr. Lochhead’s engaging in conduct which is reasonably likely to result in material injury to the reputation of Denver Water, including, without limitation, commission of a felony, fraud, embezzlement or other crime involving moral turpitude; provided, however, thet in the case of clauses (A), (B), (D) or (E) above, Cause shall not exist unless any such failure or material breach is not fully corrected prior to the expir ‘written notice that specifies in detail the alleged Cause event(s) and Denver Water's intention to terminate Mr. Lochhead’s employment for Cause. For the avoidance of doubt, a Separation from Service without Cause shall not include termination of Mr. Lochhead’s employment due to his death, termination of his employment due to his disability, or his resignation from employment. n of the ten calendar day period following delivery to Mr. Lochhead of INSURANCE At the time that Mr. Lochhead executes this Agreement, he agrees to execute a collateral assignment substantially in the form of the attached Exhibit A that assigns, transfers, and sets over all of his interest in the Life Insurance Policy to Denver Water. Denver Water shall take suchDocuSign Envelope 1D: 69FAQ765-DC3D-4111-ABCA-45C90C87C370 actions as are reasonably required to assign, transfer, and set over all of its interest in the Life Insurance Policy to Mr. Lochhead promptly upon the first to occur of: A. full satisfaction of the Repayment Obligation and the Remaining Repayment Obligation (if any); B. a Separation from Service without Cause; or, C. Mt, Lochhead remaining continuously employed as the CEO/Manager of Denver Water from the date of this Agreement through January 17, 2021. 6. PROMISSORY NOTE, At the time that Mr. Lochhead executes this Agreement, Mr, Lochhead agrees to execute a promissory note substantially in the form of the attached Exhibit B (the “Promissory Note”) promising to pay to Denver Water any Remaining Repayment Obligation. 7. WITHOLDING AND TAX REPORTING. All payments will be subject to required federal, state, and local tax, and other withholdings, required or authorized by law. Notwithstanding the foregoing, Mr. Lochhead shall be responsible for paying all required federal, state, and local tax imposed on him with respect to the Retention Benefit payments. To the extent permitted by applicable law, the portion of each Retention Benefit payment that is attributable to the Long-term Care Benefits Continuation Rider will be treated as excludible from Mr. Lochhead’s gross income, 8. OTHER AGREEMENTS. To the extent this Agreement contains terms and conditions that conflict with the terms and conditions of any other employment-related agreement between Mr. Lochhead and Denver Water, the terms and conditions of this Agreement shall control as to the subject matter hereof. Nothing contained herein shall be deemed to create a contract of employment between Mr, Lochhead and Denver Water, and both Mr. Lochhead and Denver Water are free to terminate Mr. Lochhead’s employment at will, subject to the terms of any separate employment agreement that Mr. Lochhead may have with Denver Water 9. GOVERNING LAW. The provisions of this Agreement shall be construed in accordance with, and governed by, the laws of the State of Colorado without regard to principles of conflict of laws. 10. ASSIGNMENT OF AGREEMENT. Mr. Lochhead acknowledges that his services are unique and personal. Accordingly, Mr. Lochhead may not assign his rights or delegate his duties or obligations under this Agreement to any person or entity; provided, however, that payments may be made to his estate or beneficiaries. 11, REPRESENTATION. Mr, Lochhead hereby represents that he is knowledgeable and sophisticated as to business matters, including the subject matter of this Agreement, that he has read this Agreement and understands its terms. Mr. Lochhead acknowledges thet, prior to assenting to the terms of this Agreement, he has been given a reasonable time to review it, to consult with counsel of his choice, and to negotiate at arm’s-length with Denver Water as to itsDocuSign Envelope ID; 69FAQ765-DC3D-4111-A6CA-45C90C67C370 contents, The parties agree that the language used in this Agreement is the language chosen by the parties to express their mutual intent, and that they have entered into this Agreement freely and voluntarily and without pressure or coercion from anyone. 12, SECTION 409A. The parties intend that payments or benefits payable under this Agreement not be subject to the additional tax or interest imposed pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (the “Section 409A”), and the provisions of this Agreement shall be construed and administered in accordance with such intent, To the extent such potential payments or benefits could become subject to Section 409A, the parties shall cooperate to amend this Agreement with the goal of giving Mr. Lochhead the economic benefits described herein in 2 manner that does not result in such tax or interest being imposed. If the parties are unable to agree on a mutually acceptable amendment, Denver Water may, without Mr. Lochhead’s consent and in such manner as it deems appropriate or desirable, amend or modify this Agreement or delay the payment of any amounts hereunder to the minimum extent necessary to meet the requirements of Section 409A. Mr. Lochhead agrees to perform any act, or refrain from any act, reasonably requested by Denver Water as part of any correction procedure with respect to Section 409A. In no event shall Denver Water be liable to Mr. Lochhead in the event Mr. Lochhead ineurs taxes as a result of this Agreement under Section 409A, No termination of Mr, Lochhead’s employment shall be a Separation from Service without Cause unless such termination is a “separation from service” within the meaning of Treas, Reg, Section 1.409A-1(h). 13, NOTICE AND CONTACT. ‘The parties shall contact the persons listed below for all matters related to administration of this Agreement, Alll notices required this Agreement shall be in writing and shall be deemed effective: (a) when delivered personally to the other party; or (b) seven (7) days after posting in the United States mail, first-class postage prepaid, properly addressed as follows; or (¢) when sent by e-mail. If to Mr. Lochhead: James Lochhead 416 Dahlia St. Denver, CO 80220 Jim.lochhead@denverwater.org, If to the Board: Director of Total Rewards Denver Water Department 1600 West 12th Avenue Denver, Colorado 80204 Liz.martinez@denverwater.org, or such other persons or addresses as the parties may have designated in writing.DocuSign Envelope ID; 68FAD765-DC3D-4111-ABCA-45C90C87C370 14, EEFECTIVE DATE. This agreement shall become effective on September 14, 2016, ATTESTED: CITY AND COUNTY OF DENVER, acting by and through its Shep) BOARD OF WATER COMMISSIONERS . Leb By: President DATE: 9/14/2016 APPROVED: REGISTERED AND COUNTERSIGNED: CITY AND COUNTY OF DENVER Byg fe Gail Cog ae AG fail Cagle By: C&R Chief Huy purces Officer Timothy Mi O'Brien, CPA Auditor APPROVED AS TO FORM: By: Ofiffe of General Counsel JAMES 8. LOCHHEAD (PRL, oe)‘DocuSign Envelope ID: 69FAN7B5-DC30-41 11-ASCA-45C90C57C370 EXHIBIT B PROMISSORY NOTE Up to $155,530.62 September 14, 2016 FOR VALUE RECEIVED, and subject to the terms and conditions set forth herein, James Lochhead (the "Maker"), hereby unconditionally promises to pay to the order of the City and County of Denver, acting by and through its Board of Water Commissioners (the "Noteholder,"and together with the Maker, the "Parties"), the principal amount of up to One Hundred Fifty-five Thousand Five Hundred Thirty and Sixty-two Hundredths Dollars ($155,530.62) (the "Indebtedness"), together with any accrued interest thereon, as provided in this Promissory Note (the "Note", as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms). 1. Principal, Interest and Payments. (@) Principal. The principal amount of this Note shall be the “Remaining Payment Obligation” as such term is defined in the Retention Agreement between Maker and Noteholder entered into on September 14, 2016. (b) Interest Rate. (@ The outstanding principal amount of the Indebtedness shall bear interest at the short-term applicable federal rate for the month of Maker’s termination of employment with Noteholder (the “Base Interest”). i) Notwithstanding the foregoing, if any amount payable hereunder is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such overdue amount shall bear interest at a rate of the Base Interest plus 5% from the date of such non-payment until such amount is paid in full (ii) If atany time and for any reason whatsoever, the interest rate payable on the Indebtedness shall exceed the maximum rate of interest permitted to be charged by the Noteholder to the Maker under applicable law, such interest rate shall be reduced automatically to the maximum rate of interest permitted to be charged under applicable law. (©) Payment of Principal and Interest. ‘The aggregate unpaid principal amount of the Indebtedness, all acerued and unpaid interest and all other amounts payable under this Note shall be due and payable on the day that is six (6) weeks following Maker’s termination of employment with Noteholder. The Maker may prepay any amounts due hereunder in whole or in part at any time or from time to time without penalty or premium.DocuSign Envelope ID: 69FA0765-DC3D-4111-AGCA-45C90067C370 2. Payment Mechanics. (2) Manner of Payment, All payments of interest and principal shall be made in lawful money of the United States of America no later than 5:00 PM Eastern time on the date on which such paym due, by cashier's check, certified check or by wire transfer of immediately available funds to the Noteholder’s account at a bank specified by the Notcholder in writing to the Maker from time to time, nt is (>) Application of Payments, All payments made hereunder shall be applied first to the payment of any fees or charges outstanding hereunder, second to accrued interest, and third to the payment of the principal amount outstanding under the Note. (© Business Day Convention, Whenever any payment to be made hereunder shall be due on a day that is not a business day, such payment shall be made on the next succeeding business day and such extension will be taken into account in calculating the amount of interest payable under this Note. 3. Events of Default. The occurrence of any of the following after Maker's termination of employment with Notcholder shall constitute an Event of Default hereunder: (@) Failure to Pay. The Maker fails to pay any amount of the Indebtedness when due and such failure to pay is not cured by payment of the delinquent amount together with the interest specified in Section 1(b) above within ten (10) days of the due date, () Cross:Defaults. The Maker fails to pay when due any of its indebtedness (other than indebtedness under this Note) or any interest or premium thereon when due (whether by scheduled maturity, acceleration, demand or otherwise) and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such indebtedness. (©) Bankruptey. (@ The Maker commences any case, proceeding or other action (A) under any existing or future law relating to bankruptcy, insolvency, reorganization, or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition ot other relief with respect to itor its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Maker makes a general assignment for the benefit of its creditor (i) There is commenced against the Maker any case, proceeding or other action of nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 90 days; (ii) There is commenced against the Maker any case, proceeding or other action seeking issuance of a warrant of attachment, execution or similar process against all or any substantial part ofitsDocuSign Envelope ID: 69FA0765-DC3D-4111-ABCA-45C90C87C370 assets which results in the entry of an order for any such relief which has not been vacated, discharged, or stayed or bonded pending appeal within 90 days from the entry thereof; (iv) The Maker takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) The Maker is unable to, or admits in writing its inability to, pay its debts as they become due. (@ Judements. A judgment or decree is entered against the Maker and such judgment or decree has not been vacated, discharged, stayed or bonded pending appeal within 90 days from the entry thereof. 4, Remedies, Upon the occurrence of an Event of Default and at any time thereafter during the continuance of such Event of Default, the Noteholder may at its option, by written notice to the Maker (a) declare the entire principal amount of this Note, together with all accrued interest thereon and all other amounts payable hereunder, immediately due and payable and/or (b) exercise any or all ofits rights, powers or remedies under applicable law; provided, however that, if an Event of Default described in Section 3(c) shall occur, the principal of and accrued interest on the Indebtedness shall become immediately due and payable without any notice, declaration or other act on the part of the Noteholder. 5. Miscellaneous. (@) Notices (All notices, requests or other communications required or pérmitted to be delivered hereunder shall be delivered in writing to such address as a Party may from time to time specify in vwariting. (it) Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received, (ii) sent by facsimile during the recipient's normal business hours shall be deemed to have been given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient's business on the next business day) and (iii) sent by e-mail shall be deemed received upon the sender's receipt of an acknowledgment from the intended recipient (such as by the "return receipt requested! function, as available, return e~ mail or other written acknowledgment). (© Expenses, The Maker shall reimburse the Noteholder on demand for all reasonable and documented out-of-pocket costs, expenses and fees (including reasonable expenses and fees of its internal and external counsel) incurred by the Noteholder in connection with a default by the Maker. (©) Governing Law. This Note and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Note and the transactions contemplated hereby shall be governed by the laws of the State of Colorado.DocuSign Envelope ID: 69FAQ765-DC3D-4111-A6CA-45C90C87C370 (a) Submission to Jurisdiction. @ The Maker hereby irrevocably and unconditionally (i) agrees that any legal action, suit or proceeding arising out of or relating to this Note may be brought in the courts of the State of Colorado or of the United States of America for the District of Colorado and (ii) submits to the jurisdiction of any such court in any such action, suit or proceeding. Final judgment against the Maker in any aetion, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment! Gi) Nothing in this Section 5(d) shall affect the right of the Noteholder to (i) commence legal proceedings or otherwise sue the Maker in any other court having jurisdiction over the Maker or (ii) serve process upon the Maker in any manner authorized by the laws of any such jurisdiction. (Venue. The Maker irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action ot proceeding arising out of or relating to this Note in any court referred to in Seetion 5(d)(ii) and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (Waiver of Jury Trial. THE MAKER HEREBY IRREVOCABLY WAIVES, TO THE, FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, EXCEPT FRAUD, MISREPRESENTATION OR INTENTIONAL TORT. (@) Counterparts; Integration; Effectiveness, This Note and any amendments, wi fers, consents or supplements hereto may be executed in counterparts, each of which shall constitute an original, but all taken together shall constitute a single contract. This Note constitutes the entire contract between the Parties with respect to the subject matter hereof and supersedes all previous agreements and understandings, oral or written, with respect thereto, Delivery of an executed counterpart of a signature page to this Note by facsimile or in electronic (i.e., "pdt" or "tif") format shall be effective as delivery of a manually executed counterpart of this Note. (8) Successors and Assigns. The Maker may not assign or transfer this Note or any of its rights hereunder without the prior written consent of the Noteholder. This Note shall inure to the benefit of and be binding upon the parties hereto and their permitted assigns, (Waiver of Notice. The Maker hereby (i) waives presentment, demand for payment, protest, notice of dishonor, notice of protest or nonpayment, notice of acceleration of maturity and diligence in connection with the enforcement of this Note or the taking of any action to collect sums owing hereunder; (i) waives any right to immunity from any such action or proceeding and waives any immunity or exemption of any property, wherever located, ftom garnishment, levy, execution, seizure or attachment prior to or in execution of judgment, or sale under execution or other process for the collection of debts; and (fii) waives any right to interpose any set-off or non-compulsory counterclaim or to plead laches or any statute of limitations as a defense in any such action or proceeding,‘DoeuSign Envelope ID: 69FAVTES-DC3D-4111-ABCA-45C90C67C370 () Amendments and Waivers, No term of this Note may be waived, modified or amended except by an instrument in writing signed by both of the parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. (Headings. The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof. () No Waiver; Cumulative Remedies. No failure to exereise and no delay in exercising on the part of the Noteholder, of any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or futther exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, vileges provided by law, remedies, powers and pr (m) Severability. Ifany term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or pro this Note or invalidate or render unenforceable such term or provision in any other jurisdiction, [SIGNATURE PAGE FOLLOWS]DocuSign Envelope ID: 69FA0765-DC3D-4111-A6CA-45C90C87C370_ IN WITNESS WHEREOF, the Maker has executed this Note as of the 14" day of September, 2016. The foregoing instrument was acknowledged before me this tf HA of September, 2016 by James Loghhead. (Notary signature) (Notary Seal) PATRICIA E WILLIAMS NOTARY PUBLIC STATE OF COLORADO NOTARY Ib # {o0saaoceas NY COMIIABION ExPINES Wat 88 2018