AMERICAN STATES WATER COMPANY
2000 STOCK INCENTIVE PLAN
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TABLE OF CONTENTS
Page
1. THE PLAN 1
1.1 Purpose 1
1.2 Administration and Authorization; Power and
Procedure 1
1.3 Participation 2
1.4 Shares Available for Awards; Share Limits 2
1.5 Grant of Awards 3
1.6 Award Period 3
1.7 Limitations on Exercise and Vesting of Awards 4
1.8 Acceptance of Notes to Finance Exercise 4
1.9 No Transferability; Limited Exception to
Transfer Restrictions 5
2. OPTIONS 6
2.1 Grants 6
2.2 Option Price 6
2.3 Limitations on Grant and Terms of Incentive
Stock Options 6
2.4 Limits on 10% Holders 7
2.5 Option Repricing/Cancellation and
Regrant/Waiver 7
2.6 Effects of Termination of Employment;
Termination of Subsidiary Status;
Discretionary Provisions. 7
3. RESTRICTED STOCK AWARDS 8
3.1 Grants 8
3.2 Restrictions 9
3.3 Return to the Corporation 9
4. OTHER PROVISIONS 9
4.1 Rights of Eligible Employees, Participants
and Beneficiaries 9
4.2 Adjustments; Acceleration 10
4.3 Effect of Termination of Service on Awards 12
4.4 Compliance with Laws 13
4.5 Tax Matters 13
4.6 Plan Amendment, Termination and Suspension 14
4.7 Privileges of Stock Ownership 14
4.8 Effective Date of the Plan 14
4.9 Term of the Plan 14
4.10 Governing Law/Construction/Severability 15
4.11 Captions 15
4.12 Stock-Based Awards in Substitution for Stock
Options or Awards Granted by Other
Corporation. 15
4.13 Non-Exclusivity of Plan 16
4.14 No Corporate Action Restriction 16
4.15 Other Company Benefit and Compensation
Program 16
5. DEFINITIONS 16
5.1 Definitions 16
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AMERICAN STATES WATER COMPANY
2000 STOCK INCENTIVE PLAN
1.THE PLAN
1.1 Purpose
The purpose of this Plan is to promote the success
of the Company by providing an additional means through the
grant of Awards to attract, motivate, retain and reward key
employees, including officers, whether or not directors, of
the Company with awards and incentives for high levels of
individual performance and improved financial performance of
the Company. "Corporation" means American States Water
Company and "Company" means the Corporation and its
Subsidiaries, collectively. These terms and other
capitalized terms are defined in Article 5.
1.2 Administration and Authorization; Power and
Procedure.
(a) Committee. This Plan shall be administered by and all
Awards to Eligible Employees shall be authorized by the
Committee. Action of the Committee with respect to the
administration of this Plan shall be taken pursuant to a
majority vote or by written consent of its members.
(b) Plan Awards; Interpretation; Powers of Committee.
Subject to the express provisions of this Plan, the
Committee shall have the authority:
(i) to determine eligibility and, from among those persons
determined to be eligible, the particular Eligible Employees
who will receive an Award;
(ii) to grant Awards to Eligible Employees, determine the
price at which securities will be offered or awarded and the
amount of securities to be offered or awarded to any of such
persons, and determine the other specific terms and
conditions of such Awards consistent with the express limits
of this Plan, and establish the installments (if any) in
which such Awards shall become exercisable or shall vest, or
determine that no delayed exercisability or vesting is
required, and establish the events of termination or
reversion of such Awards;
(iii) to approve the forms of Award Agreements (which need
not be identical either as to type of award or among
Participants);
(iv) to construe and interpret this Plan and any agreements
defining the rights and obligations of the Company and
Participants under this Plan, further define the terms used
in this Plan, and prescribe, amend and rescind rules and
regulations relating to the administration of this Plan;
(v) to cancel, modify, or waive the Corporation's rights
with respect to, or modify, discontinue, suspend, or
terminate any or all outstanding Awards held by Eligible
Employees, subject to any required consent under Section
4.6;
(vi) to accelerate or extend the exercisability or extend
the term of any or all such outstanding Awards within the
maximum ten-year term of Awards under Section 1.6; and
(vii) to make all other determinations and take such other
action as contemplated by this Plan or as may be necessary
or advisable for the administration of this Plan and the
effectuation of its purposes.
(c) Binding Determinations/Liability Limitation. Any
action taken by, or inaction of, the Corporation, any Subsidiary,
the Board or the Committee relating or pursuant to this Plan
and within its authority hereunder or under applicable law
shall be within the absolute discretion of that entity or
body and shall be conclusive and binding upon all persons.
Neither the Board nor any Committee, nor any member thereof
or person acting at the direction thereof, shall be liable
for any act, omission, interpretation, construction or
determination made in good faith in connection with this
Plan (or any Award made under this Plan), and all such
persons shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss,
damage or expense (including, without limitation, attorneys'
fees) arising or resulting therefrom to the fullest extent
permitted by law and/or under any directors and officers
liability insurance coverage that may be in effect from time
to time.
(d) Reliance on Experts. In making any determination
or in taking or not taking any action under this Plan, the
Committee or the Board, as the case may be, may obtain and
may rely upon the advice of experts, including professional
advisors to the Corporation. No director, officer or agent
of the Company shall be liable for any such action or
determination taken or made or omitted in good faith.
(e) Delegation. The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers or
employees of the Company.
1.3 Participation
Awards may be granted by the Committee only to
those persons that the Committee determines to be Eligible
Employees. An Eligible Employee who has been granted an
Award may, if otherwise eligible, be granted additional
Awards if the Committee shall so determine.
1.4 Shares Available for Awards; Share Limits.
(a) Shares Available. Subject to the provisions of
Section 4.2, the capital stock that may be delivered under this
Plan shall be shares of the Corporation's authorized but unissued
Common Stock. The shares may be delivered for any lawful
consideration.
(b) Share Limits. The maximum number of shares
of Common Stock that may be delivered pursuant to Awards
granted to Eligible Employees under this Plan shall not
exceed 250,000 shares (the "Share Limit"). The maximum
number of shares of Common Stock that may be delivered
pursuant to options qualified as Incentive Stock Options
granted under this Plan is 125,000 shares. The maximum
number of shares subject to those options that are granted
during any calendar year to any individual shall be limited
to 15,000 and the maximum individual limit on the number of
shares in the aggregate subject to all Awards that during
any calendar year are granted under this Plan shall be
15,000. Each of the four foregoing numerical limits shall
be subject to adjustment as contemplated by this Section 1.4
and Section 4.2.
(c) Share Reservation; Replenishment and Reissue
of Unvested Awards. No Award may be granted under this Plan
unless, on the date of grant, the sum of (i) the maximum
number of shares issuable at any time pursuant to such
Award, plus (ii) the number of shares that have previously
been issued pursuant to Awards granted under this Plan,
other than reacquired shares available for reissue
consistent with any applicable legal limitations, plus (iii)
the maximum number of shares that may be issued at any time
after such date of grant pursuant to Awards that are
outstanding on such date, does not exceed the Share Limit.
Shares that are subject to or underlie Awards which expire
or for any reason are cancelled or terminated, are
forfeited, fail to vest, or for any other reason are not
paid or delivered under this Plan, as well as reacquired
shares, shall again, except to the extent prohibited by law,
be available for subsequent Awards under the Plan. Except
as limited by law, if an Award is or may be settled only in
cash, such Award need not be counted against any of the
limits under this Section 1.4.
1.5 Grant of Awards.
Subject to the express provisions of this Plan,
the Committee shall determine the number of shares of Common
Stock subject to each Award and the price (if any) to be
paid for the shares or the Award. Each Award shall be
evidenced by an Award Agreement signed by the Corporation
and, if required by the Committee, by the Participant. The
Award Agreement shall set forth the material terms and
conditions of the Award established by the Committee
consistent with the specific provisions of this Plan.
1.6 Award Period.
Each Award and all executory rights or obligations
under the related Award Agreement shall expire on such date
(if any) as shall be determined by the Committee, but in the
case of Options or other rights to acquire Common Stock not
later than ten (10) years after the Award Date.
1.7 Limitations on Exercise and Vesting of Awards.
(a) Provisions for Exercise. Unless the Committee
otherwise expressly provides, no Award shall be exercisable or
shall vest until at least six months after the initial Award Date,
and once exercisable an Award shall remain exercisable until
the expiration or earlier termination of the Award.
(b) Procedure. Any exercisable Award shall be deemed
to be exercised when the Secretary of the Corporation receives
written notice of such exercise from the Participant,
together with any required payment made in accordance with
Section 2.2.
(c) Fractional Shares/Minimum Issue. Fractional
share interests shall be disregarded, but may be accumulated.
The Committee, however, may determine in the case of Eligible
Employees that cash, other securities, or other property
will be paid or transferred in lieu of any fractional share
interests. No fewer than 100 shares may be purchased on
exercise of any Award at one time unless the number
purchased is the total number at the time available for
purchase under the Award.
1.8 Acceptance of Notes to Finance Exercise.
The Corporation may, with the Committee's
approval, accept one or more notes from any Eligible
Employee in connection with the exercise or receipt of any
outstanding Award; provided that any such note shall be
subject to the following terms and conditions:
(a) The principal of the note shall not exceed
the amount required to be paid to the Corporation upon the
exercise or receipt of one or more Awards under the Plan and
the note shall be delivered directly to the Corporation in
consideration of such exercise or receipt.
(b) The initial term of the note shall be determined
by the Committee; provided that the term of the note, including
extensions, shall not exceed a period of five years.
(c) The note shall provide for full recourse to the
Participant and shall bear interest at a rate determined by
the Committee but not less than the interest rate necessary
to avoid the imputation of interest under the Code.
(d) If the employment of the Participant terminates,
the unpaid principal balance of the note shall become due and
payable on the 10th business day after such termination;
provided, however, that if a sale of such shares would cause
such Participant to incur liability under Section 16(b) of
the Exchange Act, the unpaid balance shall become due and
payable on the 10th business day after the first day on
which a sale of such shares could have been made without
incurring such liability assuming for these purposes that
there are no other transactions (or deemed transactions in
securities of this Corporation) by the Participant
subsequent to such termination.
(e) If required by the Committee or by applicable
law, the note shall be secured by a pledge of any shares or rights
financed thereby in compliance with applicable law.
(f) The terms, repayment provisions, and collateral
release provisions of the note and the pledge securing the note
shall conform with applicable rules and regulations of the
Federal Reserve Board as then in effect.
1.9 No Transferability; Limited Exception to Transfer
Restrictions.
(a) Limit On Exercise and Transfer. Unless otherwise
expressly provided in (or pursuant to) this Section 1.9, by
applicable law and by the Award Agreement, as the same may
be amended, (i) all Awards are non-transferable and shall
not be subject in any manner to sale, transfer,
anticipation, alienation, assignment, pledge, encumbrance or
charge; Awards shall be exercised only by the Participant;
and (ii) amounts payable or shares issuable pursuant to an
Award shall be delivered only to (or for the account of) the
Participant.
(b) Exceptions. The Committee may permit Awards
to be exercised by and paid only to certain persons or entities
related to the Participant, including but not limited to
members of the Participant's immediate family, or trusts or
other entities whose beneficiaries or beneficial owners are
members of the Participant's immediate family, pursuant to
such conditions and procedures as the Committee may
establish. Any permitted transfer shall be subject to the
condition that the Committee receive evidence satisfactory
to it that the transfer is being made for essentially estate
and/or tax planning purposes on a gratuitous or donative
basis and without consideration (other than nominal
consideration or in exchange for an interest in a qualified
transferee). Notwithstanding the foregoing or anything to
contrary in Section 1.9(c), ISOs and Restricted Stock Awards
shall be subject to any and all additional transfer
restrictions under the Code.
(c) Further Exceptions to Limits On Transfer. The
exercise and transfer restrictions in Section 1.9(a) shall not
apply to:
(i) transfers to the Corporation,
(ii) the designation of a beneficiary to receive benefits
in the event of the Participant's death or, if the Participant
has died, transfers to or exercise by the Participant's
beneficiary, or, in the absence of a validly designated
beneficiary, transfers by will or the laws of descent and
distribution,
(iii) transfers pursuant to a QDRO order if approved or
ratified by the Committee,
(iv) if the Participant has suffered a disability,
permitted transfers or exercises on behalf of the Participant
by his or her legal representative, or
(v) the authorization by the Committee of "cashless
exercise" procedures with third parties who provide
financing for the purpose of (or who otherwise facilitate)
the exercise of Awards consistent with applicable laws and
the express authorization of the Committee.
2. OPTIONS.
2.1 Grants.
One or more Options may be granted under this
Article to any Eligible Employee. Each Option granted shall
be designated in the applicable Award Agreement, by the
Committee as either an Incentive Stock Option, subject to
Section 2.3, or a Non-Qualified Stock Option.
2.2 Option Price.
(a) Pricing Limits. The purchase price per share of
the Common Stock covered by each Option shall be determined by
the Committee at the time of the Award, but shall not be
less than 100% (110% in the case of an ISO granted to a
Participant described in Section 2.4) of the Fair Market
Value of the Common Stock on the date of grant.
(b) Payment Provisions. The purchase price of any
shares purchased on exercise of an Option granted under this
Article shall be paid in full at the time of each purchase
in one or a combination of the following methods: (i) in
cash or by electronic funds transfer; (ii) by check payable
to the order of the Corporation; (iii) if authorized by the
Committee or specified in the applicable Award Agreement, by
a promissory note of the Participant consistent with the
requirements of Section 1.8; (iv) by notice and third party
payment in such manner as may be authorized by the
Committee; or (v) by the delivery of shares of Common Stock
of the Corporation already owned by the Participant,
provided, however, that the Committee may in its absolute
discretion limit the Participant's ability to exercise an
Award by delivering such shares, and provided further that
any shares delivered which were initially acquired upon
exercise of a stock option must have been owned by the
Participant at least six months as of the date of delivery.
Shares of Common Stock used to satisfy the exercise price of
an Option shall be valued at their Fair Market Value on the
date of exercise.
2.3 Limitations on Grant and Terms of Incentive Stock
Options.
(a) $100,000 Limit. To the extent that the aggregate
"Fair Market Value" of stock with respect to which incentive stock
options first become exercisable by a Participant in any
calendar year exceeds $100,000, taking into account both
Common Stock subject to Incentive Stock Options under this
Plan and stock subject to incentive stock options under all
other plans of the Company, such options shall be treated as
Nonqualified Stock Options. For this purpose, the "Fair
Market Value" of the stock subject to options shall be
determined as of the date the options were awarded. In
reducing the number of options treated as incentive stock
options to meet the $100,000 limit, the most recently
granted options shall be reduced first. To the extent a
reduction of simultaneously granted options is necessary to
meet the $100,000 limit, the Committee may, in the manner
and to the extent permitted by law, designate which shares
of Common Stock are to be treated as shares acquired
pursuant to the exercise of an Incentive Stock Option.
(b) Option Period. Each Option and all rights
thereunder shall expire no later than 10 years after the Award
Date.
(c) Other Code Limits. Incentive Stock Options may
only be granted to Eligible Employees of the Corporation or a
Subsidiary that satisfies the other eligibility requirements
of the Code. There shall be imposed in any Award Agreement
relating to Incentive Stock Options such other terms and
conditions as from time to time are required in order that
the Option be an "incentive stock option" as that term is
defined in Section 422 of the Code.
2.4 Limits on 10% Holders.
No Incentive Stock Option may be granted to any
person who, at the time the Option is granted, owns (or is
deemed to own under Section 424(d) of the Code) shares of
outstanding Common Stock possessing more than 10% of the
total combined voting power of all classes of stock of the
Corporation, unless the exercise price of such Option is at
least 110% of the Fair Market Value of the stock subject to
the Option and such Option by its terms is not exercisable
after the expiration of five years from the date such Option
is granted.
2.5 Option Repricing/Cancellation and Regrant/Waiver
of Restrictions.
Subject to Section 1.4 and Section 4.6 and the
specific limitations on Awards contained in this Plan, the
Committee from time to time may authorize, generally or in
specific cases only, for the benefit of any Eligible
Employee any adjustment in the exercise or purchase price,
the vesting schedule, the number of shares subject to, the
restrictions upon or the term of, an Award granted under
this Article by cancellation of an outstanding Award and a
subsequent regranting of an Award, by amendment, by
substitution of an outstanding Award, by waiver or by other
legally valid means. Such amendment or other action may
result among other changes in an exercise or purchase price
which is higher or lower than the exercise or purchase price
of the original or prior Award, provide for a greater or
lesser number of shares subject to the Award, or provide for
a longer or shorter vesting or exercise period.
2.6 Effects of Termination of Employment; Termination of
Subsidiary Status; Discretionary Provisions.
(a) Options - Resignation or Dismissal. If the
Participant's employment by the Company terminates for any
reason (the date of such termination being referred to as
the "Severance Date") other than Retirement, Total
Disability or death, or for Cause (as determined in the
discretion of the Committee), the Participant shall have,
unless otherwise provided in the Award Agreement and subject
to earlier termination pursuant to or as contemplated by
Section 1.6 or 4.2, three months after the Severance Date to
exercise any Option to the extent it shall have become
exercisable on the Severance Date. In the case of a
termination for Cause, the Option shall terminate on the
Severance Date. In other cases, the Option, to the extent
not exercisable on the Severance Date, shall terminate.
(b) Options - Death or Disability. If the
Participant's employment by the Company terminates as a result
of Total Disability or death, the Participant, Participant's
Personal Representative or his or her Beneficiary, as the case
may be, shall have, unless otherwise provided in the Award
Agreement and subject to earlier termination pursuant to or
as contemplated by Section 1.6 or 4.2, until 12 months after
the Severance Date to exercise any Option to the extent it
shall have become exercisable by the Severance Date. Any
Option to the extent not exercisable on the Severance Date
shall terminate.
(c) Options - Retirement. If the Participant's
employment by the Company terminates as a result of Retirement,
the Participant, Participant's Personal Representative or his or
her Beneficiary, as the case may be, shall have, unless
otherwise provided in the Award Agreement and subject to
earlier termination pursuant to or as contemplated by
Section 1.6 or 4.2, until 12 months after the Severance Date
to exercise any Option to the extent it shall have become
exercisable by the Severance Date. The Option, to the
extent not exercisable on the Severance Date, shall
terminate.
(d) Committee Discretion. Notwithstanding the
foregoing provisions of this Section 2.6, in the event of, or
in anticipation of, a termination of employment with the
Company for any reason, other than discharge for Cause, the
Committee may, in its discretion, increase the portion of
the Participant's Award available to the Participant, or
Participant's Beneficiary or Personal Representative, as the
case may be, or, subject to the provisions of Section 1.6,
extend the exercisability period upon such terms as the
Committee shall determine and expressly set forth in or by
amendment to the Award Agreement.
3.RESTRICTED STOCK AWARDS.
3.1 Grants.
The Committee may, in its discretion, grant one or
more Restricted Stock Awards to any Eligible Employee. Each
Restricted Stock Award Agreement shall specify the number of
shares of Common Stock to be issued to the Participant, the
date of such issuance, the consideration for such shares
(but not less than the minimum lawful consideration under
applicable state law) by the Participant, the extent (if
any) to which and the time (if ever) at which the
Participant shall be entitled to dividends, voting and other
rights in respect of the shares prior to vesting, and the
restrictions (which may be based on performance criteria,
passage of time or other factors or any combination thereof)
imposed on such shares and the conditions of release or
lapse of such restrictions. Such restrictions shall not
lapse earlier than six months after the Award Date, except
to the extent the Committee may otherwise provide. Stock
certificates evidencing shares of Restricted Stock pending
the lapse of the restrictions ("Restricted Shares") shall
bear a legend making appropriate reference to the
restrictions imposed hereunder and shall be held by the
Corporation or by a third party designated by the Committee
until the restrictions on such shares shall have lapsed and
the shares shall have vested in accordance with the
provisions of the Award and Section 1.7. Upon issuance of
the Restricted Stock Award, the Participant may be required
to provide such further assurance and documents as the
Committee may require to enforce the restrictions.
3.2 Restrictions.
(a) Pre-Vesting Restraints. Except as provided in
Section 3.1 and 1.9, restricted shares comprising any Restricted
Stock Award may not be sold, assigned, transferred, pledged
or otherwise disposed of or encumbered, either voluntarily
or involuntarily, until the restrictions on such shares have
lapsed and the shares have become vested.
(b) Dividend and Voting Rights. Unless otherwise
provided in the applicable Award Agreement, a Participant receiving
a Restricted Stock Award shall be entitled to cash dividend
and voting rights for all shares issued even though they are
not vested, provided that such rights shall terminate
immediately as to any Restricted Shares which cease to be
eligible for vesting.
(c) Cash Payments. If the Participant shall have
paid or received cash (including any dividends) in connection
with the Restricted Stock Award, the Award Agreement shall
specify whether and to what extent such cash shall be
returned (with or without an earnings factor) as to any
restricted shares which cease to be eligible for vesting.
3.3 Return to the Corporation.
Unless the Committee otherwise expressly provides,
Restricted Shares that remain subject to restrictions at the
time of termination of employment or are subject to other
conditions to vesting that have not been satisfied by the
time specified in the applicable Award Agreement shall not
vest and shall be returned to the Corporation in such manner
and on such terms as the Committee shall therein provide.
4. OTHER PROVISIONS
4.1 Rights of Eligible Employees, Participants and
Beneficiaries.
(a) Employment Status. Status as an Eligible Employee
shall not be construed as a commitment that any Award will be made
under this Plan to an Eligible Employee or to Eligible
Employees generally.
(b) No Employment Contract. Nothing contained in this
Plan (or in any other documents under this Plan or in any Award)
shall confer upon any Eligible Employee or Participant any
right to continue in the employ or other service of the
Company, constitute any contract or agreement of employment
or other service or affect an employee's status as an
employee at will, nor shall interfere in any way with the
right of the Company to change a person's compensation or
other benefits, or to terminate his or her employment or
other service, with or without cause. Nothing in this
Section, however, is intended to adversely affect any
express independent right of such person under a separate
employment or service contract other than an Award
Agreement.
(c) Plan Not Funded. Awards payable under this Plan
shall be payable in shares or from the general assets of the
Corporation, and (except as provided in Section 1.4(c)) no
special or separate reserve, fund or deposit shall be made
to assure payment of such Awards. No Participant,
Beneficiary or other person shall have any right, title or
interest in any fund or in any specific asset (including
shares of Common Stock, except as expressly otherwise
provided) of the Company by reason of any Award hereunder.
Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor
any action taken pursuant to the provisions of this Plan
shall create, or be construed to create, a trust of any kind
or a fiduciary relationship between the Company and any
Participant, Beneficiary or other person. To the extent
that a Participant, Beneficiary or other person acquires a
right to receive payment pursuant to any Award hereunder,
such right shall be no greater than the right of any
unsecured general creditor of the Company.
4.2 Adjustments; Acceleration.
(a) Adjustments. Upon or in contemplation of any
reclassification, recapitalization, stock split (including a
stock split in the form of a stock dividend) or reverse
stock split; any merger, combination, consolidation, or
other reorganization; any spin-off, split-up, or similar
extraordinary dividend distribution ("spin-off") in respect
of the Common Stock (whether in the form of securities or
property); any exchange of Common Stock or other securities
of the Corporation, or any similar, unusual or extraordinary
corporate transaction in respect of the Common Stock; or a
sale of all or substantially all the assets of the
Corporation as an entirety ("asset sale"); then the
Committee shall, in such manner, to such extent (if any) and
at such time as it deems appropriate and equitable in the
circumstances:
(1) proportionately adjust any or all of (a) the
number and type of shares of Common Stock (or other
securities) that thereafter may be made the subject of
Awards (including the specific maxima and numbers of shares
set forth elsewhere in this Plan), (b) the number, amount
and type of shares of Common Stock (or other securities or
property) subject to any or all outstanding Awards, (c) the
grant, purchase, or exercise price of any or all outstanding
Awards, (d) the securities, cash or other property
deliverable upon exercise of any outstanding Awards, or (e)
(subject to limitations under Section 4.10(c)) the
performance standards appropriate to any outstanding Awards,
or
(2) make provision for a cash payment or for the
assumption, substitution or exchange of any or all
outstanding share-based Awards or the cash, securities or
property deliverable to the holder of any or all outstanding
share-based Awards, based upon the distribution or consideration
payable to holders of the Common Stock upon or in respect of
such event.
The Committee may adopt such valuation methodologies for
outstanding Awards as it deems reasonable in the event of a
cash or property settlement and, in the case of Options, but
without limitation on other methodologies, may base such
settlement solely upon the excess if any of the amount
payable upon or in respect of such event over the exercise
or strike price of the Award.
In each case, with respect to Awards of Incentive Stock
Options, no adjustment shall be made in a manner that would
cause the Plan to violate Section 422 or 424(a) of the Code
or any successor provisions without the written consent of
holders materially adversely affected thereby.
In any of such events, the Committee may take such action
prior to such event to the extent that the Committee deems
the action necessary to permit the Participant to realize
the benefits intended to be conveyed with respect to the
underlying shares in the same manner as is or will be
available to shareholders generally.
(b) Possible Early Termination of Accelerated
Awards. If any Option or other right to acquire Common Stock
under this Plan has been fully accelerated as required or
permitted by Section 4.2(c) but is not exercised prior to
(1) a dissolution of the Company, or (2) an event described
in Section 4.2(a) that the Company does not survive, or (3)
the consummation of an event described in Section 4.2(a)
involving a Change of Control Event approved by the Board,
such Option or right shall terminate, subject to any
provision that has been expressly made by the Board or the
Committee, through a plan of reorganization or otherwise,
for the survival, substitution, assumption, exchange or
other settlement of such Option or right.
(c) Acceleration of Awards Upon Change in Control.
Unless prior to a Change in Control Event the Committee
determines that, upon its occurrence, benefits under any or
all Awards shall not be accelerated or determines that only
certain or limited benefits under any or all Awards shall be
accelerated and the extent to which they shall be
accelerated, and/or establishes a different time in respect
of such Event for such acceleration, then upon the
occurrence of a Change in Control Event:
(1) each Option shall become immediately exercisable,
and
(2) Restricted Stock shall immediately vest free of
restrictions.
Any discretion with respect to these events shall be
limited to the extent required by applicable accounting
requirements in the case of a transaction intended to be
accounted for as a pooling of interests transaction.
The Committee may override the limitations on
acceleration in this Section 4.2(c) by express provision in
the Award Agreement and may accord any Eligible Employee a
right to refuse any acceleration, whether pursuant to the
Award Agreement or otherwise, in such circumstances as the
Committee may approve. Any acceleration of Awards shall
comply with applicable legal requirements and, if necessary
to accomplish the purposes of the acceleration or if the
circumstances require, may be deemed by the Committee to
occur (subject to Section 4.2(d) a limited period of time
not greater than 30 days before the event. Without
limiting the generality of the foregoing, the Committee may
deem an acceleration to occur immediately prior to the
applicable event and/or reinstate the original terms of an
Award if an event giving rise to an acceleration does not
occur.
(d) Possible Rescission of Acceleration. If the
vesting of an Award has been accelerated expressly in
anticipation of an event or upon shareholder approval of an
event and the Committee or the Board later determines that the
event will not occur, the Committee may rescind the effect of
the acceleration as to any then outstanding and unexercised or
otherwise unvested Awards.
(e) Acceleration Upon Termination of Service Following
a Change in Control.
(1) Termination After Change in Control. If any
Participant's employment is terminated by the Company upon
or within one year after a Change in Control Event, and the
termination is not the result of death, Total Disability,
Retirement or a termination for Cause, then, subject to the
other provisions of this Section 4.2 (including without
limitation Section 4.2(b) and Section 4.4), all outstanding
Options and other Awards held by the Participant shall be
deemed fully vested immediately prior to the Severance Date,
irrespective of the vesting provisions of the Participant's
Award Agreement, unless the Award Agreement specifies a
different result in the case of a Change in Control Event.
(2) No Extension Beyond Expiration. Notwithstanding
the foregoing, in no event shall an Award be reinstated or
extended beyond its final expiration date.
4.3 Effect of Termination of Service on Awards.
(a) General. The Committee shall establish the effect of
a termination of employment on the rights and benefits under
each Award under this Plan and in so doing may make
distinctions based upon the cause of termination.
(b) Events Not Deemed Terminations of Service. Unless
Company policy or the Committee otherwise provides, the
employment relationship shall not be considered terminated
in the case of (i) sick leave, (ii) military leave, or (iii)
any other leave of absence authorized by the Company or the
Committee; provided that unless reemployment upon the
expiration of such leave is guaranteed by contract or law,
such leave is for a period of not more than 90 days. In the
case of any Eligible Employee on an approved leave of
absence, continued vesting of the Award while on leave from
the employ of the Company shall be suspended, unless the
Committee otherwise provides or applicable law otherwise
requires. In no event shall an Award be exercised after the
expiration of the term set forth in the Award Agreement.
(c) Effect of Change of Subsidiary Status. For
purposes of this Plan and any Award, if an entity ceases to be a
Subsidiary a termination of employment shall be deemed to
have occurred with respect to each Eligible Employee in
respect of the Subsidiary who does not continue as an
Eligible Employee in respect of another entity within the
Company.
4.4 Compliance with Laws.
This Plan, the granting and vesting of Awards under
this Plan, the offer, issuance and delivery of shares of
Common Stock, the acceptance of promissory notes and/or the
payment of money under this Plan or under Awards are
subject to compliance with all applicable federal and state
laws, rules and regulations (including but not limited to
state and federal securities law and federal margin
requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion
of counsel for the Company, be necessary or advisable in
connection therewith. In addition, any securities
delivered under this Plan may be subject to any special
restrictions that the Committee may require to preserve a
pooling of interests under generally accepted accounting
principles. The person acquiring any securities under this
Plan will, if requested by the Company, provide such
assurances and representations to the Company as the
Committee may deem necessary or desirable to assure
compliance with all applicable legal and accounting
requirements.
4.5 Tax Matters.
(a) Provision for Tax Withholding or Offset. Upon
any exercise, vesting, or payment of any Award or upon the
disposition of shares of Common Stock acquired pursuant to
the exercise of an Incentive Stock Option prior to
satisfaction of the holding period requirements of Section
422 of the Code, the Company shall have the right at its
option to (i) require the Participant (or Personal
Representative or Beneficiary, as the case may be) to pay
or provide for payment of the minimum amount of any taxes
which the Company may be required to withhold with respect
to such Award event or payment or (ii) deduct from any
amount payable in cash the minimum amount of any taxes
which the Company may be required to withhold with respect
to such cash payment. In any case where a tax is required
to be withheld in connection with the delivery of shares of
Common Stock under this Plan, the Committee may in its sole
discretion (subject to Section 4.4) grant (either at the
time of the Award or thereafter) to the Participant the
right to elect, pursuant to such rules and subject to such
conditions as the Committee may establish, to have the
Corporation reduce the number of shares to be delivered by
(or otherwise reacquire) the appropriate number of shares
valued at their Fair Market Value, to satisfy such minimum
withholding obligation, determined in each case as of the
trading day next preceding the applicable date of exercise,
vesting or payment. Shares in no event shall be withheld
in excess of the minimum number required for tax
withholding under these provisions.
4.6 Plan Amendment, Termination and Suspension.
(a) Board Authorization. The Board may, at any
time, terminate or, from time to time, amend, modify or suspend
this Plan, in whole or in part. No Awards may be granted
during any suspension of this Plan or after termination of
this Plan, but the Committee shall retain jurisdiction as to
Awards then outstanding in accordance with the terms of this
Plan.
(b) Shareholder Approval. To the extent then required
under Sections 162, 422 or 424 of the Code or any other applicable
law, or deemed necessary or advisable by the Board, any
amendment to this Plan shall be subject to shareholder
approval.
(c) Amendments to Awards. Without limiting any other
express authority of the Committee under (but subject to)
the express limits of this Plan, the Committee by agreement
or resolution may waive conditions of or limitations on
Awards to Participants that the Committee in the prior
exercise of its discretion has imposed, without the consent
of a Participant, and (subject to the requirements of
Section 1.2(b)) may make other changes to the terms and
conditions of Awards that do not affect in any manner
materially adverse to the Participant, the Participant's
rights and benefits under an Award.
(d) Limitations on Amendments to Plan and Awards. No
amendment, suspension or termination of this Plan or change
of or affecting any outstanding Award shall, without written
consent of the Participant, affect in any manner materially
adverse to the Participant any rights or benefits of the
Participant or obligations of the Company under any Award
granted under this Plan prior to the effective date of such
change. Changes contemplated by Section 4.2 shall not be
deemed to constitute changes or amendments for purposes of
this Section 4.6.
4.7 Privileges of Stock Ownership.
Except as otherwise expressly authorized by the
Committee or this Plan, a Participant shall not be entitled
to any privilege of stock ownership as to any shares of
Common Stock not actually delivered to and held of record
by the Participant. No adjustment will be made for
dividends or other rights as a shareholder for which a
record date is prior to such date of delivery.
4.8 Effective Date of the Plan.
This Plan is effective as of January 27, 2000 the date
of approval by the Board. The Plan shall be submitted for
and subject to shareholder approval.
4.9 Term of the Plan.
No Award will be granted under this Plan after January
26, 2010 (the "termination date"). Unless otherwise
expressly provided in this Plan or in an applicable Award
Agreement, any Award granted prior to the termination date
may extend beyond such date, and all authority of the
Committee with respect to Awards hereunder, including the
authority to amend an Award, shall continue during any
suspension of this Plan and in respect of Awards
outstanding on the termination date.
4.10 Governing Law/Construction/Severability.
(a) Choice of Law. This Plan, the Awards, all
documents evidencing Awards and all other related documents
shall be governed by, and construed in accordance with the
laws of the State of California.
(b) Severability. If a court of competent jurisdiction
holds any provision invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
(c) Plan Construction.
(1) Rule 16b-3. It is the intent of the Corporation
that the Awards and transactions permitted by Awards be
interpreted in a manner that, in the case of Participants
who are or may be subject to Section 16 of the Exchange Act,
satisfies the applicable requirements for exemptions under
Rule 16b-3. The exemption will not be available if the
authorization of actions by any Committee of the Board with
respect to such Awards does not satisfy the applicable
conditions of Rule 16b-3. Notwithstanding the foregoing,
the Corporation shall have no liability to any Participant
for Section 16 consequences of Awards or events under
Awards.
(2) Section 162(m). It is the further intent of the
Company that (to the extent the Company or Awards under this
Plan may be or become subject to limitations on deductibility
under Section 162(m) of the Code), Options granted with an
exercise or base price not less than Fair Market Value on
the date of grant will qualify as performance-based
compensation or otherwise be exempt from deductibility
limitations under Section 162(m) of the Code, to the extent
that the authorization of the Award (or the payment thereof,
as the case may be) satisfies any applicable administrative
requirements thereof.
4.11 Captions.
Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in
any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.
4.12 Stock-Based Awards in Substitution for Stock Options or
Awards Granted by Other Corporation.
Awards may be granted to Eligible Employees under this
Plan in substitution for employee stock options, stock
appreciation rights, restricted stock or other stock-based
awards granted by other entities to persons who are or who
will become Eligible Employees in respect of the Company, in
connection with a distribution, merger or other
reorganization by or with the granting entity or an
affiliated entity, or the acquisition by the Company,
directly or indirectly, or all or a substantial part of the
stock or assets of the employing entity.
4.13 Non-Exclusivity of Plan.
Nothing in this Plan shall limit or be deemed to limit
the authority of the Board or the Committee to grant awards
or authorize any other compensation, with or without
reference to the Common Stock, under any other plan or
authority.
4.14 No Corporate Action Restriction.
The existence of the Plan, the Award Agreements and the
Awards granted hereunder shall not limit, affect or restrict
in any way the right or power of the Board or the
shareholders of the Corporation to make or authorize: (a)
any adjustment, recapitalization, reorganization or other
change in the Corporation's or any Subsidiary's capital
structure or its business, (b) any merger, amalgamation,
consolidation or change in the ownership of the Corporation
or any subsidiary, (c) any issue of bonds, debentures,
capital, preferred or prior preference stock ahead of or
affecting the Corporation's or any Subsidiary's capital
stock or the rights thereof, (d) any dissolution or
liquidation of the Corporation or any Subsidiary, (e) any
sale or transfer of all or any part of the Corporation or
any Subsidiary's assets or business, or (f) any other
corporate act or proceeding by the Corporation or any
Subsidiary. No participant, beneficiary or any other person
shall have any claim under any Award or Award Agreement
against any member of the Board or the Committee, or the
Corporation or any employees, officers or agents of the
Corporation or any Subsidiary, as a result of any such
action.
4.15 Other Company Benefit and Compensation Program.
Payments and other benefits received by a Participant
under an Award made pursuant to this Plan shall not be
deemed a part of a Participant's compensation for purposes
of the determination of benefits under any other employee
welfare or benefit plans or arrangements, if any, provided
by the Corporation or any Subsidiary, except where the
Committee or the Board expressly otherwise provides or
authorizes in writing. Awards under this Plan may be made
in addition to, in combination with, as alternatives to or
in payment of grants, awards or commitments under any other
plans or arrangements of the Company or the Subsidiaries.
5.DEFINITIONS.
5.1 Definitions.
(a) "Award" means an award of any Option or Restricted
Stock, or any combination thereof, whether alternative or
cumulative, authorized by and granted under this Plan.
(b) "Award Agreement" means any writing setting forth the
terms of an Award that has been authorized by the Committee.
(c) "Award Date" means the date upon which the Committee
took the action granting an Award or such later date as the
Committee designates as the Award Date at the time of the
Award.
(d) "Award Period" means the period beginning on an Award
Date and ending on the expiration date of such Award.
(e) "Beneficiary" means the person, persons, trust or trusts
designated by a Participant or, in the absence of a
designation, entitled by will or the laws of descent and
distribution, to receive the benefits specified in the Award
Agreement and under this Plan in the event of a
Participant's death, and shall mean the Participant's
executor or administrator if no other Beneficiary is
designated and able to act under the circumstances.
(f) "Board" means the Board of Directors of the Corporation.
(g) "Cause" with respect to a Participant means (unless
otherwise expressly provided in the applicable Award
Agreement or another applicable contract with the
Participant) a termination of employment based upon a
finding by the Company, acting in good faith and based on
its reasonable belief at the time, that the Participant:
(1) has failed to render services to the Company where
such failure amounts to gross negligence or misconduct of the
Participant's responsibility and duties; or
(2) has committed an act of fraud or been dishonest against
the Company or any affiliate of the Company; or
(3) has been convicted of a felony or other crime involving
moral turpitude.
A termination for Cause shall be deemed to occur (subject to
reinstatement upon a contrary final determination by the
Committee) on the date on which the Company first delivers
written notice to the Participant of a finding of
termination for Cause.
(h) "Change in Control Event" means any of the following
events
(1) the dissolution or liquidation of either the Company,
unless its business is continued by another entity in which
holders of the Company's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing entity's voting securities
immediately after the event;
(2) any sale, lease, exchange or other transfer (in one or a
series of transactions) of all or substantially all of the
assets of either the Company, unless its business is
continued by another entity in which holders of the
Company's voting securities immediately before the event
own, either directly or indirectly, more than 50% of the
continuing entity's voting securities immediately after the
event;
(3) any reorganization or merger of the Company, unless the
holders of the Company's voting securities immediately
before the event own, either directly or indirectly, more
than 50% of the continuing or surviving entity's voting
securities immediately after the event;
(4) an acquisition by any person, entity or group acting in
concert of more than 50% of the voting securities of the
Company, unless the holders of the Company's voting
securities immediately before the event own, either directly
or indirectly, more than 50% of the acquirer's voting
securities immediately after the acquisition; or
(5) a change of one-half or more of the members of the Board
of Directors of the Company within a twelve-month period,
unless the election or nomination for election by
shareholders of new directors within such period
constituting a majority of the applicable Board was approved
by the vote of at least two-thirds of the directors then
still in office who were in office at the beginning of the
twelve-month period.
(i) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(j) "Commission" means the Securities and Exchange
Commission.
(k) "Committee" means the Board or one or more committees
appointed by the Board to administer all or certain aspects
of this Plan, each committee to be comprised solely of one
or more directors or such number as may be required under
applicable law.
(l) "Common Stock" means the Common Stock of the
Corporation and such other securities or property as may
become the subject of Awards, or become subject to Awards,
pursuant to an adjustment made under Section 4.2 of this
Plan.
(m) "Company" means, collectively, the Corporation and
its Subsidiaries.
(n) "Corporation" means American States Water Company, a
California corporation, and its successors.
(o) "Eligible Employee" means an officer (whether or not
a director) or key employee of the Company, including
participants in the American States Water Company Annual
Incentive Plan.
(p) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
(q) "Fair Market Value" on any date means (1) if the
stock is listed or admitted to trade on a national securities
exchange, the closing price of the stock on the Composite
Tape, as published in the Western Edition of The Wall Street
Journal, of the principal national securities exchange on
which the stock is so listed or admitted to trade, on such
date, or, if there is no trading of the stock on such date,
then the closing price of the stock as quoted on such
Composite Tape on the next preceding date on which there was
trading in such shares; (2) if the stock is not listed or
admitted to trade on a national securities exchange, the
last price for the stock on such date, as furnished by the
National Association of Securities Dealers, Inc. ("NASD")
through the NASDAQ National Market Reporting System or a
similar organization if the NASD is no longer reporting such
information; (3) if the stock is not listed or admitted to
trade on a national securities exchange and is not reported
on the National Market Reporting System, the mean between
the bid and asked price for the stock on such date, as
furnished by the NASD or a similar organization; or (4) if
the stock is not listed or admitted to trade on a national
securities exchange, is not reported on the National Market
Reporting System and if bid and asked prices for the stock
are not furnished by the NASD or a similar organization, the
value as established by the Committee at such time for
purposes of this Plan.
(r) "Incentive Stock Option" means an Option which
is intended, as evidenced by its designation, as an incentive
stock option within the meaning of Section 422 of the Code,
the award of which contains such provisions (including but
not limited to the receipt of shareholder approval of this
Plan, if the Award is made prior to such approval) and is
made under such circumstances and to such persons as may be
necessary to comply with that section.
(s) "Nonqualified Stock Option" means an Option that
is designated as a Nonqualified Stock Option and shall include
any Option intended as an Incentive Stock Option that fails
to meet the applicable legal requirements thereof. Any
Option granted hereunder that is not designated as an
incentive stock option shall be deemed to be designated a
nonqualified stock option under this Plan and not an
incentive stock option under the Code.
(t) "Option" means an option to purchase Common Stock
granted under this Plan. The Committee shall designate any
Option granted to an Eligible Employee as a Nonqualified
Stock Option or an Incentive Stock Option.
(u) "Participant" means an Eligible Employee who has been
granted an Award under this Plan.
(v) "Personal Representative" means the person or persons
who, upon the disability or incompetence of a Participant,
shall have acquired on behalf of the Participant, by legal
proceeding or otherwise, the power to exercise the rights or
receive benefits under this Plan and who shall have become
the legal representative of the Participant.
(w) "Plan" means this 2000 Stock Incentive Plan, as it
may be amended from time to time.
(x) "QDRO" means a qualified domestic relations order.
(y) "Restricted Shares" or "Restricted Stock" means
shares of Common Stock awarded to a Participant under this Plan,
subject to payment of such consideration, if any, and such
conditions on vesting (which may include, among others, the
passage of time, specified performance objectives or other
factors) and such transfer and other restrictions as are
established in or pursuant to this Plan and the related
Award Agreement, for so long as such shares remain unvested
under the terms of the applicable Award Agreement.
(z) "Retirement" means retirement from active service
as an employee or officer of the Company on or after attaining age
65.
(aa) "Rule 16b-3" means Rule 16b-3 as promulgated by the
Commission pursuant to the Exchange Act, as amended from
time to time.
(bb) "Section 16 Person" means a person subject to Section
16(a) of the Exchange Act.
(cc) "Securities Act" means the Securities Act of 1933, as
amended from time to time.
(dd) "Subsidiary" means any corporation or other entity a
majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation.
(ee) "Total Disability" means a "permanent and total
disability" within the meaning of Section 22(e)(3) of the
Code and such other disabilities, infirmities, afflictions
or conditions as the Committee by rule may include.
