Exhibit
10 (b)
AMERICAN WATER WORKS COMPANY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT
(the "Agreement") is made as of May 4, 2000, between
American Water Works Company, Inc., a Delaware corporation
(the "Company") and (the "Employee") pursuant to the
terms and conditions of the American Water Works Company,
Inc. 2000 Stock Award and Incentive Plan (the "Plan").
Capitalized terms not defined in this Agreement shall
have the meanings set forth in the Plan.
THE PARTIES AGREE AS FOLLOWS:
1. Award of Options. Pursuant to the Plan,
the
Company hereby awards to Employee options (the
"Options") to acquire shares
of Company common stock (the "Stock")
at the exercise price of $22.56 per share (the "Exercise
Price"), subject to the terms and conditions set forth in
this Agreement and the Plan. A copy of the Plan has been
delivered to Employee. By signing below, Employee agrees
to be bound by all the provisions of the Plan. The
Options granted hereunder are nonqualified stock options.
2. Vesting Schedule. Subject to Sections 6
and 7
hereof, the Options shall vest and become exercisable in
three equal installments on each of the first, second,
and third anniversaries of May 4, 2000.
3. Expiration Date. Unless terminated
earlier in
accordance with this Agreement or the provisions of the
Plan, the Options subject to this Agreement shall expire on
May 4, 2010 (the "Expiration Date").
4. Payment of Exercise Price. The Exercise
Price of
the shares as to which Options are exercised may be paid to
the Company at the time of exercise in cash or in Stock or
in such other consideration or such combination thereof as
the Committee shall permit at the time of exercise, in each
case (a) pursuant to rules and
procedures established by the Committee and (b)
having a total Fair Market Value determined as of the
date of
exercise equal to the Exercise Price.
5. Non-transferability. Except to the
extent
otherwise determined by the Committee, Options granted
hereunder
shall not be assignable or otherwise transferable other
than by will or the laws of descent and distribution.
Unless otherwise provided by the Committee, during the
lifetime of Employee the Options shall be exercisable and
elections with respect to the Options may be made only
by Employee or Employee's guardian or legal representative.
6. Termination of Employment.
(a) Except to the extent provided in
Section 7 hereof or any employment agreement or
severance agreement between Employee and the
Company, the provisions of this Section 6 shall
apply to the Options upon a termination of Employee's
employment with the Company and all its
subsidiaries ("Termination") for any reason.
(b) In the event of Employee's
voluntary
Termination (other than "Retirement", as defined)
or a Termination of Employee by the Company for
Cause (as defined), all vested and unvested Options
shall be canceled on the Termination date.
(c) In the event of Employee's
Termination by
reason of death or Disability (as defined), all
Options shall become immediately vested and shall be
exercisable in whole or in part at any time prior to
the earlier of the Expiration Date and the date one
year after the Termination date.
(d) In the event of Employee's
Termination by
reason of Retirement, all Options shall become
immediately vested and shall be exercisable in whole
or in part at any time prior to the earlier of the
Expiration Date and the date three years after the
Termination date.
(e) In the event of Employee's Termination
for
any reason other than as provided in Section 6(b),
6(c), or 6(d), Options which are unvested shall be
canceled and
Options which are vested and exercisable may be
exercised in whole or in part at any time prior to
the earlier of the Expiration Date and the date 90
days after the Termination date.
7. Change in Control. In the event of a
Change
in Control, any Option that was not previously vested
and exercisable shall become fully vested and exercisable at
the time of the Change in Control, subject to the
applicable restrictions set forth in the Plan.
8. Grant of Reload Options.
(a) Reload Options. To the extent that (i)
the
Exercise Price of the Options or any Reload Options
(as defined) related thereto is paid through the
delivery of Mature Shares (as defined) in accordance
with Section 4 ("Payment Shares") and/or (ii) Stock
is paid or surrendered in satisfaction of any
withholding taxes incurred in connection with the
exercise of the Option or any related Reload Option
("Withholding Tax Shares"), Employee shall receive
additional non-qualified stock options to purchase a
number of shares of Stock equal to the sum of the
Payment Shares and the Withholding Tax Shares
("Reload Options"), provided that (A) Employee is
then employed by the Company or any of its
subsidiaries, and (B) at the time of payment of the
Exercise Price relating to such Options (or Reload
Options), the aggregate Fair Market Value of the
Stock purchased pursuant to the exercise of such
Options (or Reload Options) exceeds the aggregate
Exercise Price of such Options (or Reload Options) by
25% or more. The exercise price per share of Reload
Options shall be the Fair Market Value of the Stock
on the date the Reload Options are granted to
Employee, and the Reload Options shall thereafter
become vested and exercisable at the earliest to
occur of (w) one year after the grant date (if
Employee has been continuously employed through
such date), (x) upon a Termination of Employee
due to death, Disability or
Retirement, (y) a Change in Control, or (z) 90 days
prior to the expiration of the Maximum Term (as
defined). The
"Maximum Term" of any Reload Option shall be equal to
the remaining term of the Options to which it relates,
measured from the date upon which the Option was
exercised but
subject to the same post-employment termination provisions
of the Options described in Section 6. Any Reload Option
granted in connection with the exercise of a Reload Option
shall have a Maximum Term equal to the remaining term of the
Reload Option to which it relates, measured from the date on
which the prior Reload Option was exercised but subject to
the same post-employment termination provisions of the
Options described in Section 6.
(b) Penalties for Premature Transfers. If
Employee sells, transfers, assigns or otherwise disposes of
more than 50% of the number of Profit Shares (as defined)
acquired upon exercise of any Options (or Reload Options),
during the one-year period following such exercise (or such
lesser period as corresponds with the shorter of (i) the
remaining term of the Reload Options, or (ii) the vesting of
the Reload Options), the Committee may, in its discretion,
preclude Employee from exercising any Reload Options then
held by Employee; provided, however, that this provision
shall not proscribe transfers by will or the laws of descent
and distribution; and provided further, however, that if any
shares subject to this Section 8(b) are delivered in payment
of the exercise price of Options, in addition to the shares
of Stock otherwise subject to this Section 8(b), an
equivalent number of shares issued upon exercise of such
Options shall remain subject to this Section 8(b). Employee
agrees that any action taken by the Committee hereunder
shall not constitute any breach of any obligation or duty
owed by the Company to Employee. Notwithstanding the
foregoing, Employee may waive all rights to a grant of
Reload Options by filing a written waiver with the Company
within ten days following the date of such grant, in which
case the restriction period described above shall not apply
with respect to any shares issued in connection with the
exercise of an Option as to which Employee's Reload Option
rights have been waived.
9. Definitions. For purposes of this Agreement:
(a) "Cause" shall have the meaning given to such
term in any employment agreement or severance agreement
between the Company and Employee in effect at the date of
Termination and, in the absence of any such agreement, shall
mean Employee's deliberate, willful or gross misconduct.
(b) "Disability" shall mean that Employee has
become eligible to receive benefits under the Company's long
term disability plan or policy.
(c) "Mature Shares" shall mean any of the
following: (i) Stock purchased by Employee in the open
market, (ii) Stock acquired by Employee upon exercise of any
option that has been held by Employee for no less than six
months after the exercise date, or (iii) any restricted
stock of the Company that is held by Employee for no less
than six months after the vesting date of such restricted
stock.
(d) "Profit Shares" shall mean the number of
shares of Stock acquired pursuant to the exercise of an
Option (or Reload Option) having a Fair Market Value on the
date of exercise equal to the excess of the aggregate Fair
Market Value of the Stock purchased upon exercise of such
Option (or Reload Option) over the aggregate Exercise Price
of such Option (or Reload Option).
(e) "Retirement" shall mean Employee's
Termination following the date on which Employee is eligible
promptly thereafter to commence receiving retirement
benefits from the Company.
10. Withholding Tax. Employee may be subject to
withholding taxes as a result of the exercise or settlement of an
Option or other payment in respect of an Option. Unless the
Committee permits otherwise, Employee shall pay to the Company in
cash, promptly when the amount of such obligations become
determinable, all applicable federal, state, local and foreign
withholding taxes that the Company in its discretion determines
result from each such exercise, settlement or payment. Unless
the Committee otherwise determines and subject to such rules and
procedures as the Committee may establish, Employee may make an
election to have shares of Stock withheld by the Company or to
tender shares of Stock to the Company to pay the amount of tax
that the Company in its discretion determines to be required so
to be withheld by the Company upon exercise of an Option, subject
to satisfying any applicable requirements for compliance with
Section 16(b) of the Exchange Act. Any shares of Stock so
withheld or tendered will be valued as of the date they are
withheld or tendered, provided that Stock shall be valued at Fair
Market Value on such date. Unless otherwise permitted by the
Committee, the value of shares withheld or tendered may not
exceed the required federal, state, local and foreign withholding
tax obligations as computed by the Company.
11. Governing Law. This Agreement shall be governed
by the laws of the State of Delaware, without regard to conflict
of law principles.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
AMERICAN WATER WORKS COMPANY, INC.
By: ____________________________
Name:
Title:
Employee hereby accepts and agrees to be bound
by all the terms and conditions of this Agreement and the Plan.
_______________________________
Employee Title Options
J. James Barr President and CEO 143,200
Ellen C. Wolf Vice President and CFO 60,650
W. Timothy Pohl General Counsel and Secretary 38,225
Joseph F. Hartnett, Jr. Treasurer 26,450
Robert D. Sievers Comptroller 26,450
