AMERICAN STATES WATER COMPANY FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
EXHIBIT
10.3.
2008
STOCK INCENTIVE PLAN
THIS NONQUALIFIED STOCK OPTION
AGREEMENT (this “Option
Agreement”) by and between AMERICAN STATES WATER COMPANY,
a California corporation (the “Corporation”), and
_____________________________ (the “Participant”) evidences the
nonqualified stock option (the “Option”) granted by the
Corporation to the Participant as to the number of shares of the Corporation’s
common shares, no par value (the “Common Shares”), first set
forth below.
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Vesting
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Date
of Vesting1,2
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The Option
is granted under the American States Water Company 2008 Stock Incentive Plan, as
amended (the “Plan”) and
subject to the Terms and Conditions of Option (the “Terms”) attached to this
Option Agreement (incorporated herein by this reference) and to the
Plan. The Option has been granted to the Participant in addition to,
and not in lieu of, any other form of compensation otherwise payable or to be
paid to the Participant. The Option is not and shall not be deemed to
be an incentive stock option within the meaning of Section 422 of the
Code. Capitalized terms are defined in the Plan if not defined
herein. The parties agree to the terms of the Option set forth
herein, and the Participant acknowledges receipt of a copy of the Terms and the
Plan.
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“PARTICIPANT”
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AMERICAN
STATES WATER COMPANY,
a
California corporation
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Signature
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By:
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Its:
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Print
Name
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Address
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CONSENT
OF SPOUSE
In
consideration of the Corporation’s execution of this Option Agreement, the
undersigned spouse of the Participant agrees to be bound by all of the terms and
provisions hereof and of the Plan.
__________________________________ ______________________
Signature
of
Spouse Date
1 Subject
to adjustment under Section 5.2 of the Plan.
2 Subject
to early termination as provided in Section 4 below.
TERMS
AND CONDITIONS OF OPTION
1. Vesting; Limits on
Exercise.
As set
forth in the Option Agreement, the Option shall vest and become exercisable in
percentage installments of the aggregate number of Common Shares subject to the
Option. The Option may be exercised only to the extent the Option is
vested and exercisable.
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Cumulative
Exercisability. To the extent that the Option is vested
and exercisable, the Participant has the right to exercise the Option (to
the extent not previously exercised), and such right shall continue, until
the expiration or earlier termination of the
Option.
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No Fractional
Shares. Fractional share interests shall be disregarded,
but may be cumulated.
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Minimum
Exercise. No fewer than 1001
Common Shares may be purchased at any one time, unless the number
purchased is the total number at the time exercisable under the
Option.
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2. Continuance of Employment
Required; No Employment Commitment.
Except as
provided in Section 4.2 below, (a) the vesting schedule requires continued
service through each applicable vesting date as a condition to the vesting of
the applicable installment of the Option and the rights and benefits under this
Option Agreement and (b) employment or service for only a portion of the vesting
period, even if a substantial portion, will not entitle the Participant to any
proportionate vesting or avoid or mitigate a termination of rights and benefits
upon or following a termination of employment or service as provided in Section
4.2 below or under the Plan.
Nothing
contained in this Option Agreement or the Plan constitutes an employment
commitment by the Company, affects the Participant’s status as an employee at
will who is subject to termination without cause, confers upon the Participant
any right to remain employed by the Corporation or any Subsidiary, interferes in
any way with the right of the Corporation or any Subsidiary at any time to
terminate such employment, or affects the right of the Corporation or any
Subsidiary to increase or decrease the Participant’s other
compensation.
3. Method of Exercise of
Option.
The Option
shall be exercisable by the delivery to the Secretary of the Corporation of a
written notice stating the number of Common Shares to be purchased pursuant to
the Option and accompanied by:
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delivery
of an executed Exercise Agreement in substantially the form attached
hereto as Exhibit A or such other form as from time to time may be
required by the Committee (the “Exercise
Agreement”);
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payment
in full for the Exercise Price of the shares to be purchased, by check or
electronic funds transfer to the Corporation, subject to such specific
procedures or directions as the Committee may
establish;
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satisfaction
of the tax withholding provisions of Section 5.5 of the Plan;
and
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any
written statements or agreements required pursuant to Section 5.4 of the
Plan.
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The
Committee also may but is not required to authorize a non-cash payment
alternative specified below at or prior to the time of exercise, in which case,
the Exercise Price and/or applicable withholding taxes, to the extent so
authorized, may be paid in full or in part by Common Shares already owned by the
Participant, valued at their Fair Market Value on the exercise date; provided, however, that any
shares acquired upon exercise of a stock option or otherwise directly from the
Corporation must have been owned by the Participant for at least six (6) months
before the date of such exercise.
4. Early
Termination of Option.
4.1 Possible
Termination of Option upon Change in Control. The Option is
subject to termination in connection with a Change in Control Event or certain
similar reorganization events as provided in Section 5.2 of the
Plan.
4.2 Termination
of Option upon a Termination of Participant’s Employment or
Services. Subject to
earlier termination on the Expiration Date of the Option or pursuant to Section
4.1 above, if the Participant ceases to be employed by or ceases to provide
services to the Corporation or a Subsidiary, the following rules shall apply
(the last day that the Participant is employed by or provides services to the
Corporation or a Subsidiary is referred to as the Participant’s “Severance
Date”):
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if
the termination of the Participant’s employment or services is the result
of any reason other than the Participant’s death, Total Disability,
Retirement or a termination by the Corporation or a Subsidiary for Cause,
(a) the Participant will have until the date that is three months after
his or her Severance Date to exercise the Option (or portion thereof) to
the extent that it was vested on the Severance Date, (b) the Option, to
the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Option, to the extent exercisable for the
3-month period following the Severance Date and not exercised during such
period, shall terminate at the close of business on the last day of the
3-month period;
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if
the termination of the Participant’s employment or services is the result
of the Participant’s death, Total Disability or the Participant’s
Retirement, (a) the Option will continue to vest and become exercisable in
accordance with the vesting schedule set forth in the Option Agreement,
(b) the Participant (or his or her beneficiary or personal representative,
as the case may be) will have until the close of business on the date
immediately prior to the Expiration Date, to the extent it is then vested,
to exercise the Option, and (c) the Option, to the extent not exercised
during such period, shall terminate on the Expiration Date;
and
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if
the Participant’s employment or services are terminated by the Company for
Cause, the Option, to the extent not exercised, whether vested or
unvested, on the Severance Date shall terminate on the Severance
Date.
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For
purposes of the Option, “Total Disability” and “Cause” have the meanings given
to such terms in the Plan. For purposes of the Option, “Retirement” means retirement
by the Participant from active service as an officer or employee of the
Corporation and/or its Subsidiaries after attaining age 55 if the sum of the
Participant’s years of service with the Corporation and/or its Subsidiaries and
age is at least 75.
Notwithstanding
the foregoing, in all events, the Option is subject to earlier termination on
the Expiration Date of the Option or as contemplated by Section
4.1. The Administrator shall be the sole judge of whether the
Participant continues to render employment or services for purposes of this
Option Agreement.
5. Non-Transferability and
Other Restrictions.
The Option
and any other rights of the Participant under this Option Agreement or the Plan
are nontransferable and exercisable only by the Participant, except as set forth
in Section 1.8 of the Plan.
6. Notices.
Any notice
to be given under the terms of this Option Agreement or the Exercise Agreement
shall be in writing and addressed to the Corporation at its principal office to
the attention of the Secretary, and to the Participant at the address given
beneath the Participant’s signature hereto, or at such other address as either
party may hereafter designate in writing to the other. Any such
notice shall be given only when received, but if the Participant is no longer an
Eligible Employee, shall be deemed to have been duly given when enclosed in a
properly sealed envelope addressed as aforesaid, registered or certified, and
deposited (postage and registry or certification fee prepaid) in a post office
or branch post office regularly maintained by the United States
Government.
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7. Plan.
The Option
and all rights of the Participant under this Option Agreement are subject to,
and the Participant agrees to be bound by, all of the terms and conditions of
the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall
govern. The Participant acknowledges receipt of a copy of the Plan
and agrees to be bound by the terms thereof. The Participant
acknowledges reading and understanding the Plan, the prospectus for the Plan,
and this Option Agreement. Unless otherwise expressly provided in
other sections of this Option Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Committee do not and shall not be
deemed to create any rights in the Participant unless such rights are expressly
set forth herein or are otherwise in the sole discretion of the Board or the
Committee so conferred by appropriate action of the Board or the Committee under
the Plan after
the date hereof.
8. Entire
Agreement.
This
Option Agreement (together with the form of Exercise Agreement attached hereto)
and the Plan together constitute the entire agreement and supersede all prior
understandings and agreements, written or oral, of the parties hereto with
respect to the subject matter hereof. The Plan, this Option Agreement
and the Exercise Agreement may be amended pursuant to Section 5.6 of the
Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, consistent with the terms
of the Plan, unilaterally waive any provision hereof or of the Exercise
Agreement in writing to the extent such waiver does not adversely affect the
interests of the Participant hereunder, but no such waiver shall operate as or
be construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.
9. Governing Law; Limited
Rights.
9.1. California Law. This Option
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of California without regard to conflict of law principles
thereunder.
9.2. Limited
Rights. The Participant has no rights as a shareholder of the
Corporation with respect to the Option as set forth in Section 5.7 of the
Plan. The Option does not place any limit on the corporate authority
of the Corporation as set forth in Section 5.14 of the Plan.
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10. Miscellaneous.
10.1 Effect of this
Agreement. Subject to the Corporation’s right to terminate the
Option pursuant to Section 5.6 of the Plan, this Option Agreement shall be
assumed by, be binding upon and inure to the benefit of any successor or
successors of the Corporation.
10.2 Counterparts. This
Option Agreement may be executed simultaneously in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
10.3 Section
Headings. The section headings of this Option Agreement are
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
(Remainder
of Page Intentionally Left Blank)
5
Exhibit
A
2008
STOCK INCENTIVE PLAN
OPTION
EXERCISE AGREEMENT
The
undersigned (the “Purchaser”) hereby irrevocably
elects to exercise his/her right, evidenced by that certain Nonqualified Stock
Option Agreement dated as of ______________ (the “Option Agreement”) under the
American States Water Company 2008 Stock Incentive Plan, as amended (the “Plan”), as
follows:
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the
Purchaser hereby irrevocably elects to purchase __________________ shares
of Common Shares (the “Shares”), of American
States Water Company (the “Corporation”),
and
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such
purchase shall be at the price of $__________________ per share, for an
aggregate amount of $__________________ (subject to applicable withholding
taxes pursuant to Section 5.5 of the
Plan).
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Capitalized
terms are defined in the Plan if not defined herein.
Delivery of
Shares. The Purchaser requests that (1) a certificate
representing the Common Shares be registered to Purchaser and delivered to:
_____________________________ or (2) that the Common Shares be registered in the
Purchaser’s name and electronically delivered
to:__________________________________________________________________________.
Plan and Option
Agreement. The Purchaser acknowledges that all of his/her
rights are subject to, and the Purchaser agrees to be bound by, all of the terms
and conditions of the Plan and the Option Agreement, both of which are
incorporated herein by this reference. If a conflict or inconsistency
between the terms and conditions of this Exercise Agreement and of the Plan or
the Option Agreement shall arise, the terms and conditions of the Plan and/or
the Option Agreement shall govern. The Purchaser acknowledges receipt
of a copy of all documents referenced herein and acknowledges reading and
understanding these documents and having an opportunity to ask any questions
that he/she may have had about them.
“PURCHASER”
Signature
Print
Name
Address
City, State, Zip Code
