EXHIBIT 10.41
CALIFORNIA WATER SERVICE GROUP
EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock
Option Agreement, California Water Service Group (the "Company") has granted you
an option under its Equity Incentive Plan (the "Plan") to purchase the number of
shares of the Company's Common Stock indicated in your Grant Notice at the
exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan have the same
definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your option will
vest as provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments.
3. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner permitted by your
Grant Notice, which may include one or more of the following:
a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, pursuant
to a program developed under Regulation T as promulgated by the Federal
Reserve Board that, prior to the issuance of Common Stock, results in
either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds.
b) Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the
period required to avoid a charge to the Company's reported earnings
(generally six months) or that you did not acquire, directly or indirectly
from the Company, that are owned free and clear of any liens, claims,
encumbrances or security interests, and that are valued at Fair Market
Value on the date of exercise. "Delivery" for these purposes, in the sole
discretion of the Company at the time you exercise your option, include
delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the
foregoing, you may not exercise your option by tender to the Company of
Common Stock to the extent such tender would violate the provisions of any
law, regulation or agreement restricting the redemption of the Company's
stock.
4. WHOLE SHARES. You may exercise your option only for whole shares of
Common Stock.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.
6. TERM. You may not exercise your option before the commencement of its
term or after its term expires. The term of your option commences on the Date of
Grant and expires upon the earliest of the following:
a) 30 days after the termination of your Continuous Service for any
reason other than death, Disability or Normal Retirement, provided that if
during any part of such 30-month period you may not exercise your option
solely because of the condition set forth in the preceding paragraph
relating to "Securities Law Compliance," your option will not expire until
the earlier of the Expiration Date or until it has been exercisable for an
aggregate period of three months after the termination of your Continuous
Service;
b) five years after the termination of your Continuous Service due to
your death, Disability or Normal Retirement;
c) the Expiration Date indicated in your Grant Notice; or
d) the day before the 10th anniversary of the Date of Grant.
If your option is an Incentive Stock Option, in order to obtain the federal
income tax advantages associated with an Incentive Stock Option, the Code
requires that at all times beginning on the date of grant of your option and
ending on the day three months before the date of your option's exercise, you
must be an employee of the Company or an Affiliate, except in the event of your
death or your permanent and total disability, as defined in Section 22(e) of the
Code. The Company has provided for extended exercisability of your option under
certain circumstances for your benefit but cannot guarantee that your option
will necessarily be treated as an Incentive Stock Option if you continue to
provide services to the Company or an Affiliate as a Consultant or Director
after your employment terminates or if you otherwise exercise your option more
than three months after the date your employment with the Company or an
Affiliate terminates.
7. EXERCISE.
a) You may exercise the vested portion of your option during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to
such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then
require.
b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise
of your option, (2) the lapse of any substantial risk of forfeiture to
which the shares of Common Stock are subject at the time of exercise, or
(3) the disposition of shares of Common Stock acquired upon such exercise.
c) If your option is an Incentive Stock Option, by exercising your
option you agree that you will notify the Company in writing within 15 days
after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of your option that occurs within two years after the
date of your option grant or within one year after such shares of Common
Stock are transferred upon exercise of your option.
8. TRANSFERABILITY.
a) If your option is an Incentive Stock Option, your option is not
transferable, except by will or by the laws of descent and distribution,
and is exercisable during your life only by you. Notwithstanding the
foregoing, by delivering written notice to the Company, in a form
satisfactory to the Company, you may designate a third party who, in the
event of your death, will thereafter be entitled to exercise your option.
b) If your option is a Nonstatutory Stock Option, your option is not
transferable, except (i) by will or by the laws of descent and
distribution, (ii) with the prior written approval of the Company, by
instrument to an inter vivos or testamentary trust, in a form accepted by
the Company, in which the option is to be passed to beneficiaries upon the
death of the trustor (settlor) and (iii) with the prior written approval of
the Company, by gift, in a form accepted by the Company, to a permitted
transferee under Rule 701 of the Securities Act.
9. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option will be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or of the Company or an Affiliate to continue your employment.
In addition, nothing in your option will obligate the Company or an Affiliate,
their respective stockholders, Boards of Directors, Officers or Employees to
continue any relationship that you might have as a Director or Consultant for
the Company or an Affiliate.
10. WITHHOLDING OBLIGATIONS.
a) At the time you exercise your option, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and
otherwise agree to make adequate provision as instructed by the Company
(including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to
the extent instructed by the Company), for any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the
Company or an Affiliate, if any, which arise in connection with the
exercise of your option.
b) The Company may, in its sole discretion, and in compliance with any
applicable legal conditions or restrictions, withhold from fully vested
shares of Common Stock otherwise issuable to you upon the exercise of your
option a number of whole shares of Common Stock having a Fair Market Value,
determined by the Company as of the date of exercise, not in excess of the
minimum amount of tax required to be withheld by law (or such lower amount
as may be necessary to avoid variable award accounting). Any adverse
consequences to you arising in connection with such share withholding
procedure will be your sole responsibility.
c) You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly,
you may not be able to exercise your option when desired even though your
option is vested, and the Company will have no obligation to issue a
certificate for such shares of Common Stock or release such shares of
Common Stock from any escrow provided for herein unless such obligations
are satisfied.
11. NOTICES. Any notices provided for in your option or the Plan will be
given in writing and will be deemed effectively given upon receipt or, in the
case of notices delivered by mail by the Company to you, five days after deposit
in the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.
12. GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option, and
is further subject to all interpretations, amendments, rules and regulations,
which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan will control.
NOTICE OF EXERCISE
California Water Service Group
c/o California Water Service Company
0000 X. Xxxxx Xx.
Xxx Xxxx, XX 00000 Date of Exercise: ___________
Ladies and Gentlemen:
This constitutes notice that I elect to exercise my stock option under the
California Water Service Group Equity Incentive Plan by purchasing the number of
shares for the price set forth below.
Type of option (check one): Incentive [ ] Nonstatutory [ ]
Stock option dated: _________________ _________________
Number of shares as to which option
is exercised ("Shares"):
_________________ _________________
Certificates to be issued in
name of: _________________ _________________
Total exercise price: $_________________ $_________________
Cash payment delivered herewith:
$_________________ $_________________
Value of _____ shares of California
Water Service Group common stock
delivered herewith(2):
$_________________ $_________________
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the California Water Service Group Equity
Incentive Plan, (ii) to provide for the payment by me to you (in the manner
designated by you) of your withholding obligation, if any, relating to the
exercise of this option, and (iii) if this exercise relates to an incentive
stock option, to notify you in writing within 15 days after the date of any
disposition of any of the shares of Common Stock issued upon exercise of this
option that occurs within two years after the date of grant of this option or
within one year after such shares of Common Stock are issued upon exercise of
this option.
Very truly yours,
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(2) Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.
