Document:

March 23, 2006

 

Mr. Gregg Mayer

92 Hersey Street

Hingham, MA  02043

Dear Gregg:

On behalf of Interleukin
Genetics, I am pleased to offer you the position of Chief Business Officer. This
position reports to Dr. Philip Reilly, CEO. The annualized compensation
for this regular, full-time position is $240,000, derived and paid monthly at
the rate of $20,000.00 per month. As part of your compensation, the Board of
Directors has approved that you be granted 8,000 shares of Interleukin Genetics’
restricted stock, which will vest on the first anniversary of your date of hire.
Further stock awards will be granted on an annual basis at the discretion of
the Board of Directors, based on your performance, and will be in line with
awards made to other senior managers at the Company.

As a regular full-time
employee, you will be able to participate in our employee benefit plans. Interleukin
Genetics currently offers group health and dental plans, short- and long-term
disability, life insurance and accidental death and dismemberment insurance, as
well as a 401(k) program and Employee Stock Purchase Program for our
regular full-time employees. Health and dental insurance coverage is effective
on your first day of work, if you elect coverage. Interleukin Genetics also
offers other benefit plans including sick time, four weeks of vacation time,
and holidays. Although there are no current plans to change or modify these
benefits, the Company reserves the right to modify these plans at any time
based upon business needs.

Your primary duties and
responsibilities will include, but are not limited to the following areas. You
will be a member of the executive management group, and in that capacity you
will help chart the company’s strategic course. Specifically, you will oversee
the development of a commercial strategy for the Company, as well as have
functional responsibility for strategic marketing, business development, and
other general management responsibilities as defined by the Chief Executive
Officer.

 

Interleukin Genetics’s
commitments to you are as stated in this written letter. Interleukin is an “at-will
employer”, and as such, it is understood that you are not being offered  employment for a definite period of time and
that either you or Interleukin may terminate the employment relationship at any
time and for any reason without prior notice.

If your employment is
terminated without cause, or due to a change in control, you will be entitled
to 6 months of salary and benefits continuation. Interleukin will make such
payments in accordance with its regular payroll schedule or in a lump sum
payment at its sole discretion.

As a confirmation of your
acceptance of this offer of employment, please sign, date, and return the copy
of this letter to me by 12 noon on Monday, March 27, 2006. The original is
for your records. We hope that you would be able to start on or before April 10,
2006.

Please call me to discuss
any questions or concerns you might have regarding the contents of this letter
or the benefits available to you.

Sincerely,

 

	
  /s/ PHILIP R. REILLY

  
	
  Philip R. Reilly

  
	
  Chief Executive Officer

  

 

	
  Accepted and agreed

  	
    /s/ 
  GREGG MAYER

  	
  Date

  	
     3-27-06

  
	
   

  	
  SignatureExhibit 10.1

 

January 30, 2006 Grants

 

AMERICAN STATES WATER COMPANY

2000 STOCK INCENTIVE PLAN

FORM OF  NONQUALIFIED STOCK OPTION AGREEMENT

 

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.

 

	
  Number
  of Common Shares:(1)

  	
   

  	
  Award
  Date: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exercise
  Price per Share:(1)                                      $               

  	
   

  	
  Expiration
  Date:(1),(2)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  %
  Vesting

  	
  Date of
  Vesting(1),(2)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
              %

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
              %

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
              %

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

The
Option is granted under the American States Water Company 2000 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.

 

	
  “PARTICIPANT”

  	
   

  	
  AMERICAN
  STATES WATER

  COMPANY,

  
	
   

  	
   

  	
   

  	
  a California
  corporation

  
	
  Signature

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print
  Name

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  City,
  State, Zip Code

  	
   

  	
   

  

 

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.

 

•                  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.

 

•                  No Fractional Shares. Fractional
share interests shall be disregarded, but may be cumulated.

 

•                  Minimum Exercise. No fewer
than 100(1) Common Shares may be purchased at any one time, unless
the number purchased is the total number at the time exercisable under the
Option.

 

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:

 

1

 

•                  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”);

 

•                  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;

 

•                  satisfaction of the tax withholding
provisions of Section 5.5 of the Plan; and

 

•                  any written statements or agreements
required pursuant to Section 5.4 of the Plan.

 

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”):

 

•                  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;

 

•                  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

 

2

 

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

 

•                  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.

 

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 and having 20 or more years of service with the
Corporation and/or its Subsidiaries.

 

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 1.9 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.

 

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

 

3

 

of the Plan and agrees to
be bound by the terms thereof. The Participant acknowledges reading and
understanding the Plan. 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, 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.

 

(Remainder
of Page Intentionally Left Blank)

 

4

 

EXHIBIT A

 

AMERICAN STATES WATER COMPANY

2000 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 2000 Stock Incentive Plan, as amended (the “Plan”), as follows:

 

•                  the Purchaser hereby irrevocably
elects to purchase                         
shares of Common Shares (the “Shares”), of
American States Water Company (the “Corporation”),
and

 

•                  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).

 

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”

  	
   

  	
  ACCEPTED
  BY:

  
	
   

  	
   

  	
  AMERICAN
  STATES WATER

  
	
   

  	
   

  	
   

  	
  COMPANY,

  
	
  Signature

  	
   

  	
  a California
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Print
  Name

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (To be
  completed by the Corporation after the price (including 

  
	
  City,
  State, Zip Code

  	
   

  	
  applicable
  withholding taxes), value (if applicable) and receipt of funds is verified.)

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