Document:

Exhibit 10.14

 

 

AMERICAN STATES WATER COMPANY

2000
STOCK INCENTIVE PLAN

(As
Amended as of January 31, 2006)

 

 

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

  	
  3

  
	
   

  	
  1.8

  	
  Acceptance of Notes to
  Finance Exercise

  	
  4

  
	
   

  	
  1.9

  	
  No Transferability;
  Limited Exception to Transfer Restrictions

  	
  4

  
	
  2.

  	
  OPTIONS

  	
  5

  
	
   

  	
  2.1

  	
  Grants

  	
  5

  
	
   

  	
  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.

  	
  STOCK UNIT AWARDS

  	
  9

  
	
   

  	
  4.1

  	
  Grants.

  	
  9

  
	
   

  	
  4.2

  	
  Payouts

  	
  9

  
	
   

  	
  4.3

  	
  Non-Transferability

  	
  10

  
	
   

  	
  4.4

  	
  Dividend Equivalent
  Rights

  	
  10

  
	
   

  	
  4.5

  	
  Cancellation of
  Restricted Stock Units

  	
  10

  

 

 

	
  5.

  	
  OTHER PROVISIONS

  	
  10

  
	
   

  	
  5.1

  	
  Rights of Eligible
  Employees, Participants and Beneficiaries

  	
  10

  
	
   

  	
  5.2

  	
  Adjustments;
  Acceleration

  	
  11

  
	
   

  	
  5.3

  	
  Effect of Termination
  of Service on Awards

  	
  13

  
	
   

  	
  5.4

  	
  Compliance with Laws

  	
  14

  
	
   

  	
  5.5

  	
  Tax Matters

  	
  14

  
	
   

  	
  5.6

  	
  Plan Amendment,
  Termination and Suspension

  	
  14

  
	
   

  	
  5.7

  	
  Privileges of Stock
  Ownership

  	
  15

  
	
   

  	
  5.8

  	
  Effective Date of the
  Plan

  	
  15

  
	
   

  	
  5.9

  	
  Term of the Plan

  	
  15

  
	
   

  	
  5.10

  	
  Governing
  Law/Construction/Severability

  	
  16

  
	
   

  	
  5.11

  	
  Captions

  	
  16

  
	
   

  	
  5.12

  	
  Stock-Based Awards in
  Substitution for Stock Options or Awards Granted by Other Corporation.

  	
  16

  
	
   

  	
  5.13

  	
  Non-Exclusivity of Plan

  	
  17

  
	
   

  	
  5.14

  	
  No Corporate Action
  Restriction

  	
  17

  
	
   

  	
  5.15

  	
  Other Company Benefit
  and Compensation Program

  	
  17

  
	
  6.

  	
  DEFINITIONS

  	
  17

  
	
   

  	
  6.1

  	
  Definitions

  	
  17

  

 

ii

 

AMERICAN STATES WATER COMPANY

2000 STOCK INCENTIVE PLAN

(As Amended as of January 31,
2006)

 

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 6.

 

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 5.6;

 

(vi)           to accelerate or extend
the exercisability or extend the term of any or all such outstanding Awards (in
the case of Options, within the maximum ten-year term of such 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 5.2, 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 1,050,000 shares (the “Share
Limit”).   The maximum number of
shares of Common Stock that may be delivered pursuant to options qualified as
Incentive Stock

 

2

 

Options granted under
this Plan is 187,500 shares.  The maximum
number of shares subject to those options that are granted during any calendar
year to any individual shall be limited to 50,000 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 50,000.  Each of the four foregoing numerical limits shall be subject to adjustment as
contemplated by this Section 1.4 and Section 5.2.

 

(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 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

 

3

 

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.

 

To the extent
permitted by applicable law, 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; (ii)
awards shall be exercised only by the Participant; and (iii) amounts payable or
shares issuable pursuant to an Award shall be delivered only to (or for the
account of) the Participant.

 

4

 

(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 the
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

 

5

 

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

 

6

 

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 5.6 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 Option granted under this Article
by cancellation of an outstanding Option and a subsequent regranting of an Option,
by amendment, by substitution of an outstanding Option, by waiver or by other
legally valid means.  Such amendment or
other action may result in, among other changes, an exercise or purchase price
which is higher or lower than the exercise or purchase price of the original or
prior Option, provide for a greater or lesser number of shares subject to the Option,
or provide for a longer or shorter vesting or exercise period; provided,
however, that, except for adjustments contemplated by Section 5.2, any such
amendment that results in the reduction of the exercise or purchase price below
the exercise price or purchase price of the original or prior Option shall be
subject to prior shareholder approval.

 

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 5.2, 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 5.2, 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 5.2, until 12 months after the Severance Date to exercise

 

7

 

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 Option 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; provided, however, that in no event shall any such extension
of the exercisability period exceed the latest of  (i) the 15th day of the third
month following the date that the Option would have otherwise terminated in
connection with a termination of employment, (ii) December 31 of the calendar
year in which the Option would have otherwise terminated in connection with a
termination of employment (but in no event shall such exercisability period be
extended to a date after the termination of the original term pursuant to
Section 1.6 hereof), or (iii) such other date that is allowable under Section
409A of the Code without making the Option subject to Section 409A.

 

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.

 

8

 

(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.     STOCK
UNIT AWARDS

 

4.1            Grants.

 

The
Committee may, in its discretion, (a) authorize and grant to any Eligible Employee
a Stock Unit Award, (b) credit to any Eligible Employee Stock Units, (c) permit
an Eligible Employee to irrevocably elect to defer by means of Stock Units or
receive in Stock Units all or a portion of any Award hereunder, or (d) grant
Stock Units in lieu of, in exchange for, in respect of, or in addition to any
other compensation or Award under this Plan. 
The specific terms, conditions, and provisions relating to each Stock
Unit grant or election, including the applicable vesting and payout provisions
of the Stock Units and the form of payment to be made at or following the
vesting thereof, shall be set forth in or pursuant to the applicable Award
Agreement and any relevant Company bonus, performance or other service or
deferred compensation plan, in form substantially as approved by the Committee,
in each case subject to compliance with Section 409A of the Code.

 

4.2            Payouts.

 

Subject
to compliance with Section 409A of the Code, the Committee in the applicable
Stock Unit Award Agreement or other award agreement or the relevant Company
deferred compensation plan may permit the Eligible Employee to elect the form
and time of payout of vested Stock Units on such conditions or subject to such
procedures as the Committee may impose, and may permit Stock Unit offsets or
other provision for payment of any applicable taxes that may be due on the
crediting, vesting or payment in respect of the Stock Units.

 

4.3            Non-Transferability.  

 

Rights in respect of Stock Unit awards may not be
sold, pledged, assigned, hypothecated, transferred, or otherwise disposed of or
encumbered, either voluntarily or

 

9

 

involuntarily, other than by will or the laws of descent or
distribution, until any restrictions have lapsed and the shares issuable
pursuant to the Stock Unit award have been issued.

 

4.4            Dividend
Equivalent Rights.

 

In its discretion, the Committee may grant to any Eligible
Employee “Dividend Equivalent Rights” concurrently with the grant of any Stock
Unit award, on such terms as set forth by the Committee in the Stock Unit
Agreement or other applicable award agreement. 
Dividend Equivalent Rights shall be based on all or part of the amount
of dividends declared on shares of Common Stock and shall be credited as of
dividend payment dates, during the period between the date of grant (or such
later date as the Committee may set) and the date the Stock Unit award expires
(or such earlier date as the Committee may set), as determined by the
Administrator.  Dividend Equivalent
Rights shall be payable in cash or Shares, and may be subject to such
conditions, as may be determined by the Administrator.

 

4.5            Cancellation
of Restricted Stock Units.

 

Unless the Committee otherwise expressly provides, Restricted
Stock Units that remain subject to conditions to vesting at the time of
termination of employment or service 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 cancelled, unless the Committee otherwise
provides in or by amendment to the applicable terms of the Award.

 

5.     OTHER
PROVISIONS

 

5.1            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.

 

10

 

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.

 

5.2            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 5.10(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.  Further, in each case, no adjustment shall be
made to any Award that

 

11

 

would subject the holder of such Award to additional tax under Section
409A of the Code with respect to such Award.

 

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 5.2(c) but is not exercised prior to (1) a dissolution of
the Company, or (2) an event described in Section 5.2(a) that the Company does
not survive, or (3) the consummation of an event described in Section 5.2(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, and

 

(3)   Restricted
Stock Units shall immediately vest free of restrictions and become payable.

 

The Committee may
override the limitations on acceleration in this Section 5.2(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 5.2(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. 
Notwithstanding the foregoing, an Award shall not be accelerated and/or
become payable pursuant to this Section 5(c) to the extent that such
acceleration and/or payment shall cause the holder of such Award to be subjected
to additional tax under Section 409A of the Code with respect to such Award.

 

(d)       Possible
Rescission of Acceleration.  If the
vesting of an Award has been accelerated expressly in anticipation of an

 

12

 

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 5.2 (including without limitation
Section 5.2(b) and Section 5.4), all outstanding Options and other Awards held by the Participant shall be deemed
fully vested immediately prior to the Severance Date and Stock Units shall
become payable upon such Severance Date (or, to the extent applicable under
Section 409A, upon the date that is six months after such Severance Date),
irrespective of the vesting and/or payment 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.

 

5.3            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.

 

13

 

5.4            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.  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.

 

5.5            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 5.4) 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.

 

5.6            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 by the provisions of Section 2.5 of the Plan, 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,

 

14

 

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 5.2 shall not
be deemed to constitute changes or amendments for purposes of this Section 5.6.

 

5.7            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.

 

5.8            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.

 

5.9            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.

 

5.10          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.

 

15

 

(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.

 

5.11          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.

 

5.12         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.

 

5.13          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.

 

5.14         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,

 

16

 

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.

 

5.15         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.

 

6.      DEFINITIONS.

 

6.1            Definitions.

 

(a)       “Award”
means an award of any Option, Restricted Stock or Stock Unit 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.

 

17

 

(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.

 

18

 

(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 Shares 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 5.2 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 and is made under such
circumstances and to such persons as may be necessary to comply with that
section.

 

19

 

(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)        “Restricted
Stock Unit” means a Stock Unit subject to such conditions on vesting and
payout as the Committee may determine.

 

(aa)     “Retirement”
means retirement from active service as an employee or officer of the Company
on or after attaining age 65.

 

(bb)     “Rule
16b-3”  means Rule 16b-3 as
promulgated by the Commission pursuant to the Exchange Act, as amended from
time to time.

 

(cc)     “Section
16 Person” means a person subject to Section 16(a) of the Exchange Act.

 

(dd)     “Securities
Act” means the Securities Act of 1933, as amended from time to time.

 

(ee)     “Stock
Unit” means a bookkeeping entry that serves as a unit of measurement
relative to a share of Common Stock for purposes of determining the payment of
the Stock Unit grant.  Stock Units are
not outstanding shares of Common

 

20

 

Stock and do not entitle
a grantee to any dividend, voting or other rights in respect of any Common
Stock.  Stock Units may, however, by
express provision in the applicable Award Agreement, entitle a Participant to
dividend equivalent rights, credited in the form of cash or additional Stock
Units, as determined by the Committee.

 

(ff)       “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.

 

(gg)     “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.

 

21Exhibit 10.30

 

AMERICAN STATES WATER COMPANY

2000 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT
(this “Agreement”) is dated as of January 30,
2006 by and between American States Water Company, a California corporation
(the “Corporation”), and [                           ] (the “Participant”).

 

WITNESSETH

 

WHEREAS,
pursuant to the American States Water Company 2000 Stock Incentive Plan, as
amended (the “Plan”), the Corporation has
granted to the Participant effective as of the date hereof (the “Award Date”), an award of restricted stock units under the
Plan (the “Award”), upon the terms and
conditions set forth herein and in the Plan.

 

NOW
THEREFORE, in consideration of services rendered and to be
rendered by the Participant, and the mutual promises made herein and the mutual
benefits to be derived therefrom, the parties agree as follows:

 

1.              Defined Terms. Capitalized
terms used herein and not otherwise defined herein shall have the meaning
assigned to such terms in the Plan.

 

2.              Grant. Subject to the terms of
this Agreement, the Corporation hereby grants to the Participant an Award with
respect to an aggregate of [                 ]
stock units (subject to adjustment as provided in Section 5.2 of the Plan)
(the “Stock Units”). As used herein, the term
“stock unit” means a non-voting unit of measurement which is deemed for
bookkeeping purposes to be equivalent to one outstanding share of the
Corporation’s Common Shares (subject to adjustment as provided in Section 5.2
of the Plan) solely for purposes of the Plan and this Agreement. The
Corporation will maintain a Stock Unit bookkeeping account for the Participant
(the “Account”). The Stock Units granted to
the Participant under this Agreement will be credited to the Participant’s
Account as of the Award Date. The Stock Units shall be used solely as a device
for the determination of the payment to eventually be made to the Participant
if such Stock Units vest pursuant to Section 3. The Stock Units shall not be
treated as property or as a trust fund of any kind.

 

3.              Vesting.

 

(a)          General.
The Award shall vest and become nonforfeitable with respect to [  ] percent
([  ]%) of the total number of Stock Units on [   ], [  ]
([  ]%) of the total number of Stock Units on [  ] and [   ]
percent ([  ]%) of the total number of Stock Units on [  ]
(each, an “Installment Vesting Date”) (subject
to adjustment under Section 5.2 of the Plan), provided the Participant is
still employed by the Corporation or a Subsidiary on the applicable Installment
Vesting Date, subject to earlier termination as provided herein or in the Plan.

 

(b)         Termination
of Employment Prior to Vesting. Notwithstanding Section 3(a),
the Participant’s Stock Units (and any Stock Units credited as dividend equivalents)
shall terminate to the extent such Stock Units have not become vested prior to
the first date the Participant is no longer employed by the Corporation or one
of its Subsidiaries, regardless of the

 

1

 

reason for the
termination of the Participant’s employment with the Corporation or a
Subsidiary; provided, however,
that if the Participant’s employment is terminated by the Corporation or a
Subsidiary as a result of the Participant’s death or Total Disability, the
Participant’s Stock Units, to the extent such units are not then vested, shall
become fully vested as of the date of termination of the Participant’s
employment. If the Participant is employed by a Subsidiary and that entity
ceases to be a Subsidiary, such event shall be deemed to be a termination of
employment of the Participant for purposes of this Agreement (unless the
Participant otherwise continues to be employed by the Corporation or another of
its Subsidiaries following such event). If any unvested Stock Units are
terminated hereunder, such Stock Units (and any Stock Units credited as
dividend equivalents) shall automatically terminate and be cancelled as of the
applicable termination date without payment of any consideration by the Corporation
and without any other action by the Participant, or the Participant’s
beneficiary or personal representative, as the case may be.

 

(c)          Early Vesting
Upon Retirement Age. Notwithstanding Section 3(a), the
Participant’s Stock Units (and any Stock Units credited as dividend
equivalents), to the extent such Stock Units are not then vested, shall become
fully vested as of the date such Participant attains Retirement Age. For
purposes of this Agreement, a Participant shall attain “Retirement
Age” at the time that the Participant both (1) is at least age
55 and (2) has 20 or more years of service to the Corporation and/or its
Subsidiaries.

 

(d)         Early
Vesting Upon Change of Control. Notwithstanding Section 3(a),
the Participant’s Stock Units (and any Stock Units credited as dividend
equivalents), to the extent such Stock Units are not then vested, shall become
fully vested upon the occurrence of a Change of Control. For purposes of this
Agreement (and notwithstanding the definition of “Change of Control Event” set
forth in the Plan), a “Change of Control”
shall mean any of the following events:

 

(1)          any sale, lease,
exchange or other change in ownership (in one or a series of transactions)
of all or substantially all of the assets of the Corporation, unless its
business is continued by another entity in which holders of the Corporation’s
voting securities immediately before the event own, either directly or
indirectly, more than fifty-five percent (55%) of the continuing entity’s
voting securities immediately after the event;

 

(2)          any reorganization or
merger of the Corporation, unless the holders of the Corporation’s voting
securities immediately before the event own, either directly or indirectly,
more than fifty-five percent (55%) of the continuing or surviving entity’s
voting securities immediately after the event, and (ii) at least a majority
of the members of the board of directors of the surviving entity resulting from
such reorganization or merger were members of the incumbent Board of Directors
of the Corporation at the time of the execution of the initial agreement or of
the action of such incumbent Board of Directors providing for such
reorganization or merger;

 

(3)          an acquisition by any
person, entity or group acting in concert of more than fifty-five percent (55%)
of the voting securities of the

 

2

 

Corporation, unless the holders of the Corporation’s
voting securities immediately before the event own, either directly or
indirectly, more than fifty-five percent (55%) of the acquirer’s voting
securities immediately after the acquisition;

 

(4)          the consummation of a
tender offer or exchange offer by any individual, entity or group which results
in such individual, entity or group beneficially owning (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934 twenty-five percent (25%)
or more of the voting securities of the Corporation, unless the tender offer is
made by the Corporation or any of its subsidiaries or the tender offer is
approved by a majority of the members of the Board of Directors of the
Corporation who were in office at the beginning of the twelve month period
preceding the commencement of the tender offer; or

 

(5)          a change of one-half or
more of the members of the Board of Directors of the Corporation 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 a vote of at least two-thirds (2/3) of the
directors then still in office who were in office at the beginning of the
twelve month period.

 

4.              Continuance of Employment. The
vesting schedule requires continued employment or service through each
applicable vesting date as a condition to the vesting of the applicable
installment of the Award and the rights and benefits under this Agreement. Partial
employment or service, even if substantial, during any vesting period 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 services as provided in Section 3(b) or under the Plan.

 

Nothing contained in this Agreement or the Plan
constitutes an employment or service commitment by the Corporation, 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 or
in service to 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 services, or affects the right of the Corporation or any
Subsidiary to increase or decrease the Participant’s other compensation or
benefits. Nothing in this paragraph, however, is intended to adversely affect
any independent contractual right of the Participant without his consent
thereto.

 

5.              Dividend and
Voting Rights.

 

(a)          Limitation
on Rights Associated with Units. The Participant shall have no
rights as a shareholder of the Corporation, no dividend rights (except as
expressly provided in Section 5(b) with respect to dividend
equivalent rights) and no voting rights, with respect to the Stock Units and
any Common Shares underlying or issuable in respect of such Stock Units until
such Common Shares are actually issued to and held of record by the Participant.
No adjustments will be made for dividends or other rights of a holder for which
the record date is prior to the date of issuance of the stock certificate.

 

3

 

(b)         Dividend
Equivalents. The Participant shall be entitled to receive
dividend equivalents in the form of additional Stock Units with respect to
the Stock Units credited to his or her Account as the Corporation declares and
pays dividends on its Common Shares in the form of cash. The number of
Stock Units to be credited to the Participant’s Account as a dividend
equivalent will equal (1) the per share cash dividend to be paid by the
Corporation on its Common Shares multiplied by the number of Stock Units then
credited to the Participant’s Account on the record date for that dividend
divided by (2) the Fair Market Value of the Common Shares on the related
dividend payment date. The Corporation shall credit such additional Stock Units
to the Participant’s Account as of the related dividend payment date. Stock
Units credited as dividend equivalents will become vested to the same extent as
the Stock Units to which they relate. For purposes of clarity, no dividend
equivalents shall be credited for a dividend record date with respect to any
Stock Units that were paid or terminated prior to such dividend record date.

 

6.              Timing and Manner of Payment.

 

(a)          General.
On or as soon as administratively practicable following each Installment Vesting
Date pursuant to Section 3(a), but in no event later than March 15 of
the year following the Installment Vesting Date, the Corporation shall deliver
to the Participant a number of Common Shares equal to the number of Stock Units
subject to this Award that become vested on such Installment Vesting Date
(including any Stock Units credited as dividend equivalents with respect to
such vested Stock Units), unless such Stock Units terminate prior to such
Installment Vesting Date pursuant to Section 3(b).

 

(b)         Payment
of Stock Units upon Termination of Employment as a Result of Death or
Disability or upon a Change of Control. Notwithstanding Section 6(a),
upon a termination of the Participant’s employment as a result of his or her
death or Disability or upon the occurrence of a Change of Control, the
Corporation shall deliver to the Participant a number of Common Shares equal to
the number of Stock Units subject to this Award that became vested in
accordance with Section 3(b) or Section 3(d), as applicable, (including
any Stock Units credited as dividend equivalents with respect to such Stock
Units) as soon as administratively practicable following such termination of
employment or Change of Control, as applicable (but in no event later than March 15
of the year following the year in which such termination of employment or
Change of Control occurs).

 

(c)          Payment
of Stock Units Following Retirement Age.

 

(1)          Notwithstanding Section 6(a) and
subject to Section 6(c)(2) below, if any portion of the Participant’s
Stock Units subject to this Award (and any Stock Units credited as dividend
equivalents with respect to such Stock Units) vest prior to the applicable
Installment Vesting Date as a result of the Participant attaining Retirement
Age pursuant to Section 3(c), then on or as soon as administratively
practicable following the Installment Vesting Date on which such portion of the
Award would have otherwise become vested pursuant to Section 3(a), but in
no event later than March 15 of the year following the Installment Vesting
Date, the Corporation shall deliver to the Participant a number of Common Shares
equal to the number of Stock Units subject to this

 

4

 

Award that would have otherwise vested on the
applicable Installment Vesting Date (including any Stock Units credited as
dividend equivalents with respect to such vested Stock Units).

 

(2)          Notwithstanding Section 6(c)(1),
if, prior to any applicable Installment Vesting Date under Section 3(a), (i) such
Participant dies or incurs a “disability” (as such term is defined in Section 409A
of the Code and the regulations thereunder) or (ii) there occurs a change
in the ownership or effective control of the Corporation or a change in the
ownership of a substantial portion of the assets of the Corporation (as defined
in Section 409A of the Code and the regulations thereunder), the Corporation
shall deliver to the Participant a number of Common Shares equal to the total
number of Stock Units then credited to the Participant’s Account (including any
Stock Units credited as dividend equivalents with respect to such Stock Units)
as soon as administratively practicable following the first to occur of (x) the
Participant’s death, (y) the Participant’s disability or (z) a change in the
ownership or effective control of the Corporation or a change in the ownership
of a substantial portion of the assets of the Corporation.

 

(d)         Termination
of Stock Units Upon Payment. A Stock Unit will terminate upon
the payment of that Stock Unit in accordance with the terms hereof, and the
Participant shall have no further rights with respect to such Stock Unit.

 

(e)          Form of
Payment. The Corporation may deliver the Common Shares
payable to the Participant under this Section 6 either by delivering one
or more certificates for such shares or by entering such shares in book entry
form, as determined by the Corporation in its discretion.

 

7.              Restrictions on Transfer. Neither
the Award, nor any interest therein or amount or shares payable in respect
thereof may be sold, assigned, transferred, pledged or otherwise disposed
of, alienated or encumbered, either voluntarily or involuntarily. The transfer
restrictions in the preceding sentence shall not apply to (a) transfers to
the Corporation, (b) transfers by will or the laws of descent and
distribution, or (c) transfers pursuant to a QDRO order if approved or
ratified by the Committee.

 

8.              Adjustments Upon Specified Events.
Upon the occurrence of certain events relating to the Corporation’s stock
contemplated by Section 5.2 of the Plan, the Administrator shall make
adjustments if appropriate in the number of Stock Units then outstanding and
the number and kind of securities that may be issued in respect of the
Award.

 

9.              Tax Withholding. Upon the
vesting and/or distribution of Common Shares in respect of the Stock Units, the
Corporation (or the Subsidiary last employing the Participant) shall have the
right at its option to (a) require the Participant to pay or provide for
payment in cash of the amount of any taxes that the Corporation or the
Subsidiary may be required to withhold with respect to such vesting and/or
distribution, or (b) deduct from any amount payable to the Participant the
amount of any taxes which the Corporation or the Subsidiary may be
required to withhold with respect to such vesting and/or distribution. In any
case where a tax is

 

5

 

required to be withheld
in connection with the delivery of Common Shares under this Agreement, the
Administrator may, in its sole discretion, direct the Corporation or the
Subsidiary to reduce the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of whole shares, valued at their then Fair
Market Value (with the “Fair Market Value” of such shares determined in
accordance with the applicable provisions of the Plan), to satisfy such
withholding obligation at the minimum applicable withholding rates.

 

10.       Notices. Any notice to be given under the terms of this
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 Participant’s
last address reflected on the Corporation’s records, 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 employee of the Corporation, shall be deemed to have been duly given by the
Corporation 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.

 

11.       Plan. The Award and all rights of the Participant under
this Agreement are subject to, and the Participant agrees to be bound by, all
of the terms and conditions of the provisions of the Plan, incorporated herein
by reference. In the event of a conflict or inconsistency between the terms and
conditions of this Agreement and of the Plan, the terms and conditions of the
Plan shall govern. The Participant agrees to be bound by the terms of the Plan
and this Agreement. The Participant acknowledges having read and understanding
the Plan, the Prospectus for the Plan, and this Agreement. Unless otherwise
expressly provided in other sections of this Agreement, provisions of the Plan
that confer discretionary authority on the Administrator 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 Administrator
so conferred by appropriate action of the Administrator under the Plan after
the date hereof.

 

12.       Entire Agreement. This Agreement 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 and this 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 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.

 

13.       Limitation on Participant’s
Rights. Participation in the Plan confers no rights or interests other than as herein provided. This
Agreement creates only a contractual obligation on the part of the Corporation
as to amounts payable and shall not be construed as creating a trust. Neither
the Plan nor any underlying program, in and of itself, has any assets. The Participant
shall have only the rights of a general unsecured creditor of the Corporation
with respect to amounts credited and benefits payable, if any, with respect to
the Stock Units, and rights no greater than the right to receive the Common
Shares as a general unsecured creditor with respect to Stock Units, as and when
payable hereunder.

 

6

 

14.       Counterparts. This 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.

 

15.       Section Headings. The section headings of this
Agreement are for convenience of reference only and shall not be deemed to
alter or affect any provision hereof.

 

16.       Governing Law. This 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.

 

17.       Construction. It is intended that the terms of the Award
will not result in the imposition of any tax liability pursuant to Section 409A
of the Code. This Agreement shall be construed and interpreted consistent with
that intent.

 

IN
WITNESS WHEREOF, the Corporation has caused this Agreement to
be executed on its behalf by a duly authorized officer and the Participant has
hereunto set his or her hand as of the date and year first above written.

 

	
  AMERICAN
  STATES WATER 

  COMPANY,

  a California corporation

  	
  PARTICIPANT

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
  Print Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Print Name

  
						

 

7

 

CONSENT OF SPOUSE

 

In consideration of the execution of the foregoing Restricted
Stock Unit Award Agreement by American States Water Company, I,                                                      ,
the spouse of the Participant therein named, do hereby join with my spouse in
executing the foregoing Restricted Stock Unit Award Agreement and do hereby
agree to be bound by all of the terms and provisions thereof and of the Plan.

 

	
  Dated:

  	
   

  	
  ,
  [   ]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature
  of Spouse

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name

  

 

8

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