Document:

Document

Final Form

SUPPLEMENT TO
INCENTIVE UNIT AWARD AGREEMENT
This Supplement to Incentive Unit Award Agreement (this “Supplement”) is executed and agreed to as of March [___], 2021, by and between OMP GP LLC, a Delaware limited liability company (the “Company”), and [________________] (the “Grantee”).
WHEREAS, the Grantee is currently an employee of Oasis Petroleum LLC, an Affiliate of the Company (the “Employer”);
WHEREAS, the LLC Agreement authorizes the issuance by the Company of Class B Units in the Company (“Class B Units”) to individuals employed by the Employer;
WHEREAS, on the terms and subject to the conditions set forth the LLC Agreement and that certain Incentive Unit Award Agreement dated as of May 22, 2017 by and between the Company and the Grantee (the “Original Award Agreement”), the Company issued to the Grantee, and the Grantee accepted such award of, 11,000 Class B Units, which were designated as “Class B1 Units” (capitalized terms used in this Supplement but not defined herein shall have the respective meanings assigned to such terms in the Original Award Agreement);
WHEREAS, the Company, OMS Holdings LLC (“OMS Holdings”), Oasis Midstream Services LLC (“OMS”), Oasis Midstream Partners LP (“OMP”) and the other parties thereto entered into that certain Contribution and Simplification Agreement effective as of the date hereof (the “Simplification Agreement”);
WHEREAS, on the terms and subject to the conditions set forth in the Simplification Agreement, as part of, and contemporaneously with, the consummation of the transactions contemplated by the Simplification Agreement, (i) the OMP incentive distribution rights held by the Company will be cancelled and converted into [_____] common units representing limited partner interests in OMP (“OMP Common Units”), (ii) a wholly owned subsidiary of OMS Holdings will merge with and into the Company, with the Company surviving such merger as the surviving company, (iii) as a result of such merger, each Class B Unit will be converted into and exchanged for [____] OMP Common Units (i.e., a total of [___] of OMP Common Units for the Grantee’s [____] Class B Units) (the “Class B Conversion”);
WHEREAS, all of the Class B Units granted to the Grantee are Unvested OMP Conversion Units, although the Discount Percentage for such Class B Units is 20% as of the date hereof and will increase to 34% in May 2021;
WHEREAS, in anticipation of, and subject to the consummation of, the Class B Conversion, the Company and the Grantee each desires to agree to (i) vesting provisions, transfer restrictions and call rights that will apply to the OMP Common Units to be received by the Grantee in the Class B Conversion (the “OMP Conversion Units”) and (ii) the terms and conditions of such vesting provisions, transfer restrictions and call rights;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, each of the Company and the Grantee hereby agrees as follows:
1.    Impact of the Class B Conversion on the Original Award Agreement; Transfer Restrictions.
(a)    No provision contained in this Supplement shall entitle the Grantee to remain an employee or service provider of, or otherwise be affiliated with, the Employer, the Company or any of their respective Affiliates for any particular period of time.
(b)    By the Grantee’s execution of this Supplement, the Grantee hereby agrees that, effective upon, and subject to the consummation of, the Class B Conversion, the Unvested OMP Conversion Units (as defined below) received by the Grantee pursuant to the Class B Conversion are hereby bound by the terms of the terms and restrictions set forth in this Supplement.
(c)    The Grantee hereby agrees that no Unvested OMP Conversion Unit may be sold, assigned, or otherwise transferred (by operation of law or otherwise) and that a restricted legend will be placed in the applicable OMP registry and the equity grant records of the Employer or its designated agent (e.g., Fidelity Stock Plan Services, LLC), reflecting such transfer restriction.
(d)    Except as expressly modified hereby, the Original Award Agreement shall remain in effect in accordance with its terms.  Furthermore, if the Simplification Agreement is terminated without the consummation of the Class B Conversion, then, upon such termination the provisions of this Supplement shall, without further action by the parties hereto, be null and void ab initio.  
2.    Vested and Unvested OMP Conversion Units.
(a)    The Company acknowledges that, if the Grantee were terminated by the Company without Cause or voluntarily terminates with Good Reason after May 2021, approximately 34% of the Grantee’s Class B Units would become vested and not subject to the Company’s call right set forth in the Original Award Agreement.  Accordingly, the Company hereby agrees that 34% of the Grantee’s OMP Conversion Units (rounded down to the nearest whole unit) will be fully vested upon the consummation of the Class B Conversion (the “Vested OMP Conversion Units”).
(b)    The OMP Conversion Units that do not vest pursuant to Section 2(a) (the “Unvested OMP Conversion Units”) will, upon the consummation of the Class B Conversion will be subject to the restrictions set forth in this Supplement.  Unvested OMP Conversion Units shall become Vested OMP Conversion Units in accordance with the provisions of Section 3.
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3.    Vesting of Unvested OMP Conversion Units.
(a)    The Company shall have no right to call any of the Vested OMP Conversion Units at any time.
(b)    Notwithstanding anything in this Supplement or the Original Award Agreement to the contrary, the Board of Directors, with the concurrence of the Compensation Committee of the board of directors of Oasis Petroleum Inc., may, at any time, (i) accelerate the vesting of all or any portion of the Unvested OMP Conversion Units received by the Grantee and (ii) modify the number of Unvested OMP Conversion Units subject to the Company’s call right upon a termination of Grantee’s employment with the Company.
(c)    Including the initial vesting set forth in Section 2(a), the OMP Conversion Units shall vest in accordance with the schedule set forth below, depending on the Grantee’s continuous service as an employee of the Employer or any other member of the Company Group through the applicable vesting date:
									
	Vesting Date	Percentage of OMP Conversion Units
that are Vested
(rounded down to the nearest whole unit)
	Number of Vested OMP Conversion Units Represented by Such Percentage
	Date of Class B Conversion	34%	
	First Anniversary of the Class B Conversion	67%	
	Second Anniversary of the Class B Conversion	100%	

(d)    If the Grantee ceases to be employed by the Employer as a result of (i) the Employer’s or any other member of the Company Group’s termination of the Grantee’s employment without Cause or (ii) the Grantee’s resignation for Good Reason, then any Unvested OMP Conversion Units held by Grantee as of the date of such termination shall become Vested OMP Conversion Units.
(e)    If the Grantee ceases to be employed by the Employer as a result of the death of Disability of the Grantee, then any Unvested OMP Conversion Units held by Grantee as of the date of such termination shall become Vested OMP Conversion Units.
4.    Call of Unvested OMP Conversion Units for No Consideration.
(a)    If the Grantee ceases to be employed by the Employer as a result of (x) the Employer’s or any other member of the Company Group’s termination of the Grantee’s employment for Cause or (y) the Grantee’s resignation without Good Reason, then the Company shall have the right (but not the obligation) to call, for no consideration in accordance with Section 5, all Unvested OMP Conversion Units held by the Grantee on the date of such 
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termination.  In such case, the date of the Grantee’s termination of employment is referred to in this Supplement as the “Trigger Date.”
(b)    For the avoidance of doubt, any Unvested OMP Conversion Units subject to the Company’s call right but that are not called within 120 days following the applicable Trigger Date (as defined below) shall become Vested OMP Conversion Units.
5.    Procedure for Call of Unvested OMP Conversion Units.
(a)    In order to exercise the Company’s right to call any Unvested OMP Conversion Units that are subject to call pursuant to Section 4, the Company shall deliver written notice (a “Call Notice”) to the Grantee, the Grantee’s legal representative or guardian, or the executor of the Grantee’s estate, as applicable (the “Holder”), no later than 120 days following the applicable Trigger Date.  Such Call Notice shall identify the Unvested OMP Conversion Units to be called (the “Subject Units”).  If such call right is exercised by the Company, then all Unvested OMP Conversion Units shall be transferred to the Company for no consideration.
(b)    The closing of the call of the Subject Units shall occur as promptly as practicable, but no later than thirty (30) days after the Company’s delivery of a Call Notice.
(c)    The Holder shall execute and deliver all documentation and agreements reasonably requested by the Company to reflect a call of the Subject Units pursuant to this Supplement, but no failure of the Holder to execute or deliver any such documentation shall affect the validity of a call of the Subject Units pursuant to this Supplement.  Following the consummation of a call of all or any portion of the Subject Units, the Grantee shall have no further interest or right in or to such Subject Units.
(d)    In connection with any call of the Subject Units hereunder, the Holder shall make customary representations and warranties concerning (i) the Holder’s valid title to and ownership of the Subject Units, free of all liens, claims and encumbrances (excluding those arising under applicable securities laws), (ii) the Holder’s authority, power and right to enter into and consummate the sale of the Subject Units, (iii) the absence of any violation, default or acceleration of any agreement to which the Holder is subject or by which the Holder’s assets are bound as a result of the agreement to sell and the sale of the Subject Units, and (iv) the absence of, or compliance with, any governmental or third-party consents, approvals, filings or notifications required to be obtained or made by the Holder in connection with the sale of the Subject Units.
(e)    All securities issued to, or otherwise received by, the Grantee in exchange for the OMP Conversion Units shall continue to be subject to transfer restrictions, vesting provisions, call right and other provisions of this Supplement, including, without limitation, Section 1, Section 2, Section 3, Section 4 and this Section 5.
6.    Representations and Warranties of the Grantee and the Company.
(a)    The Grantee hereby represents and warrants to the Company as follows:
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(i)    This Supplement and the Original Award Agreement each constitutes a legal, valid and binding obligation of the Grantee, enforceable in accordance with its terms, as applicable, and the execution, delivery and performance of each of this Supplement and the Original Award Agreement by the Grantee does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which the Grantee is a party or by which the Grantee is bound or any judgment, order or decree to which the Grantee is subject.
(ii)    The Grantee has (x) received all the information the Grantee considers necessary in connection with the Grantee’s execution of this Supplement, and (y) had an adequate opportunity (1) to ask questions and receive answers from the Company and the Grantee’s independent counsel regarding the terms, conditions and limitations set forth in this Supplement and the business, properties, prospects and financial condition of the Company and its Affiliates and (2) to obtain additional information (to the extent the Company possesses such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to the Grantee or to which the Grantee had access.
(iii)    The Grantee understands that the OMP Conversion Units are not registered under the Securities Act on the ground that Class B Conversion and the transfer of the OMP Conversion Units pursuant thereto are exempt from registration under the Securities Act pursuant to applicable exemptions therefrom and cannot be disposed of unless (x) they are subsequently registered or exempted from registration under the Securities Act or applicable securities laws and (y) such disposition is permitted under this Supplement.
(iv)    None of the Company, its Affiliates or any of their respective managers, directors, officers, employees or authorized representatives (including attorneys, accountants, consultants, bankers, lenders, prospective lenders or financial representatives) has provided any tax or legal advice to the Grantee regarding this Supplement and the Grantee has had an opportunity to receive sufficient tax and legal advice from advisors of the Grantee’s own choosing such that the Grantee is entering into this Supplement with full understanding of the tax and legal implications thereof.
(v)    The representations and warranties of the Grantee set forth in this Supplement and the Original Award Agreement are true and correct.
(b)    The Company hereby represents and warrants to the Grantee that each of this Supplement and the Original Award Agreement constitutes a legal, valid and binding obligation of the Company, enforceable in accordance with its terms, and that the execution, delivery and performance of each of this Supplement by the Company does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which the Company is a party or by which the Company is bound or any judgment, order or decree to which the Company is subject.
7.    General Provisions.  The general provisions set forth in Section 8 of the Original Award Agreement shall apply, mutatis mutandis, to this Supplement and to the Conversion Common Units as if fully set forth herein.
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8.    Spousal Provisions.  If the Grantee is married on the date of the Class B Conversion, then the Grantee shall cause his or her spouse to execute a spousal consent in the form set forth on the signature page hereto (the “Spousal Consent”) to evidence such spouse’s agreement and consent to abide by and be bound by the terms and conditions of each of this Supplement and the Original Award Agreement as to such spouse’s interest, whether as community property or otherwise, if any, in the OMP Conversion Units held by the Grantee.  Notwithstanding the execution and delivery thereof, such Spousal Consent shall not be deemed to confer or convey to such spouse any rights in the Grantee’s OMP Conversion Units that do not otherwise exist by operation of law or by agreement of the parties.  If the Grantee should marry or remarry subsequent to the date of the Class B Conversion, the Grantee shall, within thirty (30) days thereafter, obtain his or her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Supplement or the Original Award Agreement by causing such spouse to execute and deliver a Spousal Consent.  If any spouse of the Grantee fails to execute the Spousal Consent as required hereunder, until such time as the Spousal Consent is duly executed by such spouse, the Grantee’s economic rights associated with the OMP Conversion Units will automatically inure to the benefit of the Company instead of to the Grantee or his or her spouse.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Incentive Unit Award Agreement as of the date first written above.
OMP GP LLC
By:    
Name:
Title:
GRANTEE
    
Printed Name:     
SPOUSAL CONSENT
The Grantee’s spouse, if any, is fully aware of, understands and fully consents and agrees to the provisions of each of this Supplement and the Original Award Agreement and their binding effect upon any marital, elective share or community property interests he or she may now or hereafter own, and agrees that the termination of his or her and the Grantee’s marital relationship for any reason shall not have the effect of removing any OMP Conversion Units otherwise subject to this Supplement from coverage hereunder and that his or her awareness, understanding, consent and agreement are evidenced by his or her signature below.
SPOUSE
    
Name:     
[Signature Page to Supplement to Incentive Unit Award Agreement]Document

AMERICAN STATES WATER COMPANY

2021 SHORT-TERM INCENTIVE PROGRAM 

1.Purpose of 2021 Short-Term Incentive Program
American States Water Company, a California corporation, (the “Corporation”) has adopted this 2021 Short-Term Incentive Program (the “2021 STIP”) to promote the success of the Corporation by (a) motivating Executives selected to participate in the 2021 STIP to maximize the performance of the Corporation both from a financial perspective and in serving its customers and (b) rewarding them with cash Objective Bonuses directly related to such performance.  The Corporation’s board of directors recognizes that the ability of the Corporation and its subsidiaries to attract capital at a low cost is based on its financial performance and that the Corporation’s customers benefit through its ability to attract low cost capital.  This 2021 STIP sets forth the names of the individuals selected to be Participants who are eligible to earn Objective Bonuses under the 2021 STIP and the applicable Business Criteria, Performance Targets and Payout Percentages for the 2021 calendar year.  The 2021 STIP also provides for Discretionary Bonuses, which when added to the Objective Bonuses under the Plan, equal the Aggregate Bonuses payable under the 2021 STIP for the 2021 calendar year.
2.Term of 2021 STIP 
The Performance Period covered by the 2021 STIP (the “Term”) began on January 1, 2021 and will end on December 31, 2021.
3.Administration of the Plan
    The Committee shall have the authority to construe and interpret the 2021 STIP and any agreement or document referring to any Awards under the 2021 STIP, may adopt rules and regulations governing the administration of the 2021 STIP and shall exercise all other duties and powers conferred under the 2021 STIP or are incidental or ancillary thereto.  
4.Definitions
Except as otherwise expressly provided or the context otherwise requires, financial and accounting terms in the 2021 STIP are used as defined for purposes of, and shall be determined in accordance with, generally accepted accounting principles, as from time to time in effect, as applied and included in the consolidated financial statements of the Corporation, prepared in the ordinary course of business.  In addition, the following terms shall have the meanings specified below, unless a different meaning is plainly required by the context:
“Adjusted EPS - ASUS” means the EPS of ASUS for 2021 adjusted to remove 1) the general office allocation to ASUS related to any transaction fees and/or gain or loss on sale recognized in the financial statements in 2021 associated with a sale of any of the Corporation’s business units or the acquisition of any new businesses, 2) the general office allocation to ASUS related to new business development at Regulated Utilities, 3) the continued impact of the Coronavirus (COVID-19) on the EPS of ASUS for 2021 as an extraordinary or non-recurring 
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item determined in accordance with generally accepted accounting principles or another objective method of measurement, and 4) any other applicable adjustment required to be made under Section 7.
“Adjusted EPS - AWR Consolidated” means the Corporation’s EPS for 2021 adjusted to remove 1) any write-offs associated with the CPUC’s 2021 procurement audit of GSWC arising out of the settlement of claims approved by the CPUC in December 2011 related to the capital projects contracting matter, 2) expenses associated with new business development at Regulated Utilities, 3) the performance of the Rabbi Trust assets to support retirement benefits, 4) the continued impact of the Coronavirus (COVID-19) on the EPS of AWR Consolidated for 2021 as an extraordinary or nonrecurring item determined in accordance with generally accepted accounting principles or another objective method of measurement, and 5) any other applicable adjustment required to be made under Section 7.
“Adjusted EPS - Regulated Utilities” means the sum of the EPS of each of the Regulated Utilities for 2021 adjusted to remove 1) any write-offs associated with the CPUC’s 2021 procurement audit of GSWC arising out of the settlement of claims approved by the CPUC in December 2011 related to the capital projects contracting matter, 2) expenses associated with new business development, 3) the performance of the Rabbi Trust assets to support retirement benefits, 4) the continued impact of the Coronavirus (COVID-19) on the EPS of Regulated Utilities for 2021 as an extraordinary or nonrecurring item determined in accordance with generally accepted accounting principles or another objective method of measurement, and 5) any other applicable adjustment required to made under Section 7. 
“Adjusted EPS - Regulated Water Utility” means the EPS of Regulated Water Utility for 2021 adjusted to remove 1) any write-offs associated with the CPUC’s 2021 procurement audit of GSWC arising out of the settlement of claims approved by the CPUC in December 2011 related to the capital projects contracting matter, 2) expenses associated with new business development, 3) the performance of the Rabbi Trust assets to support retirement benefits, 4) the continued impact of the Coronavirus (COVID-19) on the EPS of Regulated Water  Utility for 2021 as an extraordinary or nonrecurring item determined in accordance with generally accepted accounting principles or another objective method of measurement, and 5) any other applicable adjustment required to be made under Section 7.  

“Aggregate Bonus” means the combination of a Participant’s Objective Bonus and his or her Discretionary Bonus.
“ASUS” means American States Utility Services, Inc., a California corporation, and wholly owned subsidiary of the Corporation, and its wholly owned subsidiaries.
“Award” means an award under the 2021 STIP of a conditional opportunity to receive a Bonus if the Performance Targets set forth in the Award Agreement are satisfied in the Performance Period and the opportunity to receive a discretionary bonus.
“Award Agreement” means a written agreement setting forth the material terms and conditions of the Award as determined by the Committee consistent with the terms of the 2021 STIP.   
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“Base Salary” means the Participant’s rate of annual base pay on the date the Committee approves the Business Criteria and the Performance Targets, except for Patrick Kubiak, the new GSWC Vice President - Asset Management, whose base salary increase for this promotion is effective on April 1, 2021.  
“BVES” means Bear Valley Electric Service, Inc., a California corporation and wholly owned subsidiary of the Corporation.
“Board of Directors” means the Corporation’s board of directors.
“Bonus” means a cash payment or a cash payment opportunity to receive a bonus under the 2021 STIP, as the context requires.    
“Budget” or “Budgeted” means, in the case of Adjusted EPS for the Corporation, the Regulated Utilities, Regulated Water Utility or ASUS, as the case may be, the projected Adjusted EPS for 2021 as set forth in the Operating Budget and for Expense Optimization – ASUS, Direct Construction Margin – ASUS and Direct Operating Margin – ASUS, the amounts included for these metrics in the Operating Budget. 
“Business Criteria” means Adjusted EPS - AWR Consolidated, Adjusted EPS - Regulated Utilities, Adjusted EPS - Regulated Water Utility, Adjusted EPS - ASUS, Capital Expenditures - RU, Capital Expenditures - RWU, Customer Complaints - RWU, Direct Construction Margin - ASUS, Direct Operating Margin - ASUS, Expense Optimization - ASUS, SOX Deficiencies - RU, SOX Deficiencies - ASUS, Safety - Recordable Work Incidents - ASUS, Safety - Recordable Work Incidents - RWU, Supplier Diversity - RU and Supplier Diversity - RWU.
“Capital Expenditures - RU” means the dollar amount of capital expenditures for 2021 for the Regulated Utilities. 

“Capital Expenditures - RWU” means the dollar amount of capital expenditures for 2021 for GSWC. 

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board of Directors.  
“CPUC” means the California Public Utilities Commission.
“Customer Complaints - RWU” means the number of water quality, pressure, and leak complaints received from water customers by GSWC divided by the average number of water customers served by GSWC during 2021.  
“Direct Construction Margin – ASUS” means a percentage determined by dividing total construction revenues less ASUS construction costs (reported as expenses in the Corporation’s Form 10-K for 2021 filed with the Securities and Exchange Commission) by total construction revenues. Construction revenues and construction costs for this purpose shall exclude (i) the construction revenues and construction costs of any new base, (ii) the continued 
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impact of the Coronavirus (COVID-19) on the Direct Construction Margin as an extraordinary or nonrecurring item determined in accordance with generally accepted accounting principles or another objective method of measurement, and (iii) any other applicable adjustment required to be made under Section 7. 
“Direct Operating Margin – ASUS” means a percentage determined by dividing total operations and maintenance revenues less direct operations expense by total operations and maintenance revenues as recorded in the Corporation’s Form 10-K.  Total operations and maintenance revenues for this purpose shall exclude revenues of any new base awards received in 2021. Direct operations expense for this purpose shall include other operation, administration and general, depreciation and amortization, and property and other taxes as reflected in the Corporation’s Form 10-K, but shall exclude (i) expenses of any new base awarded during 2021, (ii) expenses of ASUS administration and centralized functions, (iii) general office expenses of GSWC approved by the CPUC to be allocated to ASUS, (iv) property and other taxes allocable to construction activities, (v) direct maintenance expenses, (vi) pre-contract expenses associated with construction activities, (vii) the continued impact of the Coronavirus (COVID-19) on the Direct Operating Margin as an extraordinary or nonrecurring item determined in accordance with generally accepted accounting principles or another objective method of measurement, and (viii) any other applicable adjustment required to be made under Section 7. 
“Discretionary Bonus” means a bonus payable to a Participant based on that Participant’s Individual Performance Measures.
“EPS” means fully diluted earnings per share as reported in the Corporation’s consolidated financial statements for 2021.
“Executive” means the Chief Executive Officer of the Corporation and any other key employee (including any officer of the Corporation or any of its subsidiaries) who is a Senior Vice President or Vice President.   
“Expense Optimization – ASUS” means the sum of other operations and administrative and general expenses of ASUS in 2021 (as reflected in the Corporation’s 10-K) excluding (i) expenses of ASUS incurred in connection with any new base awards during 2021, (ii) general office expenses of GSWC approved by the CPUC to be allocated to ASUS, (iii) expenses incurred in connection with ASUS’s new business development cost center, (iv) expenses included in the Corporation’s Form 10-K for awards recorded under the 2021 STIP and the 2016 Stock Incentive Plan, (v) expenses related to the continued impact of the Coronavirus (COVID-19) as an extraordinary or nonrecurring item determined in accordance with generally accepted accounting principles or another objective method of measurement, and (vi) other applicable adjustment required to be made under Section 7. 
“GSWC” means Golden State Water Company, a California corporation and wholly owned subsidiary of the Corporation.
“Individual Performance Measures” means the criteria or goals utilized to determine the amounts of each Participant’s Discretionary Bonus.
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“Objective Bonus” means a bonus based on the degree of achievement of the Performance Targets for the Business Criteria.  
    “Operating Budget” means the Corporation’s operating budget for 2021 as presented to the Board of Directors at its February 2, 2021 meeting adjusted for the unbudgeted impact on income tax expense of certain cost of removal expenditures incurred in prior years in connection with environmental remediation and the cleanup at one of GSWC’s plant sites, and other adjustments allowed to be made under Section 7.
“OSHA Violation” means an intentional or willful violation of the rules and regulations of the Occupational Health and Safety Administration which results in a serious injury, serious illness or death and arises out of a situation that the employer knew or should have known could result in serious injury, serious illness or death, provided that the situation could have reasonably been remedied by the employer.  
“Participant” means an Executive selected by the Committee to participate in the 2021 STIP.    
“Payout Percentage” means the percentage of a Participant’s Target Aggregate Bonus that is payable based on the degree of satisfaction of a Performance Target or the Individual Performance Measures.
“Performance Measures” means the Business Criteria and Individual Performance Measures.  
“Performance Target” means a specific goal established by the Committee with respect to the Business Criteria as set forth in Section 6.
“Regulated Utilities (RU)” means GSWC, BVES and any other utility that becomes a direct or indirect subsidiary of the Corporation, which is designated a “regulated utility” by the Committee.
“Regulated Water Utility (RWU)” means GSWC’s water operations and any other water utility that becomes a direct or indirect subsidiary of the Corporation, which is designated a “regulated water utility” by the Committee. 
“Safety-Recordable Work Incidents – ASUS” means the number of work-related injuries and illnesses as reported on the OSHA Form 300s for ASUS other than for (i) new bases awarded in 2021, and (ii) work-related injuries and illnesses related to the Coronavirus (COVID-19). 
“Safety-Recordable Work Incidents - RWU” means the number of work-related injuries and illnesses as reported on the OSHA Form 300 for GSWC’s water operations other than work-related injuries and illnesses related to the Coronavirus (COVID-19).
“SOX” means the Sarbanes-Oxley Act of 2002.
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“SOX Deficiencies - ASUS” means the number of “control deficiencies” (each a “CD”), “significant deficiencies” (each an “SD”) and “material weaknesses” (each a “MW”) reported for ASUS in the independent auditor’s report for 2021 pursuant to Section 404 of SOX.
“SOX Deficiencies - RU” means the number of CDs, SDs and MWs reported for the Regulated Utilities in the independent auditor’s report for 2021 pursuant to Section 404 of SOX.
    “Supplier Diversity - RU” means the percentage reported by the Regulated Utilities to the CPUC annually by March 1 in its General Order 156 Compliance Filing.  The percentage is calculated by taking the Regulated Utilities’ total procurement dollars for the reporting period with CPUC qualified women-owned, minority-owned, disabled veteran-owned, and lesbian, gay, bisexual and transgender-owned business enterprises divided by the Regulated Utilities’ total procurement dollars (net of exclusions allowed under the General Order 156 Compliance Filing for the reporting period, such as payments for purchased water, purchased power, pump taxes, income taxes, franchise fees, and postage). 
    “Supplier Diversity - RWU” means the percentage reported by the Regulated Water Utility to the CPUC annually by March 1 in its General Order 156 Compliance Filing.  The percentage is calculated by taking the Regulated Water Utility’s total procurement dollars for the reporting period with CPUC qualified women-owned, minority-owned, disabled veteran-owned, and lesbian, gay, bisexual and transgender-owned business enterprises divided by the Regulated Water Utility’s total procurement dollars (net of exclusions allowed under the General Order 156 Compliance Filing for the reporting period, such as payments for purchased water, purchased power for pumping, pump taxes, income taxes, franchise fees, and postage).  
“Target Aggregate Bonus” means the amount of bonus that would be payable if each of the Performance Targets were met at the targeted level and the Participant’s Individual Performance Measures were met at the targeted level.

“Total Disability” means a “permanent and total disability” within the meaning of Section 22(e) of the Code and such other disabilities, infirmities, afflictions or conditions as the Committee may by rule include. 

5.Participation and Individual Awards
The individuals who have been selected as Participants in the 2021 STIP are set forth below together with the amount of their Target Aggregate Bonuses as a percentage of Base Salary:  
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	Participant
	Target
Aggregate Bonus
	GSWC Officers
	Administrative and General
	Robert J. Sprowls	100.00%
	Eva G. Tang	34.70%
	Gladys M. Farrow	28.90%
	Operations
	Denise L. Kruger	34.70%
	Paul J. Rowley	28.90%
	Sunil K. Pillai	28.90%
	Bryan K. Switzer (Keith)	28.90%
	Patrick Kubiak	21.675%
	ASUS Officers
		Stuart Harrison	46.50%
		Granville R. Hodges, Jr. (Rusty)	28.90%

For purposes of this 2021 STIP, the GSWC officers will be divided into (1) Administrative and General Officers and (2) Operations Officers.
The Corporation will enter into an Award Agreement with each Participant that (a) describes his or her Individual Performance Measures and sets forth his or her Target Aggregate Bonus, (b) sets forth his or her threshold, target and maximum Performance Targets and (c) incorporates the terms and conditions of this 2021 STIP by reference.  The Target Aggregate Bonus amount set forth above shall represent the aggregate amount of up to two separate bonuses: an Objective Bonus under the 2021 STIP and a Discretionary Bonus.  
6.Performance Targets for Objective Bonuses
The threshold, target and maximum Performance Targets for the 2021 STIP are set forth in Exhibit A to this 2021 STIP.
7.Adjustments
    To preserve the intended incentives and benefits of an Award, the Committee shall adjust the Performance Targets to eliminate the effects of the following:  (i) the gain, loss, income or expense resulting from changes in accounting principles, tax law, California Public Utilities Commission rules and regulations, or any such laws, regulations or provisions affecting reported results that became effective during the Performance Period, (ii) any transaction fees and/or gain or loss on sale recognized in the financial statements associated with a sale or restructuring of any of the Corporation’s business units or the acquisition of any new businesses, (iii) the impairment of tangible or intangible assets, (iv) derivative gains or losses attributable to fixed-price purchase contracts, (v) the impact of market conditions on pension expenses, (vi)  gains or losses from all or certain claims and/or litigation and all or certain insurance recoveries relating to the Performance Period; and (vii) the impact of any other extraordinary or non-recurring item 
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or expense determined in accordance with generally accepted accounting principles or another objective method of measurement.  
8.Determination of Participants’ Aggregate Bonuses
The Aggregate Bonus payable to each Participant shall be determined on the basis of the extent to which the Performance Targets for the Business Criteria and that Participant’s Individual Performance Measures are achieved.  The amount of Aggregate Bonus payable is equal to the amount of the Target Aggregate Bonus multiplied by the sum of the Payout Percentages for each of the Performance Measures as determined pursuant to the tables in (a) Section B of Exhibit A for Participants that are Administrative and General Officers employed by GSWC, (b) Section C for Participants that are Operations Officers employed by GSWC and (c) Section D for Participants employed by ASUS.  In the case of the death or Total Disability of an Executive, the Aggregate Bonus payable shall be prorated based on the number of days in the Performance Period that the Executive was employed prior to his her death or Total Disability divided by the number of days in the Performance Period.     
As soon as practicable following December 31, 2021 and the completion of the independent auditor’s report for 2021, the Committee shall determine the extent to which the Performance Targets for the Business Criteria are achieved and the extent to which the Individual Performance Measures are achieved, and determine the Payout Percentage for each of the Performance Measures.  In order for a Participant to receive any payment with respect to the Participant’s Discretionary Bonus, the Participant must meet the standards established for the Participant’s position, which standards shall be one of the components of the Participant’s Individual Performance Measures.  The determination of whether the standards established for the Participant’s position are achieved shall be made by the Committee, which (other than for the Company’s President and Chief Executive Officer) determination shall be based on the recommendations of the President and Chief Executive Officer or another direct supervisor of the Participant.
For levels of achievement between threshold and maximum, the Committee shall determine the Payout Percentage by interpolation.  Subject to Section 9 below, the Aggregate Bonus for each Participant shall be the sum of the Payout Percentages determined with respect to each Performance Measure multiplied by the amount of Participant’s Target Aggregate Bonus. Notwithstanding the fact that the Performance Targets have been attained, the Corporation may pay a Bonus to a Participant that is less than the amount determined by the formula or standard established pursuant to his or her Award Agreement or may pay no Bonus at all, as determined by the Committee in its sole discretion.  In no event may the Committee pay a Bonus to any Participant in excess of the maximum amount set forth in that Participant’s Award Agreement.
9.    Payment of Accounts
At the time the Committee makes the determinations described in Section 8, it shall certify the amounts of the Objective Bonuses payable to Participants by resolution or other appropriate writing evidencing that the amount has been accurately determined in accordance with the terms and limitations of the 2021 STIP and that the Performance Targets and any other material terms previously established by the Committee pursuant to the 2021 STIP have been satisfied.  The Committee shall, at the same time, determine the amount of the Discretionary 
8

Bonus payable to Participants.  Any such payment shall be made in cash, subject to applicable withholding requirements and the provisions of Section 11. Payment of such bonuses (the Aggregate Bonuses) shall be made as soon as practicable following the Committee’s determination and certification, but in no event later than December 31, 2022.  
10.Effect of Termination of Employment
    Except in the event of the death or Total Disability of the Participant or as otherwise provided in an employment agreement, memorandum of understanding, other contract between a Participant and the Corporation or one of its Subsidiaries, or by the Committee in its sole discretion, the Bonuses payable under a Participant’s Award will be forfeited, and the Participant will not be entitled to any bonus payments with respect to such Award if the Participant ceases to be employed by the Corporation or one of its Subsidiaries for any reason prior to the date the bonus payments under the 2021 STIP are paid to Participants. 
11.Recoupment of Bonuses
    Any payment of an Objective Bonus and/or Discretionary Bonus under this 2021 STIP is subject to recoupment pursuant to the Corporation’s Policy Regarding the Recoupment of Certain Performance-Based Compensation Payments as in effect from time to time, or as otherwise may be required by law and a Participant shall promptly make any reimbursement requested by the Board of Directors or the Committee pursuant to such policy with respect to any such Bonuses.  Further, each Participant shall agree, by accepting an Award under the 2021 STIP and executing an Award Agreement, that the Corporation and/or any of its affiliates may deduct from any amounts it may owe the Participant from time to time (such as wages or other compensation) any and all amounts the Participant is required to reimburse the Corporation pursuant to such policy with respect to the Award.

12.Section 409A of the Code
    This 2021 STIP shall be interpreted in a manner such that the payment of an Objective Bonus, Discretionary Bonus or Aggregate Bonus contemplated hereby will either (i) comply with Section 409A or (ii) be exempt from the requirements of Section 409A as a “short-term deferral” under Section 409A, including Treasury Regulations Section 1.409A-1(b)(4). It is intended that the terms of this 2021 STIP will not result in the imposition of any tax liability pursuant to Section 409A, and shall be construed and interpreted consistent with that intent.

13.    No Right to Continued Employment
    No Award made to any Participant under the 2021 STIP shall be construed to confer any legal right to be continued in the employ of the Corporation or any of its subsidiaries.  The Corporation expressly reserves any and all rights for it or any of its subsidiaries to discharge an Executive in its or their sole discretion, without liability of any person, entity or the Committee.  Nothing in this Section 13, however, is intended to adversely affect any express independent right to any person under a separate employment agreement.  Notwithstanding any other provision hereof and the fact that the Performance Targets have been obtained, the Corporation shall have no obligation to pay any Bonus hereunder nor to pay the maximum amount so 
9

calculated or any prorated amount based on service during the period, unless the Committee otherwise expressly provides by written contract of other written commitment.  
14.    Discretion of Committee 
    Any decision made or action taken by the Committee arising out of or in connection with the construction, administration, interpretation and effect of the 2021 STIP shall be within the absolute discretion of the Committee and shall be conclusive and binding upon all persons.  No member of the Committee shall have any liability for actions taken or omitted under the 2021 STIP by the member or any other person.
15.     No Funding of Plan
The Corporation shall not be required to fund or otherwise segregate any cash or any other assets which may at any time be paid to the Participants under the 2021 STIP.  The 2021 STIP shall constitute an “unfunded plan” of the Corporation.  The Corporation shall not, by any provision of the 2021 STIP, be deemed to be a trustee of any property and any rights of any Participant or former Participant shall be no greater than those of a general unsecured creditor or shareholder of the Corporation, as the case may be.
16.    Non-Transferability of Benefits and Interests
Except as expressly provided by the Committee, no benefit payable under the 2021 STIP shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be void and no such benefit shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of any Participant.  This Section 16 shall not apply to any assignment of a contingency or payment due (i) after the death of a Participant to the deceased Participant’s legal representative or beneficiary or (ii) the disability of a Participant to the disabled Participant’s personal representative.  
17.    Law to Govern
All questions pertaining to the construction, regulation, validity and effect of the provisions of the 2021 STIP shall be determined in accordance with the laws of the State of California.
18.    Non-Exclusivity
    The 2021 STIP does not limit the authority of the Corporation, the Board of Directors of the Corporation or the Committee, or any subsidiary of the Corporation, to grant awards or authorize any other compensation to any person under any other plan or authority.

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EXHIBIT A

2021 STIP
PERFORMANCE TARGETS AND PAYOUT PERCENTAGES

A.    Performance Targets for Objective Bonuses

												
	Performance 
Measure	Performance Targets
	Threshold	Target	Maximum
	Adjusted EPS - AWR Consolidated	80% Budget	100% Budget	120% Budget
	Adjusted EPS - Regulated Utilities (RU)	80% Budget	100% Budget	120% Budget
	Adjusted EPS - Regulated Water Utility (RWU)	80% Budget	100% Budget	120% Budget
	Adjusted EPS - ASUS	80% Budget	100% Budget	130% Budget
	Capital Expenditures - RU	> $105 million
	> $120 million
	> $135 million

	Capital Expenditures - RWU	> $100 million
	> $110 million
	> $120 million

	Customer Complaints - RWU	≤ 0.11%	≤ 0.07%	≤ 0.03%
	Supplier Diversity - RU	> 23.5%
	> 26.5% 
	> 29.5% 

	Supplier Diversity - RWU	> 23.5%
	> 26.5% 
	> 29.5% 

	Safety - Recordable Work Incidents  - RWU	17	13	9
	SOX Deficiencies - RU	No MW, No SD & No more than 4 CDs	No MW, No SD & No more than 2 CDs	No MW, No SD & No CD
	SOX Deficiencies - ASUS	No MW, No SD & No more than 1 CD	No MW, No SD & No CD	N/A
	Expense Optimization - ASUS	< 101% of Budget
	< 99% of Budget
	< 97% of Budget

	Direct Construction Margin - ASUS	> Budget less 200 basis points
	> Budget
	> Budget plus 200 basis points

	Direct Operating Margin - ASUS	> Budget less 100 basis points
	> Budget
	> Budget plus 100 basis points

	Safety - Recordable Work Incidents  - ASUS	13	10	7 and No OSHA Violations

A-1

    

B.    Payout Percentages for Performance Measures - GSWC Administrative and General Officers
												
	Performance 
Measure	Payout Percentage
	Threshold	Target	Maximum
	Adjusted EPS - AWR Consolidated	10.0%	20.0%	35.0%
	Adjusted EPS - Regulated Utilities (RU)	11.5%	20.0%	30.0%
	Adjusted EPS - ASUS	5.0%	10.0%	15.0%
	Capital Expenditures - RU	5.0%	10.0%	15.0%
	Customer Complaints - Regulated Water Utility (RWU)	1.5%	5.0%	7.0%
	Supplier Diversity - RU	1.5%	5.0%	7.0%
	SOX Deficiencies - RU	1.5%	5.0%	6.0%
	SOX Deficiencies - ASUS	1.5%	5.0%	5.0%
	Objective Bonus Total	37.5%	80.0%	120.0%
	Individual Performance Measure
(Discretionary Bonus)
	12.5%	20.0%	35.0%
	Aggregate Bonus	50.0%	100.0%	155.0%

A-2
    

C.    Payout Percentages for Performance Measures - GSWC Operations Officers
												
	Performance 
Measure	Payout Percentage
	Threshold	Target	Maximum
	Adjusted EPS - Regulated Water Utility (RWU)	20.0%	40.0%	60.0%
	Capital Expenditures - RWU	8.0%	16.0%	24.0%
	Customer Complaints - RWU	2.5%	6.0%	8.0%
	Supplier Diversity - RWU	2.5%	6.0%	8.0%
	Safety - Recordable Work Incidents - RWU	2.5%	6.0%	8.0%
	SOX Deficiencies - RU	2.0%	6.0%	7.0%
	Objective Bonus Total	37.5%	80.0%	115.0%
	Individual Performance Measure
(Discretionary Bonus)	12.5%	20.0%	35.0%
	Aggregate Bonus	50.0%	100.0%	150.0%

A-3
    

D.    Payout Percentages for Performance Measures - ASUS Officers
												
	Performance 
Measure	Payout Percentage
	Threshold	Target	Maximum
	Adjusted EPS - ASUS	15.0%	40.0%	70.0%
	Direct Operating Margin - ASUS	7.0%	12.5%	22.0%
	Direct Construction Margin - ASUS	7.0%	12.5%	22.0%
	Expense Optimization - ASUS	4.0%	6.0%	10.0%
	Safety – Recordable Work Incidents -ASUS	2.5%	4.0%	6.0%
	SOX Deficiencies - ASUS	2.0%	5.0%	5.0%
	Objective Bonus Total	37.5%	80.0%	135.0%
	Individual Performance Measure
(Discretionary Bonus)	12.5%	20.0%	35.0%
	Aggregate Bonus	50.0%	100.0%	170.0%

A-4

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