Edison International 2001 Long-Term Incentive Basic Grants Terms and Conditions under 2000 Equity Plan

 EDISON INTERNATIONAL Equity Compensation Plan 2000 Equity Plan Terms and Conditions for 2001 Long-Term Incentive Basic Grants Long-term incentives (LTI) for the year 2001 for eligible persons (Holders) at Edison International (EIX) or its participating affiliates (the Companies, or individually, the Company) include EIX nonqualified stock options to purchase EIX common stock (EIX Options) to be awarded under the Equity Compensation Plan (ECP) or the 2000 Equity Plan (2000 Plan) and contingent EIX Performance Shares, 50% of which will be payable as Stock Grants under the ECP and 50% of which will be payable in cash outside of the plans. The LTI are subject to the following terms and conditions: 1. PRICE The exercise price of an EIX Option stated in the award certificate is the average of the high and low sales prices of EIX Common Stock as reported in the Western Edition of The Wall Street Journal for the New York Stock Exchange Composite Transactions for the date of the award. 2. VESTING (a) Subject to the provisions of Section 3, EIX Options may only be exercised or paid to the extent vested. The EIX Options vest over a four-year period as described in this Section 2 (Vesting Period). The initial vesting date will be January 2nd of the year following the date of the grant, or six months after the date of the grant, whichever date is later. The EIX Options will vest over the following period: o On the initial vesting date, one-fourth of the EIX Options will vest. o On January 2nd of the following year, an additional one-fourth of the EIX Options will vest. o On January 2nd of the following year, an additional one-fourth of the EIX Options will vest o On January 2nd of the fourth year following the date of grant, the balance of the EIX Options will vest. (b) The vested portions of the EIX Options will accumulate to the extent not exercised, and be exercisable by Holder subject to the provisions of Section 3, in whole or in part, in any subsequent period but not later than the first business day of the 10th calendar year following the date of the award. (c) The Performance Shares will vest and become payable at the end of the Retention Period (defined in Section 4). (d) If, during the Vesting Period, Holder (i) terminates employment on or after (A) attaining age 65, (B) attaining age 55 with five "years of service," as defined in the Southern California Edison Company Retirement Plan, or (C) such earlier date that qualifies Holder for retirement under any Company retirement plan, (ii) terminates employment while on leave with a permanent and total disability, or (iii) dies while employed by the Company, then the vesting and exercise provisions of this Section 2(d) will apply. The EIX Options will vest to the extent necessary to cause the aggregate number of shares subject to vested EIX Options (including any shares acquired pursuant to previously exercised EIX Options) to equal the product of 1/48th of the number of shares granted times the number of full months of service Holder has completed during the Vesting Period, and such vested options will be exercisable for the full original term. Notwithstanding the foregoing, the EIX Options of a Holder who served as a member of the Southern California Edison Company Management Committee (which was dissolved in 1993) will fully vest upon his or her retirement or death, or upon employment termination while on leave of absence with a permanent and total disability. (e) If, during the Retention Period, Holder (i) terminates employment on or after (A) attaining age 65 or (B) attaining age 55 with five "years of service," as defined in the Southern California Edison Company Retirement Plan, or (C) such earlier date that qualifies the Holder for retirement under any Company retirement plan, or (ii) terminates employment while on leave with a permanent and total disability or (iii) Page 1 dies while employed by the Company, then 1/36th of the Performance Shares will vest for each full month of service Holder completed during the Retention Period prior to such termination or death. (f) Upon termination of employment during the EIX Option term for any reason other than those specified in Section 2(d), only those EIX Options that have vested as of the prior vesting date may be exercised, and they will be forfeited unless they are exercised within 180 days following the date of termination, or by the end of the applicable EIX Option term if that date is earlier. If termination of employment for any reason other than those specified in Section 2(e) occurs during the Retention Period, the Performance Shares will be forfeited. (g) Notwithstanding the foregoing, in the event of a "Change in Control of EIX" as defined in Appendix A hereto, if EIX Common Stock does not remain outstanding after the Change in Control of EIX, and the EIX Options and Performance Shares are not replaced by new owners, the EIX Options and Performance Shares will vest in full and be paid in cash. If EIX Common Stock remains outstanding and Holder is severed during a protected period as defined by an applicable severance plan or agreement, then the EIX Options and Performance Shares will vest and be subject to the terms of the applicable severance plan or agreement. 3. EIX OPTION EXERCISE (a) Holder may exercise an EIX Option by providing written notice to EIX on the form prescribed by EIX for this purpose accompanied by full payment of the applicable exercise price. Payment must be in cash, or its equivalent, including EIX Common Stock valued on the exercise date at a per share price equal to the average of the high and low sales prices of EIX Common Stock as reported in the Western Edition of The Wall Street Journal for the New York Stock Exchange Composite Transactions acceptable to EIX. A broker-assisted "cashless" exercise may be accommodated for EIX Options at the discretion of EIX. Until payment is accepted, Holder will have no rights in the optioned stock. EIX Options may be exercised at any time after they have vested through the first business day of the 10th calendar year following the date of the award except as otherwise provided in Sections 2(d), 2(f), 2(g) and 8. (b) Holder agrees that any securities acquired by him or her hereunder are being acquired for his or her own account for investment and not with a view to or for sale in connection with any distribution thereof and that he or she understands that such securities may not be sold, transferred, pledged, hypothecated, alienated, or otherwise assigned or disposed of without either registration under the Securities Act of 1933 or compliance with the exemption provided by Rule 144 or another applicable exemption under such act. (c) Holder will have no right or claim to any specific funds, property or assets of EIX as a result of the award. 4. PERFORMANCE SHARES (a) Performance Shares are EIX stock-based retention units subject to vesting over a three-calendar-year period commencing on January 1st of the year the Performance Shares are granted ("Retention Period"). A target number of contingent Performance Shares will be awarded during the first two months of the Retention Period. The target number of Performance Shares will be paid if Holder remains employed at the end of the Retention Period except as provided in Section 2(e), 2(f), and 2(g). (b) There will be one performance measurement date for the three-year Retention Period. The measurement date will be the last business day of the Retention Period. (c) Each Performance Share earned will be worth one share of EIX Common Stock. One-half of the earned Performance Shares will be paid in EIX Common Stock as a Stock Payment under the Plan. The remaining one-half of the earned Performance Shares will be paid in cash. The value of each Performance Share will be equal to the average of the high and low sales prices per share of EIX Common Stock as reported in the Western Edition of The Wall Street Journal for the New York Stock Exchange Composite Transactions for the measurement date. The shares of EIX Common Stock and the cash payable for the earned Performance Shares will be delivered within 30 days following the end of the Retention Period. Page 2 5. DELAYED PAYMENT OR DELIVERY OF LTI GAINS Notwithstanding the terms of any LTI, Holders who are eligible to defer salary under the EIX Executive Deferred Compensation Plan (EDCP) may irrevocably elect to alternatively exercise all or part of any vested EIX Option pursuant to the terms of the Option Gain Deferral Program (OGDP), and/or may irrevocably elect to defer receipt of all or a part of the cash portion of any Performance Shares pursuant to the terms of the EDCP. To make such an election, Holder must submit a signed agreement in the form approved by the Administrator at least six months prior to the expiration date in the case of an EIX Option, or at least six months prior to the measurement date in the case of a Performance Share. An EIX Option may not be exercised for six months after the signed agreement is submitted except under the limited circumstances specified in the OGDP. Any subsequent exercises or payments will be subject to the terms, conditions and restrictions of the OGDP or the EDCP, as applicable. 6. TRANSFER AND BENEFICIARY (a) The LTI will not be transferable by Holder. During the lifetime of Holder, the LTI will be exercisable only by him or her. Holder may designate a beneficiary who, upon the death of Holder, will be entitled to exercise the then vested portion of the LTI during the remaining term subject to the provisions of the Plan and these terms and conditions. (b) Notwithstanding the foregoing, EIX Options of Holders who have served on the EIX Management Committee are transferable to a spouse, children or grandchildren, or trusts or other vehicles established exclusively for their benefit. Any transfer request must specifically be authorized by EIX in writing and shall be subject to any conditions, restrictions or requirements as the administrator may determine. 7. TERMINATION OF LONG TERM INCENTIVES (a) In the event of termination of the employment of Holder for any reason other than those specified in Section 2(d) or 2(e), EIX Options will terminate 180 days from the date on which such employment terminated, and Performance Shares will be forfeited. In addition, the LTI may be terminated if EIX elects to substitute cash awards as provided under Section 12. (b) If a Holder's employment terminates for a reason identified in Section 2(d), Holder's unvested EIX Options (after application of the vesting provisions of Section 2(d)) will terminate on the date of such termination, and Holder's vested EIX Options will terminate on the first business day of the 10th calendar year following the date of the award. (c) Notwithstanding the foregoing provisions of this Section 7, no EIX Option may remain outstanding after the first business day of the 10th calendar year following the date of the award, and each EIX Option and Performance Share may be terminated if EIX elects to substitute a cash award as provided under Section 12. 8. ENGAGING IN COMPETITION WITH EIX OR ITS AFFILIATES In the event that a Holder who is at the level of Senior Vice President or above "competes" (as defined below) with any of the Companies prior to, or during the six-month period following, any exercise of an EIX Option, the Committee, in its sole discretion, may rescind such exercise within two years thereafter. In the event of any such rescission, Holder shall pay to EIX or the Company by which he is or was last employed the amount of any gain realized as a result of the rescinded exercise in such manner and on such terms and conditions as the Committee may require, and EIX or such Company shall be entitled to set-off the amount of any such gain against any amount owed to Holder by EIX or such Company. For purposes of this Section 9, "compete" shall mean Holder's rendering of services for any organization or engaging directly or indirectly in any business that competes with the business of the Company by which he is or was last employed without the prior written consent of the General Counsel of EIX. 9. TAXES EIX will have the right to retain and withhold the amount of taxes required by any government to be withheld or otherwise deducted and remitted with respect to the exercise of any LTI. In its discretion, EIX may require Holder to reimburse EIX for any such taxes required to be withheld by EIX and may withhold any distribution in whole or in part until EIX is so reimbursed. In lieu thereof, EIX will have the right to withhold from any other cash amounts due from EIX to Holder an amount equal to such taxes required to be withheld by EIX, or to retain and withhold a number of shares of EIX Common Stock having a market value equal to such taxes and cancel (in whole or in part) the shares, or to repurchase such shares from Page 3 Holder within six months after the shares of Common Stock were acquired by Holder. Shares withheld or repurchased to reimburse EIX for federal and state income and payroll taxes shall be limited to the number of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such tax liabilities based on the minimum statutory withholding rates that are applicable to such supplemental taxable income. 10. CONTINUED EMPLOYMENT Nothing in the award certificate or this Statement of Terms and Conditions will be deemed to confer on Holder any right to continue in the employ of EIX or an EIX affiliate or interfere in any way with the right of the employer to terminate his or her employment at any time. 11. NOTICE OF DISPOSITION OF SHARES AND SECTION 16 (a) Holder agrees that if he or she should dispose of any shares of stock acquired on the exercise of EIX Options, including a disposition by sale, exchange, gift or transfer of legal title within six months from the date such shares are transferred to Holder, Holder will notify EIX promptly of such disposition. (b) If an LTI is granted to a person who later becomes subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended (Section 16), the LTI will immediately and automatically become subject to the requirements of Rule 16b-3(d)(3) (Rule) and may not be exercised, paid or transferred until the Rule has been satisfied. In its sole discretion, the Administrator may take any action to assure compliance with the requirements of the Rule, including withholding delivery to Holder (or any other person) of any security or of any other payment in any form until the requirements of the Rule have been satisfied. The Secretary of Edison International may waive compliance with the requirements of the Rule if he or she determines the transaction to be exempt from the provisions of paragraph (b) of Section 16. 12. AMENDMENT The LTI are subject to the terms of the Plan as amended from time to time. EIX reserves the right to substitute cash awards substantially equivalent in value to the LTI. The LTI may not otherwise be restricted or limited by any Plan amendment or termination approved after the date of the award without Holder's consent. 13. FORCE AND EFFECT The various provisions herein are severable in their entirety. Any determination of invalidity or unenforceability of any one provision will have no effect on the continuing force and effect of the remaining provisions. 14. GOVERNING LAW The terms and conditions of the LTI will be construed under the laws of the State of California. 15. NOTICE Unless waived by EIX, any notice required under or relating to the LTI must be in writing, with postage prepaid, addressed to: Edison International, Attn: Corporate Secretary, P.O. Box 800, Rosemead, CA 91770. EDISON INTERNATIONAL [Beverly P. Ryder] - ----------------------------------- Beverly P. Ryder Page 4 APPENDIX A CHANGE IN CONTROL "Change in Control of EIX" shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied: (a) Any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of EIX) becomes the Beneficial Owner, directly or indirectly, of securities of EIX representing thirty percent (30%) or more of the combined voting power of the EIX's then outstanding securities. For purposes of this clause, "Person" shall not include one or more underwriters acquiring newly-issued voting securities (or securities convertible into voting securities) directly from EIX with a view towards distribution. (b) On any day after the date of grant (the "Measurement Date") Continuing Directors cease for any reason to constitute a majority of the Board. A director is a "Continuing Director" if he or she either: (i) was a member of the Board on the applicable Initial Date (an "Initial Director"); or (ii) was elected to the Board, or was nominated for election by EIX's shareholders, by a vote of at least two-thirds (2/3) of the Initial Directors then in office. A member of the Board who was not a Director on the applicable Initial Date shall be deemed to be an Initial Director for purposes of clause (B) above if his or her election, or nomination for election by EIX's shareholders, was approved by a vote of at least two-thirds (2/3) of the Initial Directors (including directors elected after the applicable Initial Date who are deemed to be Initial Directors by application of this provision) then in office. "Initial Date" means the later of (A) the date of grant or (B) the date that is two (2) years before the Measurement Date. (c) EIX is liquidated; all or substantially all of EIX's assets are sold in one or a series of related transactions; or EIX is merged, consolidated, or reorganized with or involving any other corporation, other than a merger, consolidation, or reorganization that results in the voting securities of EIX outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of EIX (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization. Notwithstanding the foregoing, a bankruptcy of EIX or a sale or spin-off of an Edison International Affiliate (short of a dissolution of EIX or a liquidation of substantially all of EIX's assets, determined on an aggregate basis) will not constitute a Change in Control of EIX. (d) The consummation of such other transaction that the Board may, in its discretion in the circumstances, declare to be a Change in Control of EIX for purposes of this Plan.