H2O AMERICA

The Board has unanimously approved, and recommends that stockholders approve, an amendment to the Corporation’s Certificate of Incorporation to designate the U.S. federal district courts as the exclusive forum for claims arising under the Securities Act of 1933 (the “Federal Forum Selection Amendment”).

Since 2015, Section 115 of the DGCL has permitted Delaware corporations to adopt a provision in their certificates of incorporation or bylaws requiring any or all internal corporate claims to be brought solely and exclusively in any or all of the courts in the state of Delaware. Consistent with this statute, Article XIII of the Corporation’s current Certificate of Incorporation designates the state and federal courts located within the State of Delaware as the sole and exclusive forums for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, and (iv) any action asserting a claim governed by the internal affairs doctrine, unless the Corporation consents to an alternative forum. This type of provision, which is often referred to as a “state forum selection provision”, have become a standard feature in the governing documents of Delaware corporations.

In 2020, the Delaware Supreme Court upheld the validity for Delaware corporations to adopt federal forum selection provisions requiring that claims arising under the Securities Act of 1933, as amended (the “Securities Act”), be brought in federal court. Since this decision, federal forum selection provisions have become increasingly common for Delaware corporations.

Reasons for The Proposed Amendment

The Board believes that the Corporation and its stockholders will benefit from having actions arising under the Securities Act litigated in the U.S. federal district courts. The federal district courts have considerable experience and expertise in matters arising under the Securities Act and, therefore, can provide greater predictability regarding the outcome of these disputes as well as a more streamlined, efficient and organized process for resolve them. In addition, adoption of the Federal Forum Selection Amendment would help the Corporation avoid the need to litigate multiple actions involving the same matter in both state and federal courts, thereby reducing the risk of duplicative litigation expenses and the possibility of inconsistent outcomes, and would allow the Corporation to focus on litigating its underlying rights or remedies.

If the Federal Forum Selection Amendment becomes effective, it may have potential effects in addition to those discussed above, including limiting stockholders’ ability to bring such claims in a judicial forum that they consider advantageous or discouraging such claims more generally. To address these potential effects, the proposed Federal Forum Selection Amendment would not require that Securities Act claims be brought in any particular federal district court and would give the Corporation the flexibility to consent to an alternative forum. The Federal Forum Selection Amendment will also add a provision clarifying that neither the Federal Forum Selection Amendment nor the Corporation’s current state forum selection provision will affect suits brought to enforce any liability, obligation or duty created by the Exchange Act to the extent such application would be contrary to law.

Based on these considerations, including the benefits to the Corporation and stockholders that will result from discouraging plaintiff forum shopping and multi-forum litigation and providing a more streamlined and efficient process for the resolution of Securities Act disputes, the Board believes that amending the Certificate of Incorporation to require Securities Act claims to be brought in the U.S. federal district courts is in the best interests of the Corporation and its stockholders.

Proposed Amendment

The Board is asking the stockholders to approve the proposed Federal Form Selection Amendment to the Certificate of Incorporation, which, upon approval, would amend and restate Article XIII of the Certificate of Incorporation to read as follows (with additions to the Article indicated by underlining and deletions indicated by strikeouts):

(a) Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the State of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

(b) Unless the Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for any claim arising under the Securities Act of 1933, as amended (the “Securities Act”), or any rule or regulation promulgated thereunder (in each case, as amended from time to time), shall be the federal district courts of the United States; provided, however, that if the foregoing provisions of this clause (b) of Article XIII are, or the application of such provisions to any person or any circumstance is, deemed to be illegal, invalid or unenforceable, then the sole and exclusive state court forum for any claim arising under the Securities Act or any rule or regulation promulgated thereunder (in each case, as amended from time to time) shall be the Court of Chancery of the State of Delaware.

(c) Notwithstanding anything to the contrary in this Certificate of Incorporation, the foregoing provisions of this Article XIII shall not apply to any claim seeking to enforce any liability, obligation or duty created by the Exchange Act to the extent such application would be contrary to law.

The state forum selection provision set forth in clause (a) of Article XIII will not be amended or changed in any way. A copy of the proposed amendment to Article XIII of the Certificate of Incorporation to adopt a federal exclusive forum provision is included as part of the Certificate of Amendment attached to this proxy statement as Appendix A.

Approval of this Proposal 4 requires the affirmative vote of the holders of a majority of the Corporation’s common stock outstanding and entitled to vote at the Annual Meeting. If stockholders approve this Proposal 4, the Federal Forum Selection Amendment will become effective upon the filing of the related Certificate of Amendment with the Delaware Secretary of State, which we anticipate filing as soon as reasonably practicable after the Annual Meeting. If this proposal is not approved by our stockholders, Article XIII of the current Certificate of Incorporation will not be amended and no federal forum selection provision will be added; however, the Corporation’s existing state forum selection provision will remain in effect.

Consequences of Vote

The Federal Forum Selection Amendment is separate and operates independently from the Officer Exculpation Amendment discussed in Proposal 3. Therefore, if stockholders approve this Proposal 4, but not the Officer Exculpation Amendment discussed in Proposal 3, a copy of the Certificate of Amendment that includes only the Federal Forum Selection Amendment will be filed with the Delaware Secretary of State. In addition, we may file a Restated Certificate of Incorporation to integrate the Federal Forum Selection Amendment (if approved), the Officer Exculpation Amendment (if approved) and other prior amendments made to the Certificate of Incorporation into a single document.