UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 21, 2007
AMERICAN STATES WATER COMPANY
(Exact name of registrant as specified in its charter)
California 001-14431 95-4676679
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
630 East Foothill Blvd.
San Dimas, California 91773
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 394-3600
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GOLDEN STATE WATER COMPANY
(Exact name of registrant as specified in its charter)
California 001-12008 95-1243678
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
630 East Foothill Blvd.
San Dimas, California 91773
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 394-3600
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing requirement of the registrant under any of the
following provisions (see General Instruction A.2 below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the exchange Act
(17 CFR 14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Section 8 - Other Events
Item 8.01. Other Events.
On May 21, 2007, the Board of Directors amended the 2003 Non-Employee
Directors Stock Plan to eliminate the annual grant of stock options for
non-employee directors and to provide instead for annual grants of restricted
stock units equal in value to the annual retainer for non-employee directors,
effective as of May 1, 2007. No shareholder approval is required for this
amendment to the Plan.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
Exhibit 10.1. 2003 Non-Employee Directors Stock Plan, as amended
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN STATES WATER COMPANY
Date: May 24, 2007 /s/ Robert J. Sprowls
----------------------------------------
Robert J. Sprowls
Sr. Vice President, Chief Financial
Officer, Treasurer and Corporate Secretary
Exhibit 10.1
SECOND AMENDMENT
TO THE
AMERICAN STATES WATER COMPANY
2003 NON-EMPLOYEE DIRECTORS STOCK PLAN
Effective as of May 1, 2007, the American States Water Company 2003
Non-Employee Directors Stock Plan (the "Plan") is amended to provide that:
FIRST: The definition of "Eligible Non-Employee Director" is amended in its
- ----- entirety to provide as follows:
"`Eligible Non-Employee Director' means each Non-Employee Director who
first becomes a Non-Employee Director on or after the date of the 2003
Annual Meeting and each other Non-Employee Director who notifies the
Company in writing of his or her election to waive all benefits under the
Retirement Plan in exchange for participation in the Stock Unit Award
feature under Section 5.2(a) of this Plan."
SECOND: Section 4.1 is amended in its entirety to provide as follows:
- ------
"4.1 Annual Award.
(a) On the date of each annual meeting of stockholders in the
years 2003 thorough 2006, each Non-Employee Director in office
immediately following the annual meeting shall be granted,
without further action by the Committee, a Nonqualified Stock
Option to purchase shares of Common Stock. Each Non-Qualified
Stock Option granted pursuant to this Section 4.1(a) in
2003 and 2004 shall be an option to purchase 1000 shares and each
Nonqualified Stock Option granted pursuant to this Section 4.1(a)
in 2005 and 2006 shall be an option to purchase 3000 shares.
(b) If any person who was not a Non-Employee Director at the
immediately preceding annual meeting of stockholders at which a
grant is made pursuant to Section 4.1(a) becomes a Non-Employee
Director within six months following such annual meeting, then
such Non-Employee Director shall be granted, without any further
action by the Committee, a Nonqualified Stock Option to purchase
that number of shares of Common Stock granted to Non-Employee
Directors at the immediately preceding annual meeting, the Grant
Date of which shall be the date the person takes office;
provided, however, that no such grant shall be made after May 1,
2007."
THIRD: Section 5.2 is amended in its entirety to provide as follows:
- -----
"5.2 Annual Award.
(a) As of the date of each annual meeting of stockholders
commencing in 2004, the Stock Unit Account of each Eligible
Non-Employee Director in office immediately following the annual
meeting, shall be credited with a number of Stock Units equal to
(1) the amount of the then-current annual retainer payable by the
Company for services rendered as a director for such year,
divided by (2) the Fair Market Value of Common Stock on the last
trading date prior to such annual meeting; provided, however,
that in no event shall the Stock Unit Account of an Eligible
Non-Employee Director be credited with Stock Units with respect
to more than 10 years of service (including, for this purpose,
the number of years of service taken into account under Section
5.1(a)).
(b) As of the date of each annual meeting of the stockholders
commencing in 2007, the Stock Unit Account of each Eligible
Non-Employee Director in office immediately following the annual
1
meeting shall be credited with a number of Stock Units equal to
(1) the amount of the then-current annual retainer payable by the
Company for services rendered as a director for such year,
divided by (2) the Fair Market Value of Common Stock on the last
trading date prior to such annual meeting.
(c) Annual grants that would otherwise exceed the maximum number
of shares allotted for issuance under the Plan contained in
Section 7.1 shall be prorated within such limitation pursuant to
Section 7.2."
FOURTH: Section 5.5 is amended in its entirety to provide as follows:
- ------
"5.5 Distribution of Benefits.
(a) Notwithstanding anything herein to the contrary, the portion
of a Non-Employee Director's Stock Unit Account attributable to
Stock Units granted pursuant to Section 5.1 or 5.2(a) (and any
Dividend Equivalents attributable to such Stock Units) shall be
distributed in accordance with this Section 5.5(a).
(1) Commencement of Benefits Distribution. Subject to the
terms of this Section 5.5(a) and Section 6, each Eligible
Non-Employee Director shall be entitled to receive a
distribution of his or her Stock Unit Account in the form of
shares of Stock upon his or her termination of service as a
director of the Company.
(2) Manner of Distribution. Upon an Eligible Non-Employee
Director's termination of service as a director of the
Company, the Company shall, subject to Section 7.2, deliver
to the Participant (or his or her Beneficiary, as
applicable) a number of shares of Stock equal to the number
of Stock Units (as adjusted pursuant to Section 6, if
applicable) to which the Participant is then entitled under
the terms of Section 5.5(a). Such distribution shall be made
in a lump sum as soon as administratively practicable, but
no later than 30 days, following the Participant's
termination of service, unless the Participant elects in
writing, as provided in Section 5.5(a)(3), to receive a
distribution of his or her benefits in respect of such Units
in up to ten substantially equal annual installments.
(3) Election for Installment Distribution; Changes in
Elections. A Participant may elect to receive his or her
benefits in up to ten annual installments, and to
subsequently change any prior distribution election, by
filing a written election with the Committee on a form
provided by the Committee; provided, however, that no such
election shall be effective until at least twelve months
after such election is filed with the Committee, and no such
election shall become effective after a Non-Employee
Director's termination of service. An election made pursuant
to this Section 5.5(a)(3) shall not affect the date of the
commencement of benefits. Notwithstanding the foregoing, if
the number of Stock Units credited to a Non-Employee
Director's Stock Unit Account at the time of the termination
of his or her service is less than 1,000, then his or her
benefit under this Section 5.5(a) shall be paid in a lump
sum.
(b) Notwithstanding anything herein to the contrary, the portion
of a Non-Employee Director's Stock Unit Account attributable to
Stock Units granted pursuant to Section 5.2(b) (and any Dividend
Equivalents attributable to such Stock Units) shall be
distributed in accordance with this Section 5.5(b).
(1) Commencement of Benefits Distribution. With respect to
each grant of Stock Units to a Non-Employee Director, the
Non-Employee Director shall be entitled to receive one-third
of such Stock Units (including Dividend Equivalents
applicable to such Stock Units) on each of the first, second
and third anniversaries of such grant in the form of shares
of Stock. Notwithstanding the foregoing, if a Non-Employee
Director terminates service as a director of the Company
prior to the complete distribution of his or her Stock Unit
Account, such Non-Employee Director shall be entitled to
receive a distribution of his or her Stock Unit Account in
the form of shares of Stock.
2
(2) Manner of Distribution. Upon the first, second, and
third anniversaries of the date of grant of Stock Units to a
Non-Employee Director (or if earlier, the Non-Employee
Director's termination of service as a director of the
Company), the Company shall, subject to Section 7.2, deliver
to the Participant (or his or her Beneficiary, as
applicable) a number of shares of Stock equal to the number
of Stock Units (as adjusted pursuant to Section 6, if
applicable) to which the Participant is then entitled under
the terms of Section 5.5(b). Such distribution shall be made
in a lump sum as soon as administratively practicable, but
no later than 30 days, following the applicable anniversary
of the grant (or, if earlier, the Participant's termination
of service)."
AMERICAN STATES WATER COMPANY
Date: May 24, 2007 /s/ Robert J. Sprowls
----------------------------------------
Robert J. Sprowls
Sr. Vice President, Chief Financial
Officer, Treasurer and Corporate Secretary
3
AMENDMENT
TO THE
AMERICAN STATES WATER COMPANY
2003 NON-EMPLOYEE DIRECTORS STOCK PLAN
(As Amended and Restated Effective January 1, 2005)
WHEREAS, American States Water Company maintains the American States Water
Company 2003 Non-Employee Directors Stock Plan (the "Plan"); and
WHEREAS, Section 9 of the Plan provides that the Board of Directors may
amend the Plan.
NOW, THEREFORE BE IT RESOLVED, the Plan is hereby amended as set forth
below:
Effective as of November 1, 2006, Section 6 is amended in its entirety to
read as follows:
"Section 6 Change in Capital Structure
6.1 Adjustments. Upon (or, as may be necessary to effect the adjustment,
immediately prior to): 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 in respect of
the Common Stock; or 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; then the Committee shall equitably and
proportionately adjust (1) the number and type of shares of Common Stock (or
other securities) that thereafter may be made the subject of awards (including
the specific share limits, maximums and numbers of shares set forth elsewhere in
this Plan), (2) the number, amount and type of shares of Common Stock (or other
securities or property) subject to any outstanding awards, (3) the grant,
purchase, or exercise price of any outstanding awards, and/or (4) the
securities, cash or other property deliverable upon exercise or payment of any
outstanding awards, in each case to the extent appropriate to preclude the
enlargement or dilution of rights and benefits under such awards.
It is intended that, if possible, any adjustments contemplated by the
preceding paragraph be made in a manner that satisfies applicable legal, tax
(including, without limitation and as applicable in the circumstances, Section
424 of the Code, Section 409A of the Code and Section 162(m) of the Code) and
accounting (so as to not trigger any charge to earnings with respect to such
adjustment) requirements.
Without limiting the generality of Section 8.3, any good faith
determination by the Committee pursuant to this Section 6.1 shall be conclusive
and binding on all persons.
6.2 Corporate Transactions-Assumption or Termination of Awards. Upon the
occurrence of any of the following: any merger, combination, consolidation, or
other reorganization; any exchange of Common Stock or other securities of the
Corporation; a sale of all or substantially all the business, stock or assets of
the Corporation; a dissolution of the Corporation; or any other event in which
the Corporation does not survive (or does not survive as a public company in
respect of its Common Stock); then the Committee may make provision for a cash
payment in settlement of, 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, to the extent relevant under the circumstances, 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 or similar rights, but without limitation on other
methodologies, may base such settlement solely upon the excess if any of the per
share amount payable upon or in respect of such event over the exercise or base
price of the award.
1
In any of the events referred to in this Section 6.2, the Committee may
take such action contemplated by this Section 6.2 prior to such event (as
opposed to on the occurrence of 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.
Without limiting the generality of Section 8.3, any good faith
determination by the Committee pursuant to its authority under this Section 6.2
shall be conclusive and binding on all persons.
6.3 Option Termination. To the extent that any vested Option is not
exercised prior to (i) a dissolution of the company or (ii) a merger or other
corporate event, and no provision is made for the assumption, conversion,
substitution or exchange of the Option, the Option shall terminate upon the
occurrence of such event."
IN WITNESS WHEREOF, American States Water Company has caused this Amendment
to be executed on the 9th day of November, 2006.
AMERICAN STATES WATER COMPANY
Date: May 24, 2007 /s/ Robert J. Sprowls
----------------------------------------
Robert J. Sprowls
Sr. Vice President, Chief Financial
Officer, Treasurer and Corporate Secretary
2
AMERICAN STATES WATER COMPANY
2003 NON-EMPLOYEE DIRECTORS STOCK PLAN
TABLE OF CONTENTS
PAGE
----
SECTION 1. GENERAL DESCRIPTION.....................................................1
SECTION 2. DEFINITIONS.............................................................1
SECTION 3. EFFECTIVE DATE; DURATION................................................3
SECTION 4. STOCK OPTION AWARDS.....................................................3
4.1 Annual Award....................................................................3
4.2 Maximum Number of Shares. ......................................................4
4.3 Option Price. ..................................................................4
4.4 Option Period and Exercisability. ..............................................4
4.5 Termination of Directorship. ...................................................4
4.6 Option Agreements. .............................................................4
4.7 Dividend Equivalent Credits to Option Dividend Equivalent Accounts..............5
SECTION 5. STOCK UNITS AWARDS......................................................5
5.1 2003 Awards.....................................................................5
5.2 Annual Award....................................................................6
5.3 Crediting of Dividend Equivalents to Stock Unit Accounts........................6
5.4 Units and Other Amounts Vest Immediately........................................6
5.5 Distribution of Benefits........................................................6
SECTION 6. CHANGES IN CAPITAL STRUCTURE............................................7
SECTION 7. SHARES SUBJECT TO THE PLAN; SHARE LIMITS................................7
7.1 Shares Available for Issuance. .................................................7
7.2 Share Limits; Cut Backs. .......................................................8
7.3 Fractional Shares; Minimum Issue. ..............................................8
SECTION 8. ADMINISTRATION..........................................................8
8.1 The Administrator...............................................................8
8.2 Committee Action................................................................8
8.3 Rights and Duties; Delegation and Reliance; Decisions Binding...................8
SECTION 9. AMENDMENT AND TERMINATION; STOCKHOLDER APPROVAL.........................9
9.1 Amendment and Termination.......................................................9
9.2 Stockholder Approval............................................................9
SECTION 10 MISCELLANEOUS...........................................................9
10.1 Limitation on Participants' Rights..............................................9
10.2 Beneficiaries...................................................................10
10.3 Non-Transferability.............................................................10
10.4 Obligations Binding Upon Successors.............................................11
10.5 Governing Law; Severability.....................................................11
10.6 Compliance with Laws............................................................11
10.7 Limitations on Rights Associated with Units.....................................11
10.8 Plan Construction...............................................................12
10.9 Headings Not Part of Plan.......................................................12
AMERICAN STATES WATER COMPANY
2003 NON-EMPLOYEE DIRECTORS STOCK PLAN
Section 1. General Description
The American States Water Company 2003 Non-Employee Directors Stock Plan (the
"Plan") provides for grants of stock units and stock options to non-employee
directors. The purposes of the Plan are (a) to attract, motivate and retain
eligible directors of the Company by providing to them supplemental stock-based
compensation and (b) to encourage eligible directors to increase their stock
ownership in the Company.
Section 2. Definitions
Whenever the following terms are used in this Plan they shall have the meaning
specified below unless the context clearly indicates to the contrary:
"Account or Accounts" means the Participant's Stock Unit Account or Option
Dividend Equivalent Account, as the context requires.
"Award Units" means Stock Units credited pursuant to Sections 5.1 and 5.2 and
any Dividend Equivalents credited thereon pursuant to Section 5.3.
"Board" means the Board of Directors of the Company.
"Cause" has the same meaning as determined under Section 304 of the California
Corporations Code or any successor thereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Common Stock of the Company, subject to adjustment
pursuant to Section 6.
"Committee" means the Board or a Committee of the Board acting under delegated
authority from the Board.
"Company" means American States Water Company, a California corporation, and its
successors and assigns.
"Dividend Equivalent" means (a), with respect to a Participant's Option Dividend
Equivalent Account, the amount of cash dividends or other cash distributions
paid by the Company on that number of shares of Common Stock that is equal to
the number of shares subject to each outstanding Option held by the Participant
as of the applicable measurement date for the dividend or other distribution,
which amount shall be allocated as Stock Units credited to the Participant's
Option Dividend Equivalent Account pursuant to Section 4.7; and (b), with
respect to a Participant's Stock Unit Account, the amount of cash dividends or
other cash distributions paid by the Company on that number of shares of Common
Stock that is equal to the number of Stock Units then credited to the
Participant's Stock Unit Account as of the applicable measurement date for the
dividend or other distribution, which amount shall be allocated as additional
Stock Units to the Participant's Stock Unit Account pursuant to Section 5.3.
"Distribution Subaccount" means a subaccount of a Non-Employee Director's Option
Dividend Equivalent Account established to separately account for Dividend
Equivalents credited in the form of Stock Units with respect to each outstanding
Option.
"Effective Date" means May 20, 2003, subject to shareholder approval at the 2004
annual meeting of shareholders.
"Eligible Non-Employee Director" means each Non-Employee Director who first
becomes a Non-Employee Director on or after the date of the 2003 Annual Meeting
and each other Non-Employee Director who notifies the Company in writing of his
or her election to waive all benefits under the Retirement Plan in exchange for
participation in the Stock Unit Award feature under Section 5 of this Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time.
"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.
"Grant Date" means the date on which an Option is granted pursuant to Section 4.
"Non-Employee Director" means a member of the Board who is not an officer or
employee of the Company or a subsidiary.
"Option or Nonqualified Stock Option" means an option to purchase a number of
shares of Common Stock granted to Non-Employee Directors pursuant to Section
4.1.
1
"Option Dividend Equivalent Account" means the bookkeeping account maintained by
the Company on behalf of each Participant that is credited with Dividend
Equivalents in accordance with Section 4.7, and includes each Distribution
Subaccount.
"Participant" means any person who has been granted an Option or Award Units
under this Plan.
"Plan" means the American States Water Company 2003 Non-Employee Directors Stock
Plan.
"Retirement" means a retirement or resignation by a Non-Employee Director who
either (a) has attained age 65 and has provided at least five years service as a
member of the Board or (b) is required to retire from service on the Board and
not seek reelection or nomination pursuant to the Company's director retirement
policy.
"Retirement Plan" means the Company's Amended and Restated Retirement Plan for
Non-Employee Directors of American States Water Company.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock" means a share of Common Stock.
"Stock Unit or Unit" means a non-voting unit of measurement which is deemed for
bookkeeping and payment purposes to represent one outstanding share of Common
Stock of the Company solely for purposes of determining benefits under this
Plan, established pursuant to the grant of Award Units under Sections 5.1 and
5.2, or in respect of Dividend Equivalents under Section 4.7 or Section 5.3, and
payable solely in a share of Stock, on a one-for-one basis.
"Stock Unit Account" means the bookkeeping account maintained by the Company on
behalf of each Participant that is credited with Award Units and Dividend
Equivalents in accordance with Section 5.
"2003 Annual Meeting" means the Company's 2003 annual meeting of stockholders.
Section 3. Effective Date; Duration
The effective date of the Plan is May 20, 2003, subject to approval of the
Company's stockholders at their 2004 annual meeting. No awards may be granted
under the Plan after May 19, 2013. The Plan shall continue in effect until all
matters relating to Options, Stock Units and the administration of the Plan have
been completed and all payments of benefits have been made.
Section 4. Stock Option Awards
4.1 Annual Award.
(a) On the date of each annual meeting of stockholders during the term
of the Plan, each Non-Employee Director in office immediately
following the annual meeting shall be granted, without further action
by the Committee, (i) a Nonqualified Stock Option to purchase 1,000
shares of Common Stock at the 2003 Annual Meeting and the 2004 Annual
Meeting, and (ii) a Nonqualified Stock Option to purchase 3,000 shares
of Common Stock commencing with the 2005 Annual Meeting and each
Annual Meeting thereafter during the term of the Plan.
(b) If any person who was not a Non-Employee Director at the
immediately preceding annual meeting of stockholders at which a grant
is made pursuant to Section 4.1(a) becomes a Non-Employee Director
within six months following such annual meeting, then such
Non-Employee Director shall be granted, without any further action by
the Committee, a Nonqualified Stock Option to purchase 3,000 shares of
Common Stock, the Grant Date of which shall be the date the person
takes office.
4.2 Maximum Number of Shares. Annual grants that would otherwise exceed the
maximum number of shares allotted for issuance under the Plan contained in
Section 7.1 shall be prorated within such limitation pursuant to Section
7.2.
4.3 Option Price. The exercise price per share of the Stock covered by each
Option granted pursuant to this Section 4 shall be 100% of the Fair Market
Value of the Stock on the Grant Date. The exercise price of any Option
granted under this Section 4 shall be paid in full at the time of each
purchase in cash, by electronic funds transfer, or by check or in shares of
Stock valued at their Fair Market Value on the date the Participant
exercises the Option, or partly in such shares and partly in cash, provided
that any such shares used in payment that were previously acquired by the
Participant from the Company upon exercise of an Option or otherwise shall
have been owned by the Participant at least six months prior to the date of
exercise. The Company shall not be obligated to deliver shares of Stock
unless and until it receives full payment of the exercise price therefor
and any related conditions of the Option have been satisfied.
2
4.4 Option Period and Exercisability. Each Option granted under this
Section 4 and all rights or obligations thereunder shall expire 10 years
after the Grant Date and shall be subject to earlier termination as
provided below. Each Option shall be fully exercisable upon the Grant Date.
4.5 Termination of Directorship.
(a) If a Non-Employee Director's services as a member of the Board
terminate for any reason other than Cause, then any Option granted
pursuant to this Section 4 held by such Participant shall remain
exercisable for the period of time set forth in the option agreement
evidencing his or her Option.
(b) If a Non-Employee Director's services as a member of the Board
terminate for Cause, all unexercised Options shall terminate on the
date of termination of services.
4.6 Option Agreements. Each Option granted to a Non-Employee Director shall
be evidenced by an agreement in a form approved by the Committee and shall
contain the terms and conditions consistent with the Plan as approved by
the Committee relating to the Option.
4.7 Dividend Equivalent Credits to Option Dividend Equivalent Accounts.
(a) As of each dividend record date, a Participant's Option Dividend
Equivalent Account shall be credited with Stock Units in an amount
equal to the Dividend Equivalents representing dividends payable as of
such dividend record date on a number of shares equal to the aggregate
number of shares subject to each outstanding Option granted to such
Participant divided by the then Fair Market Value of a share of Common
Stock on the dividend record date. The Dividend Equivalents
attributable to each Option granted to a Participant shall be credited
to a separate Distribution Subaccount established for such
Participant.
(b) Stock Units credited to the Participant's Distribution Subaccount
with respect to an Option shall become payable to the Participant upon
the earlier to occur of (1) the date the Option is exercised or (2)
three years from the Grant Date.
(c) Stock Units credited to a Non-Employee Director's Option Dividend
Equivalent Account shall at all times be fully vested and
non-forfeitable and shall be distributed in an equivalent whole number
of shares of Stock. Any fractional share interests shall be
accumulated and paid in cash on the distribution date.
Section 5. Stock Units Awards
5.1 2003 Awards
(a) Continuing Eligible Non-Employee Directors. As of the date of the
2003 Annual Meeting, the Stock Unit Account of each person who is
continuing in office as an Eligible Non-Employee Director immediately
following such meeting shall be credited with a number of Stock Units
equal to (1) $15,000, multiplied by (2) the lesser of (i) the
Non-Employee Director's years of prior Board service or (ii) 10,
divided by (3) the Fair Market Value of a share of Common Stock on the
last trading date prior to the 2003 Annual Meeting.
(b) New Non-Employee Directors. As of the date of the 2003 Annual
Meeting, the Stock Unit Account of each person who first becomes a
Non-Employee Director at the 2003 Annual Meeting shall be credited
with a number of Stock Units equal to (1) the amount of the
then-current annual retainer divided by (2) the Fair Market Value of a
share of Common Stock on the last trading date prior to the 2003
Annual Meeting.
5.2 Annual Award. As of the date of each annual meeting of stockholders
commencing in 2004, the Stock Unit Account of each Eligible Non-Employee
Director in office immediately following the annual meeting, shall be
credited with a number of Stock Units equal (1) the amount of the
then-current annual retainer payable by the Company for services rendered
as a director for such year, divided by (2) the Fair Market Value of Common
Stock on the last trading date prior to such annual meeting; provided,
however, that in no event shall the Stock Unit Account of an Eligible
Non-Employee Director be credited with Stock Units with respect to more
than 10 years of service (including, for this purpose, the number of years
of service taken into account under Section 5.1(a)). Annual grants that
would otherwise exceed the maximum number of shares allotted for issuance
under the Plan contained in Section 7.1 shall be prorated within such
limitation pursuant to Section 7.2.
3
5.3 Crediting of Dividend Equivalents to Stock Unit Accounts.
(a) As of each dividend record date, an Eligible Non-Employee
Director's Stock Unit Account shall be credited with additional Stock
Units in an amount equal to the Dividend Equivalents representing
dividends payable as of such dividend record date on a number of
shares equal to the aggregate number of Units credited to the
Participant's Stock Unit Account divided by the Fair Market Value of a
share of Common Stock on the dividend record date.
(b) Stock Units credited in respect of Dividend Equivalents shall be
paid in Stock at the same time and the same manner as the Stock Units
to which they relate.
5.4 Units and Other Amounts Vest Immediately. All Units or other amounts
credited to an Eligible Non-Employee Director's Stock Unit Account shall be
at all times fully vested and not subject to a risk of forfeiture.
5.5 Distribution of Benefits.
(a) Commencement of Benefits Distribution. Subject to the terms of
this Section 5.5 and Section 6, each Eligible Non-Employee Director
shall be entitled to receive a distribution of his or her Stock Unit
Account in the form of shares of Stock upon his or her termination of
service as a director of the Company.
(b) Manner of Distribution. Upon an Eligible Non-Employee Director's
termination of service as a director of the Company, the Company
shall, subject to Section 7.2, deliver to the Participant (or his or
her Beneficiary, as applicable) a number of shares of Stock equal to
the number of Stock Units (as adjusted pursuant to Section 6, if
applicable) to which the Participant is then entitled under the terms
of this Section 5 of the Plan. Such distribution shall be made in a
lump sum as soon as administratively practicable, but no later than 30
days, following the Participant's termination of service, unless the
Participant elects in writing, as provided in Section 5.5(c), to
receive a distribution of his or her benefits in respect of such Units
in up to ten substantially equal annual installments.
(c) Election for Installment Distribution; Changes in Elections. A
Participant may elect to receive his or her benefits in up to ten
annual installments, and to subsequently change any prior distribution
election, by filing a written election with the Committee on a form
provided by the Committee; provided, however, that no such election
shall be effective until at least twelve months after such election is
filed with the Committee, and no such election shall become effective
after a Non-Employee Director's termination of service. An election
made pursuant to this Section 5.5(c) shall not affect the date of the
commencement of benefits. Notwithstanding the foregoing, if the number
of Stock Units credited to a Non-Employee Director's Stock Unit
Account at the time of the termination of his or her service is less
than 1,000, then his or her benefit under this Section 5 shall be paid
in a lump sum.
Section 6. Changes in Capital Structure.
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 Company, 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 Company 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
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 Options,
Stock Units and Accounts (including the specific maximums 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
Options and payable in respect of Stock Units, (c) the grant, purchase, or
exercise price of any or all outstanding Options, and the number and type of
Stock Units credited under the Plan, or (d) the securities, cash or other
property deliverable upon exercise of any outstanding Options and payable in
respect of Stock Units or make provision for a cash payment or for the
assumption, substitution or exchange of any or all outstanding Options and Stock
Units or the cash, securities or property deliverable to the holder of any or
all outstanding Options and Stock Units, based upon the distribution or
consideration payable to holders of the Common Stock upon or in respect of such
event.
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The Committee may adopt such valuation methodologies for outstanding Options and
Stock Units 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 price of the Option.
To the extent that any vested Option is not exercised prior to (i) a dissolution
of the Company or (ii) a merger or other corporate event, and no provision is
made for the assumption, conversion, substitution or exchange of the Option, the
Option shall terminate upon the occurrence of such event.
Section 7. Shares Subject To The Plan; Share Limits
7.1 Shares Available for Issuance. Subject to adjustment under Section 6,
the aggregate number of shares of Stock that may be issued or delivered
under the Plan shall not exceed 250,000 shares. Stock delivered by the
Company under the Plan shall be shares of authorized and unissued shares of
Stock and/or previously issued Stock held as treasury shares and shall be
fully paid and non-assessable when issued. Shares issuable on exercise of
Options or payment of Stock Units shall be reserved for issue, and to the
extent that awards terminate or expire without payment in shares, the
shares will be available for subsequent grants or accretions. Subject to
adjustment under Section 6, the aggregate number of Stock Units that may be
issued or delivered under the Plan is 118,000.
7.2 Share Limits; Cut Backs. If any grant of an Option or the award or
crediting of Stock Units would cause the sum of the shares of Stock
previously issued and shares issuable under outstanding awards under the
Plan to exceed the maximum number of shares authorized under the Plan, the
Company shall prorate among the Non-Employee Directors the grant of new
Options or award of Stock Units and allocate the number of remaining shares
available for issuance first to the grant of Options and second toward the
award of Award Units. If and for so long as no available share
authorization remains, no additional Options shall be granted or Stock
Units credited and cash shall be paid in lieu of dividend equivalents under
Sections 4.7 and 5.3 for such duration.
7.3 Fractional Shares; Minimum Issue. Fractional share interests may be
accumulated but shall not be issued. Cash will be paid or transferred in
lieu of any fractional share interests that remain upon a final
distribution under the Plan. No fewer than 100 shares may be purchased on
exercise of an Option at any one time unless the number purchased is the
total number at the time available for purchase under the Option.
Section 8. Administration
8.1 The Administrator.
The Administrator of this Plan shall be the Board as a whole or a Committee as
appointed from time to time by the Board to serve as administrator of this Plan.
The participating members of any Committee so acting shall include, as to
decisions in respect of participants who are subject to Section 16 of the
Exchange Act, only those members who are Non-Employee Directors (as defined in
Rule 16b-3 promulgated under the Exchange Act). Members of the Committee shall
not receive any additional compensation for administration of this Plan.
8.2 Committee Action.
A member of the Committee shall not vote or act upon any matter which relates
solely to himself or herself as a Participant in this Plan. Action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or (assuming compliance with Section 8.1) by
unanimous written consent of its members.
8.3 Rights and Duties; Delegation and Reliance; Decisions Binding.
Subject to the limitations of this Plan, the Committee shall be charged with the
general administration of this Plan and the responsibility for carrying out its
provisions, and shall have powers necessary to accomplish those purposes,
including, but not by way of limitation, the following:
(a) To construe and interpret this Plan;
(b) To resolve any questions concerning the amount of benefits payable
to a Participant (except that no member of the Committee shall
participate in a decision relating solely to his or her own benefits);
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(c) To make adjustments under Section 6 and all other determinations
required by this Plan;
(d) To maintain all the necessary records for the administration of
this Plan; and
(e) To make and publish forms, rules and procedures for the
administration of this Plan.
The determination of the Committee made in good faith as to any disputed
question or controversy and the Committee's determination of benefits payable to
Participants, including decisions as to adjustments under Section 6, shall be
conclusive and binding for all purposes of this Plan. In performing its duties,
the Committee shall be entitled to rely on information, opinions, reports or
statements prepared or presented by: (i) officers or employees of the Company
whom the Committee believes to be reliable and competent as to such matters; and
(ii) counsel (who may be employees of the Company), independent accountants and
other persons as to matters which the Committee believes to be within such
persons' professional or expert competence. The Committee shall be fully
protected with respect to any action taken or omitted by it in good faith
pursuant to the advice of such persons. The Committee may delegate ministerial,
bookkeeping and other non-discretionary functions to individuals who are
officers or employees of the Company.
Section 9. Amendment and Termination; Stockholder Approval
9.1 Amendment and Termination. Subject to Section 9.2, the Board shall have
the right to amend this Plan in whole or in part from time to time or may
at any time suspend or terminate this Plan; provided, however, that, except
as contemplated by Section 6, no amendment or termination shall cancel or
otherwise adversely affect in any way, without his or her written consent,
any Participant's rights with respect to Stock Units credited to his or her
Accounts or Options granted; and provided further that neither Section 4
nor any other provision of the Plan or an award shall be amended to permit
the reduction (by amendment, substitution, cancellation and regrant or
other means) of the exercise price of any Option without prior stockholder
approval. Any amendments authorized hereby shall be stated in an instrument
in writing, and all Participants shall be bound by such amendment. Changes
contemplated by Section 6 shall not be deemed to constitute changes or
amendments for purposes of this Section 9.1.
9.2 Stockholder Approval. The Plan, any grant, election, action, crediting
or vesting prior to stockholder approval, shall be subject to approval of
the Plan by the stockholders of the Company and, to the extent required
under applicable law or listing agency rule, required by the provisions of
Section 9.1, or deemed necessary or advisable by the Board, any amendment
to the Plan shall be subject to stockholder approval.
Section 10. Miscellaneous
10.1 Limitation on Participants' Rights. Participation in this Plan shall
not give any person the right to continue to serve as a member of the Board
or any rights or interests other than as expressly provided herein. This
Plan shall create only a contractual obligation on the part of the Company
as to such amounts and shall not be construed as creating a trust or
fiduciary relationship between the Company, the Board, the Committee, and
any Participant or other person. This Plan, in and of itself, has no
assets. Participants shall have only the rights of a general unsecured
creditor of the Company with respect to amounts credited and benefits
payable, if any, on their Accounts, and rights no greater than the right to
receive the Common Stock (or equivalent value as a general unsecured
creditor) with respect to Accounts. Participants shall not be entitled to
receive actual dividends or to vote Shares until after delivery of a
certificate representing the Shares.
10.2 Beneficiaries.
(a) Beneficiary Designation. Upon forms provided by the Company each
Non-Employee Director may designate in writing the Beneficiary or
Beneficiaries (as defined in Section 10.2(b)) whom such Non-Employee
Director desires to receive any amounts payable under the Plan after
his or her death. Beneficiary designation forms shall be effective on
the date that the form is received by the Corporate Secretary. A
Non-Employee Director may from time to time change his or her
designated Beneficiary or Beneficiaries without the consent of such
Beneficiary or Beneficiaries by filing a new designation in writing
with the Corporate Secretary. However, if a married Non-Employee
Director wishes to designate a person other than his or her spouse as
Beneficiary, such designation shall be consented to in writing by the
spouse. The Non-Employee Director may change any election designating
a Beneficiary or Beneficiaries without any requirement of further
spousal consent if the spouse's consent so provides. Notwithstanding
the foregoing, spousal consent shall not be necessary if it is
established that the required consent cannot be obtained because the
spouse cannot be located or because of other circumstances prescribed
by the Committee. The Company and the Committee may rely on the
Non-Employee Director's designation of a Beneficiary or Beneficiaries
last filed in accordance with the terms of the Plan.
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(b) Definition of Beneficiary. A Participant's "Beneficiary" or
"Beneficiaries" shall be the person, persons, trust or trusts (or
similar entity) designated by the Participant or, in the absence of a
designation, entitled by will or the laws of descent and distribution
to receive the Participant's benefits under this Plan in the event of
the Participant's death, and shall mean the Participant's executor or
administrator if no other Beneficiary is identified and able to act
under the circumstances.
10.3 Non-Transferability. A Participant's rights and interests under the
Plan in respect of Options and Stock Units, including amounts payable or
Stock deliverable under or in respect thereof, may not be assigned,
pledged, or transferred except:
(a) in the event of a Participant's death, to a designated beneficiary
as provided in Section 10.2(b) above, or in the absence of such
designation, by will or the laws of descent and distribution; or
(b) in the case of Options, with the consent of the Committee
evidenced in writing or by duly adopted resolution, to certain persons
or entities related to the Participant, including but not limited to
members of the Participant's immediate family, charitable
institutions, or trusts or other entities whose beneficiaries or
beneficial owners are members of the Participant's immediate family
and/or charitable institutions, 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 or a gratuitous or donative basis
and without consideration (other than nominal consideration or in
exchange for an interest in a qualified transferee) and only if such
transfer would not adversely affect the Company's eligibility to use
Form S-8 to register under the Securities Act of 1933, as amended, the
offering of shares issuable under the Plan by the Company.
The above exercise and transfer restrictions shall not apply to transfers to the
Company or transfers pursuant to a court order.
10.4 Obligations Binding Upon Successors.
Obligations of the Company under this Plan shall be binding upon successors of
the Company.
10.5 Governing Law; Severability.
The validity of this Plan and any agreements entered into under the Plan or any
of its provisions shall be construed, administered and governed in all respects
under the laws of the State of California. If any provisions of this Plan shall
be held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.
10.6 Compliance with Laws.
This Plan and the offer, issuance and delivery of shares of Common Stock and/or
the payment of benefits under this Plan 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 to such approvals by any
listing, agency or any regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to prior
registration or such restrictions as the Company may deem necessary or desirable
to assure compliance with all applicable legal requirements, and the person
acquiring such securities shall, if requested by the Company, provide such
assurances and representations to the Company as it may reasonably request to
assure such compliance.
10.7 Limitations on Rights Associated with Units.
A Non-Employee Director's Accounts shall be a memorandum account on the books of
the Company. The Units credited to a Non-Employee Director's Accounts shall be
used solely as a device for the determination of the number of shares of Stock
to be distributed to the Participant in accordance with this Plan following his
or her termination of service as a director of the Company. The Units shall not
be treated as property or as a trust fund of any kind. No Participant shall be
entitled to any voting or other stockholder rights with respect to Units
credited under this Plan. The number of Units credited to a Participant's
Accounts shall be subject to adjustment in accordance with Section 6 and the
terms of this Plan.
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10.8 Plan Construction.
It is the intent of the Company that transactions pursuant to this Plan satisfy
and be interpreted in a manner that satisfies the applicable conditions for
exemption under Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3") so
that, to the extent consistent therewith, the crediting of Units and the payment
of Stock as well as grants of Options will be entitled to the benefits of Rule
16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not
be subjected to avoidable liability thereunder.
10.9 Headings Not Part of Plan.
Headings and subheadings in this Plan are inserted for reference only and are
not to be considered in the construction of the provisions hereof.
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