Exhibit
10.8


 


AMERICAN STATES WATER COMPANY


 


2003 NON-EMPLOYEE DIRECTORS STOCK PLAN


 


Amended Restated, and Corrected Effective as of


January 27, 2009


 


 

















 


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.

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  CHANGES IN CAPITAL STRUCTURE

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Adjustments.

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Corporate Transactions-Assumption or Termination of
  Awards.

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Option Termination.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  SHARES SUBJECT TO THE PLAN;
  SHARE LIMITS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Shares Available for Issuance.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Share Limits; Cut Backs.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Fractional Shares; Minimum Issue.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  ADMINISTRATION

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  The Administrator

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Committee Action

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Rights and Duties; Delegation and Reliance;
  Decisions Binding

  	
   

  	
  10

  



 


i

















 


	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  AMENDMENT AND TERMINATION;
  STOCKHOLDER APPROVAL

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Amendment and Termination

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Stockholder Approval

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Limitation on Participants’ Rights

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Beneficiaries

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Non-Transferability

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.4

  	
   

  	
  Obligations Binding Upon Successors.

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.5

  	
   

  	
  Governing Law; Severability

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.6

  	
   

  	
  Compliance with Laws

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.7

  	
   

  	
  Limitations on Rights Associated with Units

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.8

  	
   

  	
  Plan Construction

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.9

  	
   

  	
  Headings Not Part of Plan

  	
   

  	
  13

  



 


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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.  The Plan is amended and
restated in its entirety effective as of January 27, 2009.


 


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


 


1

















 


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 5.2(a) 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.


 


2

















 


“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 in the years 2003 through 2006,
each Non-Employee Director in office immediately following the annual 


 


3

















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.


 


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.


 


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

















 


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 from the date of grant of an Option to the earlier
of (1) the third anniversary of the date of grant of such Option or (2) the
Participant’s termination of service for Cause, regardless of whether the
Option has been partially or fully exercised, 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 originally
subject to such Option 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 of the Non-Employee Director’s termination of service as a director of the
Company 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
Eligible 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

















 


5.2          Annual
Award.


 


(a)   As of the
date of each annual meeting of stockholders in the years 2004 through 2008, 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
(the “Retirement 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 Retirement 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 2009, the Stock
Unit Account of each Non-Employee Director in office immediately following the
annual meeting shall be credited with a number of Stock Units (the “Compensation
Stock Units”) equal to (1) two times 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. 
As of the date of each annual meeting of the stockholders in 2007 and
2008, the Stock Unit Account of each Non-Employee Director was credited with a
number of Compensation 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.


 


5.3          Crediting of Dividend Equivalents to Stock Unit Accounts.


 


(a)           As
of each dividend record date, a 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 a Non-Employee
Director’s Stock Unit Account shall be at all times fully vested and not
subject to a risk of forfeiture.


 


6

















 


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 Retirement Stock Units granted pursuant to Section 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 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 a 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.


 


(b)   Notwithstanding
anything herein to the contrary, the portion of a Non-Employee Director’s Stock
Unit Account attributable to Compensation 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)           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).


 


7

















 


Section 6.              Changes 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.


 


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 


 


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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.


 


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 


 


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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);


 


(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.


 


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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-


 


11

















 


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.


 


(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 


 


12

















 


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.


 


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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