UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 15, 2006
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Date of Report (Date of Earliest Event Reported)
ITRON, INC.
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(Exact Name of Registrant as Specified in its Charter)
Washington 000-22418 91-1011792
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(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
2818 N. Sullivan Road, Spokane, WA 99216
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(Address of Principal Executive Offices, Zip Code)
(509) 924-9900
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(Registrant's Telephone Number, Including Area Code)
None
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under Securities Act (17 CFR
230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-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))
Item 1.01 Entry into a Material Definitive Agreement
On February 15, 2006, the Compensation Committee of the Board of Directors of
Itron, Inc. (the Company) approved the following agreements as they pertain to
the Company's key executive officers:
o The Form of Change in Control Agreement for certain of the Company's
executive officers providing for compensation and benefit arrangements
upon a change in control of the Company. This Change in Control
Agreement will replace the existing change in control agreement.
Exhibit 10.2 is incorporated herein by reference.
o Revised Long-Term Performance Plan (LTPP) for senior management and key
executive officers to provide for a three-year cliff vesting period.
Exhibit 10.20 is incorporated herein by reference.
o The Form of Restricted Stock Award for use in connection with the
Company's LTPP. Exhibit 10.23 is incorporated herein by reference.
The following awards were made under the LTPP to executive officers of
the Company:
Name Position Restricted Stock Awards
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LeRoy D. Nosbaum Chief Executive Officer and Chairman of the Board 5,420 shares
Steven M .Helmbrecht Sr. Vice President and Chief Financial Officer 2,208 shares
Russell N. Fairbanks, Jr. Sr. Vice President and General Counsel 2,208 shares
Philip C. Mezey Sr. Vice President, Software Solutions 2,007 shares
Malcolm Unsworth Sr. Vice President, Hardware Solutions 2,208 shares
Jared P. Serff Vice President, Competitive Resources 1,646 shares
Other terms of the awards are as described in the LTPP and the related Form of
Notice of Restricted Stock Award, which are filed herewith as described above.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
The following exhibits are filed as part of this report:
Exhibit Number Description
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10.2 Form of Change in Control Agreement between Itron, Inc. and
certain of its executive officers.
10.20 Amended Long-Term Performance Plan dated February 15, 2006.
10.23 Form of Notice of Restricted Stock Award for the Amended
Long-Term Performance Plan.
The information presented in this Current Report on Form 8-K contains
forward-looking statements and certain assumptions upon which such
forward-looking statements are in part based. Numerous important factors,
including those factors identified in Itron, Inc.'s Annual Report on Form 10-K
and other of the Company's filings with the Securities and Exchange Commission,
and the fact that the assumptions set forth in this Current Report on Form 8-K
could prove incorrect, could cause actual results to differ materially from
those contained in such forward-looking statements.
SIGNATURE
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.
ITRON, INC.
Dated: February 17, 2006 By: /s/ STEVEN M. HELMBRECHT
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Steven M. Helmbrecht
Sr. Vice President and Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
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10.2 Form of Change in Control Agreement between Itron, Inc. and
certain of its executive officers.
10.20 Amended Long-Term Performance Plan dated February 15, 2006.
10.23 Form of Notice of Restricted Stock Award for the Amended
Long-Term Performance Plan.
Exhibit 10.2
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (this "Agreement"), dated as of ______
__, 2006, is between Itron, Inc., a Washington corporation (the "Company"), and
_______________ (the "Executive").
The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its shareholders to ensure that
the Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change in Control (defined below) of
the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Executive arising from the personal uncertainties and risks
created by a pending or threatened Change in Control, to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change in Control, and to provide the
Executive with reasonable compensation and benefits arrangements upon a Change
in Control.
In order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement with the Executive.
1. EMPLOYMENT
1.1 Certain Definitions
(a) "Cause" shall mean cause given by the Executive to the Company and
shall include the occurrence of one or more of the following events:
(i) Executive's willful injury of the Company, or Executive's
breach of fiduciary duty to the Company involving personal profit;
(ii) Conviction of Executive under any applicable criminal law
involving the commission of a crime against the Company or any felony;
(iii) Habitual or repeated misuse by Executive of alcohol or
controlled substances that materially impairs Executive's ability to
perform his duties under this Agreement; or
(iv) Any willful act of Executive involving moral turpitude
materially and adversely affecting the business, goodwill or reputation
of the Company.
(b) "Change in Control" shall mean:
(i) consummation of an acquisition by any Entity of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (1) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock")
or (2) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"), excluding,
however, the following: (a) any acquisition directly from the Company,
other than an acquisition by virtue of the exercise of a conversion
privilege where the security being so converted was not acquired
directly from the Company by the party exercising the conversion
privilege, (b) any acquisition by the Company, (c) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by
the Company or any Related Company, or (d) a Related Party Transaction;
(ii) a change in the composition of the Board during any
two-year period such that the individuals who, as of the beginning of
such two-year period, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board;
provided, however, that for purposes of this definition, any individual
who becomes a member of the Board subsequent to the beginning of the
two-year period, whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least two-thirds
of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member of
the Incumbent Board; and provided further, however, that any such
individual whose initial assumption of office occurs as a result of or
in connection with an actual or threatened solicitation of proxies or
consents by or on behalf of an Entity other than the Board shall not be
considered a member of the Incumbent Board;
(iii) consummation of a merger or consolidation of the Company
with or into any other company or other entity, excluding, in each
case, a Related Party Transaction;
(iv) consummation of a statutory share exchange pursuant to
which the Company's outstanding shares are acquired or a sale in one
transaction or a series of transactions undertaken with a common
purpose of at least 50% of the Company's outstanding voting securities,
excluding, in each case, a Related Party Transaction; or
(v) consummation of a sale, lease, exchange or other transfer
in one transaction or a series of related transactions undertaken with
a common purpose of all or substantially all of the Company's assets,
excluding, in each case, a Related Party Transaction.
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Where a series of transactions undertaken with a common
purpose is deemed to be a Change in Control, the date of such Change in
Control shall be the date on which the last of such transactions is
consummated.
(c) "Change in Control Date" shall mean the first date during the Term
of Agreement (as defined in Section 1.1(b)) on which a Change in Control occurs.
Anything in this Agreement to the contrary notwithstanding, if a Change in
Control occurs and if the Executive's employment with the Company is terminated
prior to the date on which the Change in Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect the
Change in Control or (ii) otherwise arose in connection with or anticipation of
the Change in Control, then for all purposes of this Agreement the "Change in
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
(d) "Entity" shall mean any individual, entity or group (within the
meaning of Section 13(d)(3) of the Exchange Act).
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(f) "Good Reason" shall mean the occurrence of any of the following
events, without the consent of the Executive:
(i) A demotion or other material reduction in the nature or
status of the Executive's responsibilities as contemplated by Section
1.3, excluding for this purpose an isolated and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive; provided that a
change in the person or office to which the Executive reports, without
a corresponding reduction in duties, status and responsibilities,
resulting primarily from organizational changes incident to a merger or
acquisition, shall not constitute "Good Reason";
(ii) Any failure by the Company to comply with any of the
provisions of Section 3 hereof, other than an isolated and inadvertent
failure not occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(iii) The Company's requiring the Executive to be based at any
office or location other than that described in Section 1.4 hereof; or
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(iv) Any failure by the Company to comply with and satisfy
Section 10 hereof, provided that the Company's successor has received
at least ten days' prior written notice from the Company or the
Executive of the requirements of Section 10 hereof.
(g) "Parent Company" shall mean a company or other entity which as a
result of a Change in Control owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries.
(h) "Related Company" shall mean any entity that is directly or
indirectly controlled by, in control of or under common control with the
Company.
(i) "Related Party Transaction" shall mean a Change in Control pursuant
to which:
(i) the Entities who are the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Change in Control will immediately
upon the consummation of the Change in Control beneficially own,
directly or indirectly, at least 50% of the outstanding shares of
common stock, and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors of the Successor Company in substantially the same
proportions as their ownership, immediately prior to such Change in
Control, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities;
(ii) no Entity (other than the Company, any employee benefit
plan or related trust of the Company or a Related Company, the
Successor Company or, if reference was made to equity ownership of any
Parent Company for purposes of determining whether clause (i) above is
satisfied in connection with the applicable Change in Control, such
Parent Company) will beneficially own, directly or indirectly, 40% or
more of, respectively, the outstanding shares of common stock of the
Successor Company or the combined voting power of the outstanding
voting securities of the Successor Company entitled to vote generally
in the election of directors unless such ownership resulted solely from
ownership of securities of the Company prior to the Change in Control;
and
(iii) individuals who were members of the Incumbent Board will
immediately after the consummation of the Change in Control constitute
at least a majority of the members of the board of directors of the
Successor Company (or, if reference was made to equity ownership of any
Parent Company for purposes of determining whether clause (i) above is
satisfied in connection with the applicable Change in Control, of the
Parent Company).
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(j) "Successor Company" shall mean the surviving company, the successor
company or Parent Company, as applicable, in connection with a Change in
Control.
(k) "Term of Agreement" shall mean an initial period commencing on the
date hereof and ending 18 months after the date hereof; provided, however, that
commencing on the date that is 12 months after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), the Term of Agreement
shall be automatically extended so as to terminate 18 months from such Renewal
Date, unless prior to the Renewal Date the Company shall give notice to the
Executive that the Term of Agreement shall not be so extended.
1.2 Post-Change in Control Period
The Company hereby agrees to continue the Executive in its employ or in
the employ of its affiliated companies, and the Executive hereby agrees to
remain in the employ of the Company, the Successor Company or their affiliated
companies, in accordance with the terms and provisions of this Agreement, for
the period commencing on the Change in Control Date and ending [one] [two] years
after such date (the "Post-Change in Control Period").
1.3 Position and Duties
During the Post-Change in Control Period, the Executive's position,
authority, duties and responsibilities shall be reasonably commensurate with the
most significant of those held, exercised and assigned at any time during the
90-day period immediately preceding the Change in Control Date.
1.4 Location
During the Post-Change in Control Period, the Executive's services
shall be performed at any office located no more than 50 miles from the office
where Executive was performing services as of the Change in Control Date.
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1.5 Employment at Will
The Executive and the Company acknowledge that, except as may otherwise
be provided under any other written agreement between the Executive and the
Company, the employment of the Executive by the Company or its affiliated
companies is "at will" and, prior to the Change in Control Date, may be
terminated by either the Executive or the Company or its affiliated companies
for any reason and at any time. Moreover, if prior to the Change in Control
Date, the Executive's employment with the Company or its affiliated companies
terminates for any reason,then the Executive shall have no further rights under
this Agreement.
1.6 Board of Directors
If the Executive is or becomes a member of the Board, his or her
continuation as such shall be subject to the will of the Company's shareholders
and the Board, as provided in the Company's bylaws and articles of
incorporation. Therefore, removal of the Executive from, or nonelection of the
Executive to, the Board by the Company's shareholders or the Board, as provided
in the Company's bylaws and articles of incorporation, shall in no event be
deemed a breach of this Agreement by the Company nor shall it entitle the
Executive to any benefits hereunder.
2. ATTENTION AND EFFORT
During the Post-Change in Control Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive will
devote his time, attention and effort during normal business hours to the
business and affairs of the Company and discharge the responsibilities assigned
to him hereunder, and will use his reasonable best efforts to perform such
responsibilities faithfully and efficiently. It shall not be a violation of this
Agreement for the Executive to (a) serve on corporate, civic or charitable
boards or committees, (b) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (c) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities in accordance with this Agreement. It is expressly
understood and agreed that to the extent any such activities have been conducted
by the Executive prior to the Post-Change in Control Period, the continued
conduct of such activities (or the conduct of activities similar in nature and
scope thereto) during the Post-Change in Control Period shall not thereafter be
deemed to interfere with the performance of the Executive's responsibilities to
the Company.
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3. COMPENSATION
During the Post-Change in Control Period, the Company agrees to pay or
cause to be paid to the Executive, and the Executive agrees to accept in
exchange for the services rendered hereunder by him/her, the following
compensation:
3.1 Salary
The Executive shall receive an annual base salary (the "Annual Base
Salary"), at least equal to the annual base salary established by the Board or
the Compensation Committee of the Board (the "Compensation Committee") for the
fiscal year in which the Change in Control Date occurs or, if the Executive's
annual salary has not been established for such fiscal year prior to the Change
in Control Date, then the Annual Base Salary shall be at least equal to the
Executive's annual base salary for the preceding fiscal year. The Annual Base
Salary shall be paid in substantially equal installments and at the same
intervals as the salaries of other officers of the Company are paid. During the
Post-Change in Control Period, the Board or the Compensation Committee shall
review the Annual Base Salary at least annually and shall determine any
increases in future years.
3.2 Bonus
In addition to Annual Base Salary, the Executive shall be awarded an
annual bonus in cash at least equal to the maximum annual bonus established for
the Executive for the fiscal year in which the Change in Control Date occurs
("Annual Bonus"). If an Annual Bonus has not been established for such fiscal
year prior to the Change in Control Date, the Annual Bonus shall be at least
_____% of Annual Base Salary. The Annual Bonus in subsequent years of this
Agreement shall not be less than the initial Annual Bonus payable hereunder.
Each such Annual Bonus shall be paid no later than 60 days after the end of the
fiscal year for which the Annual Bonus is awarded, unless the Executive elects
to defer the receipt of such Annual Bonus in accordance with applicable terms in
any deferred compensation plan executed by the Executive.
3.3 Long Term Performance Plan Awards
If the Executive receives a payout of outstanding awards under the
Company's Long Term Performance Plan ("LTPP") in accordance with the
change-of-control provisions of the LTPP, then the Executive will receive
payouts under the LTPP (or a successor plan) in subsequent years of this
Agreement that are no less than such initial payment. Except as provided in
Section 6.1, the LTPP award for any year shall be paid to the executive in
accordance with the LTPP's terms, as in effect on the Change in Control Date;
provided, however, that distributions shall be made in shares of the Successor
Company (if Company stock ceases to be publicly traded on or after the Change in
Control Date).
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4. BENEFITS
4.1 Incentive, Retirement and Welfare Benefit Plans; Vacation
During the Post-Change in Control Period, the Executive shall be
entitled to participate in the fringe benefit programs provided by the Successor
Company to its similarly situated executives. If, however, when considered in
the aggregate, such fringe benefit programs are of less value to the Executive
than the Company's fringe benefit programs in effect immediately prior to the
Change in Control Date, then the Executive shall be entitled to the same fringe
benefits as the Executive was eligible for immediately prior to the Change in
Control Date (or, at the election of the Successor Company, to monthly cash
payments equal to the difference in value (grossed up for applicable taxes with
respect to those fringe benefits that would not have been includible in the
Executive's taxable income) between the benefits actually provided to the
Executive by the Successor Company for such month and the monthly fringe
benefits for which the Executive was eligible immediately prior to the Change in
Control Date), including, without limitation, paid vacations; any incentive,
savings and retirement plan, practice, policy or program; and all welfare
benefit plans, practices, policies and programs (including, without limitation,
medical, prescription, dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance plans and programs).
4.2 Expenses
During the Post-Change in Control Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable employment expenses
incurred by him/her in accordance with the policies, practices and procedures of
the Company and its affiliated companies in effect for the executives of the
Company and its affiliated companies during the Post-Change in Control Period.
5. TERMINATION
Employment of the Executive during the Post-Change in Control Period
may be terminated as follows:
5.1 By the Company or the Executive
Upon giving Notice of Termination (as defined below), the Company may
terminate the employment of the Executive with or without Cause, and the
Executive may terminate his or her employment for Good Reason or for any reason,
at any time during the Post-Change in Control Period.
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5.2 Automatic Termination
This Agreement and the Executive's employment during the Post-Change in
Control Period shall terminate automatically upon the death or Total Disability
of the Executive. The term "Total Disability" as used herein shall mean the
Executive's inability (with or without such accommodation as may be required by
law and which places no undue burden on the Company), as determined by a
physician selected by the Company and acceptable to the Executive, to perform
the duties set forth hereunder for a period or periods aggregating 120 calendar
days in any 12-month period as a result of physical or mental illness, loss of
legal capacity or any other cause beyond the Executive's control, unless the
Executive is granted a leave of absence by the Board.
5.3 Notice of Termination
Any termination by the Company or by the Executive during the
Post-Change in Control Period shall be communicated by Notice of Termination to
the other party given in accordance with Section 10 hereof. The term "Notice of
Termination" shall mean a written notice which (a) indicates the specific
termination provision in this Agreement relied upon and (b) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated. The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
5.4 Date of Termination
During the Post-Change in Control Period, the term "Date of
Termination" shall mean (a) if the Executive's employment is terminated by
reason of death, at the end of the calendar month in which the Executive's death
occurs, (b) if the Executive's employment is terminated by reason of Total
Disability, immediately upon a determination by the Company of the Executive's
Total Disability, and (c) in all other cases, ten days after the date of mailing
or personal delivery of the Notice of Termination. The Executive's employment
and performance of services will continue during such ten-day period; provided,
however, that the Company may, upon notice to the Executive and without reducing
the Executive's compensation during such period, excuse the Executive from any
or all of his or her duties during such period.
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6. TERMINATION PAYMENTS
In the event of termination of the Executive's employment during the
Post-Change in Control Period, all compensation and benefits set forth in this
Agreement shall terminate except as specifically provided in this Section 6.
6.1 Termination by the Company for Other Than Cause or by the
Executive for Good Reason
If the Company terminates the Executive's employment other than for
Cause or the Executive terminates his or her employment for Good Reason prior to
the end of the Post-Change in Control Period, the Executive shall be entitled
to:
(a) receive payment of the following accrued obligations (the "Accrued
Obligations"):
(i) the Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid;
(ii) the product of (x) the Annual Bonus payable with respect
to the fiscal year in which the Date of Termination occurs and (y) a
fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of
which is 365; and
(iii) any compensation previously deferred by the Executive
(adjusted for any earnings, gains or losses allocated thereto) as such
deferred compensation becomes payable under the deferral plan pursuant
to which such compensation was deferred, and any accrued vacation pay,
in each case to the extent not theretofore paid;
(b) for a period of 18 months after the Date of Termination, or if
less, until such time as COBRA continuation coverage under the Successor
Company's group health insurance plan ceases to be available to the Executive
and his/her family, payment or reimbursement of the premiums for any COBRA
continuation coverage elected by the Executive and his/her family under the
Successor Company's group health insurance plan;
(c) for a period of 24 months after the Date of Termination, payment or
reimbursement of any premiums (and any income taxes payable by the Executive on
such payments or reimbursements) for any individual life insurance policy on the
Executive's life resulting from the Executive's conversion of his/her coverage
under the Successor Company's group-term life insurance plan to such policy; and
(d) subject to adjustment as provided in Section 6.5, an amount as
severance pay equal to the product of (i) [one] [two] [three] and (ii) the sum
of the Executive's (x) Annual Base Salary, (y) Annual Bonus payable for the
fiscal year in which the Date of Termination occurs, and (z) the payout received
by the Executive (or to which the Executive is entitled) under Section 3.3 above
for the year in which the Change in Control Date occurs. Severance pay under
this paragraph (d) shall be paid in a lump sum within two and one-half (2 1/2)
months after the Date of Termination.
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Stock options granted to the Executive will vest and be exercisable in
accordance with the terms of the applicable grant and the applicable Stock
Option Plan; and outstanding awards under the LTPP will vest and be paid out in
accordance with the terms of the LTPP.
6.2 Termination for Cause or Other Than for Good Reason
If the Executive's employment shall be terminated by the Company for
Cause or by the Executive for other than Good Reason during the Post-Change in
Control Period, this Agreement shall terminate without further obligation to the
Executive other than the obligation to pay to the Executive his or her Annual
Base Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive (adjusted for any earnings, gains or losses
allocated thereto), in each case to the extent theretofore unpaid. Payments of
any compensation previously deferred by the Executive (and any related earnings,
gains and losses) will be made in accordance with the terms of the deferral plan
pursuant to which such compensation was deferred.
6.3 Expiration of Term
In the case of a termination of the Executive's employment as a result
of the expiration of the term of this Agreement, the Executive shall not be
entitled to receive any payments hereunder, other than the Accrued Obligations.
6.4 Termination Because of Death or Total Disability
If the Executive's employment is terminated by reason of the
Executive's death or Total Disability during the Post-Change in Control Period,
this Agreement shall terminate automatically without further obligations to the
Executive or his or her legal representatives under this Agreement, other than
for payment of Accrued Obligations (which shall be paid to the Executive's
estate or beneficiary, as applicable in the case of the Executive's death).
6.5 Excise Taxes
(a) In the event that the Executive becomes entitled to the payments or
other benefits described in Section 6.1 hereof and the Executive becomes subject
to the tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor provision (the "Excise Tax") as a result
of such payments and benefits and any other payments or benefits from the
Company required to be taken into account under Code Section 280G(b)(2)
(collectively, "Parachute Payments"), the Company shall pay to Executive an
additional amount (the "Make-Whole Payment") equal to the sum of (i) the Excise
Tax payable to the Executive prior to the Make-Whole Payment and (ii) the
Federal, state and local income tax and Excise Tax (including any interest or
penalties thereon) payable upon all payments made under subparagraphs (i) and
(ii) of this Section 6.5(a). Notwithstanding the foregoing, if reducing the
payment due to the Executive under Section 6.1 by up to five percent (5%) would
not subject the Executive to the Excise Tax, then the Company may reduce the
payment to the Executive by such amount (not to exceed five percent (5%)) as
would not subject the Executive to the Excise Tax.
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(b) All determinations required to be made under this Section 6.5,
including whether the Executive has received a Parachute Payment, shall be made
by the Company's independent tax advisor (the "Tax Advisor") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that the Executive has
received a payment under Section 6.1, or such earlier time as is requested by
the Company. In the event that the Tax Advisor is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Executive shall appoint another recognized independent tax advisor to make the
determinations required hereunder (which independent tax advisor shall then be
referred to as the Tax Advisor hereunder). All fees and expenses of the Tax
Advisor shall be borne solely by the Company. If the Tax Advisor determines that
no Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executive's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. As promptly as practicable following such
determination, the Company shall pay to or distribute for the benefit of the
Executive such payments as are then due to the Executive under this Agreement.
Any determination by the Tax Advisor shall be binding upon the Company and
Executive.
(c) The Executive shall promptly pay to the Company any refunds of
Excise Tax received by the Executive. The Company shall promptly reimburse the
Executive for any additional federal, state or local taxes incurred by the
Executive as a result of any payments to the Executive pursuant to Section
6.5(b).
6.6 Payment Schedule
Unless otherwise provided herein, all payments under this Section 6
shall be made to the Executive at the same intervals as such payments were made
to him/her immediately prior to termination.
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7. REPRESENTATIONS, WARRANTIES AND OTHER CONDITIONS
In order to induce the Company to enter into this Agreement, the
Executive represents and warrants to the Company as follows:
7.1 Health
The Executive is in good health and knows of no physical or mental
disability which, with or without any accommodation which may be required by law
and which places no undue burden on the Company, would prevent him/her from
fulfilling his or her obligations hereunder.
7.2 No Violation of Other Agreements
The Executive represents that neither the execution nor the performance
of this Agreement by the Executive will violate or conflict in any way with any
other agreement by which the Executive may be bound.
8. NOTICE AND CURE OF BREACH
Whenever a breach of this Agreement by either party is relied upon as
justification for any action taken by the other party pursuant to any provision
of this Agreement, other than any action that constitutes "Cause" under this
Agreement, before such action is taken, the party asserting the breach of this
Agreement shall give the other party at least ten days' prior written notice of
the existence and the nature of such breach before taking further action
hereunder and shall give the party purportedly in breach of this Agreement the
opportunity to correct such breach during the ten-day period.
9. FORM OF NOTICE
Every notice required by the terms of this Agreement shall be given in
writing by serving the same upon the party to whom it was addressed personally
or by registered or certified mail, return receipt requested, at the address set
forth below or at such other address as may hereafter be designated by notice
given in compliance with the terms hereof:
If to the Executive:
--------------------------------------------
--------------------------------------------
--------------------------------------------
If to the Company: Itron, Inc.
2818 N. Sullivan Road
Spokane, Washington 99215
Attn: General Counsel
13
or such other address as shall be provided in accordance with the terms hereof.
Except as set forth in Section 5.4 hereof, if notice is mailed, such notice
shall be effective upon mailing.
10. ASSIGNMENT
This Agreement is personal to the Executive and shall not be assignable
by the Executive. The Company may assign its rights hereunder to (a) any
corporation resulting from any merger, consolidation or other reorganization to
which the Company is a party or (b) any corporation, partnership, association or
other person to which the Company may transfer all or substantially all of the
assets and business of the Company existing at such time. All the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns.
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean Itron, Inc. and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
11. WAIVERS
No delay or failure by any party hereto in exercising, protecting or
enforcing any of its rights, tides, interests or remedies hereunder, and no
course of dealing or performance with respect hereto, shall constitute a waiver
thereof. The express waiver by a party hereto of any right, title, interest or
remedy in a particular instance or circumstance shall not constitute a waiver
thereof in any other instance or circumstance. All rights and remedies shall be
cumulative and not exclusive of any other rights or remedies.
12. AMENDMENTS IN WRITING
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure therefrom by either
party hereto, shall in any event be effective unless the same shall be in
writing, specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by the Company
and the Executive, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Company and the Executive.
14
13. SECTION 409A OF THE CODE
Notwithstanding any other provision of this Agreement, the Company and
the Executive intend that any payments, benefits or other provisions applicable
to this Agreement comply with the payout and other limitations and restrictions
imposed under Section 409A of the Code ("Section 409A"), as clarified or
modified by guidance from the U.S. Department of Treasury or the Internal
Revenue Service - in each case if and to the extent Section 409A is otherwise
applicable to this Agreement and such compliance is necessary to avoid the
penalties otherwise imposed under Section 409A. In this connection, the Company
and the Executive agree that the payments, benefits and other provisions
applicable to this Agreement, and the terms of any deferral and other rights
regarding this Agreement, shall be deemed modified if and to the extent
necessary to comply with the payout and other limitations and restrictions
imposed under Section 409A, as clarified or supplemented by guidance from the
U.S. Department of Treasury or the Internal Revenue Service - in each case if
and to the extent Section 409A is otherwise applicable to this Agreement and
such compliance is necessary to avoid the penalties otherwise imposed under
Section 409A..
14. APPLICABLE LAW
This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by, and construed and
enforced in accordance with, the laws of the State of Washington, without regard
to any rules governing conflicts of laws.
15. SEVERABILITY
If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, including, without
limitation, the duration of such provision, its geographical scope or the extent
of the activities prohibited or required by it, then, to the full extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to reform such
provision to the extent necessary for such provision to be enforceable under
applicable law.
15
16. ENTIRE AGREEMENT
This Agreement on and as of the date hereof constitutes the entire
agreement between the Company and the Executive with respect to Executive's
duties and benefits upon and after a Change in Control and any other subject
matters addressed herein. All prior or contemporaneous oral or written
communications, understandings or agreements between the Company and the
Executive with respect to such subject matters, are hereby superseded and
nullified in their entireties. Any and all future oral or written
communications, understandings or agreements between the Company and the
Executive with respect to such subject matter shall not alter, amend, expand or
otherwise change the duties and benefits provided herein, unless in compliance
with the requirements of Paragraph 12 herein.
17. WITHHOLDING
The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
18. COUNTERPARTS
This Agreement may be executed in counterparts, each of which
counterpart shall be deemed an original, but all of which together shall
constitute one and the same Instrument.
[Signature page follows]
16
IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement as of the date set forth above.
EXECUTIVE
---------------------------------------------
ITRON, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
17
Exhibit 10.20
ITRON
KNOWLEDGE TO SHAPE YOUR FUTURE
LONG-TERM PERFORMANCE PLAN
SPECIFICATIONS & GUIDELINES
ITRON, INC.
AMENDED BY THE
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON
FEBRUARY 16, 2005, AUGUST 1, 2005
AND FEBRUARY 15, 2006
This document constitutes part of a prospectus for securities that have been
registered under the Securities Exchange Act of 1933, as amended, and
supplements a Plan Summary dated May 28, 2004 for the Itron, Inc. Amended and
Restated 2000 Stock Incentive Plan.
Purpose
Long-term incentives serve to align, motivate and reward executives for their
contributions to the long-term financial success and growth of the Company. The
objectives for the Long-Term Performance Plan (or LTPP) are to:
o Provide a greater long-term orientation and competitiveness to total
compensation for Itron executives, by establishing a performance-based
component, paid out in Itron restricted stock;
o Align individual executive rewards with shareholder value over a long-term
period, based on the achievement of predetermined annual objectives whose
achievement will be rewarded with Itron restricted stock to be vested after
a three-year waiting period; and
o Enable Itron to meet competitive total compensation needs in attracting and
retaining critical executive talent.
Overview
The Long-Term Performance Plan provides performance awards that are contingent
on the attainment of annual performance goals. The length of each performance
period will be one year, unless the Compensation Committee of the Board of
Directors provides otherwise. At the beginning of the performance period, goals
are established which are designed to measure the degree of business success
over the timeframe. The Compensation Committee reviews and approves goals that
are recommended by management. At the end of the period, performance against the
goals is assessed and payouts are determined.
Business results for Itron will be measured over the performance period. Payouts
will be in restricted Itron shares and, unless the Compensation Committee
determines otherwise in its sole discretion with respect to an award granted to
a particular participant, awards will vest at the end of a three-year period.
This vesting period will both serve as an executive retention tool and tie
executive performance to shareholder value.
Eligibility
Eligibility for the plan will include senior management and key executives who
impact organization-wide results. Actual participation will be based on
recommendation by the Chief Executive Officer and approval by the Compensation
Committee. Current plan participants are recapped in the attached appendix.
Other executives may be eligible for future awards, upon recommendation of the
Chief Executive Officer and approval by the Compensation Committee.
Participation in the Long-Term Performance Plan for a given period will not be
construed to confer a right to participate in the plan in any subsequent period,
or the right to continue in the Company's employment.
Award Opportunities
Award opportunities will be established for each executive at the beginning of
the performance period. Awards will be calculated as a percentage of base salary
that is in existence on the last day of the performance period and expressed as
a dollar amount. Award opportunities will increase or decrease as performances
goes beyond or falls short of the performance objectives for that performance
period.
- --------------------------------------------------------------------------------
In addition, threshold and maximum award levels will be established as a percent
of the LTPP Target.
Annually, Itron establishes a Target Annual Plan (TAP) for the coming year.
Goals, financial and otherwise, as established in the TAP do not necessarily
reflect the same goals that will be used for the LTPP.
Performance Measurement
At the beginning of each performance period, the Chief Executive Officer will
recommend and communicate the specific range of performance objectives for the
Company to the Compensation Committee. The goals and the key performance factors
will be reviewed and approved by the Compensation Committee.
Performance Measures
Performance objectives will be set on the basis of corporate plans for the
following performance period, condition of the utility industry and
competitive performance in the market place. In the process of determining
appropriate LTPP goals, consideration will be given to proposed
acquisitions, financing and other major issues that could have material
impact on the financial performance of the Company. Typical performance
measures may include but are not limited to: Revenue Growth, Earnings
Growth, Cash Flow, Return on Capital Employed, Net Operating Profit after
Tax, Normalized Earnings per Share or a combination of measures.
Performance Weighting
Corporate performance will determine 100% of the award for all plan
participants. Performance for other organization levels, i.e. business
unit, product group, etc., may be included in future performance periods.
Performance/Payout Relationship
A range of performance levels -- including threshold, LTPP Target, and
maximum -- and associated payouts will be established at the beginning of
the performance period. As well, in any performance period performance
hurdles could be established. At the end of each performance period,
Itron's actual performance against the goals established for that
performance period will be assessed and the resulting payouts determined.
Performance and payout opportunity will be expressed as a percentage of the
LTPP Target Award. For example, achieving 100% of the performance goals
would result in participants receiving 100% of the LTPP Target Award.
Payouts will be linearly interpolated for performance achievement between
the indicated levels. The Compensation Committee may use discretion to set
threshold levels and determine final award payouts.
Pro forma Results
In calculating performance attainment, pro forma results will generally be
used. Pro forma results, as defined, will be GAAP numbers adjusted for
IPR&D, amortization of intangibles, restructuring charges and other
extraordinary events subject to approval by the Compensation Committee of
the Board. Adjustments to GAAP for the purpose of pro forma results will be
discussed with the Compensation Committee at the time of the event and
confirmed by the Compensation Committee at its next scheduled meeting.
- --------------------------------------------------------------------------------
Payouts
Payouts will be announced as soon after the end of the performance period as
practical, and be in the form of restricted stock with a three-year cliff
vesting period. The number of shares of restricted stock to be paid out to
participants will be determined by dividing the dollar amount of the award
payout by the fair market value of Itron common stock on the date the
Compensation Committee approves the payout.
The dollar amount of the award payout will be a percentage of the eligible
employee's base pay as shown below in one of three tiers. Base pay will be the
employee's annual salary as of the last day of the performance period. The tier
structure can be changed at the recommendation of the Chief Executive Officer
and the approval of the Compensation Committee of the Board of Directors.
% OF BASE
TIER POSITION SALARY
----------------------------------------------------------------------
Tier I Chairman & Chief Executive Officer 75%
President & Chief Operating Officer 75%
----------------------------------------------------------------------
----------------------------------------------------------------------
Tier II Sr. Vice President and Chief Financial Officer 50%
Sr. Vice President and General Counsel 50%
Sr. Vice President Hardware 50%
Sr. Vice President Software 50%
Vice President Competitive Resources 50%
Vice President Investor Relations 50%
Vice President International 50%
Vice President Marketing 50%
Vice President Itron Electric Metering 50%
Tier III Others as Defined 25%
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
New Participants
An employee hired into an eligible position during a performance period may
begin participation in the subsequent performance period or, at the
recommendation of the Chief Executive Officer and approval by the Compensation
Committee, in the ongoing performance period. New participants permitted to join
an ongoing performance period will be eligible to receive a prorate payout based
on the number of full months worked during the performance period. New
participants in the plan will be nominated by the Chief Executive Officer and
approved by the Compensation Committee.
Changes in Employment
Participants who terminate employment during a performance period for any reason
including termination for Cause (as defined in the Company's Amended and
Restated 2000 Stock Incentive Plan), voluntary termination, discharge by the
Company, death, disability, or retirement will forfeit their award payment for
that performance period.
Unless the Compensation Committee determines otherwise in its sole discretion
with respect to an award granted to a particular participant, participants who,
during a vesting period for restricted stock issued in connection with a prior
performance period, terminate employment for any reason, including termination
for Cause, voluntary termination, discharge by the Company, death, disability,
or retirement, will forfeit their entire unvested award payment(s).
Change-of-Control
All outstanding awards will be accelerated and paid out at maximum levels
immediately prior to a change-of-control of the Company and payout will be in
the form of fully vested shares of Itron common stock. In addition, any
outstanding unvested restricted stock issued in connection with a prior
performance period will accelerate in full immediately prior to a
change-of-control of the Company. "Change-of-control" will be consistent with
the language in the Company's standard change of control agreements in effect at
the time.
Tax Consequences
Participants will not be deemed to receive income at the time an award is
granted. Likewise, participants will not be deemed to receive income at the time
an award is paid in shares of restricted stock. However, participants will
generally recognize taxable ordinary income when the restricted stock ceases to
be subject to restrictions in an amount equal to the excess of the fair market
value of the shares at such time over the amount, if any, paid for the shares.
Within 30 days after a participant receives the restricted stock, the
participant may elect (83(b) Election) under Section 83(b) of the Internal
Revenue Code of 1986 (Code) to recognize taxable ordinary income in an amount
equal to the excess of the fair market value of the restricted stock at the time
of receipt over the amount, if any, paid for the shares. If a participant makes
an 83(b) Election, when the restrictions on the restricted stock lapse, the
participant will not have to recognize any additional income at that time.
However, if a participant has to forfeit the restricted stock to Itron (e.g.,
upon termination prior to expiration of the restriction period), the participant
may not deduct the income recognized at the time of receipt of the restricted
stock, and the participant will have a capital loss equal to the amount, if any,
paid for the shares.
The Company will be entitled to a deduction at the same time and in the same
amount as a participant recognizes ordinary income, subject to certain
limitations on deductions for compensation under Section 162(m) of the Code.
- --------------------------------------------------------------------------------
This is only a brief summary of the U.S. federal income tax laws and regulations
that apply to an award under the plan. Participants should not rely on this
summary for a complete statement of such laws and regulations. The tax laws and
regulations are complex and are subject to legislative changes. In addition,
circumstances peculiar to certain individuals may change the usual income tax
results. FOR THESE REASONS, PARTICIPANTS SHOULD CONSULT A TAX ADVISOR TO
DETERMINE THE INCOME TAX CONSEQUENCES OF AN AWARD UNDER THE PLAN.
Governance
Senior management and the Compensation Committee will be responsible for the
administration and governance of the plan. The decisions of the Committee shall
be conclusive and binding on all participants.
Amendment, Modification, or Termination of the Plan
Itron, by action of its Board of Directors and/or Compensation Committee,
reserves the right to amend, modify, or terminate the plan at any time.
Rest of page intentionally left blank
- --------------------------------------------------------------------------------
Exhibit 10.23
ITRON, INC.
NOTICE OF RESTRICTED STOCK AWARD
AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN
Date: _______ __, 2006
To: _______________
You have been granted an award of restricted stock (the "Restricted
Stock Award") by Itron, Inc. (the "Company") in connection with a payout under
the Company's Long-Term Performance Plan. This Restricted Stock Award is subject
to the terms of the enclosed Restricted Stock Award Agreement and the Company's
Amended and Restated 2000 Stock Incentive Plan (the "Plan"). Except as expressly
provided otherwise in the Restricted Stock Award Agreement, the Restricted Stock
Award is limited by and subject to the express terms and conditions of the Plan.
Defined terms in the Plan have the same meanings in this Notice of Restricted
Stock Award, except where the context otherwise requires. By accepting this
Restricted Stock Award, you accept it subject to the terms of this Notice of
Restricted Stock Award and the enclosed Restricted Stock Award Agreement.
The basic terms of the Restricted Stock Award are summarized as
follows:
1. Number of Shares: _________
2. Grant Date: __________
3. Fair Market Value Per Share (Informational, for tax purposes): _______
4. Vesting:
The shares subject to the Restricted Stock Award vest three years from
the Grant Date. Prior to such vesting date, the shares are considered unvested
shares and will be forfeited to the Company if you terminate employment for any
reason prior to expiration of the three-year vesting period, except as otherwise
provided in Section 5 of the Restricted Stock Award Agreement.
-1-
ITRON, INC.
RESTRICTED STOCK AWARD AGREEMENT
In connection with a payout under the Itron, Inc. (the "Company")
Long-Term Performance Plan (the "LTPP") and pursuant to your Notice of
Restricted Stock Award (the "Grant Notice"), the Company has granted you an
award of restricted stock (the "Restricted Stock Award") under its Amended and
Restated 2000 Stock Incentive Plan (the "Plan") for the number of shares of the
Company's Common Stock indicated in your Grant Notice. The Grant Notice, the
Plan and this Restricted Stock Award Agreement (this "Agreement") govern the
terms of the award. Capitalized terms not explicitly defined in this Agreement
but defined in the Plan have the same definitions as in the Plan.
1. Vesting
Shares that have vested and are no longer subject to forfeiture
according to the vesting schedule set forth in the Grant Notice are referred to
herein as "Vested Shares." Shares that are not vested and remain subject to
forfeiture under the preceding schedule are referred to herein as "Unvested
Shares." The Unvested Shares will vest (and to the extent so vested cease to be
Unvested Shares remaining subject to forfeiture) in accordance with the vesting
schedule set forth in the Grant Notice. Collectively, the Unvested Shares and
the Vested Shares are referred to herein as the "Shares."
2. Transfer Restrictions
Any sale, transfer, assignment, encumbrance, pledge, hypothecation,
conveyance in trust, gift, transfer by bequest, devise or descent, or other
transfer or disposition of any kind, whether voluntary or by operation of law,
directly or indirectly, of Unvested Shares will be strictly prohibited and void;
provided, however, that such restrictions on transfer will not apply to a
gratuitous transfer of the Shares provided that you obtain the Company's prior
written consent to such transfer.
3. Status of Participant
You will be recorded as a shareholder of the Company with respect to
the Shares.
4. Securities Law Compliance
4.1 You represent and warrant that you (a) have been furnished with all
information which you deem necessary to evaluate the merits and risks of receipt
of the Shares, (b) have had the opportunity to ask questions and receive answers
concerning the information received about the Shares and the Company, and (c)
have been given the opportunity to obtain any additional information you deem
necessary to verify the accuracy of any information obtained concerning the
Shares and the Company.
4.2 You hereby agree that you will in no event sell or distribute all
or any part of the Shares unless (a) there is an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
and applicable state securities laws covering any such transaction involving the
Shares or (b) the Company receives an opinion of your legal counsel (concurred
in by legal counsel for the Company) stating that such transaction is exempt
from registration or the Company otherwise satisfies itself that such
transaction is exempt from registration. You understand that the Company has no
obligation to you to register the Shares with the Securities and Exchange
Commission and has not represented to you that it will so register the Shares.
4.3 You confirm that you have been advised, prior to your receipt of
the Shares, that neither the offering of the Shares nor any offering materials
have been reviewed by any administrator under the Securities Act or any other
applicable securities act.
4.4 You hereby agree to indemnify the Company and hold it harmless from
and against any loss, claim or liability, including attorneys' fees or legal
expenses, incurred by the Company as a result of any breach by you of, or any
inaccuracy in, any representation, warranty or statement made by you in this
Agreement or the breach by you of any terms or conditions of this Agreement.
5. Termination of Employment; Change of Control
5.1 Termination of Employment
Except as provided in Section 5.2 below, if your employment terminates
during the Shares' three-year vesting period for any reason, including
termination by reason of voluntary termination, discharge by the Company, death,
Disability, Retirement or for Cause, the Unvested Shares will be forfeited to
the Company.
5.2 Change of Control
Upon a Change of Control (as defined in the Company's standard Change
of Control Agreement in effect at the time), any Unvested Shares will accelerate
in vesting and no longer be subject to forfeiture.
6. Section 83(b) Election for Restricted Stock Award; Independent
Tax Advice
You understand that under Section 83(a) of the Internal Revenue Code of
1986 (the "Code"), the fair market value of the Unvested Shares on the date the
forfeiture restrictions lapse will be taxed, on the date such forfeiture
restrictions lapse, as ordinary income subject to payroll and withholding tax
and tax reporting, as applicable. For this purpose, the term "forfeiture
restrictions" means the right of the Company to receive back any Unvested Shares
upon termination of your employment with the Company. You understand that you
may elect under Section 83(b) of the Code to be taxed at ordinary income rates
on the fair market value of the Unvested Shares at the time they are acquired,
rather than when and as the Unvested Shares cease to be subject to the
forfeiture restrictions. Such election (an "83(b) Election") must be filed with
the Internal Revenue Service within 30 days from the grant date of the
Restricted Stock Award.
You understand that there are significant risks associated with the
decision to make an 83(b) Election. If you make an 83(b) Election and the
Unvested Shares are subsequently forfeited to the Company, you will not be
entitled to a deduction for any ordinary income previously recognized as a
result of the 83(b) Election. If you make an 83(b) Election and the value of the
Unvested Shares subsequently declines, the 83(b) Election may cause you to
recognize more compensation income than you would have otherwise recognized. On
the other hand, if the value of the Unvested Shares increases and you have not
made an 83(b) Election, you may recognize more compensation income than you
would have if you had made the election.
THE FORM FOR MAKING AN 83(b) ELECTION IS ATTACHED TO THIS AGREEMENT AS
EXHIBIT B. YOU UNDERSTAND THAT, IF YOU DECIDE TO MAKE AN 83(b) ELECTION, IT IS
YOUR RESPONSIBILITY TO FILE SUCH AN ELECTION WITH THE INTERNAL REVENUE SERVICE
AND THAT FAILURE TO FILE SUCH AN ELECTION WITHIN THE 30-DAY PERIOD MAY RESULT IN
THE RECOGNITION OF ORDINARY INCOME BY YOU AS THE FORFEITURE RESTRICTIONS LAPSE.
You further understand that an additional copy of such election form should be
filed with your federal income tax return for the calendar year in which the
date of this Agreement falls. You acknowledge that the foregoing is only a
summary of the federal income tax laws that apply to the award of the Shares
under this Agreement and does not purport to be complete. YOU FURTHER
ACKNOWLEDGE THAT THE COMPANY HAS DIRECTED YOU TO SEEK INDEPENDENT ADVICE
REGARDING THE APPLICABLE PROVISIONS OF THE CODE AND THE INCOME TAX LAWS OF ANY
MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH YOU MAY RESIDE.
You agree to execute and deliver to the Company with this Agreement a
copy of the Acknowledgment and Statement of Decision Regarding Section 83(b)
Election (the "Acknowledgment") attached hereto as Exhibit A. You further agree
that if you choose to make an 83(b) Election with the Internal Revenue Service,
you will also deliver to the Company with this signed Agreement a signed copy of
the 83(b) Election.
You acknowledge that determining the actual tax consequences to you of
receiving or disposing of the Shares may be complicated. These tax consequences
will depend, in part, on your specific situation and may also depend on the
resolution of currently uncertain tax law and other variables not within the
control of the Company. You are aware that you should consult a competent and
independent tax advisor for a full understanding of the specific tax
consequences to you of receiving or disposing of the Shares. Prior to executing
this Agreement, you either have consulted with a competent tax advisor
independent of the Company to obtain tax advice concerning the Shares in light
of your specific situation or have had the opportunity to consult with such a
tax advisor but have chosen not to do so.
7. Book Entry Registration of the Shares
The Company will issue the Shares by registering the Shares in book
entry form with the Company's transfer agent in your name and the applicable
restrictions will be noted in the records of the Company's transfer agent and in
the book entry system. No certificate(s) representing all or a part of the
Shares will be issued until the Shares become Vested Shares.
8. Stop-Transfer Notices
You understand and agree that, in order to ensure compliance with the
restrictions referred to in this Agreement, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its own records. The Company will not be required to (a) transfer
on its books any Shares that have been sold or transferred in violation of the
provisions of this Agreement or (b) treat as the owner of the Shares, or
otherwise accord voting, dividend or liquidation rights to, any transferee to
whom the Shares have been transferred in contravention of this Agreement.
9. Tax Withholding
As a condition to the removal of restrictions from your Vested Shares
registered in book entry form with the Company's transfer agent, you agree to
make arrangements satisfactory to the Company for the payment of any federal,
state, local or foreign withholding tax obligations that arise either upon
receipt of the Shares or as the forfeiture restrictions on any Shares lapse. You
may satisfy such withholding obligations by any of the following means or a
combination thereof: (a) paying cash; (b) electing to have the Company withhold
shares of Common Stock (up to the employer's minimum tax withholding rate); or
(c) transferring to the Company shares of Common Stock (already owned by you for
the period necessary to avoid a charge to the Company's earnings for financial
reporting purposes). Notwithstanding the previous sentence, you acknowledge and
agree that the Company and any Related Corporation has the right to deduct from
payments of any kind otherwise due to you any federal, state, local or foreign
taxes of any kind required by law to be withheld with respect to the Restricted
Stock Award.
10. General Provisions
10.1 Notices
Whenever any notice is required or permitted hereunder, such notice
must be in writing and personally delivered or sent by mail. Any notice required
or permitted to be delivered hereunder will be deemed to be delivered on the
date on which it is personally delivered, or, whether actually received or not,
on the third business day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address that such person has theretofore specified by written
notice delivered in accordance herewith. You or the Company may change, by
written notice to the other, the address previously specified for receiving
notices. Notices delivered to the Company should be addressed as follows:
Company: Itron, Inc.
Attn: General Counsel
2818 N. Sullivan Road
Spokane, WA 99216
10.2 No Waiver
No waiver of any provision of this Agreement will be valid unless in
writing and signed by the person against whom such waiver is sought to be
enforced, nor will failure to enforce any right hereunder constitute a
continuing waiver of the same or a waiver of any other right hereunder.
10.3 Undertaking
You hereby agree to take whatever additional action and execute
whatever additional documents the Company may deem necessary or advisable in
order to carry out or effect one or more of the obligations or restrictions
imposed on either you or the Shares pursuant to the express provisions of this
Agreement.
10.4 Entire Contract
This Agreement, the LTPP, the Grant Notice and the Plan constitute the
entire contract between the parties hereto with regard to the subject matter
hereof and supersede all prior oral or written agreements on the subject. This
Agreement is made pursuant to the provisions of the Plan and will in all
respects be construed in conformity with the express terms and provisions of the
Plan.
10.5 Successors and Assigns
The provisions of this Agreement will inure to the benefit of, and be
binding on, the Company and its successors and assigns and you and your legal
representatives, heirs, legatees, distributees, assigns and transferees by
operation of law, whether or not any such person will have become a party to
this Agreement and agreed in writing to join herein and be bound by the terms
and conditions hereof.
10.6 Counterparts
This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but which, upon execution, will constitute one
and the same instrument.
10.7 Governing Law
The provisions of the Grant Notice and this Agreement will be governed
by the laws of the state of Washington, without giving effect to principles of
conflicts of law.
IN WITNESS WHEREOF, the parties have executed this
Agreement dated as of __________, 200__.
ITRON, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[NAME OF EMPLOYEE]
------------------------------------------
Recipient's Signature
EXHIBIT A
ACKNOWLEDGMENT AND STATEMENT OF DECISION REGARDING SECTION 83(b) ELECTION
The undersigned, a recipient of _______ shares of common stock of
Itron, Inc., a Washington corporation (the "Company"), pursuant to a restricted
stock award granted under the Company's Amended and Restated 2000 Stock
Incentive Plan (the "Plan"), hereby states as follows:
1. The undersigned acknowledges receipt of a copy of the Restricted
Stock Award Agreement and the Plan relating to the offering of such shares. The
undersigned has carefully reviewed the Plan and the Restricted Stock Award
Agreement pursuant to which the award was granted.
2. The undersigned either (check and complete as applicable)
(a) has consulted, and has been fully advised by, the
undersigned's own tax advisor,
________________________, whose business address is
_________________________, regarding the federal,
state and local tax consequences of receiving shares
under the Plan, and particularly regarding the
advisability of making an election pursuant to
Section 83(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), and pursuant to the
corresponding provisions, if any, of applicable state
law, or
(b) has knowingly chosen not to consult such a tax
advisor.
3. The undersigned hereby states that the undersigned has decided
(check as applicable)
(a) to make an election pursuant to Section 83(b) of the
Code, and is submitting to the Company, together with
the undersigned's executed Restricted Stock Award
Agreement, an executed form entitled "Election Under
Section 83(b) of the Internal Revenue Code of 1986",
or
(b) not to make an election pursuant to Section 83(b) of
the Code.
4. Neither the Company nor any subsidiary or representative of the
Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned's acquisition of shares under the
Plan or of the making or failure to make an election pursuant to Section 83(b)
of the Code or the corresponding provisions, if any, of applicable state law.
Dated: _______________ ___________________________________
Recipient
___________________________________
Print Name
EXHIBIT B
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of
the Internal Revenue Code, to include in taxpayer's gross income for the current
taxable year the amount of any compensation taxable to taxpayer in connection
with taxpayer's receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME OF TAXPAYER:
-------------------------------------------------
ADDRESS:
----------------------------------------------------
IDENTIFICATION NO. OF TAXPAYER:
-----------------------------------
TAXABLE YEAR: ___________
2. The property with respect to which the election is made is described as
follows: _______________ shares of the Common Stock of Itron, Inc., a
Washington corporation (the "Company").
3. The date on which the property was transferred is:
__________________________
4. The property is subject to the following restrictions:
The property is subject to a forfeiture right pursuant to which the
Company can reacquire the Shares if for any reason taxpayer's services
with the Company are terminated. The Company's right to receive back
the shares lapses as follows: _____________________.
5. The aggregate fair market value at the time of transfer, determined
without regard to any restriction other than a restriction which by its
terms will never lapse, of such property is: $____________
6. The amount (if any) paid for such property is: $___________
The undersigned has submitted a copy of this statement to the person
for whom the services were performed in connection with the undersigned's
receipt of the above-described property. The undersigned is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be
revoked except with the consent of the Commissioner of Internal Revenue.
Dated: _______________ __________________________________________
Taxpayer
DISTRIBUTION OF EXHIBIT B COPIES
1. File original with the Internal Revenue Service Center where the
taxpayer's income tax return will be filed. Filing must be made by no
later than 30 days after the date of grant.
2. Attach one copy to the taxpayer's income tax return for the taxable
year in which the property was transferred.
3. Mail one copy to the Company at the following address:
Itron, Inc.
2818 N. Sullivan Road
Spokane, WA 99216
