Exhibit 10.18
SJW CORP.
STOCK OPTION
DIVIDEND EQUIVALENT RIGHTS
AGREEMENT
AS AMENDED AND RESTATED EFFECTIVE
AS OF JANUARY 1, 2005
AS SUBSEQUENTLY AMENDED ON
FEBRUARY 27, 2008 AND OCTOBER 22, 2008
EFFECTIVE AS OF JANUARY 1,
2008
RECITALS
A. Participant has been granted one
or more stock options to purchase shares of the Corporation’s
Common Stock under the Plan (the “Options”). The
Options also provide Participant with dividend equivalent rights
with respect to the shares of Common Stock subject to those
Options. Each such option is evidenced by a Notice of Grant and
Stock Option Agreement (collectively, the “Option
Agreement”).
B. The Options with such dividend
equivalent rights are more particularly identified in attached
Schedule A.
C. The terms and conditions
governing those dividend rights were originally set forth in a
Dividend Equivalent Rights Agreement for each such Option (or other
written document evidencing those dividend equivalent rights with
respect to one or more of the Options). Each such agreement or
other written document shall hereinafter be referred to
collectively as the “Rights Agreements.”
D. Each of those separate Rights
Agreements was first amended and restated on February 28, 2006
through one consolidated agreement effective as of January 1,
2005 and thereafter amended and restated on February 27, 2008
effective as of January 1, 2008 in order to bring the
provisions of those Rights Agreements, to the extent they pertained
to Options that were not vested and exercisable as of
December 31, 2004, into compliance with the requirements of
the proposed Treasury Regulations under Section 409A of the
Internal Revenue Code (the “Code”) applicable to the
payment of dividend equivalent rights.
E. The purpose of this amendment is
to (i) bring each of the Rights Agreements, as previously
amended and restated retroactive to January 1, 2005, into
compliance with the applicable distribution requirements of Code
Section 409A and the final Treasury Regulations thereunder,
effective as of January 1, 2008, and (ii) terminate each
of those Rights Agreements, effective with the distribution date
provided herein.
F. All capitalized terms in this
Agreement shall have the meaning assigned to them in the Plan and
the applicable Option Agreements.
NOW, THEREFORE
, it is hereby agreed as
follows:
1. Each of the Rights Agreements
pertaining to the Options, to the extent those agreements pertain
to Options (or portions thereof) which were not vested and
exercisable as of December 31, 2004 is hereby amended and
restated as follows, retroactive to January 1, 2008, with
respect to each covered Option (or portion thereof):
(i) An Option Deferred Stock Account
with respect to each Option shall continue to be maintained for the
Participant on the books and records of the Corporation.
(ii) Each time a dividend is paid on
the Corporation’s outstanding shares of Common Stock after
the Grant Date of that Option, the Option Deferred Stock Account
will be credited with a dollar amount equal to the amount of that
dividend paid per share multiplied by the number of shares of
Common Stock at the time subject to such Option (plus the number of
shares previously credited to the Option Deferred Stock Account
pursuant to the dividend equivalent rights hereunder) as of the
record date for the dividend; provided, however, that
no further amounts shall be credited with respect to such option
shares after the earliest to occur of (x) the
fourth anniversary of the Grant Date of that Option, (y) the
date that Option is first exercised or (z) December 31,
2008.
(iii) As of the first business day
in January each year, the cash dividend amounts credited to the
Option Deferred Stock Account during the immediately preceding
calendar year shall be converted into a book entry of an additional
number of shares of Common Stock (rounded up to the next whole
share) determined by dividing (i) those cash dividend
equivalent amounts by (ii) the average of the Fair Market
Value per share of Common Stock on each of the dates in the
immediately preceding calendar year on which those dividend amounts
were credited to the Option Deferred Stock Account.
(iv) The shares credited to the
Option Deferred Stock Account will vest at the same time and in the
same manner as the Option Shares to which they are attributable
vest. The shares which so vest shall be distributed to the
Participant in the form of actual shares of Common Stock issued
under the Plan on the earliest to occur of the
following dates (the “Distribution Date”): (x) the
fourth anniversary of the Grant Date of the Option, (y) the
date of the Participant’s Separation from Service or
(z) January 7, 2009; provided, however ,
that in the event of a Distribution Date under (x) or (y), the
distribution shall be made on such Distribution Date or as soon as
administratively practicable thereafter, but in no event later than
the end of the calendar year in which such Distribution Date occurs
or (if later) the fifteenth day of the third calendar month
following such date. In the event of a Distribution Date under (z),
the vested shares at the time credited to the Option Deferred Stock
Account will be distributed
