Exhibit 10.13
SJW CORP.
EXECUTIVE SEVERANCE
PLAN
AS AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 2009
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The SJW Corp. Executive Severance
Plan (the
“Plan”), originally adopted as of January 28, 1999
by SJW Corp. (“Company”) for the benefit of the
Officers (as defined below) of the Company and/or other members of
the Employer Group (as defined below) and as previously amended as
of September 21, 1999, May 1,
2003, January 1, 2008 and October 22, 2008, is
hereby further amended and restated effective as of January 1,
2009. The purpose of the October 22, 2008 restatement was to
conform the provisions of the plan document to the applicable
requirements of Section 409A of the Internal Revenue Code and
the Treasury Regulations issued thereunder and effect certain
administrative revisions to the Plan. The purpose of the
January 1, 2009 restatement is to modify the formula
provisions of the Plan governing the cash severance benefits
payable thereunder.
W
I T N
E S S E T H
:
WHEREAS , the Officers are currently employed by the
Company and/or one or more other members of the Employer Group
(collectively referred to as the
“Employer”).
WHEREAS , the Employer wishes to retain the services of
the Officers and to encourage the Officers to remain with the
Employer.
WHEREAS , the Company desires to maintain this Plan to
provide security for the Officers in the event their employment
with the Employer is affected under certain circumstances in
connection with a Change in Control affecting the
Employer.
WHEREAS, the benefits provided under the Plan may be
deemed to constitute a deferred compensation arrangement subject to
Section 409A of the Internal Revenue Code and the applicable
Treasury Regulations thereunder; and
WHEREAS, the Company has previously amended and restated
the provisions of the Plan so that those provisions comply with the
applicable requirements of Section 409A of the Internal
Revenue Code and the Treasury Regulations thereunder.
WHEREAS, the Company now desires to revise the formula
provisions of the Plan governing the calculation of the cash
severance benefits payable under the Plan so that a separate
formula calculation will be utilized for the Company’s Chief
Executive Officer solely for that purpose.
NOW, THEREFORE
, the Plan is hereby amended and
restated as set forth below.
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1.
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DEFINITIONS. For purposes of this Plan:
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(a) “Beneficiary” shall
mean the person or persons whom the Officer shall designate in
writing (on the form attached hereto as Exhibit B) to receive any
benefits to which such Officer becomes entitled hereunder but which
have not been paid or provided prior to the time of his or her
death. Such designation shall be valid only if it is made on such
form, and the Employer receives that form prior to the
Officer’s death.
(b) “Change in Control”
shall be deemed to take place upon the occurrence of any of the
following events:
(i) The acquisition, directly or
indirectly, by any person or related group of persons (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act), other
than the Company or a person that directly or indirectly controls,
is controlled by, or is under, control with the Company or an
employee benefit plan maintained by the Company or such person, of
beneficial ownership (as defined in Rule 13d-3 of the Exchange Act)
of securities of the Company that results in such person or related
group of persons beneficially owning securities representing 30% or
more of the combined voting power of the Company’s
then-outstanding securities;
(ii) A merger, recapitalization,
consolidation, or other similar transaction to which the Company is
a party, unless securities representing at least 50% of the
combined voting power of the then-outstanding securities of the
surviving entity or a parent thereof are immediately thereafter
beneficially owned, directly or indirectly and in substantially the
same proportion, by the persons who beneficially owned the
Company’s outstanding voting securities immediately before
the transaction;
(iii) A sale, transfer or
disposition of all or substantially all of the Company’s
assets, unless securities representing at least 50% of the combined
voting power of the then-outstanding securities of the entity
acquiring the Company’s assets or parent thereof are
immediately thereafter beneficially owned, directly or indirectly
and in substantially the same proportion, by the persons who
beneficially owned the Company’s outstanding voting
securities immediately before the transaction;
(iv) A merger, recapitalization,
consolidation or other transaction to which the Company is a party
or the sale, transfer or other disposition of all or substantially
all of the Company’s assets if, in either case, the members
of the Company’s Board of Directors immediately prior to
consummation of the transaction do not, upon consummation of the
transaction, constitute at least a majority of the board of
directors of the surviving entity or the entity acquiring the
Company’s assets, as the case may be, or a parent thereof
(for this purpose, any change in the composition of the
Company’s Board of Directors that is anticipated or pursuant
to an understanding or agreement in connection with a transaction
will be deemed to have occurred at the time of the transaction);
or
(v) A change in the composition of
the Company’s Board of Directors over a period of thirty-six
(36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections
for Board membership, to be comprised of
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individuals who either (a) have
been Board members since the beginning of such period or
(b) have been elected or nominated for election as Board
members during such period by at least a majority of the Board
members who were described in clause (a) or who were
previously so elected or approved and who were still in office at
the time the Board approved such election or nomination;
provided,
however, that no
Change in Control shall be deemed to occur for purposes of this
Plan if the result of the transaction is to give more ownership or
control of the Company to any person or related group of persons
who held securities representing more than thirty percent
(30%) of the combined voting power of the Company’s
outstanding securities as of March 3, 2003.
(c) “Code” shall mean
the Internal Revenue Code of 1986, as amended.
(d) “Employee” means an
individual for so long as he or she is in the employ of at least
one member of the Employer Group, subject to the control and
direction of the employer entity as to both the work to be
performed and the manner and method of performance.
(e) “Employer Group”
means the Company and each member of the group of commonly
controlled corporations or other businesses that include the
Company, as determined in accordance with Sections 414(b) and
(c) of the Code and the Treasury Regulations thereunder,
except that in applying Sections 1563(1), (2) and (3) of
the Code for purposes of determining the controlled group of
corporations under Section 414(b), the phrase “at least
50 percent” shall be used instead of “at least 80
percent” each place the latter phrase appears in such
sections, and in applying Section 1.414(c)-2 of the Treasury
Regulations for purposes of determining trades or businesses that
are under common control for purposes of Section 414(c), the
phrase “at least 50 percent” shall be used instead of
“at least 80 percent” each place the latter phrase
appears in Section 1.4.14(c)-2 of the Treasury
Regulations.
(f) “Employer” shall
mean collectively the Company and each of the other members of the
Employer Group.
(g) “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended from time to
time.
(h) “Good Cause” shall
be deemed to exist with respect to an Officer if, and only
if:
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(1)
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The Officer
engages in acts or omissions that result in substantial harm to the
business or property of the Employer and that constitute
dishonesty, intentional breach of fiduciary obligation or
intentional wrongdoing;
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(2)
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The Officer is
convicted of a criminal violation involving fraud or dishonesty;
or
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(3)
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The Officer
intentionally and knowingly participates in the preparation or
release of false or materially misleading financial statements
relating to the Company’s operations and financial condition
or the Officer intentionally and knowingly submits any false or
erroneous certification required of him or her under the
Sarbanes-Oxley Act of 2002 or any securities exchange on which
shares of the Company’s common stock are at the time listed
for trading.
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(i) “Good Reason” shall
exist with respect to an Officer if and only if, without the
Officer’s express written consent:
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(1)
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there is a
significantly adverse change in the nature or the scope of the
Officer’s authority or in his or her overall working
environment;
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(2)
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the Officer is
assigned duties materially inconsistent with his or her present
duties, responsibilities and status;
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(3)
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there is a
reduction in the sum of the Officer’s rate of base salary and
target bonus; or
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(4)
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the Employer
changes by fifty-five (55) miles or more the principal
location in which the Officer is required to perform
services;
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provided,
however , that,
before the Officer may resign for any Good Reason event, the
Officer must first provide written notice to the Employer
identifying such Good Reason event within ninety (90) days
after the occurrence of such event and the Employer shall have
failed to cure such event within thirty (30) days after
receipt of such written notice.
(j) “Officer” shall mean
(i) any individual who has been elected as an officer of SJW
Corp. or San Jose Water Company by the Board of Directors and is
serving in such capacity at any time during the applicable time
period set forth in Section 2(a) of the Plan, unless expressly
excluded from coverage under the Plan by the Board of Directors at
the time of such election, and (ii) any individual who has
been elected as an officer of any other member of the Employer
Group and has been expressly designated by the Executive
Compensation Committee of the Board of Directors as a participant
in the Plan and is serving in such capacity at any time during the
applicable time period set forth in Section 2(a) of the Plan.
The persons who are Officers as of October 1, 2008 are set
forth on Exhibit A.
(k) “Plan Administrator”
shall mean the Executive Compensation Committee of the
Company’s Board of Directors.
(l) “Salary” shall mean
the annual rate of base salary in effect for the Officer on
(l) the date of the Change in Control or, if greater,
(2) the date the Officer’s employment with the Employer
terminates.
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(m) “Separation from
Service” shall mean the Officer’s cessation of Employee
status and shall be deemed to occur for purposes of the Plan at
such time as the level of his or her bona fide services to be
performed as an Employee (or non-employee consultant) permanently
decreases to a level that is not more than twenty percent
(20%) of the average level of services he or she rendered as
an Employee during the immediately preceding thirty-six
(36) months (or such shorter period for which he or she may
have rendered such service). Any such determination as to
Separation from Service, however, shall be made in accordance with
the applicable standards of the Treasury Regulations issued under
Code Section 409A. In addition to the foregoing, a Separation
from Service will not be deemed to have occurred while an Employee
is on military leave, sick leave or other bona fide leave of
absence if the period of such leave does not exceed six
(6) months or any longer period for which such Employee is,
either by statute or contract, provided with a right to
reemployment with one or more members of the Employer Group;
provided, however, that in the event of an
Employee’s leave of absence due to any medically determinable
physical or mental impairment that can be expected to result in
death or to last for a continuous period of not less than six
(6) months and that causes such individual to be unable to
perform his or her duties as an Employee, no Separation from
Service shall be deemed to occur during the first twenty-nine
(29) months of such leave. If the period of leave exceeds six
(6) months (or twenty-nine (29) months in the event of
disability as indicated above) and the Employee is not provided
with a right to reemployment either by statute or contract, then
such Employee will be deemed to have a Separation from Service on
the first day immediately following the expiration of such six
(6)-month or twenty-nine (29)-month period.
(n) “Specified Employee”
shall mean an Officer who is, pursuant to procedures established by
the Plan Administrator in accordance with the applicable standards
of Code Section 409A and the Treasury Regulations thereunder
and applied on a consistent basis for all non-qualified deferred
compensation plans of the Employer Group subject to Code
Section 409A, deemed at the time of his or her Separation from
Service to be a “specified employee” under Code
Section 409A. The Specified Employees shall be identified on
December 31 of each calendar year and shall include each
Officer who is a “key employee” (within the meaning of
that term under Code Section 416(i)) at any time during the
twelve (12)-month period ending with such date. An Officer who is
so identified as a Specified Employee will have that status for the
twelve (12)-month period beginning on April 1 of the following
calendar year.
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2.
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BENEFITS
UPON TERMINATION OF EMPLOYMENT.
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(a) If (i) at any time during
the period beginning with the execution of a definitive agreement
to effect a Change in Control and ending with the earlier of
(x) the termination of that agreement without a Change in
Control or (y) the expiration of the twenty-four (24)-month
period measured from the effective date of the Change in Control
contemplated by that agreement, an Officer incurs a Separation from
Service because his or her Employee status is involuntarily
terminated by his or her Employer for any reason other than Good
Cause, or (ii) at any time within the twenty-four (24)-month
period measured from the effective date of a Change in Control, the
Officer incurs a Separation from Service as a result of his or her
resignation from Employee status for Good Reason, then the Employer
shall provide that Officer with the following benefits
(collectively the “Change in Control Benefit”),
provided and only if such Officer timely delivers the requisite
release under Section 2(b) and such release become effective
in accordance with applicable law:
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(1)
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A cash amount
determined in accordance with the formula provisions set forth
below shall be paid (less any customary taxes and withholdings) in
a series of successive equal annual installments over the period of
years equal to the Applicable Multiple in effect for the Officer.
Unless otherwise specified in attached Exhibit A, the Applicable
Multiple for each Officer shall be three (3). The first such annual
installment shall be paid on the first day of the first month,
within the sixty (60)-day period measured from the date of the
Officer’s Separation from Service, that is coincident with or
next following the date on which the release required of the
Officer under Section 2(b) below first becomes effective
following the expiration of any applicable revocation period. In no
event, however, shall such initial payment be made later than the
last day of such sixty (60)-day period on which the release is so
effective. Each subsequent installment shall be paid on each
successive one-year anniversary of the initial payment date, and
the right to each installment payment hereunder shall be treated as
a right to a series of separate payments for purposes of
Section 409A. The applicable cash amount shall be determined
as follows:
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a.
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for the
Company’s Chief Executive Officer, an amount equal to the
Adjusted Applicable Multiple of such Officer’s annual rate of
Salary (at the level in effect in the fiscal year of such cessation
of Employee status or, if higher, immediately before the Change in
Control), with the Adjusted Applicable Multiple to be three and
three quarters (3.75) and to be used solely for
purposes of calculating such cash severance payment, and for all
other calculations and determinations under the Plan, the
Applicable Multiple of three (3) shall be used for the Chief
Executive Officer, including (without limitation) the number of
annual installments in which the Salary amount calculated hereunder
is to be paid; and
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b.
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for each of the
other Officers participating in the Plan, an amount equal to the
Applicable Multiple of the sum of the Officer’s annual rate
of Salary and annual target bonus (each at the level in effect in
the fiscal year of such cessation of Employee status or, if higher,
immediately before the Change in Control)
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(2)
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If the Officer elects to continue
medical care coverage under the Company’s group health care
plans pursuant to COBRA, the Employer will reimburse the Officer
for the costs such Officer incurs to obtain such continued coverage
for himself or herself and his or her spouse and eligible
dependents (collectively, the “Coverage Costs”) until
the earlier of (x) the date of the last annual installment
payable under Section 2(a)(1) above or (y) the first date
on which the Officer is covered under another employer’s
health benefit program without exclusion for any pre-existing
medical condition. During the period for which the Officer’s
COBRA
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coverage rights are in effect,
such coverage shall be obtained under the Company’s group
health care plans. For the period (if any) following the completion
of such COBRA coverage and continuing through the completion of the
limited period for which medical care coverage is to be provided
hereunder, such coverage shall continue under the Company’s
group health plans or pursuant to one or more other plans or
insurance policies providing equivalent coverage. In order to
obtain reimbursement for the Officer’s Coverage Costs under
each applicable plan or policy, the Officer must submit appropriate
evidence to the Employer of each periodic payment of his or her
Coverage Costs within ninety (90) days after the required
payment date of those Coverage Costs, and the Employer shall within
thirty (30) days after such submission reimburse the Officer
for that payment. To the extent the Officer incurs any other
medical care expenses reimbursable pursuant to the coverage
obtained in accordance herewith, the Officer shall submit
appropriate evidence of each such expense to the plan administrator
within ninety (90) days after incurrence of that expense and
shall receive reimbursement of the documented expense within thirty
(30) days after such submission or after any additional period
that may be required to perfect the claim. During the period such
medical care coverage remains in effect hereunder, the following
provisions shall govern the arrangement: (a) the amount of
Coverage Costs or other medical care expenses eligible for
reimbursement in any one calendar year of such coverage shall not
affect the amount of Coverage Costs or other medical care expenses
eligible for reimbursement in any other calendar year for which
such reimbursement is to be provided hereunder; (ii) no
Coverage Costs or other medical care expenses shall be reimbursed
after the close of the calendar year following the calendar year in
which those Coverage Costs or expenses were incurred; and
(iii) the Officer’s right to the reimbursement of such
Coverage Costs or other medical care expenses cannot be liquidated
or exchanged for any other benefit. To the extent the reimbursed
Coverage Costs are treated as taxable income to the Officer, the
Employer shall report the reimbursement as taxable W-2 wages and
collect the applicable withholding taxes, and the resulting tax
liability shall be the Officer’s sole
responsibility.
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(3)
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The Company will make provisions
in its Supplemental Execu
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