Exhibit 10.1
SJW CORP.
LONG-TERM INCENTIVE PLAN
------------------------
AS AMENDED AND RESTATED JANUARY 30, 2008
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This Amended and Restated Long-Term Incentive Plan (the "Plan") is
intended to promote the interests of SJW Corp., a California corporation, by
providing eligible persons in the Corporation's service with the opportunity
to participate in one or more cash or equity incentive compensation programs
designed to encourage them to continue their service relationship with the
Corporation.
The Plan was initially adopted by the Board on March 6, 2002 and
approved by the Corporation's shareholders on April 18, 2002. The Plan has
been subsequently amended from time to time, and this new Amended and
Restated Plan was adopted by the Board on January 30, 2008, subject to the
approval of the Corporation's shareholders at the 2008 Annual Meeting.
Accordingly, the Amended and Restated Plan shall become effective upon such
shareholder approval. All Awards outstanding under the Plan at that time
shall continue to be governed by the existing terms and provisions of the
applicable agreements evidencing those Awards, and nothing in this Amended
and Restated Plan shall be deemed to affect or modify the existing terms and
conditions of those Awards.
Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Amended and Restated Plan is hereby divided into a series of
separate incentive compensation programs as follows:
- The Discretionary Grant Program under which eligible persons
may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock or stock appreciation rights tied to the
value of such Common Stock,
- the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
pursuant to restricted stock awards, restricted stock units, performance
shares or other stock-based awards which vest upon the completion of a
designated service period or the attainment of pre-established performance
milestones, or such shares of Common Stock may be issued as a bonus for
services rendered the Corporation (or any Parent or Subsidiary), and
- the Incentive Bonus Program under which eligible persons may,
at the discretion of the Plan Administrator, be provided with incentive bonus
opportunities through performance unit awards tied to the attainment of pre-
established performance milestones or through dividend equivalent rights
issued separately or in conjunction with other Awards made under the Plan.
B. The special incentive compensation programs previously
established for the non-employee Board members under the Plan, namely, the
Deferral Election Program and the Deferred Restricted Stock Program, each as
amended as of December 6, 2007, shall continue in effect under the January
30, 2008 amendment and restatement of the Plan.
C. The provisions of Articles One and Five shall apply to all
incentive compensation programs under the Plan and shall govern the interests
of all persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Executive Compensation Committee shall have sole and exclusive
authority to administer the Discretionary Grant, Stock Issuance and Incentive
Bonus Programs with respect to Section 16 Insiders. Administration of the
Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect
to all other persons eligible to participate in those programs may, at the
Board's discretion, be vested in the Executive Compensation Committee or a
Secondary Board Committee, or the Board may retain the power to administer
those programs with respect to such persons.
B. The Executive Compensation Committee may make Awards to any and
all non-employee Board members, including members of the Executive
Compensation Committee, upon such terms and conditions as the Executive
Compensation Committee deems appropriate in its sole discretion or pursuant
to one or more formulaic programs which provide for the automatic grant of
such Awards in such amounts, at such times and subject to such terms as the
Executive Compensation Committee may designate in advance, in each instance
subject to the express provisions of the Plan and the limitations of Section
V.C of this Article One. The terms and conditions of the Awards may vary
among the non-employee Board members on an individual by individual basis or
may differ from the terms and conditions in effect for prior Awards made to
the non-employee Board members. The Executive Compensation Committee may
also implement one or more programs which provide the non-employee Board
members with the opportunity to elect on an advance basis to receive specific
types of Awards, either on a current or deferred basis, in lieu of retainer
or meeting fees otherwise payable to them in cash for their service as non-
employee Board members and/or as members of one or more Board committees (or
for their service as members of the board of directors of any Parent or
Subsidiary or any committee of such board). All discretionary Awards to non-
employee Board members authorized by the Executive Compensation Committee and
all formulaic programs implemented by the Executive Compensation Committee
for such Board members shall be subject to approval and ratification by a
majority of the Board.
C. Members of the Executive Compensation Committee or any Secondary
Board Committee shall serve for such period of time as the Board may
determine and may be removed by the Board at any time. The Board may also at
any time terminate the functions of any Secondary Board Committee and
reassume all powers and authority previously delegated to such committee.
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority
(subject to the provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for proper administration of the
Discretionary Grant, Stock Issuance and Incentive Bonus Programs and to make
such determinations under, and issue such interpretations of, the provisions
of those programs and any outstanding Awards thereunder as it may deem
necessary or advisable. Decisions of the Plan Administrator within the scope
of its administrative functions under the Plan shall be final and binding on
all parties who have an interest in the Discretionary Grant, Stock Issuance
and Incentive Bonus Programs under its jurisdiction or any Award thereunder.
E. Service as a Plan Administrator by the members of the Executive
Compensation Committee or the Secondary Board Committee shall constitute
service as Board members, and the members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Executive
Compensation Committee or the Secondary Board Committee shall be liable for
any act or omission made in good faith with respect to the Plan or any Award
thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).
B. The Plan Administrator shall have full authority to determine, (i)
with respect to Awards made under the Discretionary Grant Program, which
eligible persons are to receive such Awards, the time or times when those
Awards are to be made, the number of shares to be covered by each such Award,
the time or times when the Award is to become exercisable, the vesting
schedule (if any) applicable to the Award, the maximum term for which such
Award is to remain outstanding and the status of a granted option as either
an Incentive Option or a Non-Statutory Option; (ii) with respect to Awards
under the Stock Issuance Program, which eligible persons are to receive such
Awards, the time or times when the Awards are to be made, the number of
shares subject to each such Award, the vesting and issuance schedules
applicable to the shares which are the subject of such Award, the cash
consideration (if any) payable for those shares and the form (cash or shares
of Common Stock) in which the Award is to be settled; and (iii) with respect
to Awards under the Incentive Bonus Program, which eligible persons are to
receive such Awards, the time or times when the Awards are to be made, the
performance objectives for each such Award, the amounts payable at designated
levels of attained performance, any applicable service vesting requirements,
the payout schedule for each such Award and the form (cash or shares of
Common Stock) in which the Award is to be settled.
C. The Plan Administrator shall have the absolute discretion to grant
options or stock appreciation rights in accordance with the Discretionary
Grant Program, to effect stock issuances and other stock-based awards in
accordance with the Stock Issuance Program and to grant incentive bonus
awards in accordance with the Incentive Bonus Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The total number of shares of Common Stock
reserved for issuance over the term of the Plan shall not exceed One Million
Eight Hundred Thousand (1,800,000) shares*1.
B. Each person participating in the Plan shall be subject to the
following limitations:
- For Awards denominated in shares of Common Stock (whether
payable in Common Stock, cash or a combination of both), the maximum number
of shares of Common Stock for which such Awards may be made to such person in
any calendar year shall not exceed Six Hundred Thousand (600,000) shares of
Common Stock in the aggregate, and
- For Awards denominated in cash (whether payable in cash,
Common Stock or a combination of both), the maximum dollar amount for which
such Awards may be made in the aggregate to such person shall not exceed one
million dollars ($1,000,000.00) per calendar year within the applicable
service or performance measurement period (not to exceed three calendar
years).
C. The maximum number of shares of Common Stock for which Awards may
be made to any one non-employee Board member shall not exceed in the
aggregate four thousand (4,000) shares per calendar year, except that such
limit shall be increased to ten thousand (10,000) shares for the year in
which the non-employee Board member is first appointed or elected to the
Board.
D. Shares of Common Stock subject to outstanding Awards made under
the Plan shall be available for subsequent issuance under the Plan to the
extent those Awards expire or terminate for any reason prior to the issuance
of the shares of Common Stock subject to those Awards. Unvested shares
issued under the Plan and subsequently forfeited or repurchased by the
Corporation, at a price per share not greater than the original issue price
paid per share, pursuant to the Corporation's repurchase rights under the
Plan shall be added back to the number of shares of Common Stock reserved for
issuance under the Plan and shall accordingly be available for subsequent
reissuance. Should the exercise price of an option under the Plan be paid
with shares of Common Stock, then the authorized reserve of Common Stock
under the Plan shall be reduced by the gross number of shares for which that
option is exercised, and not by the net number of shares issued under the
exercised stock option. Upon the exercise of any stock appreciation right
under the Plan, the share reserve shall be reduced by the gross number of
shares as to which such right is exercised, and not by the net number of
shares actually issued by the Corporation upon such exercise. If shares of
Common Stock otherwise issuable under the Plan are withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise, vesting or settlement of an Award, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced
on the basis of the gross number of shares issuable under such Award at the
time of exercise, vesting or settlement, calculated in each instance prior to
any such share withholding.
E. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares,
exchange of shares, spin-off transaction or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, or should the value of outstanding shares of Company Stock be
substantially reduced as a result of a spin-off transaction or an
extraordinary dividend or distribution, or should there occur any merger,
consolidation or other reorganization, then equitable adjustments shall be
made by the Plan Administrator to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted Common Stock-denominated
Awards under the Plan per calendar year, (iii) the maximum number and/or
class of securities for which a non-employee Board member may be granted
Common Stock-denominated Awards under the Plan in any one calendar year, (iv)
the number and/or class of securities and the exercise or base price per
share in effect under each outstanding Award under the Discretionary Grant
Program, (v) the number and/or class of securities subject to each
outstanding Award under the Stock Issuance Program and the cash consideration
(if any) payable per share, (vi) the number and/or class of securities
subject to each outstanding Award under the Incentive Bonus Program
denominated in shares of Common Stock and (vii) the number and/or class of
securities subject to the Corporation's outstanding repurchase rights under
the Plan and the repurchase price payable per share. The adjustments shall
be made in such manner as the Plan Administrator deems appropriate in order
to prevent the dilution or enlargement of benefits under the Plan and the
outstanding Awards thereunder, and such adjustments shall be final, binding
and conclusive. In the event of a Change in Control, however, the
adjustments (if any) shall be made solely in accordance with the applicable
provisions of the Plan governing Change in Control transactions.
F. Outstanding Awards granted pursuant to the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
ARTICLE TWO
DISCRETIONARY GRANT PROGRAM
---------------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document
evidencing an Incentive Option shall, in addition, be subject to the
provisions of the Plan applicable to such options.
Exercise Price.
A. Exercise Price
1. The exercise price per share shall be fixed by the Plan
Administrator; provided, however, that such exercise price shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of the documents
evidencing the option, be payable in one or more of the forms specified
below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock (whether delivered in the form of
actual stock certificates or through attestation of ownership) held for the
requisite period (if any) necessary to avoid any resulting charge to the
Corporation's earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date, or
(iii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide instructions to (a) a brokerage firm
(reasonably satisfactory to the Corporation for purposes of administering
such procedure in compliance with the Corporation's pre-clearance/pre-
notification policies) to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price
payable for the purchased shares plus all applicable income and employment
taxes required to be withheld by the Corporation by reason of such exercise
and (b) the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm on such settlement date in order to complete
the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable
at such time or times, during such period and for such number of shares as
shall be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of any
options granted pursuant to the Discretionary Grant Program that are
outstanding at the time of the Optionee's cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such period
of time thereafter as shall be determined by the Plan Administrator and set
forth in the documents evidencing the option, but no such option shall be
exercisable after the expiration of the option term.
(ii) Any option held by the Optionee at the time of the
Optionee's death and exercisable in whole or in part at that time may be
subsequently exercised by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant
to the Optionee's will or the laws of inheritance or by the Optionee's
designated beneficiary or beneficiaries of that option.
(iii) Should the Optionee's Service be terminated for Cause or
should the Optionee otherwise engage in conduct constituting grounds for a
termination for Cause while holding one or more outstanding options granted
under this Article Two, then all of those options shall terminate immediately
and cease to be outstanding.
(iv) During the applicable post-Service exercise period, the
option may not be exercised for more than the number of vested shares for
which the option is at the time exercisable; provided, however, that one or
more options under the Discretionary Grant Program may be structured so that
those options continue to vest in whole or part during the applicable post-
Service exercise period. Upon the expiration of the applicable exercise
period or (if earlier) upon the expiration of the option term, the option
shall terminate and cease to be outstanding for any shares for which the
option has not been exercised.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from the
limited exercise period otherwise in effect for that option to such greater
period of time as the Plan Administrator shall deem appropriate, but in no
event beyond the expiration of the option term,
(ii) include an automatic extension provision whereby the
specified post-Service exercise period in effect for any option granted under
this Article Two shall automatically be extended by an additional period of
time equal in duration to any interval within the specified post-Service
exercise period during which the exercise of that option or the immediate
sale of the shares acquired under such option could not be effected in
compliance with applicable federal and state securities laws, but in no event
shall such an extension result in the continuation of such option beyond the
expiration date of the term of that option, and/or
(iii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of vested
shares of Common Stock for which such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested had the
Optionee continued in Service.
D. Shareholder Rights. The holder of an option shall have no
shareholder rights with respect to the shares subject to the option until
such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of
Common Stock. Should the Optionee cease Service while such shares are
unvested, the Corporation shall have the right to repurchase any or all of
those unvested shares at a price per share equal to the lower of (i) the
exercise price paid per share or (ii) the Fair Market Value per share of
Common Stock at the time of repurchase. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise
and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document
evidencing such repurchase right.
F. Transferability of Options. The transferability of options
granted under the Plan shall be governed by the following provisions:
(i) Incentive Options. During the lifetime of the Optionee,
Incentive Options shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or the laws of inheritance
following the Optionee's death.
(ii) Non-Statutory Options. Non-Statutory Options shall be
subject to the same limitation on transfer as Incentive Options, except that
the Plan Administrator may structure one or more Non-Statutory Options so
that the option may be assigned in whole or in part during the Optionee's
lifetime through a gratuitous transfer or domestic relations order to one or
more Family Members of the Optionee or to a trust established exclusively for
the Optionee and/or such Family Members. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment.
The terms applicable to the assigned portion shall be the same as those in
effect for the option immediately prior to such assignment and shall be set
forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
(iii) Beneficiary Designations. Notwithstanding the foregoing, the
Optionee may designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding options under this Article Two
(whether Incentive Options or Non-Statutory Options), and those options
shall, in accordance with such designation, automatically be transferred to
such beneficiary or beneficiaries upon the Optionee's death while holding
those options. Such beneficiary or beneficiaries shall take the transferred
options subject to all the terms and conditions of the applicable agreement
evidencing each such transferred option, including (without limitation) the
limited time period during which the option may be exercised following the
Optionee's death.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Five shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options
when issued under the Plan shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
B. Dollar Limitation. The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000).
To the extent the Employee holds two (2) or more such options which
become exercisable for the first time in the same calendar year, then for
purposes of the foregoing limitations on the exercisability of those options
as Incentive Options, such options shall be deemed to become first
exercisable in that calendar year on the basis of the chronological order in
which they were granted, except to the extent otherwise provided under
applicable law or regulation.
C. 10% Shareholder. If any Employee to whom an Incentive Option is
granted is a 10% Shareholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share
of Common Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant date.
III. STOCK APPRECIATION RIGHTS
A. Authority. The Plan Administrator shall have full power and
authority, exercisable in its sole discretion, to grant stock appreciation
rights in accordance with this Section III to selected Optionees or other
individuals eligible to receive option grants under the Discretionary Grant
Program.
B. Types. Two types of stock appreciation rights shall be authorized
for issuance under this Section III: (i) tandem stock appreciation rights
("Tandem Rights") and (ii) stand-alone stock appreciation rights ("Stand-
alone Rights").
C. Tandem Rights. The following terms and conditions shall govern
the grant and exercise of Tandem Rights.
1. One or more Optionees may be granted a Tandem Right,
exercisable upon such terms and conditions as the Plan Administrator may
establish, to elect between the exercise of the underlying option for shares
of Common Stock or the surrender of that option in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the
Fair Market Value (on the option surrender date) of the number of shares in
which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (ii) the aggregate exercise price payable
for such vested shares.
2. Any distribution to which the Optionee becomes entitled upon
the exercise of a Tandem Right may be made in (i) shares of Common Stock
valued at Fair Market Value on the option surrender date, (ii) cash or (iii)
a combination of cash and shares of Common Stock, as specified in the
applicable Award agreement.
D. Stand-Alone Rights. The following terms and conditions shall
govern the grant and exercise of Stand-alone Rights:
1. One or more individuals eligible to participate in the
Discretionary Grant Program may be granted a Stand-alone Right not tied to
any underlying option under this Discretionary Grant Program. The Stand-
alone Right shall relate to a specified number of shares of Common Stock and
shall be exercisable upon such terms and conditions as the Plan Administrator
may establish. In no event, however, may the Stand-alone Right have a
maximum term in excess of ten (10) years measured from the grant date. The
provisions and limitations of Paragraphs B.2 and B.3 of Section I of this
Article Two shall also be applicable to any Stand-alone Right awarded under
the Plan.
2. Upon exercise of the Stand-alone Right, the holder shall be
entitled to receive a distribution from the Corporation in an amount equal to
the excess of (i) the aggregate Fair Market Value (on the exercise date) of
the shares of Common Stock underlying the exercised right over (ii) the
aggregate base price in effect for those shares.
3. The number of shares of Common Stock underlying each Stand-
alone Right and the base price in effect for those shares shall be determined
by the Plan Administrator in its sole discretion at the time the Stand-alone
Right is granted. In no event, however, may the base price per share be less
than the Fair Market Value per underlying share of Common Stock on the grant
date.
4. Stand-alone Rights shall be subject to the same
transferability restrictions applicable to Non-Statutory Options and may not
be transferred during the holder's lifetime, except for an assignment in the
form of a gratuitous transfer or pursuant to domestic relations order to one
or more Family Members of the holder or to a trust established for the
holder and/or one or more such Family Members. In addition, one or more
beneficiaries may be designated for an outstanding Stand-alone Right in
accordance with substantially the same terms and provisions as set forth in
Section I.F of this Article Two.
5. The distribution with respect to an exercised Stand-alone
Right may be made in (i) shares of Common Stock valued at Fair Market Value
on the exercise date, (ii) cash or (iii) a combination of cash and shares of
Common Stock, as specified in the applicable Award agreement.
6. The holder of a Stand-alone Right shall have no shareholder
rights with respect to the shares subject to the Stand-alone Right unless and
until such person shall have exercised the Stand-alone Right and become a
holder of record of the shares of Common Stock issued upon the exercise of
such Stand-alone Right.
E. Post-Service Exercise. The provisions governing the exercise of
Tandem and Stand-alone Rights following the cessation of the recipient's
Service shall be substantially the same as those set forth in Section I.C of
this Article Two for the options granted under the Discretionary Grant
Program, and the Plan Administrator's discretionary authority under Section
I.C.2 of this Article Two shall also extend to any outstanding Tandem or
Stand-alone Appreciation Rights.
IV. CHANGE IN CONTROL
A. In the event of an actual Change in Control transaction, each
outstanding Award made under the Discretionary Grant Program of this Amended
and Restated Plan shall automatically accelerate and become exercisable,
immediately prior to the effective date of that Change in Control, as to all
the shares of Common Stock at the time subject to such Award, unless (i) such
Award is to be assumed by the successor corporation (or parent thereof) or is
otherwise to continue in full force and effect pursuant to the terms of the
Change in Control transaction or (ii) such Award is to be replaced with a
cash retention program of the successor corporation which preserves the
spread existing at the time of the Change in Control on any shares as to
which the Award is not otherwise at that time exercisable and provides for
subsequent payout of that spread in accordance with the same (or more
favorable) exercise/vesting schedule in effect for that Award or (iii) the
acceleration of such Award is subject to other limitations imposed by the
Plan Administrator.
B. All outstanding repurchase rights under the Discretionary Grant
Program shall automatically terminate, and the shares of Common Stock subject
to those terminated rights shall immediately vest in full, immediately prior
to the effective date of an actual Change in Control transaction, except to
the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) or are otherwise to continue in full force
and effect pursuant to the terms of the Change in Control transaction or (ii)
such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator.
C. Immediately following the consummation of the Change in Control,
all outstanding Awards made under the Discretionary Grant Program of this
Amended and Restated Plan shall terminate and cease to be outstanding, except
to the extent assumed by the successor corporation (or parent thereof) or are
otherwise continued in full force and effect pursuant to the terms of the
Change in Control transaction.
D. Each Award which is assumed in connection with a Change in Control
or otherwise continued in effect shall be appropriately adjusted, immediately
after such Change in Control, to apply to the number and class of securities
into which the shares of Common Stock subject to that Award would have been
converted in consummation of such Change in Control had those shares actually
been outstanding at that time. Appropriate adjustments to reflect such
Change in Control shall also be made to (i) the exercise or base price per
share in effect under each outstanding Award, provided the aggregate exercise
or base price in effect for such securities shall remain the same, (ii) the
maximum number and/or class of securities available for issuance over the
remaining term of the Plan (iii) the maximum number and/or class of
securities for which any one person may be granted Common Stock-denominated
Awards under the Plan per calendar year, (iv) the maximum number and/or class
of securities for which a non-employee Board member may be granted Common
Stock-denominated Awards under the Plan in any one calendar year, (v) the
number and/or class of securities and the exercise or base price per share in
effect under each outstanding Award under the Discretionary Grant Program,
(vi) the number and/or class of securities subject to each outstanding Award
under the Stock Issuance Program and the cash consideration (if any) payable
per share, (vii) the number and/or class of securities subject to each
outstanding Award under the Incentive Bonus Program denominated in shares of
Common Stock and (viii) the number and/or class of securities subject to the
Corporation's outstanding repurchase rights under the Plan and the repurchase
price payable per share. To the extent the actual holders of the
Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor
corporation may, in connection with the assumption or continuation of the
outstanding Awards under the Discretionary Grant Program and with the Plan
Administrator's approval, substitute, for the securities underlying those
assumed rights, one or more shares of its own Common Stock with a fair market
value equivalent to the cash consideration paid per share of Common Stock in
such Change in Control transaction, provided such Common Stock is readily
traded on an established U.S. securities exchange or market.
E. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding Awards under the Discretionary Grant
Program so that those Awards shall, immediately prior to the effective date
of an actual Change in Control transaction, become exercisable as to all the
shares of Common Stock at the time subject to those Awards and may be
exercised as to any or all of those shares as fully vested shares of Common
Stock, whether or not those Awards are to be assumed or replaced in the
Change in Control transaction or otherwise continued in effect. In addition,
the Plan Administrator shall have the discretionary authority to structure
one or more of the Corporation's repurchase rights under the Discretionary
Grant Program so that those rights shall terminate immediately prior to the
effective date of an actual Change in Control transaction, and the shares
subject to those terminated rights shall thereupon vest in full.
F. The Plan Administrator shall have full power and authority to
structure one or more outstanding Awards under the Discretionary Grant
Program so that those Awards shall become exercisable as to all the shares of
Common Stock at the time subject to those Awards in the event the Optionee's
Service is subsequently terminated by reason of an Involuntary Termination
within a designated period following the effective date of any Change in
Control transaction in which those Awards do not otherwise fully accelerate.
In addition, the Plan Administrator may structure one or more of the
Corporation's repurchase rights so that those rights shall immediately
terminate with respect to any shares held by the Optionee at the time of such
Involuntary Termination, and the shares subject to those terminated
repurchase rights shall accordingly vest in full at that time.
G. The portion of any Incentive Option accelerated in connection with
a Change in Control shall remain exercisable as an Incentive Option only to the
extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-statutory Option under
the Federal tax laws.
V. PROHIBITION ON REPRICING PROGRAMS
The Plan Administrator shall not (i) implement any
cancellation/regrant program pursuant to which outstanding options or stock
appreciation rights under the Plan are cancelled and new options or stock
appreciation rights are granted in replacement with a lower exercise price
per share, (ii) cancel outstanding options or stock appreciation rights under
the Plan with exercise prices per share in excess of the then current Fair
Market Value per share of Common Stock for consideration payable in equity
securities of the Corporation or (iii) otherwise directly reduce the exercise
price in effect for outstanding options or stock appreciation rights under
the Plan, without in each such instance obtaining shareholder approval.
ARTICLE THREE
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
pursuant to restricted stock awards that vest in one or more increments over
a designated period of Service. Shares of Common Stock may also be issued
under the Stock Issuance Program pursuant to performance shares or restricted
stock units which entitle the recipients to receive the shares underlying
those Awards upon the attainment of designated performance goals or the
satisfaction of specified Service requirements or upon the expiration of a
designated time period following the vesting of those Awards. Each Award
under the Stock Issuance Program shall be evidenced by an Award Agreement
which complies with the terms specified below.
A. Issue Price/Consideration.
1. Shares may be issued for a cash consideration per share fixed
by the Plan Administrator at the time of the Award, but in no event shall
such cash consideration be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the Award date.
2. Shares of Common Stock may also be issued under the Stock
Issuance Program for any of the following items of consideration which the
Plan Administrator may deem appropriate in each individual instance:
(i) past services rendered to the Corporation (or any Parent
or Subsidiary); or
(ii) any other valid consideration under the State in which
the Corporation is at the time incorporated.
B. Vesting Provisions.
1. Shares of Common Stock issued under the Stock Issuance Program
may, at the discretion of the Plan Administrator, be fully and immediately
vested upon issuance as a bonus for Service rendered or may vest in one or
more installments over the Participant's period of Service or upon the
attainment of specified performance objectives. The elements of the vesting
schedule applicable to any unvested shares of Common Stock issued under the
Stock Issuance Program shall be determined by the Plan Administrator and
incorporated into the Stock Issuance Agreement. Shares of Common Stock may
also be issued under the Stock Issuance Program pursuant to performance
shares or restricted stock units which entitle the recipients to receive the
shares underlying those Awards upon the attainment of designated performance
goals and/or the satisfaction of specified Service requirements or upon the
expiration of a designated time period following the vesting of those Awards,
including (without limitation) a deferred distribution date following the
termination of the Participant's Service. Notwithstanding the foregoing, the
following limitations shall apply with respect to the vesting schedules
established for the Awards made under the Stock Issuance Program, subject to
the acceleration provisions in Paragraphs B.6 and B.7 below and Section II of
this Article Three:
(i) for any such Award which is to vest on the basis of
Service, the minimum vesting period shall be three (3) years, with the rate
of vesting over that period to be determined by the Plan Administrator; and
(ii) for any such Award which is to vest on the basis of
performance objectives, the performance period shall have a duration of at
least one year.
2. The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more
Awards under the Stock Issuance Program so that the shares of Common Stock
subject to those Awards shall vest (or vest and become issuable) upon the
achievement of pre-established performance objectives based on one or more
Performance Goals and measured over the performance period specified by the
Plan Administrator at the time of the Award.
3. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which
the Participant may have the right to receive with respect to the
Participant's unvested shares of Common Stock by reason of any stock
dividend, stock split, recapitalization, combination of shares, exchange of
shares, spin-off transaction, extraordinary dividend or distribution or other
change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the
same vesting requirements applicable to the Participant's unvested shares of
Common Stock and (ii) such escrow arrangements as the Plan Administrator may
deem appropriate. Equitable adjustments to reflect each such transaction
shall also be made by the Plan Administrator to the repurchase price payable
per share by the Corporation for any unvested securities subject to its
existing repurchase rights under the Plan; provided the aggregate repurchase
price shall in each instance remain the same.
4. The Participant shall have full shareholder rights with
respect to any shares of Common Stock issued to the Participant under the
Stock Issuance Program, whether or not the Participant's interest in those
shares is vested. Accordingly, the Participant shall have the right to vote
such shares and to receive any dividends paid on such shares, subject to any
applicable vesting requirements. The Participant shall not have any
shareholder rights with respect to the shares of Common Stock subject to a
performance share or restricted stock unit award until that award vests and
the shares of Common Stock are actually issued thereunder. However,
dividend-equivalent units may be paid or credited on outstanding performance
share or restricted stock unit awards, subject to such terms and conditions
as the Plan Administrator may deem appropriate.
5. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those
shares shall be immediately surrendered to the Corporation for cancellation,
and the Participant shall have no further shareholder rights with respect to
those shares. To the extent the surrendered shares were previously issued to
the Participant for consideration paid in cash or cash equivalent, the
Corporation shall repay to the Participant the lower of (i) the cash
consideration paid for the surrendered shares or (ii) the Fair Market Value
of those shares at the time of cancellation.
6. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock
which would otherwise occur upon the cessation of the Participant's Service
or the non-attainment of the performance objectives applicable to those
shares. Any such waiver shall result in the immediate vesting of the
Participant's interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after
the Participant's cessation of Service or the attainment or non-attainment of
the applicable performance objectives. However, no vesting requirements tied
to the attainment of performance objectives may be waived with respect to
shares which were intended at the time of issuance to qualify as performance-
based compensation under Code Section 162(m), except in the event of the
Participant's Involuntary Termination or as otherwise provided in Section II
of this Article Three.
7. Outstanding performance shares or restricted stock units under
the Stock Issuance Program shall automatically terminate, and no shares of
Common Stock shall actually be issued in satisfaction of those Awards, if the
performance goals or Service requirements established for those Awards are
not attained or satisfied. The Plan Administrator, however, shall have the
discretionary authority to issue vested shares of Common Stock under one or
more outstanding Awards of performance shares or restricted stock units as to
which the designated performance goals or Service requirements have not been
attained or satisfied. However, no vesting requirements tied to the
attainment of performance goals may be waived with respect to Awards which
were intended, at the time those Awards were made, to qualify as performance-
based compensation under Code Section 162(m), except in the event of the
Participant's Involuntary Termination or as otherwise provided in Section II
of this Article Three.
8. The following additional requirements shall be in effect for
any performance shares awarded under this Article Three:
(i) At the end of the performance period, the Plan
Administrator shall determine the actual level of attainment for each
performance objective and the extent to which the performance shares awarded
for that period are to vest and become payable based on the attained
performance levels.
(ii) The performance shares that so vest shall be paid as soon
as practicable following the end of the performance period, unless such
payment is to be deferred for the period specified by the Plan Administrator
at the time the performance shares are initially awarded the period
designated by the Participant pursuant to a timely-filed deferral election
made in accordance with the applicable requirements of Code Section 409A.
(iii) Performance shares that vest may be paid in (i) cash,
(ii) shares of Common Stock or (iii) any combination of cash and shares of
Common Stock, as determined by the Plan Administrator in its sole discretion.
(iv) Performance shares may also be structured so that the
shares are convertible into shares of Common Stock, but the rate at which
each performance share is to so convert shall be based on the attained level
of performance for each applicable performance objective.
II. CHANGE IN CONTROL
A. Each outstanding Award made under the Stock Issuance Program of
this Amended and Restated Plan may be assumed in connection with a Change in
Control or otherwise continued in effect. Each Award so assumed or continued
in effect shall be adjusted immediately after the consummation of that Change
in Control so as to apply to the number and class of securities into which
the shares of Common Stock subject to that Award immediately prior to the
Change in Control would have been converted in consummation of such Change in
Control had those shares actually been outstanding at that time, and
appropriate adjustments shall also be made to the consideration (if any)
payable per share thereunder, provided the aggregate amount of such
consideration shall remain the same. To the extent the actual holders of the
Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor
corporation may, in connection with the assumption or continuation of the
outstanding Awards and subject to the Plan Administrator's approval,
substitute one or more shares of its own common stock with a fair market
value equivalent to the cash consideration paid per share of Common Stock in
such Change in Control transaction, provided such common stock is readily
traded on an established U.S. securities exchange or market.
B. If an Award made under the Stock Issuance Program of this Amended
and Restated Plan is not assumed or otherwise continued in effect or replaced
with a cash retention program of the successor corporation which preserves
the Fair Market Value of the underlying shares of Common Stock at the time of
the Change in Control and provides for the subsequent payout of that value in
accordance with the same (or more favorable) vesting schedule in effect for
those shares at the time of such Change in Control, then such Award shall
vest, and the shares of Common Stock subject to that Award shall be issued as
fully-vested shares, immediately prior to the effective date of the Change in
Control or at such other time as set forth in the applicable Award Agreement.
C. The Plan Administrator shall have the discretionary authority to
structure one or more unvested Awards under the Stock Issuance Program so
that the shares of Common Stock subject to those Awards shall automatically
vest in whole or in part immediately prior to the effective date of an actual
Change in Control transaction or upon the subsequent termination of the
Participant's Service by reason of an Involuntary Termination within a
designated period following the effective date of that Change in Control
transaction.
D. The Plan Administrator's authority under Paragraph C of this
Section II shall also extend to any Awards intended to qualify as
performance-based compensation under Code Section 162(m), even though the
automatic vesting of those Awards pursuant to Paragraph D or E of this
Section II may result in their loss of performance-based status under Code
Section 162(m).
E. All of the Corporation's outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall vest in full,
immediately prior to the effective date of an actual Change in Control
transaction, except to the extent (i) the Awards to which those repurchase
rights are to be assumed by the successor corporation (or parent thereof) or
are otherwise to continue in full force and effect pursuant to the terms of
the Change in Control transaction, (ii) those Awards are to be replaced with
a cash retention program of the successor corporation which preserves, for
each such Award, the Fair Market Value of the underlying shares of Common
Stock at the time of the Change in Control and provides for the subsequent
payout of that value in accordance with the same (or more favorable) vesting
schedule in effect for those shares at the time of such Change in Control or
(iii) such accelerated vesting is precluded by other limitations imposed in
the Stock Issuance Agreement.
ARTICLE FOUR
INCENTIVE BONUS PROGRAM
I. INCENTIVE BONUS TERMS
The Plan Administrator shall have full power and authority to
implement one or more of the following incentive bonus programs under the
Plan:
(i) performance unit awards ("Performance Unit Awards"), and
(ii) dividend equivalent rights ("DER Awards")
A. Performance Unit Awards. The Plan Administrator shall have the
discretionary authority to make Performance Unit Awards in accordance with
the terms of this Article Four. Each such Performance Unit Award shall be
evidenced by one or more documents in the form approved by the Plan
Administrator; provided however, that each such document shall comply with
the terms specified below.
1. A Performance Unit shall represent a participating interest in
a special bonus pool tied to the attainment of pre-established performance
objectives based on one or more Performance Goals. The amount of the bonus
pool may vary with the level at which the applicable performance objectives
are attained, and the value of each Performance Unit which becomes due and
payable upon the attained level of performance shall be determined by
dividing the amount of the resulting bonus pool (if any) by the total number
of Performance Units issued and outstanding at the completion of the
applicable performance period.
2. Performance Units may also be structured to include a Service
requirement which the Participant must satisfy following the completion of
the performance period in order to vest in the Performance Units awarded with
respect to that performance period.
3. Performance Units which become due and payable following the
attainment of the applicable performance objectives and the satisfaction of
any applicable Service requirement may be paid in (i) cash, (ii) shares of
Common Stock valued at Fair Market Value on the payment date or (iii) a
combination of cash and shares of Common Stock as the Plan Administrator
shall determine.
B. DER Awards. The Plan Administrator shall have the discretionary
authority to make DER Awards in accordance with the terms of this Article
Four. Each such DER Award shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided however, that each such
document shall comply with the terms specified below.
1. The DER Awards may be made as stand-alone awards or in tandem
with other Awards made under the Plan. The term of each such DER Award shall
be established by the Plan Administrator at the time of grant, but no DER
Award shall have a term in excess of ten (10) years.
2. Each DER shall represent the right to receive the economic
equivalent of each dividend or distribution, whether in cash, securities or
other property (other than shares of Common Stock), which is made per issued
and outstanding share of Common Stock during the term the DER remains
outstanding. A special account on the books of the Corporation shall be
maintained for each Participant to whom a DER Award is made, and that account
shall be credited per DER with each such dividend or distribution made per
issued and outstanding share of Common Stock during the term of that DER
remains outstanding.
3. Payment of the amounts credited to such book account may be
made to the Participant either concurrently with the actual dividend or
distribution made per issued and outstanding share of Common Stock or may be
deferred for a period specified by the Plan Administrator at the time the DER
Award is initially made or designated by the Participant pursuant to a
timely-filed deferral election made in accordance with the requirements of
Code Section 409A.
4. Payment may be paid in (i) cash, (ii) shares of Common Stock
or (iii) a combination of cash and shares of Common Stock as the Plan
Administrator shall determine. If payment is to be made in the form of
Common Stock, the number of shares of Common Stock into which the cash
dividend or distribution amounts are to be converted for purposes of the
Participant's book account may be based on the Fair Market Value per share of
Common Stock on the date of conversion, a prior date or an average of the
Fair Market Value per share of Common Stock over a designated period, as the
Plan Administrator shall determine in its sole discretion.
5. The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more DER
Awards so that those Awards shall vest only after the achievement of pre-
established performance objectives based upon one or more Performance Goals.
II. CHANGE IN CONTROL
A. The Plan Administrator shall have the discretionary authority to
structure one or more Awards under this Article Four so that those Awards
shall automatically vest in whole or in part immediately prior to the
effective date of an actual Change in Control transaction or upon the
subsequent termination of the Participant's Service by reason of an
Involuntary Termination within a designated period following the effective
date of such Change in Control.
B. The Plan Administrator's authority under Paragraph A of this
Section II shall also extend to any Awards under this Article Four that are
intended to qualify as performance-based compensation under Code Section
162(m), even though the automatic vesting of those Awards pursuant to such
Paragraph A may result in their loss of performance-based status under Code
Section 162(m).
ARTICLE FIVE
MISCELLANEOUS
-------------
I. DEFERRED COMPENSATION
A. The Plan Administrator may, in its sole discretion, structure one
or more Awards under the Stock Issuance or Incentive Bonus Programs so that
the Participants may be provided with an election to defer the compensation
associated with those Awards for federal income tax purposes. Any such
deferral opportunity shall comply with all applicable requirements of Code
Section 409A.
B. To the extent the Corporation maintains one or more separate non-
qualified deferred compensation arrangements which allow the participants the
opportunity to make notional investments of their deferred account balances
in shares of Common Stock, the Plan Administrator may authorize the share
reserve under the Plan to serve as the source of any shares of Common Stock
that become payable under those deferred compensation arrangements. In such
event, the share reserve under the Plan shall be reduced on a share-for-one
share basis for each share of Common Stock issued under the Plan in
settlement of the deferred compensation owed under those separate
arrangements.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise, issuance or vesting of an Award under the Plan shall be
subject to the satisfaction of all applicable income and employment tax
withholding requirements.
B. The Plan Administrator may, in its discretion, provide Optionees
and Participants to whom Awards are made under the Plan with the right to use
shares of Common Stock in satisfaction of all or part of the Withholding
Taxes to which such holders may become subject in connection with the
exercise, vesting or settlement of those Awards. Such right may be provided
to any such holder in either or both of the following formats:
1. Stock Withholding: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the
exercise, vesting or settlement of such Award, a portion of those shares with
an aggregate Fair Market Value equal to the percentage of the Withholding
Taxes (not to exceed one hundred percent (100%)) designated by such
individual. The shares of Common Stock so withheld shall reduce the number
of shares of Common Stock authorized for issuance under the Plan.
2. Stock Delivery: The election to deliver to the Corporation,
at the time of the exercise, vesting or settlement of such Award, one or more
shares of Common Stock previously acquired by such individual with an
aggregate Fair Market Value equal to the percentage of the Withholding Taxes
(not to exceed one hundred percent (100%)) designated by the individual. The
shares of Common Stock so delivered shall neither reduce the number of shares
of Common Stock authorized for issuance under the Plan nor be added to the
number of shares of Common Stock authorized for issuance under the Plan.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends
on the certificates evidencing those unvested shares.
IV. TERM OF THE PLAN AND EFFECT OF RESTATEMENT
A. The Plan shall terminate upon the earliest to occur of (i) April
29,2018*2, (ii) the date on which all shares available for issuance under the
Plan shall have been issued as fully vested shares or (iii) the termination
of all outstanding Awards in connection with a Change in Control. Should the
Plan terminate on April 29, 2018, then all Awards outstanding at that time
shall continue to have force and effect in accordance with the provisions of
the documents evidencing those Awards.
B. The Amended and Restated Plan will, upon the approval of the
Corporation's shareholders at the Annual Meeting, effect the following
modifications to the provisions of the Plan in effect immediately prior to
such amendment and restatement:
(i) expand and re-confirm the list of financial and non-financial
targets that may serve as the performance criteria for the vesting of Awards
so that those Awards may qualify as performance-based compensation not
subject to the $1 million limitation on income tax deductibility per
executive officer imposed under Code Section 162(m);
(ii) clarify the gross counting provisions in effect under the
Plan to assure that the share reserve is reduced by the gross number of
shares that vest and become issuable under each Award, and not by the net
number actually issued in settlement of the Award and the applicable
withholding taxes;
(iii) specifically authorize the issuance of restricted stock unit
awards;
(iv) expand the Change in Control provisions to effect the
following principal changes (A) define the applicable change in control
events in accordance with the definitions in effect under the Corporation's
Executive Severance Plan, (B) provide discretionary authority to the Plan
Administrator to structure one or more Awards so that they will vest in whole
or in part upon a Change in Control event or the subsequent termination of
the Optionee's or Participant's Service and (C) clarify the procedures for
effecting the assumption of outstanding Awards in Change in Control
transactions;
(v) expand the capital adjustment provisions to allow for
equitable adjustments to outstanding Awards to reflect spin-off transactions
and extraordinary dividends;
(vi) effect the necessary revisions to comply with the applicable
requirements of Code Section 409A, including more specific definitions of the
members of the controlled group and an express requirement that all deferral
opportunities be structured so as to comply with such Code provision;
(vii) prohibit the repricing of outstanding stock options and stock
appreciation rights;
(viii) extend the term of the Plan until April 29, 2018; and
(ix) expand the class of persons eligible to receive Awards
under the Plan so as to include all Employees, the non-employee members of
the board of directors of any Parent or Subsidiary and consultants in the
service of the Corporation or any Parent or Subsidiary.
C. Should the Corporation's shareholders not approve the Amended and
Restated Plan at the Annual Meeting, then the modification to the terms of
the Plan described in subparagraphs (i), (viii) and (ix) of Section IV.B.3 of
this Article Five shall not be implemented.
V. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects; provided, however, that
shareholder approval shall be required for any amendment to the Plan which
materially increases the number of shares of Common Stock authorized for
issuance under the Plan (other than pursuant to Section V.D of Article One),
materially expands the class of individuals eligible to participate in the
Plan, expands the types of awards which may be made under the Plan or extends
the term of the Plan or to the extent such shareholder approval may otherwise
be required under applicable law or regulation or pursuant to the listing
standards of the Stock Exchange on which the Common Stock is at the time
primarily traded. However, no such amendment or modification shall adversely
affect the rights and obligations with respect to Awards at the time
outstanding under the Plan unless the Optionee or the Participant consents to
such amendment or modification.
B. Awards may be made under the Plan that involve shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided no shares shall actually be issued pursuant to those Awards
until the number of shares of Common Stock available for issuance under the
Plan is sufficiently increased by shareholder approval of an amendment of the
Plan authorizing such increase. If such shareholder approval is not obtained
within twelve (12) months after the date the first excess Award is made, then
all Awards granted on the basis of such excess shares shall terminate and
cease to be outstanding.
VI. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any Award under
the Plan and the issuance of any shares of Common Stock in connection with
the issuance, exercise or vesting of any Award under the Plan shall be
subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
Awards made under the Plan and the shares of Common Stock issuable pursuant
to those Awards.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of applicable securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any Stock Exchange on which Common Stock is then listed for
trading.
VIII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by
each, to terminate such person's Service at any time for any reason, with or
without cause.
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Annual Meeting shall mean the 2008 annual meeting of the
Corporation's shareholders.
B. Award shall mean any of the following awards authorized for issuance
or grant under the Plan: stock options, stock appreciation rights, direct
stock issuances, restricted stock or restricted stock unit awards,
performance shares, performance units, dividend-equivalent rights and cash
incentive awards.
C. Award Agreement shall mean the agreement(s) between the Corporation
and the Optionee or Participant evidencing a particular Award made to that
individual under the Plan, as such agreement(s) may be in effect from time to
time
D. Board shall mean the Corporation's Board of Directors.
E. Cause shall, with respect to each Award made under the Plan, be
defined in accordance with the following provisions:
- Cause shall have the meaning assigned to such term in the Award
Agreement for the particular Award or in any other agreement incorporated by
reference into the Award Agreement for purposes of defining such term.
- In the absence of any other Cause definition in the Award
Agreement for a particular Award (or in any other agreement incorporated by
reference into the Award Agreement), an individual's termination of Service
shall be deemed to be for Cause if such termination occurs by reason his or
her commission of any act of fraud, embezzlement or dishonesty, any
unauthorized use or disclosure by such person of confidential information or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by such person adversely affecting the business or
affairs of the Corporation (or any Parent or Subsidiary) in a material
manner.
F. Change in Control shall, with respect to each Award made under the
Plan, be defined in accordance with the following provisions:
- Change in Control shall have the meaning assigned to such term in
the Award Agreement for the particular Award or in any other agreement
incorporated by reference into the Award Agreement for purposes of defining
such term.
- In the absence of any other Change in Control definition in the
Award Agreement (or in any other agreement incorporated by reference into the
Award Agreement), Change in Control shall mean a change in ownership or
control of the Corporation effected through any of the following
transactions:
(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 1934 Act), other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under control with the
Corporation or an employee benefit plan maintained by the Corporation or such
person, of beneficial ownership (as defined in Rule 13d-3 of the 1934 Act) of
securities of the Corporation that results in such person or related group of
persons beneficially owning securities representing thirty percent (30%) or
more of the combined voting power of the Corporation's then-outstanding
securities;
(ii) a merger, recapitalization, consolidation, or other similar
transaction to which the Corporation is a party, unless securities
representing at least fifty percent (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
Corporation's outstanding voting securities immediately before the
transaction;
(iii) a sale, transfer or disposition of all or substantially all
of the Corporation's assets, unless securities representing at least fifty
percent (50%) of the combined voting power of the then-outstanding securities
of the entity acquiring the Corporation'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
Corporation's outstanding voting securities immediately before the
transaction;
(iv) a merger, recapitalization, consolidation, or other
transaction to which the Corporation is a party or the sale, transfer or
other disposition of all or substantially all of the Corporation's assets if,
in either case, the members of the Board 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 Corporation's assets, as the case may be, or a parent
thereof (for this purpose, any change in the composition of the Board 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 Board 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 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
Corporation to any person or related group of persons who held securities
representing more than thirty percent (30%) of the combined voting power of
the Corporation's outstanding securities as of March 3, 2003.
G. Code shall mean the Internal Revenue Code of 1986, as amended.
H. Common Stock shall mean the Corporation's common stock.
I. Corporation shall mean SJW Corp., a California corporation, and any
corporate successor to all or substantially all of the assets or voting stock
of SJW Corp. which has by appropriate action assumed the Plan and the
outstanding Awards thereunder.
J. Discretionary Grant Program shall mean the discretionary grant
program in effect under Article Two of the Plan pursuant to which stock
options and stock appreciation rights may be granted to one or more eligible
individuals.
K. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary, whether now existing or
subsequently established), 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.
L. Exercise Date shall mean the date on which the Corporation shall
have received written notice of the option exercise.
M. Executive Compensation Committee shall mean the Executive
Compensation Committee of the Board comprised of two (2) or more non-employee
Board members.
N. Fair Market Value per share of Common Stock on any relevant date
shall be the closing selling price per share of Common Stock at the close of
regular hours trading on the New York Stock Exchange (or any other national
securities exchange or market on which the Common Stock is at the time
primarily traded) on the date in question. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the selling price at the close of regular hours trading on the
last preceding date for which such quotation exists.
O. Family Member means, with respect to a particular Optionee or
Participant, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.
P. Good Reason shall, with respect to each Award made under the Plan,
be defined in accordance with the following provisions:
- Good Reason shall have the meaning assigned to such term in the
Award Agreement for the particular Award or in any other agreement
incorporated by reference into the Award Agreement for purposes of defining
such term.
- In the absence of any other Good Reason definition in the Award
Agreement (or in any other agreement incorporated by reference into the Award
Agreement), Good Reason shall mean an individual's voluntary resignation
following (A) a change in his or her position with the Corporation (or any
Parent or Subsidiary) which materially reduces his or her duties,
responsibilities or authority, (B) a material diminution in the duties,
responsibilities or authority of the person to whom such individual reports,
(C) a material reduction in such individual's level of compensation
(including base salary, fringe benefits and target bonus under any corporate-
performance based bonus or incentive programs), with a reduction of more than
fifteen percent (15%) to be deemed material for such purpose, or (D) a
material relocation of such individual's place of employment, with a
relocation of more than fifty (50) miles to be deemed material for such
purpose, provided, however, that a resignation for Good Reason may be
effected only after (i) the individual provides written notice to the
Corporation of the event or transaction constituting grounds for such
resignation within sixty (60) days after the occurrence of that event or
transaction and (ii) the Corporation fails to take the requisite remedial
action with respect to such event or transaction within thirty (30) days
after receipt of such notice.
Q. Incentive Bonus Program shall mean the incentive bonus program in
effect under Article Four of the Plan.
R. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.
S. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation (or any Parent or Subsidiary) for reasons other than for Cause,
or
(ii) such individual's voluntary resignation for Good Reason.
T. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
U. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.
V. Optionee shall mean any person to whom an option is granted under
the Discretionary Grant or Automatic Grant Program.
W. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
X. Participant shall mean any person who is issued an Award under
either the Stock Issuance Program or the Incentive Bonus Program.
Y. Permanent Disability or Permanently Disabled shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of
twelve (12) months or more. However, solely for purposes of Awards made to
the non-employee Board members, Permanent Disability or Permanently Disabled
shall mean the inability of the non-employee Board member to perform his or
her usual duties as a Board member by reason of any medically determinable
physical or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more.
Z. Performance Goals shall mean any of the following performance
criteria upon which the vesting of one or more Awards under the Plan may be
based: (i) pre-tax or after-tax earnings, profit or net income, (ii) revenue
or revenue growth, (iii) earnings per share, (iv) return on assets, capital
or shareholder equity, (v) total shareholder return, (vi) gross or net profit
margin, (vii) cash flow, (viii) approved rate increases, (ix) earnings or
operating income before interest, taxes, depreciation, amortization and/or
charges for stock-based compensation, (x) increases in customer base, (xi)
operating income, net operating income or net operating income after recorded
tax expense; (xii) operating profit, net operating profit or net operating
profit after recorded tax expense, (xiii) operating margin, (xiv) cost
reductions or other expense control objectives, (xv) market price of the
Common Stock, whether measured in absolute terms or in relationship to
earnings or operating income, (xvi) compliance with applicable environmental
requirements or applicable regulatory requirements, (xvii) budget objectives,
(xviii) working capital, (xix) mergers, acquisitions or divestitures, (xx)
attainment of water industry objectives measured in terms of water quality,
service, reliability and efficiency or (xxi) measures of customer
satisfaction. Each performance criteria may be based upon the attainment of
specified levels of the Corporation's performance under one or more of the
measures described above relative to the performance of other entities and
may also be based on the performance of any of the Corporation's business
units or divisions or any Parent or Subsidiary. Each applicable Performance
Goal may include a minimum threshold level of performance below which no
Award will be earned, levels of performance at which specified portions of an
Award will be earned and a maximum level of performance at which an Award
will be fully earned. Each applicable Performance Goal may be structured at
the time of the Award to provide for appropriate adjustment for one or more
of the following items: (A) asset impairments or write-downs; (B) litigation
judgments or claim settlements; (C) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results; (D) accruals for reorganization and restructuring programs; (E) any
extraordinary nonrecurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
condition and results of operations appearing in the Corporation's annual
report to shareholders for the applicable year; (F) the operations of any
business acquired by the Corporation or any Parent or Subsidiary or of any
joint venture in which the Corporation or any Parent or Subsidiary
participates; (G) the divestiture of one or more business operations or
the assets thereof; or (H) the costs incurred in connection with such
acquisitions or divestitures.
AA. Plan shall mean the Corporation's Long-Term Incentive Plan, as
amended and restated as set forth in this document.
BB. Plan Administrator shall mean the particular entity, whether the
Executive Compensation Committee, the Board or the Secondary Board Committee,
which is authorized to administer the Discretionary Grant and Stock Issuance
Programs with respect to one or more classes of eligible persons, to the
extent such entity is carrying out its administrative functions under the
Plan with respect to the persons under its jurisdiction.
CC. Secondary Board Committee shall mean a committee of one or more
Board members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.
DD. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of
the 1934 Act.
EE. Service shall mean the performance of services for the Corporation
(or any Parent or Subsidiary, whether now existing or subsequently
established) by a person in the capacity of an Employee, a non-employee
member of the board of directors or a consultant or independent advisor,
except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance. For purposes of the Plan, an
Optionee or Participant shall be deemed to cease Service immediately upon the
occurrence of the either of the following events: (i) the Optionee or
Participant no longer performs services in any of the foregoing capacities
for the Corporation or any Parent or Subsidiary or (ii) the entity for which
the Optionee or Participant is performing such services ceases to remain a
Parent or Subsidiary of the Corporation, even though the Optionee or
Participant may subsequently continue to perform services for that entity.
Service shall not be deemed to cease during a period of military leave, sick
leave or other personal leave approved by the Corporation; provided, however,
that should such leave of absence exceed three (3) months, then for purposes
of determining the period within which an Incentive Option may be exercised
as such under the federal tax laws, the Optionee's Service shall be deemed to
cease on the first day immediately following the expiration of such three
(3)-month period, unless Optionee is provided with the right to return to
Service following such leave either by statute or by written contract.
Except to the extent otherwise required by law or expressly authorized by the
Plan Administrator or by the Corporation's written policy on leaves of
absence, no Service credit shall be given for vesting purposes for any period
the Optionee or Participant is on a leave of absence.
FF. Stock Exchange shall mean the American Stock Exchange, the Nasdaq
Global Market or the New York Stock Exchange.
GG. Stock Issuance Program shall mean the stock issuance program in
effect under Article Three of the Plan.
HH. Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
II. 10% Shareholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any
Parent or Subsidiary).
JJ. Withholding Taxes shall mean the applicable federal and state
income and employment withholding taxes to which the holder of an Award under
the Plan may become subject in connection with the exercise, vesting or
settlement of that Award.
- -----------------------
*1: As of January 31, 2008, 381,752 shares of Common Stock were subject to
outstanding Awards, 101,429 shares had been issued in settlement of Awards made
under the Plan and 1,316,819 shares were available for future Awards.
*2: If this January 2008 Amendment and Restatement is not approved by the
Corporation's shareholders at the 2008 Annual Meeting, then the expiration date
of the Plan will remain April 17, 2012.