Exhibit 10.18
SJW CORP.
STOCK OPTION
DIVIDEND EQUIVALENT RIGHTS AGREEMENT
AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2005
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RECITALS
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A. Participant has been granted one or more stock options to purchase
shares of the Corporation's Common Stock under the Plan (the "Options"). The
Options also provide Participant with dividend equivalent rights with respect to
the shares of Common Stock subject to those Options. Each such option is
evidenced by a Notice of Grant and Stock Option Agreement (collectively, the
"Option Agreement").
B. The Options with such dividend equivalent rights are more particularly
identified in attached Schedule A.
C. The terms and conditions governing those dividend rights are currently
set forth in a Dividend Equivalent Rights Agreement for each such Option (or
other written document evidencing those dividend equivalent rights with respect
to one or more of the Options). Each such agreement or other written document
shall hereinafter be referred to collectively as the "Rights Agreement".
D. Proposed Treasury Regulations under Code Section 409A establish certain
requirements with respect to the payment of dividend equivalent rights which
must be satisfied in order to adverse income tax consequences to Participant.
Those requirements will apply to the portion of each Option which was not vested
and exercisable as of December 31, 2004.
E. The purpose of this amended and restated Agreement is to amend each of
the Rights Agreements relating to the Options so as to conform the terms and
conditions of each such agreement to the applicable distribution requirements of
Code Section 409A and the proposed Treasury Regulations thereunder.
F. All capitalized terms in this Agreement shall have the meaning assigned
to them in the Plan and the applicable Option Agreements.
NOW, THEREFORE, it is hereby agreed as follows:
1. Each of the Rights Agreements pertaining to the Options, to the extent
those agreements pertain to Options (or portions thereof) which were not vested
and exercisable as of December 31, 2004 is hereby amended and restated as
follows, retroactive to January 1, 2005, with respect to each covered Option (or
portion thereof):
(i) An Option Deferred Stock Account with respect to the Option
shall continue to be maintained for the Participant on the books and
records of the Corporation.
(ii) Each time a dividend is paid on the Corporation's
outstanding shares of Common Stock after the Grant Date, the Option
Deferred Stock Account will be credited with a dollar amount equal to
the amount of that dividend paid per share multiplied by the number of
shares of Common Stock at the time subject to the Option (plus the
number of shares previously credited to the Option Deferred Stock
Account pursuant to the dividend equivalent rights hereunder) as of
the record date for the dividend; provided, however, that no further
amounts shall be credited after the earlier of the fourth anniversary
of the Grant Date or the first exercise of the Option.
(iii) As of the first business day in January each year, the cash
dividend amounts credited to the Option Deferred Stock Account during
the immediately preceding calendar year shall be converted into a book
entry of an additional number of shares of Common Stock determined by
dividing (i) those cash dividend equivalent amounts by (ii) the
average of the Fair Market Value per share of Common Stock on each of
the dates in the immediately preceding calendar year on which those
dividend amounts were credited to the Option Deferred Stock Account.
(iv) The shares credited to the Option Deferred Stock Account
will vest at the same time and in the same manner as the Option Shares
to which they are attributable vest. The shares which so vest shall be
distributed to the Participant in the form of actual shares of Common
Stock issued under the Plan on the earlier of the following dates (the
"Distribution Date"): (i) the fourth anniversary of the Grant Date of
the Option or (ii) the date of the Participant's separation from
service (as determined in accordance with the provisions of Code
Section 409A and the applicable Treasury Regulations thereunder) or as
soon after such Distribution Date as administratively practicable, but
in no event later than the end of the calendar year in which the
Distribution Date occurs or (if later) the fifteenth day of the third
calendar month following such date. Such payment shall be subject to
the Corporation's collection of all applicable withholding taxes. In
no event shall any shares of Common Stock credited to the Option
Deferred Stock Account be distributed to the Participant if and to the
extent those shares do not vest in accordance with the foregoing
provisions.
(v) Notwithstanding any provision to the contrary in the Plan,
the Option Agreement or this Agreement, no distribution which becomes
due and payable by reason of the Participant's separation from service
shall be made to a Participant prior to the earlier of (i) the
expiration of the six (6)-month period measured from the date of such
separation from service or (ii) the date of his or her death, if the
Participant is deemed at the time of such separation from service to
be a "key employee" within the meaning of that term under Code Section
416(i) and such delayed commencement is otherwise required in order to
avoid a prohibited distribution under Code Section 409A(a)(2). Upon
the expiration of the applicable Code Section 409A(a)(2) deferral
period, all distributions deferred pursuant to this subparagraph shall
be paid in a lump sum to the Participant.
2. This Amended and Restated Dividend Equivalent Rights Agreement shall,
with respect to each Option identified in attached Schedule A, replace the
Rights Agreement in effect for that Option immediately prior hereto, but only to
the extent that Option was not vested and exercisable as of December 31, 2004.
Except for the modifications effected by this Agreement, all the terms and
provisions of each Option shall continue in full force and effect and shall
continue to be governed by the terms of the Plan and the applicable Option
Agreement and (to the extent that Option was vested and exercisable as of
December 31, 2004) the Dividend Equivalent Rights Agreement in effect for that
Option immediately prior hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
_______ day of _______________, 2006.
SJW CORP.
By: ______________________________________
Title: ____________________________________
__________________________________________
PARTICIPANT
SCHEDULE A
LIST OF COVERED OPTIONS*
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Grant Exercise Price Option Expiration
Date Per Share ($) Shares (#) Date
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* The listed options are subject to this Amended and Restated Dividend
Equivalent Rights Agreement only to the extent those options were not vested and
exercisable as of December 31, 2004.