EXHIBIT 10.25
SJW CORP.
RESTRICTED STOCK UNIT ISSUANCE AGREEMENT
RECITALS
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A. The Board has adopted the Plan for the purpose of retaining the services
of selected Employees and consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. Participant is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's issuance of an equity incentive award under the Plan designed to
retain Participant's continued service.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix A.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Restricted Stock Units. The Corporation hereby awards to the
Participant, as of the Award Date, Restricted Stock Units under the Plan. Each
Restricted Stock Unit which vests during the Participant's period of Service
shall entitle the Participant to receive one share of Common Stock on the
applicable vesting date. The number of shares of Common Stock subject to the
awarded Restricted Stock Units, the applicable vesting schedule for those
shares, the date on which those vested shares shall become issuable to
Participant and the remaining terms and conditions governing the award (the
"Award") shall be as set forth in this Agreement.
AWARD SUMMARY
Award Date: January 30, 2006
Number of Shares Subject
to Award: 7,000 shares of Common Stock (the "Shares")
Vesting Schedule: The Shares shall vest in a series of four (4)
successive equal annual installments upon the
Participant's completion of each year of Service
over the four (4)-year period measured from the
Award Date. However, the Shares may be subject
to accelerated vesting in whole or in part in
accordance with the provisions of Paragraphs 4
and 6 of this Agreement.
Issuance Schedule The Shares in which the Participant vests on an
annual basis in accordance with the foregoing
Vesting Schedule shall be issued, subject to the
Corporation's collection of all applicable
Withholding Taxes, on the applicable annual
vesting date or as soon thereafter as
administratively practicable, but in no event
later than the close of the calendar year in
which such annual vesting date occurs or (if
later) the fifteenth day of the third calendar
month following such vesting date. The
applicable Withholding Taxes are to be collected
pursuant to the procedure set forth in Paragraph
8 of this Agreement.
2. Limited Transferability. Prior to actual receipt of the Shares which
vest and become issuable hereunder, the Participant may not transfer any
interest in the Award or the underlying Shares. Any Shares which vest hereunder
but which otherwise remain unissued at the time of the Participant's death may
be transferred pursuant to the provisions of the Participant's will or the laws
of inheritance or to the Participant's designated beneficiary or beneficiaries
of this Award. The Participant may also direct the Corporation to issue the
stock certificates for any Shares which in fact vest and become issuable under
the Award during his or her lifetime to one or more designated family members or
a trust established for the Participant and/or his or her family members. The
Participant may make such a beneficiary designation or certificate directive at
any time by filing the appropriate form with the Plan Administrator or its
designee.
3. Cessation of Service. Except as otherwise provided in Paragraph 4 below,
should the Participant cease Service for any reason prior to vesting in one or
more Shares subject to this Award, then the Award will be immediately cancelled
with respect to those unvested Shares, and the number of Restricted Stock Units
will be reduced accordingly. The Participant shall thereupon cease to have any
right or entitlement to receive any Shares under those cancelled units.
Accordingly, if the Participant's Service is terminated by the Corporation for
Good Cause or if Participant voluntarily terminates his Service other than for
Good Reason, then this Award will be immediately cancelled with respect to all
Restricted Stock Units which are not otherwise vested at that time, and the
Participant shall thereupon cease to have any right or entitlement to receive
any Shares under those cancelled Restricted Stock Units.
4. Accelerated Vesting. The following special vesting acceleration
provisions shall be in effect for the Award and shall be in addition to the
vesting acceleration provisions of Paragraph 6 of this Agreement:
(a) Upon the termination of Participant's Service by reason of death or
Permanent Disability or resignation for Good Reason, or upon the Corporation's
termination of his Service other than for Good Cause, all the Shares at the time
subject to this Award shall immediately vest.
(b) The Shares which vest on an accelerated basis pursuant to this
Paragraph 4 shall be issued on the date of the Participant's Separation from
Service or as soon as administratively practicable thereafter, subject to the
Corporation's collection of the applicable Withholding Taxes, but in no event
later than the close of the calendar year in which such Separation from Service
occurs or (if later) the fifteenth (15th) day of the third calendar month
following the date of such Separation from Service.
5. Stockholder Rights and Dividend Equivalents.
(a) The holder of this Award shall not have any stockholder rights,
including voting or dividend rights, with respect to the Shares subject to the
Award until the Participant becomes the record holder of those Shares following
their actual issuance upon the Corporation's collection of the applicable
Withholding Taxes.
(b) Notwithstanding the foregoing, should any dividend or other
distribution, whether regular or extraordinary and whether payable in cash,
securities or other property, be declared and paid on the outstanding Common
Stock while one or more Shares remain subject to this Award (i.e., those Shares
are not otherwise issued and outstanding for purposes of entitlement to the
dividend or distribution), then a special book account shall be established for
the Participant and credited with a phantom dividend equal to the actual
dividend or distribution which would have been paid on the Shares at the time
subject to this Award had those Shares been issued and outstanding and entitled
to that dividend or distribution. The phantom dividend equivalents so credited
shall vest at the same time as the Shares to which they relate and shall be
distributed to the Participant (in the same form the actual dividend or
distribution was paid to the holders of the Common Stock entitled to that
dividend or distribution) concurrently with the issuance of those Shares in
accordance with the applicable vesting and issuance provisions of this
Agreement. However, each such distribution shall be subject to the Corporation's
collection of the Withholding Taxes applicable to that distribution.
6. Change of Control.
(a) Any Restricted Stock Units subject to this Award at the time of a
Change in Control may be assumed by the successor entity or otherwise continued
in full force and effect or may be replaced with a cash incentive program of the
successor entity which preserves the Fair Market Value of any Restricted Stock
Units subject to the Award at the time of the Change in Control and provides for
subsequent payout of that value in accordance with the vesting provisions
applicable to the Award. In the event of such assumption or continuation of the
Award or such replacement of the Award with a cash incentive program, no
accelerated vesting of the Restricted Stock Units shall occur at the time of the
Change in Control.
(b) In the event the Award is assumed or otherwise continued in effect, the
Restricted Stock Units subject to the Award will be adjusted immediately after
the consummation of the Change in Control so as to apply to the number and class
of securities into which the Shares subject to those units immediately prior to
the Change in Control would have been converted in consummation of that Change
in Control had those Shares actually been issued and outstanding at that time.
To the extent the actual holders of the 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 Restricted Stock Units subject to the Award at that time, 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 the Change in Control
transaction, provided such shares are registered under the federal securities
laws and readily tradable on an established securities exchange.
(c) If the Restricted Stock Units subject to this Award at the time of the
Change in Control are not so assumed or otherwise continued in effect or
replaced with a cash incentive program in accordance with Paragraph 6(a) above,
then those units will vest immediately upon the closing of the Change in
Control. The Shares subject to those vested units shall be issued immediately
upon vesting (or otherwise converted into the right to receive the same
consideration per share of Common Stock payable to the other stockholders of the
Corporation in consummation of that Change in Control), subject to the
Corporation's collection of the applicable Withholding Taxes pursuant to the
provisions of Paragraph 8.
(d) This Agreement shall not in any 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.
7. Adjustment in Shares. Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to the total number and/or class of securities
issuable pursuant to this Award in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
8. Collection of Withholding Taxes.
(a) The Corporation shall collect the applicable Withholding Taxes with
respect to each distribution of phantom dividend equivalents under Paragraph
5(b) by withholding a portion of that distribution equal to the amount of those
taxes, with the cash portion of the distribution to be the first portion so
withheld. The Corporation shall collect the applicable Withholding Taxes with
respect to each issuance of vested Shares hereunder through an automatic share
withholding procedure pursuant to which the Corporation will withhold, at the
time of such issuance, a portion of the Shares with a Fair Market Value
(measured as of the issuance date) equal to the amount of those taxes; provided,
however, that the amount of any Shares so withheld shall not exceed the amount
necessary to satisfy the Corporation`s required tax withholding obligations
using the minimum statutory withholding rates for federal and state tax purposes
that are applicable to supplemental taxable income.
(b) Except as otherwise provided in Paragraph 6 and Paragraph 8(b), the
settlement of all Restricted Stock Units which vest under the Award shall be
made solely in shares of Common Stock. In no event, however, shall any
fractional shares be issued. Accordingly, the total number of shares of Common
Stock to be issued pursuant to the Award shall, to the extent necessary, be
rounded down to the next whole share in order to avoid the issuance of a
fractional share.
9. Deferred Issue Date. Notwithstanding any provision to the contrary in
this Agreement, no Shares which become issuable by reason of the Participant's
Separation from Service shall actually be issued to a Participant prior to the
earlier of (i) the expiration of the six (6)-month period measured from the date
of his or her 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 issuance 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 Shares deferred pursuant
to this Paragraph 9 shall be issued in a lump sum to the Participant.
10. Compliance with Laws and Regulations. The issuance of shares of Common
Stock pursuant to the Award shall be subject to compliance by the Corporation
and Participant with all applicable requirements of law relating thereto and
with all applicable regulations of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock may be listed for trading at
the time of such issuance.
11. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Participant shall be in writing and addressed to
Participant at the address indicated below Participant's signature line on this
Agreement. All notices shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party to
be notified.
12. Successors and Assigns. Except to the extent otherwise provided in this
Agreement, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the Corporation and its successors and assigns and Participant,
Participant's assigns, the legal representatives, heirs and legatees of
Participant's estate and any beneficiaries of the Award designated by
Participant.
13. Construction. This Agreement and the Award evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the terms of the Plan. All decisions of the Plan Administrator with respect
to any question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in the Award.
14. Governing Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
15. Employment at Will. Nothing in this Agreement or in the Plan shall
confer upon 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
Participant) or of Participant, which rights are hereby expressly reserved by
each, to terminate Participant's Service at any time for any reason, with or
without cause.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first indicated above.
SJW CORP.
By:
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Title:
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W. ▇▇▇▇▇▇▇ ▇▇▇▇
Signature:
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Address:
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APPENDIX A
DEFINITIONS
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The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Restricted Stock Unit Issuance Agreement.
B. Award shall mean the award of Restricted Stock Units made to the
Participant pursuant to the terms of this Agreement.
C. Award Date shall mean the date the Restricted Stock Units are awarded to
Participant pursuant to the Agreement and shall be the date indicated in
Paragraph 1 of the Agreement.
D. Board shall mean the Corporation's Board of Directors.
E. Change in Control shall mean any change in control or ownership of the
Corporation which occurs by reason of one or more of the following events:
(i) the acquisition, directly or indirectly by any person or related
group of persons (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the 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 any such entity, of
beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of
securities of the Corporation which, when added to other acquisitions
effected by such person or related group during the twelve (12)-month
period ending with the most recent acquisition, represent thirty-five
percent (35%) or more of the total 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 more than 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 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, or
(iv) a change in the composition of the Board over a period of twelve
(12) 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 that no Change in Control shall occur 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 hold securities representing thirty-five
percent (35%) or more of the combined voting power of the Corporation's
outstanding securities as of March 3, 2003.
F. Code shall mean the Internal Revenue Code of 1986, as amended.
G. Common Stock shall mean shares of the Corporation's common stock.
H. Corporation shall mean SJW Corp., a California corporation, and any
successor corporation to all or substantially all of the assets or voting stock
of SJW Corp. which shall by appropriate action adopt the Plan and/or assume the
Award.
I. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), 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.
J. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time listed or admitted to trading
on any Stock Exchange, then the Fair Market Value shall be the closing
selling price per share on the date in question on that Stock Exchange, as
such price is officially quoted in the composite tape of transactions on
such exchange. If there is no reported sale of Common Stock on such Stock
Exchange on the date in question, then the Fair Market Value shall be the
closing selling price on the exchange on the last preceding date for which
such quotation exists.
(ii) If the Common Stock is not at the time listed or admitted to
trading on any Stock Exchange but is traded on the Nasdaq National Market,
the Fair Market Value shall be the closing selling price per share on the
date in question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor system.
If there is no reported closing selling price for the Common Stock on the
date in question, then the closing selling price on the last preceding date
for which such quotation exists shall be determinative of Fair Market
Value.
K. Good Cause shall be deemed to exist if, and only if (i) Participant
engages in acts or omissions that result in substantial harm to the business or
property of the Corporation or any Parent or Subsidiary and that constitute
dishonesty, intentional breach of fiduciary obligation or intentional
wrongdoing, or (ii) Participant is convicted of a criminal violation involving
fraud or dishonesty.
L. Good Reason shall mean, without Participant's express written consent,
(i) his removal from any of the following positions: President and Chief
Executive Officer of the Corporation, President and Chief Executive Officer of
San ▇▇▇▇ Water Company and President of SJW Land Company, or any other
significant change in the nature or the scope of his authority or overall
working environment; (ii) the assignment to Participant of duties materially
inconsistent with his duties, responsibilities and status as President and Chief
Executive Officer of the Corporation, President and Chief Executive Officer of
San ▇▇▇▇ Water Company and President of SJW Land Company; (iii) a reduction in
Participant's rate of base salary or target annual bonus, other than a reduction
in an amount not in excess of fifteen percent (15%) of either his base salary or
the sum of his base salary and target annual bonus pursuant to a uniform
reduction in the base salary or target bonus payable to all senior executives of
the Corporation to which Participant and the Executive Compensation Committee
have mutually agreed and which occurs prior to a Change in Control; (iv) a
change by the Corporation by fifty-five (55) miles or more of the principal
location at which Participant is required to perform Participant's services
hereunder or (v) a material breach by the Corporation of any of its obligations
under its employment agreement with the Participant dated January 1, 2003 which
remains uncured for more than thirty (30) days following Participant's written
notice to the Board in which Participant specifically identifies the material
breach which has occurred.
M. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from
time to time.
N. Participant shall mean the person to whom the Award is made pursuant to
the Agreement.
O. 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.
P. Permanent Disability shall mean the Participant's inability 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.
Q. Plan shall mean the Corporation's Long-Term Incentive Plan.
R. Plan Administrator shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.
S. Restricted Stock Unit shall mean each unit subject to this Award which
shall entitle the Participant to receive one share of Common Stock under the
Plan at a designated time following the vesting of that unit.
T. Separation from Service shall mean the Participant's termination of
Service under circumstances which are deemed to constitute a separation from
service within the meaning of Code Section 409A and the applicable Treasury
Regulations thereunder.
U. Service shall mean the Participant's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor. For purposes of this Agreement, Participant shall be deemed to cease
Service immediately upon the occurrence of the either of the following events:
(i) 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
Participant performs such services ceases to remain a Parent or Subsidiary of
the Corporation, even though 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 except to the extent otherwise required by
law or expressly authorized by the Plan Administrator or the Corporation's
written leave of absence policy, no Service credit shall be given for vesting
purposes for any period the Participant is on a leave of absence.
V. Stock Exchange shall mean the American Stock Exchange or the New York
Stock Exchange.
W. 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.
X. Withholding Taxes shall mean (i) the employee portion of the federal,
state and local employment taxes required to be withheld by the Corporation in
connection with the vesting of the shares of Common Stock under the Award and
any phantom dividend equivalents relating to those shares and (ii) the federal,
state and local income taxes required to be withheld by the Corporation in
connection with the issuance of those vested shares and the distribution of any
phantom dividend equivalents relating to such shares.