EXHIBIT 10.31

SJW CORP.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

RECITALS

A. The Board has adopted the Plan for the purpose of retaining the services of
selected Employees of 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.

(a) The Corporation hereby awards to the Participant, as of the Award Date
indicated below, Restricted Stock Units under the Plan.

(b) This award shall continue in full force and effect, and except as otherwise
provided in this Agreement, the Restricted Stock Units shall vest upon the
attainment of a pre-established performance objective tied to total shareholder
return measured over a specified period, provided the Participant continues in
Service through the completion date of that measurement period. Each Restricted
Stock Unit which so vests shall entitle the Participant to receive one share of
Common Stock on the specified issuance date. The number of shares of Common
Stock subject to the awarded Restricted Stock Units, the applicable performance
target for the vesting of those shares, the alternative and special vesting
provisions which may become applicable to such shares, the date on which the
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:            Number of Shares        Subject to Award:       shares of
Common Stock (the “Shares”) Vesting Schedule:   The Shares shall vest upon the
attainment of the Performance Objective set forth in attached Schedule I,
provided the Participant continues in Service through the completion of the
Measurement Period (the “Normal Vesting

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   Schedule”). However, the Shares may also vest in accordance with the
alternative vesting provisions of Paragraph 4 of this Agreement and the special
vesting provisions of Paragraph 6 of this Agreement. Issuance Schedule    The
Shares in which the Participant vests in accordance with the Normal Vesting
Schedule will become issuable on                                          (the
“Issuance Date”). The actual issuance of the Shares shall be subject to the
Corporation’s collection of all applicable Withholding Taxes and shall be
effected on the Issuance Date or as soon as administratively practicable
thereafter, but in no event later than the close of the calendar year in which
such Issuance Date occurs. The Shares which vest pursuant to Paragraph 4 or
Paragraph 6 of this Agreement shall be issued in accordance with the provisions
of the applicable Paragraph. The procedures pursuant to which the applicable
Withholding Taxes are to be collected are 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 re-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 the completion of
the Measurement Period, then the Restricted Stock Units subject to this Award
shall be immediately cancelled, and the Participant shall cease to have any
right or entitlement to receive any Shares under those cancelled units.

4. Alternative Vesting. Except to the extent otherwise provided in Paragraph 6,
should any of the following events occur prior to the
                                         completion date of the Measurement
Period: (i) the Participant’s cessation of Employee status by reason of death or
Permanent Disability, (ii) the Participant’s resignation from Employee status
for Good Reason or (iii) the Corporation’s termination of the Participant’s
Employee status other than for Good Cause, then the Participant shall vest in a
portion of the Restricted Stock Units if the Performance Objective for the
Measurement Period is in fact attained and such attainment is certified by the
Executive Compensation Committee of the Board, with any such certification to
occur during the month of                                         . The number
of Restricted Stock Units in which the Participant shall vest upon such
certified attainment of the Performance Objective shall be determined by
multiplying the total number of Restricted Stock Units at the time subject to
this Award by a fraction the numerator of which is the number of whole months of
Service (rounded up to the next whole month) completed by Participant during the
Measurement Period

 

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and the denominator of which is                              (            )
months. To the extent the Participant so vests in one or more Restricted Stock
Units, the underlying Shares shall be issued on the
                                         Issuance Date or as soon as
administratively practicable thereafter, subject to the Corporation’s collection
of the applicable Withholding Taxes, but in no event later than
                                        .

5. Stockholder Rights. 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.

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 retention program of the
successor entity which preserves the Fair Market Value of the underlying Shares
at the time of the Change in Control and provides for the subsequent vesting and
payout of that value in accordance with the provisions of this Paragraph 6(a).
No accelerated vesting of the Restricted Stock Units or the underlying Shares
shall occur in the event of such assumption or continuation of the Award or such
replacement of the Award with a cash retention program. However, the vesting
provisions in effect for the Award following the Change in Control shall no
longer be tied to the attainment of the Performance Objective set forth in
Schedule I and shall instead be converted into the following Service-vesting
schedule:

(i) The Award (whether in its assumed or continued form or as converted into a
cash retention program) shall vest in full upon the Participant’s continuation
in Service through the                                          completion date
of the Measurement Period. Following the completion of such Service vesting
period, the securities, cash or other property underlying the vested Award shall
be issued on the normal                                          Issuance Date
or as soon as administratively practicable thereafter, subject to the
Corporation’s collection of the applicable Withholding Taxes, but in no event
later than                                         .

(ii) Should any of the following events occur within twenty-four (24) months
after the effective date of such Change in Control but prior to the
                                         completion date of the Measurement
Period: (A) the Participant’s cessation of Employee status by reason of death or
Permanent Disability, (B) the Participant’s resignation from Employee status for
Good Reason or (C) the Corporation’s termination of the Participant’s Employee
status other than for Good Cause, then the Award shall immediately vest in full,
and the securities, cash or other property underlying the Award shall, subject
to the Corporation’s collection of the applicable Withholding Taxes, be
distributed on the earlier of (x) the scheduled
                                         Issuance Date or (y) the date of the
Participant’s Separation from Service, provided such Separation from

 

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Service occurs within twenty-four (24) months after a Qualifying Change in
Control, or as soon as administratively practicable after the applicable
distribution date, but in no event later than the close of the calendar year in
which such distribution date occurs.

(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 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 retention program under Paragraph 6(a), then those units
will vest immediately prior to the closing of the Change in Control. The Shares
subject to those vested units shall be 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, and such
consideration shall be distributed to Participant on the tenth (10th) business
day following the earliest to occur of (i) the
                                         Issuance Date, (ii) the date of the
Participant’s Separation from Service, provided such Separation from Service
occurs within twenty-four (24) months after a Qualifying Change in Control, or
(iii) the first date following a Qualifying Change in Control on which the
distribution can be made without contravention of any applicable provisions of
Code Section 409A. Such distribution shall be 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, 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, or should the value of outstanding
shares of Common 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 the total number and/or class of
securities issuable

 

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pursuant to this Award in order to reflect such change and thereby prevent a
dilution or enlargement of benefits hereunder. The determination of the Plan
Administrator shall be final, binding and conclusive. In the event of a Change
in Control, the adjustments (if any) shall be made in accordance with the
provisions of Paragraph 6.

8. Issuance of Shares of Common Stock/Collection of Withholding Taxes.

(a) On the Issuance Date (or any earlier date on which the Shares are to be
issued in accordance with the terms of this Agreement), the Corporation shall
issue to or on behalf of the Participant a certificate (which may be in
electronic form) for the applicable number of shares of Common Stock, subject,
however, to the Corporation’s collection of the applicable Withholding Taxes.

(b) The Corporation shall collect the applicable Withholding Taxes with respect
to the vested Shares issued 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
applicable 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. In the event payment is made in a
form other than the Shares, the Corporation shall collect from the Participant
the applicable Withholding Taxes pursuant to such procedures as the Corporation
deems appropriate under the circumstances.

(c) Notwithstanding the foregoing provisions of Paragraph 8(b), 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 or any other
amounts hereunder (the “Employment Taxes”) shall in all events be collected from
the Participant no later than the last business day of the calendar year in
which the Shares or other amounts vest hereunder. Accordingly, to the extent the
applicable issuance date for one or more vested Shares or the distribution date
for such other amounts is to occur in a year subsequent to the calendar year in
which those Shares or other amounts vest, the Participant shall, on or before
the last business day of the calendar year in which the Shares or other amounts
vest, deliver to the Corporation a check payable to its order in the dollar
amount equal to the Employment Taxes required to be withheld with respect to
those Shares or other amounts. The provisions of this Paragraph 8(c) shall be
applicable only to the extent necessary to comply with the applicable tax
withholding requirements of Code Section 3121(v).

(d) Except as otherwise provided in Paragraph 6(c) 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.

 

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9. Deferred Issue Date. Notwithstanding any provision to the contrary in this
Agreement, no Shares or other amounts which become issuable or distributable by
reason of Participant’s Separation from Service shall actually be issued or
distributed to Participant prior to the earlier of (i) the first day of the
seventh (7th) month following the date of such Separation from Service or
(ii) the date of Participant’s death, if Participant is deemed at the time of
such Separation from Service to be a specified employee under
Section 1.409A-1(i) of the Treasury Regulations issued under Code Section 409A,
as determined by the Plan Administrator in accordance with consistent and
uniform standards applied to all other Code Section 409A arrangements of the
Corporation, and such delayed commencement is otherwise required in order to
avoid a prohibited distribution under Code Section 409A(a)(2). The deferred
Shares or other distributable amount shall be issued or distributed in a lump
sum on the first day of the seventh (7th) month following the date of
Participant’s Separation from Service or, if earlier, the first day of the month
immediately following the date the Corporation receives proof of Participant’s
death.

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 on which the Common Stock may
be listed for trading at the time of such issuance.

11. Benefit Limit. The benefit limitation of this Paragraph 11 shall apply only
to the extent Participant is not otherwise entitled to a Code Section 4999 tax
gross-up, pursuant to the terms of the Corporation’s Executive Severance Plan
(or any successor plan), with respect to the Shares that vest on an accelerated
basis in connection with a Change in Control or subsequent cessation of Employee
status:

In the event the vesting and issuance of the Shares subject to this Award would
otherwise constitute a parachute payment under Code Section 280G, then the
vesting and issuance of those Shares shall be subject to reduction to the extent
necessary to assure that the number of Shares which vest and are issued under
this Award will be limited to the greater of (i) the number of Shares which can
vest and be issued without triggering a parachute payment under Code
Section 280G or (ii) the maximum number of Shares which can vest and be issued
under this Award so as to provide the Participant with the greatest after-tax
amount of such vested and issued Shares after taking into account any excise tax
the Participant may incur under Code Section 4999 with respect to those Shares
and any other benefits or payments to which the Participant may be entitled in
connection with any change in control or ownership of the Corporation or the
subsequent termination of the Participant’s Service.

12. 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.

 

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13. 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.

14. 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.

15. 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.

16. 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 respective
dates indicated below.

 

  SJW CORP. By:     Name:     Title:     Dated:       ,    

 

  W. Richard Roth Signature:     Address:     Dated:       ,    

 

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APPENDIX A

DEFINITIONS

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 of such securities effected by such person or related group
during the twelve (12)-month period ending with the most recent acquisition,
represent thirty percent (30%) 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 at least 50% of
the combined voting power of the then-outstanding securities of the surviving
entity or a parent thereof are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the persons
who beneficially owned the 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

 

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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 of directors that is anticipated or pursuant to an
understanding or agreement in connection with a transaction will be deemed to
have occurred at the time of the transaction, provided such change occurs within
twelve (12) months after the effective date of the transaction); or

(v) 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 percent (30%) 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: provided, however, that solely for purposes of determining whether

 

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Participant has incurred a Separation from Service, the term “Employee” shall
have the meaning assigned to such term in the Separation from Service definition
set forth in this Appendix.

J. Fair Market Value per share of Common Stock on any relevant date shall be the
closing selling price per share on the date in question on the Stock Exchange on
which the Common Stock is at that time primarily traded, 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.

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.

The foregoing definition shall not in any way preclude or restrict the right of
the Corporation (or any Parent or Subsidiary) to discharge or dismiss
Participant or any other person in the Service of the Corporation (or any Parent
or Subsidiary) for any other acts or omissions, but such other acts or omissions
shall not be deemed, for purposes of the Plan or this Agreement, to constitute
grounds for termination for Good Cause.

L. Good Reason shall mean the occurrence of any of the following events 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 Jose Water Company and President and Chief
Executive Officer 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 Jose Water Company and
President and Chief Executive Officer 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 December 9, 2008 (or
any successor agreement) 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.

 

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M. Measurement Period shall mean the period over which the Performance Objective
is to be measured. That period shall be the                  (        )-year
period measured from                          to                         .

N. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time
to time.

O. Participant shall mean the person to whom the Award is made pursuant to the
Agreement.

P. 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.

Q. Performance Objective shall mean the attainment of the total shareholder
return objective set forth in attached Schedule I, as calculated over the
specified Measurement Period.

R. 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.

S. Plan shall mean the Corporation’s Long-Term Incentive Plan.

T. Plan Administrator shall mean either the Board or a committee of the Board
acting in its capacity as administrator of the Plan.

U. 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.

V. Qualifying Change in Control shall mean the date on which there occurs a
Change in Control that also qualifies as: (i) a change in the ownership of the
Corporation, as determined in accordance with Section 1.409A-3(i)(5)(v) of the
Treasury Regulations, (ii) a change in the effective control of the Corporation,
as determined in accordance with Section 1.409A-3(i)(5)(vi) of the Treasury
Regulations, or (iii) a change in the ownership of a substantial portion of the
assets of the Corporation, as determined in accordance with
Section 1.409A-3(i)(5)(vii) of the Treasury Regulations.

W. Separation from Service shall mean the Participant’s cessation of Employee
status by reason of his or her death, retirement or termination of employment.
The Participant shall be deemed to have terminated employment for such purpose
at such time as the level of his or her bona fide services to be performed as an
Employee (or as a

 

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consultant or independent contractor) permanently decreases to a level that is
not more than twenty percent (20%) of the average level of services he or she
rendered as an Employee during the immediately preceding thirty-six (36) months
(or such shorter period for which he or she may have rendered such services).
Solely for purposes of determining when a Separation from Service occurs,
Participant will be deemed to continue in “Employee” status for so long as he or
she remains in the employ of one or more members of the Employer Group, subject
to the control and direction of the employer entity as to both the work to be
performed and the manner and method of performance. “Employer Group” means the
Corporation and any Parent or Subsidiary and any other corporation or business
controlled by, controlling or under common control with, the Corporation, as
determined in accordance with Sections 414(b) and (c) of the Code and the
Treasury Regulations thereunder, except that in applying Sections 1563(1),
(2) and (3) for purposes of determining the controlled group of corporations
under Section 414(b), the phrase “at least 50 percent” shall be used instead of
“at least 80 percent” each place the latter phrase appears in such sections and
in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of
determining trades or businesses that are under common control for purposes of
Section 414(c), the phrase “at least 50 percent” shall be used instead of “at
least 80 percent” each place the latter phrase appears in Section 1.4.14(c)-2 of
the Treasury Regulations. Any such determination as to Separation from Service,
however, shall be made in accordance with the applicable standards of the
Treasury Regulations issued under Section 409A of the Code.

X. 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 as an Employee 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 the following special provisions
shall be in effect for any such leave:

– Should the period of such leave (other than a disability leave) exceed six
(6) months, then Participant shall be deemed to cease Service and to incur a
Separation from Service upon the expiration of the initial six (6)- month period
of that leave, unless Participant retains a right to re-employment under
applicable law or by contract with the Corporation (or any Parent or
Subsidiary).

– Should the period of a disability leave exceed twenty-nine (29) months, then
Participant shall be deemed to cease Service and to incur a Separation from
Service upon the expiration of the initial twenty-nine (29)-month period of that
leave, unless Participant retains a right to re-employment under

 

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applicable law or by contract with the Corporation (or any Parent or
Subsidiary). For such purpose, a disability leave shall be a leave of absence
due to any medically determinable physical or mental impairment that can be
expected to result in death or to last for a continuous period of not less than
six (6) months and causes Participant to be unable to perform the duties of his
or her position of employment with the Corporation (or any Parent or Subsidiary)
or any substantially similar position of employment.

– 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 Participant
is on a leave of absence.

Y. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or
Global Select Market or the New York Stock Exchange.

Z. 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.

AA. 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 (or any other
property) 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 (or any other property) and the distribution of any phantom dividend
equivalents relating to such shares.

 

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SCHEDULE I

PERFORMANCE OBJECTIVE

The performance objective which must be attained for all the Restricted Stock
Units to vest shall be the realization of a total return to the Corporation’s
shareholders for the              (        )-year period measured from
                     to                      (the “Measurement Period”) of at
least                  percent (        %) per year, compounded annually. Such
total shareholder return shall be measured as follows:

first, the base value of the Common Stock at the                      start of
the Measurement Period shall be determined by averaging the closing selling
prices per share of such Common Stock over the days in                      on
which the Common Stock was traded;

then, the ending value of the Common Stock on the                      close of
the Measurement Period shall be determined by averaging the closing selling
prices per share of Common Stock for the days in                      on which
the Common Stock is traded,

then, there shall be determined the dollar amount by which the ending value of
the Common Stock as so determined exceeds the base value of the Common Stock as
determined above (the “Increase in Value”);

then, an additional dollar amount (the “Additional Value”) shall be calculated
by multiplying (i) the number of shares of Common Stock (including fractional
shares) which could have been purchased during the period from
                     to                      had the cash dividend paid per
share of Common Stock during that period been immediately re-invested in Common
Stock at the closing selling price per share on each such dividend payment date
by (ii) the average of the closing selling prices per share of Common Stock for
the days in                      on which the Common stock is traded; and

finally, the Increase in Value calculated above shall be added to the Additional
Value, and the resulting dollar amount shall then be expressed as a percentage
of the base value of the Common Stock calculated at the start of the Measurement
Period.

If the resulting percentage obtained from the foregoing calculation yields a
total shareholder return of at least              percent (        %) per year,
compounded annually, then the Performance Objective shall be deemed to have been
attained.

The foregoing formula shall be appropriately adjusted to reflect any stock
dividends, stock splits, exchange of shares, spin-off transaction, extraordinary
dividend or distribution, combination of shares, recapitalization or other
similar transaction affecting the outstanding shares of Common Stock without the
Corporation’s receipt of consideration.

 

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