--------------------------------------------------------------------------------

EXHIBIT 10.24
 
SAN JOSE WATER COMPANY
SPECIAL DEFERRAL ELECTION   PLAN
 
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008
 
 
ARTICLE I
 
NAME AND PURPOSE
 
1.01           Purpose.  San Jose Water Company, a corporation duly organized
and existing under the laws of State of California (the “Corporation”),
established the Special Deferral Election Plan (the “Plan”), effective as of
January 1, 2005,  in order to provide a select group of the management personnel
and other highly compensated employees of one or more participating employers
with an opportunity to defer a portion of their earnings each year and to
realize an investment return on those funds during the deferral period. The Plan
is hereby amended and restated, effective January 1, 2008, to conform the
provisions of the plan document to the applicable requirements of Section 409A
of the Internal Revenue Code and the Treasury Regulations issued thereunder. The
Plan as so amended and restated shall continue to function solely as a so-called
“top hat” plan of deferred compensation subject to the provisions of the
Employee Retirement Income Security Act of 1974 (as amended from time to time)
applicable to such a plan. The provisions of the Plan and its various amendments
in effect prior to this amendment and restatement were intended to comply with
the proposed Treasury Regulations under Internal Revenue Code Section 409A and
the regulatory guidance provided by the U.S. Treasury and the Internal Revenue
Service with respect to Section 409A compliance and transitional relief.
 
1.02           General.  The benefits provided under the Plan shall be paid, as
they become due, either directly from the Participating Employer’s general
assets or through a grantor trust arrangement established in accordance with the
provisions of Article VIII.  The interest of each participant (and his or her
beneficiary) in any benefits that become payable under the Plan shall be no
greater than that of an unsecured creditor of the Participating Employer.
 
 
ARTICLE II
 
ADMINISTRATION OF THE PLAN
 
2.01           Plan Administrator.  The Plan shall be administered by the
Executive Compensation Committee of the Board of Directors of SJW Corp.  The
Executive Compensation Committee acting in such administrative capacity shall be
referred to in this document as the Plan Administrator and shall have full and
complete authority to administer the Plan and shall select the eligible
employees who are to participate in the Plan.
 
 
 

--------------------------------------------------------------------------------

 
 
2.02           Authority.  The interpretation and construction of any provision
of the Plan and the adoption of rules and regulations for plan administration
shall be made by the Plan Administrator.   Decisions of the Plan Administrator
shall be final and binding on all parties who have an interest in the Plan,
including (without limitation) all decisions relating to an individual’s
eligibility for participation in the Plan, his or her entitlement to benefits
hereunder and the amount of any such benefit entitlement.
 
 
ARTICLE III
 
DEFINITIONS
 
3.01           “Account” shall mean the account maintained for each Participant
on the books and records of the Participating Employer to which there shall be
credited the Eligible Earnings deferred by such Participant pursuant to his or
her Deferral Elections under the Plan.
 
The Participant’s Account will be divided into a series of subaccounts, and
there will accordingly be a separate Deferral Election Subaccount for each year
the Participant defers a portion of his or her Eligible Earnings.  There shall
also be established a separate Deferral Election Subaccount with respect to the
March 2005 bonus payment which the Participant may have elected in whole or in
part to defer under the Plan in accordance with the provisions of the Plan as in
effect at that time.

3.02           “Affiliated Company” shall mean (i) the Corporation and (ii) any
other member of the group of commonly controlled corporations or other
businesses that include the Corporation, as determined in accordance with
Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder.
 
3.03            “Board” shall mean the Corporation’s Board of Directors.
 
3.04           “Change in Control” shall mean a change in ownership or control
of the Corporation  or a change in ownership or control of SJW Corp., a
California corporation (“SJW Corp.) which occurs while SJW  Corp. is the
beneficial owner (as determined pursuant to Rule 13d-3 of the 1934 Act) of
securities that possess more than fifty percent (50%) of the total combined
voting power of the Corporation’s outstanding voting securities.
 
A. Change in Control of the Corporation shall be deemed to occur if:
 
(i)           any one person or more than one person acting as a group (other
than the Corporation or any entity that directly or indirectly controls, is
controlled by or is under common control with, the Corporation) acquires
beneficial ownership (as determined pursuant to Rule 13d-3 of the 1934 Act) of
securities that, together with any other securities  beneficially owned by such
person or group, possess more than fifty percent (50%) of the total combined
voting power of the Corporation’s outstanding voting securities;
 
 
2

--------------------------------------------------------------------------------

 
 
(ii)           a merger, reorganization, consolidation or other similar
transaction to which the Corporation in a party, unless (A) securities
possessing more than fifty percent (50%) of the total combined voting power of
the surviving entity or the parent thereof are, immediately after such
transaction, owned beneficially, directly or indirectly and in substantially the
same proportion, by the person or persons who beneficially owned the
Corporation’s outstanding voting securities immediately before such transaction
or (B) the other party to the merger, reorganization or other transaction is an
entity that directly or indirectly controls, is controlled by or is under common
control with, the Corporation;
 
(iii)          a majority of the Board members is replaced over a twelve (12)-
month period by Board members whose appointment or election is not endorsed by a
majority of those individuals serving as Board members immediately prior to the
date of such appointment or election; or
 
(iv)          the Corporation sells all or substantially all of its assets in
connection with the liquidation or dissolution of the Corporation (other than to
an entity that directly or indirectly controls, is controlled by or is under
common control with, the Corporation), unless securities possessing more than
fifty percent (50%) of the total combined voting power of the entity acquiring
such assets or the parent thereof are, immediately after such sale, owned
beneficially, directly or indirectly and in substantially the same proportion,
by the person or persons who beneficially owned the Corporation’s outstanding
voting securities immediately before such sale.

A Change in Control of SJW Corp. shall be deemed to occur upon the closing of
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
Exchange Act), other than SJW Corp. or a person that directly or indirectly
controls, is controlled by, or is under, control with SJW Corp. or an employee
benefit plan maintained by any such entity, of beneficial ownership (as defined
in Rule 13d-3 of the 1934 Act) of securities of SJW Corp. which, when aggregated
with any other acquisition of such securities by such person or group within the
twelve (12)-month period ending with the date of the latest such
acquisition,  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 then-outstanding securities of SJW Corp.;

(ii)           A merger, recapitalization, consolidation, or other similar
transaction to which SJW Corp. is a party, unless securities representing more
than 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 outstanding voting
securities  of SJW Corp. immediately before the transaction;

 
3

--------------------------------------------------------------------------------

 

(iii)           A sale, transfer or disposition of all or substantially all of
the assets of SJW Corp., unless securities representing more than fifty percent
(50%) of the combined voting power of the then-outstanding securities of the
entity acquiring the SJW Corp. assets or the parent of such acquiring entity are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned the
outstanding voting securities of SJW Corp. immediately before the transaction;

(iv)           A change in the composition of the Board of Directors of SJW
Corp. over a twelve (12)-month period such that a majority of those 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 of SJW Corp. shall be deemed to
occur if the result of the transaction is to give more ownership or control of
SJW Corp. to any person or related group of persons who hold securities
representing more than thirty percent (30%) of the combined voting power of the
outstanding securities of SJW Corp. as of March 3, 2003.

3.05            “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.
 
3.06           “Corporation” shall mean San Jose Water Company and any successor
or assignee corporation, whether by way of merger, acquisition or other
reorganization.
 
3.07           “Deferral Election” shall mean the irrevocable election filed by
the Participant under Article V of this Plan pursuant to which a portion of his
or her Eligible Earnings for the Plan Year is to be deferred in accordance with
the provisions of the Plan.
 
3.08            “Eligible Earnings” shall mean any direct and current cash
compensation, including salary, bonuses and other incentive-type compensation,
earned by the Participant for service as an Employee during the Plan
Year.  Eligible Earnings shall also include any bonus earned by the Participant
for service as an Employee during the period commencing
 
4

--------------------------------------------------------------------------------

 
January 1, 2004 and continuing through March 31, 2005 and otherwise payable to
such Participant in March 2005 in the absence of a Deferral Election under the
Plan (the “March 2005 Bonus Payment”). In no event, however, shall a
Participant’s Eligible Earnings include, for purposes of the Plan:
 
(i)           any item of compensation (other than the March 2005 Bonus Payment)
earned for a period of service rendered prior to the effective date of the
Deferral Election which the Participant filed with respect to that item, or
 
(ii)           any item of compensation paid or distributed to the Participant
after a period of deferral, whether under this Plan or any other program of
deferred compensation maintained by the Corporation or any Affiliated Company.
 
3.09           “Eligible Employee” shall mean any Employee who is either a
highly compensated employee of his or her Participating Employer or part of its
management personnel, as determined pursuant to guidelines established from time
to time by the Plan Administrator.  In no event shall any of the following
individuals be deemed to be Eligible Employees:
 
(i)           an Employee who is not resident in the United States,

(ii)          any individual classified as an independent contractor or
consultant or as a temporary employee, or

(iii)         any individual who has ceased Employee status, whether by reason
of Retirement or otherwise.

3.10           “Employee” shall mean an individual for so long as he or she is
in the employ of at least one member of the Employer Group, subject to the
control and direction of the employer entity as to both the work to be performed
and the manner and method of performance.
 
3.11           “Employer Group” means the (i) Corporation and (ii) any other
member of the group of commonly controlled corporations or other businesses that
include 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.
 
3.12           “Extended Deferral Election” shall mean a Participant’s election,
made in accordance with the terms and conditions of Section 7.02 of this Plan,
to defer the distribution of his or her Deferral Election Subaccount for an
additional period of at least five (5) years measured from the January 31 date
(or the date of any other specified event) on which that particular subaccount
was scheduled to first become due and payable under the Plan.
 
 
5

--------------------------------------------------------------------------------

 
 
3.13           “1934 Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.
 
3.14            “Participant” shall mean each Eligible Employee who participates
in the Plan through one or more Deferral Elections under Article V.
 
3.15           “Participating Employer” shall mean, with respect to each
Participant, the Affiliated Company employing that individual which has, with
the consent of the Plan Administrator, adopted this Plan as a deferred
compensation program for one or more of its Eligible Employees. The
Participating Employers for the 2007 Plan Year are set forth in attached
Schedule I. Any additional Affiliated Companies which may from time to time
become Participating Employers shall be listed in revised Schedule I.
 
3.16            “Plan Year” shall mean each calendar year the Plan continues in
effect, beginning with the 2005 calendar year.
 
3.17           “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 non-employee consultant) permanently decreases to a
level that is not more than twenty percent (20%) of the average level of
services he or she rendered as an Employee during the immediately preceding
thirty-six (36) months (or such shorter period for which he or she may have
rendered such Employee service).  Any such determination as to Separation from
Service, however, shall be made in accordance with the applicable standards of
the Treasury Regulations issued under Code Section 409A.  In addition to the
foregoing, a Separation from Service will not be deemed to have occurred while
the Participant is on military leave, sick leave or other bona fide leave of
absence if the period of such leave does not exceed six (6) months or any longer
period for which such Participant’s right to reemployment with one or more
members of the Employer Group is provided either by statute or contract;
provided, however, that in the event of a Participant’s leave of absence due to
any medically determinable physical or mental impairment that can be expected to
result in death or to last for a continuous period of not less than six (6)
months and that causes such individual to be unable to perform his or her duties
as an Employee, no Separation from Service shall be deemed to occur during the
first twenty-nine (29) months of such leave.  If the period of leave exceeds six
(6) months (or twenty-nine (29) months in the event of disability as indicated
above) and the Participant’s right to reemployment is not provided either by
statute or contract, then such Employee will be deemed to have a Separation from
Service on the first day immediately following the expiration of such six
(6)-month or twenty-nine (29)-month period.
 
 
6

--------------------------------------------------------------------------------

 
 
3.18            “Specified Employee” shall mean a “key employee” (within the
meaning of that term under Code Section 416(i)), as determined by the Plan
Administrator in accordance with the applicable standards of Code Section 409A
and the Treasury Regulations thereunder and applied on a consistent basis for
all non-qualified deferred compensation plans of the Employer Group subject to
Code Section 409A.  The Specified Employees shall be identified on December 31
of each calendar year and shall have that status for the twelve (12)-month
period beginning on April 1 of the following calendar year.
 
3.19            “Valuation Date” shall mean any date as of which the balance
credited to each of the Participant’s Deferral Election Subaccounts under the
Plan is to be determined. If the date in question is coincident with a date on
which the U.S. financial markets are open for business, then the Valuation Date
shall be that same date; otherwise, the Valuation Date shall be first date
immediately preceding the date in question on which the U.S. financial markets
are open for business.
 
 
ARTICLE IV
 
PARTICIPATION
 
4.01           Eligibility Rules.  The Plan Administrator shall have absolute
discretion in selecting the Eligible Employees who are to participate in the
Plan for each Plan Year.  An Eligible Employee selected for participation for
any Plan Year must, in order to participate in the Plan for that year, file his
or her Deferral Election on or before the last day of the immediately preceding
Plan Year. However, an Eligible Employee who is first selected for participation
in the Plan after the start of a Plan Year and who has not otherwise been
eligible for participation in any other non-qualified elective account balance
plan subject to Code Section 409A and maintained by one or more Affiliated
Companies will have until the thirtieth (30th) day following the date he or she
is so selected in which to file his or her Deferral Election for that Plan Year.
 
4.02           Cessation of Participation.  Every Eligible Employee who becomes
a Participant may continue to file Deferral Elections under the Plan for one or
more subsequent Plan Years until the earliest of (i) his or her exclusion from
the Plan upon written notice from the Plan Administrator, (ii) his or her
cessation of Employee status or (iii) the termination of the Plan.  The Plan
Administrator shall have complete discretion to exclude one or more individuals
from Participant status for one or more Plan Years as the Plan Administrator
deems appropriate, including the entire period the Participant continues in
Employee status following such exclusion.  However, no such exclusion authorized
by the Plan Administrator shall become effective until the first day of the
first Plan Year coincident with or next following the date of the Plan
Administrator resolution authorizing such exclusion.  If any individual is
excluded from Participant status for one or more Plan Years, then such
individual shall not be entitled to defer any part of his or her Eligible
Earnings for those Plan Years.
 
 
7

--------------------------------------------------------------------------------

 
 
ARTICLE V
 
DEFERRAL ELECTION
 
5.01           Annual Election.  Each Participant shall have the right to file a
Deferral Election to defer a portion of his or her Eligible Earnings for each
Plan Year for which he or she is to be or remain a Participant.
 
5.02           Election Procedure.  Each Deferral Election shall be made in
compliance with all of the following requirements and shall not be effective
unless such requirements are met:
 
A.                      The Deferral Election must be exercised by means of a
written notice filed with the Plan Administrator or its designate. The notice
shall be substantially in the form of the Deferral Election attached as Exhibit
A and must be filed on or before the last day of the calendar year immediately
preceding the start of the Plan Year for which the Eligible Earnings subject to
that election are to be earned.  However, an Eligible Employee who is first
selected for participation in the Plan after the start of a Plan Year and who
has not otherwise been eligible for participation in any other non-qualified
elective account balance plan subject to Code Section 409A and maintained by one
or more Affiliated Companies must file his or her initial Deferral Election no
later than thirty (30) days after the date he or she is so selected.  Such
Deferral Election shall only be effective for Eligible Earnings attributable to
Employee service for the period commencing with the first day of the first
calendar month coincident with or next following the filing of such Deferral
Election and ending with the close of such Plan Year.
 
B.           The percentage of Eligible Earnings which a Participant may elect
to defer each Plan Year pursuant to his or her Deferral Election must comply
with the following guidelines:
 
(i)           To the extent the Participant’s base salary is the subject of the
Deferral Election, the amount to be deferred pursuant to such election must not
be less than five percent (5%), nor more than fifty percent (50%), of the
portion of such base salary included within his or her Eligible Earnings for
such Plan Year.

(ii)           To the extent the Participant’s bonus or other incentive
compensation is the subject of the Deferral Election, the amount to be deferred
pursuant to such election must be a multiple of five percent (5%), up to one
hundred percent (100%) of the portion of such bonus or other incentive
compensation included in his or her Eligible Earnings for such Plan Year.

C.           The Participant must also specify in the Deferral Election the
event or date which shall serve as the commencement date for the distribution of
the Deferral Election Subaccount attributable to that election. The following
commencement dates shall be permissible:
 
 
8

--------------------------------------------------------------------------------

 
 
-           January 31 of any calendar year which is at least five (5) calendar
years after the calendar year in which the Eligible Earnings credited to such
subaccount were earned,
 
-           January 31 of the calendar year following the calendar year in which
occurs the Participant’s Separation from Service,
 
-           the earlier of (i) January 31 of any calendar year which is at least
five (5) calendar years after the calendar year in which the Eligible Earnings
credited to such subaccount were earned or (ii) January 31 of the calendar year
following the calendar year in which occurs the Participant’s Separation from
Service, or
 
-           the closing of a Change in Control transaction.
 
-           the earliest of (i) January 31 of any calendar year which is at
least five (5) calendar years after the calendar year in which the Eligible
Earnings credited to such subaccount were earned, (ii) January 31 of the
calendar year following the calendar year in which occurs the Participant’s
Separation from Service or (iii) the closing of a Change in Control transaction,
or
 
-           any other combination of the foregoing.
 
D.           The Participant shall also specify in the Deferral Election the
manner in which the Deferral Election Subaccount attributable to that election
shall be distributed.  The following methods of distribution shall be
permissible:
 
-           lump sum payment,
 
-           annual installments over five (5)-year term, or
 
-           annual installments over ten (10)-year term
 
For purposes of Sections 7.02 and 7.08, an installment distribution shall be
treated as a single aggregate payment, and not as a series of individual
installment payments.
 
E.           The Deferral Election for a particular Plan Year shall become
irrevocable as of the first day of that Plan Year (or any later day the Deferral
Election for such Plan Year may be filed under Section 5.02 by a newly-eligible
Participant), and no subsequent changes may be made to that Deferral Election
once it becomes irrevocable.
 
5.03           Deferral Election Subaccounts.  A separate Deferral Election
Subaccount shall be established for each Plan Year for which the Participant
defers a portion of his or her Eligible Earnings under the Plan.  Such
subaccount shall be credited with the Eligible Earnings subject to the Deferral
Election in effect for that Plan Year, as and when those Eligible Earnings would
have otherwise become due and payable to the Participant in the absence of such
Deferral Election. A separate Deferral Election Subaccount shall also be
maintained for any portion of the March 2005 Bonus Payment which the Participant
may have elected to defer under the Plan.  The Participant shall at all times be
fully vested in the balance credited to each of his or her Deferral Election
Subaccounts.
 
 
9

--------------------------------------------------------------------------------

 
 
5.04           Withholding Taxes.  The Participant shall be responsible for the
satisfaction of all federal, state and local employment and other payroll taxes
(including FICA taxes) which are required to be withheld on the Eligible
Earnings deferred under the Plan and shall accordingly pay such taxes as and
when they become due under applicable law, either by separate check payable to
the Participating Employer or through the Participating Employer’s withholding
of those taxes from other wages and earnings payable to the
Participant.  Accordingly, the  Participant’s  Deferral Election shall be deemed
to authorize such tax withholding by the Participating Employer in the absence
of any other arrangement made by the Participant to satisfy his or her
withholding tax liability.
 
5.05           Subsequent Distribution.  The Deferral Election Subaccounts shall
be distributed in accordance with the provisions of Article VII of the Plan.
 
 
ARTICLE VI
 
INVESTMENT RETURN

6.01           Investment Return for 2005 Calendar Year. For the period from
January 1, 2005 to December 31, 2005 (the “2005 Investment Year”), each of the
Participant’s outstanding Deferral Election Subaccounts was adjusted
periodically to reflect the earnings, gains and losses equal to the actual
investment experience realized for the period by one or more of the investment
funds selected by the Participant from the investment alternatives available
under the Plan for the 2005 Investment Year. At the close of the 2005 Investment
Year, each of the Participant’s outstanding Deferral Election Subaccounts was
valued in accordance with the valuation procedures set forth in Section 6.05,
and the balance shall thereafter be credited with a fixed rate of interest in
accordance with the applicable provisions of Sections 6.02 and 6.03.
 
6.02           Investment Return for 2006 Calendar Year. For the period from
January 1, 2006 to December 31, 2006 (the “2006 Investment Year”), each of the
Participant’s outstanding Deferral Election Subaccounts was credited with a
fixed rate of interest, compounded semi-annually, equal to the 30-year long-term
borrowing cost of funds to the Corporation (or the equivalent thereof), as
measured as of the start of the 2006 Investment Year. Following the close of the
2006 Investment Year, the Deferral Election Subaccounts shall be credited with a
fixed rate of interest in accordance with the applicable provisions of Section
6.03
 
6.03           Investment Return for Subsequent Calendar Years.  Commencing
January 1, 2007 and continuing throughout the period there remains an
outstanding balance credited to such subaccount, each of the Participant’s
Deferral Election Subaccounts shall be credited with a fixed rate of interest,
compounded semi-annually and periodically reset in accordance with the following
procedures:
 
 
10

--------------------------------------------------------------------------------

 
 
-           For each Plan Year, beginning with the 2007 Plan Year, the fixed
rate of interest shall be equal to the lower of (i) the then current 30-year
long-term borrowing cost of funds to the Corporation (or the equivalent
thereof), as measured as of the start of such Plan Year, or (ii) 120% of the
long-term Applicable Federal Rate determined as of the start of such Plan Year
and based on semi-annual compounding.

6.04           Charges to Account.  Each of the Participant’s Deferral Election
Subaccounts shall be charged with its allocable share of the costs and expenses
incurred in connection with the administration of the investment return
provisions of this Article VI, except to the extent one or more Participating
Employers elect in their sole discretion to pay all or a portion of those costs
and expenses.
 
6.05           Account Value.   The value of each of the Participant’s Deferral
Election Subaccounts on any Valuation Date in question shall be equal to the
balance credited to that subaccount as of the close of business on that date,
including the appropriate adjustments for (i) any deferred Eligible Earnings or
investment gains or earnings or interest return credited to such subaccount as
of such date and (ii) any distributions, hardship withdrawals or investment
losses charged against the subaccount as of such date.
 
6.06           Account Statements.  Following the close of each calendar
quarter, each Participant shall receive a written statement of the value of each
of his or her Deferral Election Subaccounts as of the last Valuation Date in
that quarter.
 
 
ARTICLE VII
 
DISTRIBUTION OF BENEFITS
 
7.01           Normal Distribution.  The Participant’s Deferral Election
Subaccount for a particular Plan Year shall become due and payable in accordance
with the commencement date and method of distribution designated by the
Participant in his or her Deferral Election for that Plan Year, and such
distribution shall begin as soon as administratively practicable on or after the
designated commencement date or event, but in no event later than the later of
(i) the close of the calendar year in which the designated commencement date or
event occurs or (ii) the fifteenth (15th) day of the third (3rd) calendar month
following the occurrence of such commencement date or event.
 
7.02           Extended Deferral Election.  A Participant may make an Extended
Deferral Election with respect to any Deferral Election Subaccount maintained
for him or her under the Plan, provided the Participant remains at the time of
such election a highly compensated Employee or member of the management group of
an Affiliated Company (as determined pursuant to guidelines established by the
Plan Administrator).  However, only one Extended Deferral Election may be made
per Deferral Election Subaccount. The Extended Deferral Election must be made by
filing an appropriate election form with the Plan Administrator at least twelve
(12) months prior to the date the Deferral Election Subaccount subject to such
election is scheduled to become payable pursuant to Section 7.01, and the
Extended Deferral Election for that subaccount shall in no event become
effective or otherwise have any force or applicability until the expiration of
the twelve (12)-month period measured from the date such election is filed with
the Plan Administrator. Accordingly, the Extended Deferral Election shall become
null and void should the Participant’s pre-existing specified commencement date
or event occur within that twelve (12)-month period. The Extended Deferral
Election must also specify a January 31 commencement date in a Plan Year which
is at least five (5) Plan Years later than the Plan Year in which the
distribution of that subaccount would have otherwise been made or commenced in
the absence of the Extended Deferral Election.  As part of the Extended Deferral
Election, the Participant may also elect a different method of distribution,
provided the selected method complies with one of the forms of distribution
specified in Section 5.02E. Once the Extended Deferral Election becomes
effective in accordance with the foregoing provisions of this Paragraph 7.02,
such election shall remain in effect, whether or not the Participant continues
in Employee status; provided, however, that in the event of the Participant’s
death, the provisions of Paragraph 7.05 shall apply.
 
 
11

--------------------------------------------------------------------------------

 
 
7.03           Special Distribution Election in 2007.  Notwithstanding the
limitations and restrictions of Section 7.02, Participants may make a special
election to change the time and form of the distribution of one or more of their
Deferral Election Subaccounts, provided that the distribution election is made
at least twelve months in advance of the newly elected distribution date, and
the election is made no later than December 31, 2007.  An election made pursuant
to this Section 7.03 shall be treated as an initial distribution election and
shall be subject to any special administrative rules imposed by the Plan
Administrator, including rules intended to comply with Section 409A of the Code.
No election under this Section 7.03 shall (i) change the payment date of any
distribution otherwise scheduled to be paid in 2007 or cause a payment to be
made in 2007 that was otherwise scheduled for payment in a later year or (ii) be
permitted after December 31, 2007
 
7.04            Hardship Withdrawal.  If a Participant (A) incurs a severe
financial hardship as a result of (i) a sudden and unexpected illness or
accident involving the Participant or his or her spouse or any dependent (as
determined pursuant to Section 152(a) of the Code),  (ii) a casualty loss
involving the Participant’s property or (iii) other similar extraordinary and
unforeseeable event beyond the Participant’s control and (B) does not have any
other resources available, whether through reimbursement or compensation (by
insurance or otherwise), liquidation of existing assets (to the extent such
liquidation would not itself result in financial hardship) or cancellation of
his or her existing Deferral Election under the Plan, to satisfy such financial
emergency, then the Participant may apply to the Plan Administrator for an
immediate distribution from his or her Account in an amount necessary to satisfy
such financial hardship and the tax liability attributable to such
distribution.  The Plan Administrator shall have complete discretion to accept
or reject the request and shall in no event authorize a distribution in an
amount in excess of that reasonably required to meet such financial hardship and
the tax liability attributable to that distribution.
 
7.05           Death Before Full Distribution. If the Participant dies before
the entire balance of his or her Account is distributed, then the
unpaid  balance shall be paid in a lump sum to his or her designated
beneficiary(ies) under the Plan.  Such payment shall be made as soon as
administratively practical following the Participant’s death, but in no event
later than the later of (i) the end of the calendar year in which the
Participant’s death occurs or (ii) the fifteenth (15th) day of the third (3rd)
calendar month following the date of the Participant’s death. The Participant
may designate one or more such beneficiaries, or may revoke his or her existing
beneficiary designation and make a new designation, by filing a properly
completed Beneficiary Designation, in substantially the form of attached Exhibit
B, with the Plan Administrator or its designate.  Should the Participant die
without a valid beneficiary designation in effect or after the death of his or
her designated beneficiary(ies), then any amounts due him or her under the Plan
shall be paid to the personal representative of his or her estate.
 
 
12

--------------------------------------------------------------------------------

 
 
7.06           Valuation.   The amount to be distributed from any Deferral
Election Subaccount pursuant to this Article VII shall be determined on the
basis  of the balance credited to that subaccount as of the most recent
practicable Valuation Date (as determined by the Committee or its designate)
preceding the date of the actual distribution. For a Participant who has elected
an installment distribution for any Deferral Election Subaccount, such
distribution shall be effected through a series of substantially equal payments
(as adjusted for investment gains or losses), and the amount of each such annual
installment shall accordingly be determined by dividing the balance credited to
that subaccount as of the most recent practicable Valuation Date (as determined
by the Plan Administrator) preceding the date of the actual distribution of that
installment by the number of installments (including the current installment)
remaining in the selected five (5) or ten (10)-year distribution period.
 
7.07           Withholding.  All payments made under the Plan shall be subject
to the Participating Employer’s withholding of all required federal, state and
local income and employment/payroll taxes, and all such payments shall be net of
such tax withholding.
 
7.08           Small Account Balances.
 
A.           If the aggregate balance of the Participant’s Account is not
greater than the applicable dollar amount in effect under Code Section
401(g)(1)(B) at the time of the Participant’s Separation from Service and the
Participant is not otherwise at that time participating in any other
non-qualified elective account balance plan subject to Code Section 409A and
maintained by one or more members of the Affiliated Group, then that balance
shall be distributed to the Participant in a lump sum distribution as soon as
administratively practical following such Separation from Service, whether or
not the Participant elected that form of distribution or distribution event, but
in no event later than the later of (i) the end of the calendar year in which
such Separation from Service occurs or (ii) the fifteenth (15th) day of the
third (3rd) calendar month following the date of such Separation from Service.
 
B.           Should the aggregate present value of all of the remaining unpaid
installments due to a Participant who is receiving one or more installment
distributions under the Plan fall below Twenty-Five Thousand Dollars ($25,000),
then those unpaid installments shall be paid to the Participant in a single lump
sum within thirty (30) days thereafter.
 
 
13

--------------------------------------------------------------------------------

 
 
7.09           Mandatory Deferral of Distribution.  Notwithstanding any
provision to the contrary in this Article VII or any other article in the Plan,
no distribution which becomes due and payable by reason of a Participant’s
Separation from Service shall be made to such  Participant prior to the earlier
of (i) the first day of the seventh (7th) month following the date of the
Participant’s 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 Specified Employee 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 deferral period, all payments deferred pursuant to
this Section 7.09 (whether they would have otherwise been payable in a single
sum or in installments in the absence of such deferral) shall be paid in a lump
sum to the Participant, and any remaining payments due under the Plan shall be
paid in accordance with the normal payment dates specified for them
herein.  During such deferral period, the Participant’s Account shall continue
to be subject to the investment return provisions of Article VI.
 
 
ARTICLE VIII
 
MISCELLANEOUS

8.01           Benefits Not Funded.  The obligation to pay the vested balance of
each Participant’s Deferral Election Subaccounts hereunder shall at all times be
an unfunded and unsecured obligation of the Participating Employer. Except to
the extent the Corporation or any Participating Employer may in its sole
discretion elect to implement a grantor trust to hold funds for the payment of
any benefits which become due and payable hereunder, neither the Corporation nor
any Participating Employer shall have any obligation to establish any trust,
escrow arrangement or other fiduciary relationship for the purpose of
segregating funds for the payment of the balances credited to such subaccounts,
nor shall the Corporation or any Participating Employer be under any obligation
to invest any portion of its general assets in mutual funds, stocks, bonds,
securities or other similar investments in order to accumulate funds for the
satisfaction of its obligations under the Plan.
 
8.02           General Creditor Status. The Participant (or his or her
beneficiary) shall look solely and exclusively to the general assets of the
Participating Employer for the payment of the Deferral Election Subaccounts
maintained on the Participant’s behalf under the Plan.  Payments from any
grantor trust established by the Corporation or any Participating Employer under
the Plan shall be made as and when benefits become payable to Participants in
accordance with the distribution provisions of Article VII of the Plan, with any
remaining balance due the Participants to be paid out of the general assets of
the Participating Employer.
 
8.03           No Employment Right.  Neither the action of the Corporation or
the Participating Employer in establishing or maintaining the Plan, nor any
action taken under the Plan by the Committee, nor any provision of the Plan
itself shall be construed so as to grant any person the right to remain in the
employ of the Participating Employer or any other Affiliated Company for any
period of specific duration, and the Participant may be discharged at any time,
with or without cause.
 
 
14

--------------------------------------------------------------------------------

 
 
8.04           Amendment/Termination.  The Plan Administrator may at any time
amend the provisions of the Plan to any extent and in any manner the Plan
Administrator shall deem advisable, and such amendment shall become effective at
the time of such Plan Administrator action. Without limiting the generality of
the foregoing, the Plan Administrator may amend the Plan to impose such
restrictions upon (i) the timing, filing and effectiveness of Deferral Elections
or Extended Deferral Elections and (ii) the distribution provisions of Article
VII which the Plan Administrator deems appropriate or advisable in order to
avoid the current income taxation of amounts deferred under the Plan which might
otherwise occur as a result of changes to the tax laws and regulations governing
deferred compensation arrangements such as the Plan. The Plan Administrator may
also at any time terminate the Plan in whole or in part.  Except for such
modifications, limitations or restrictions as may otherwise be required to avoid
current income taxation or other adverse tax consequences to Participants as a
result of changes to the tax laws and regulations applicable to the Plan, no
such plan amendment or plan termination authorized by the Plan Administrator
shall adversely affect the benefits of Participants accrued to date under the
Plan or otherwise reduce the then outstanding balances credited to their
Deferral Election Subaccounts or otherwise adversely affect the distribution
provisions in effect for those subaccounts, and all amounts deferred prior to
the date of any such plan amendment or termination shall, subject to the
foregoing exception, continue to become due and payable in accordance with the
distribution provisions of Article VII as in effect immediately prior to such
amendment or termination.
 
8.05           Applicable Law.  The Plan is intended to constitute an unfunded
deferred compensation arrangement for a select group of management and other
highly compensated persons, and all rights hereunder shall be construed,
administered and governed in all respects in accordance with the provisions of
the Employee Retirement Income Security Act of 1974 (as amended from time to
time) applicable to such an arrangement and, to the extent not pre-empted
thereby, by the laws of the State of California without resort to its
conflict-of-laws provisions.  If any provision of this Plan shall be held by a
court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions of the Plan shall continue in full force and effect.
 
8.06           Satisfaction of Claims.  Any payment made to a Participant or his
or her legal representative or beneficiary in accordance with the terms of this
Plan shall to the extent thereof be in full satisfaction of all claims with
respect to that payment which such person may have against the Plan, the Plan
Administrator (or its designate), the Corporation, the Participating Employer
and all other Affiliated Companies, any of whom may require the Participant or
his or her legal representative or beneficiary, as a condition precedent to such
payment, to execute a receipt and release in such form as shall be determined by
the Plan Administrator.
 
8.07           Alienation of Benefits.  No person entitled to any benefits under
the Plan shall have the right to alienate, pledge, hypothecate or otherwise
encumber his or her interest in such benefits, and those benefits shall not, to
the maximum extent permissible by law, be subject to claim of his or her
creditors or liable to attachment, execution or other process of law.
Notwithstanding the foregoing, any benefits in which the Participant has a
vested right under the Plan may instead be distributed to one or more third
parties (including, without limitation, the Participant’s former spouse) to the
extent such distribution is required by a domestic relations order or other
order or directive of a court with jurisdiction over the Participant and his or
her benefits hereunder, and the Participant shall cease to have any right,
interest or entitlement to any benefits to be distributed pursuant to such order
or directive.
 
 
15

--------------------------------------------------------------------------------

 
 
8.08           Expenses.  In addition to the expenses and costs set forth in
Section 6.03, each  Participant’s Account shall also be charged with its
allocable share of all other costs and expenses incurred in the operation and
administration of the Plan, except to the extent one or more Participating
Employers elect in their sole discretion to pay all or a portion of those costs
and expenses.
 
8.09           Successors and Assigns.  The obligation of each Participating
Employer  to make the payments required hereunder shall be binding upon the
successors and assigns of that Participating Employer, whether by merger,
consolidation, acquisition or other reorganization. Except for such
modifications, limitations or restrictions as may otherwise be required to avoid
current income taxation or other adverse tax consequences to Participants as a
result of changes to the tax laws and regulations applicable to the Plan, no
amendment or termination of the Plan by any such successor or assign shall
adversely affect or otherwise impair the rights of Participants to receive
benefit payments hereunder, to the extent attributable to amounts deferred prior
to the date of such amendment or termination, in accordance with the applicable
distribution provisions of Article VII hereof as in effect immediately prior to
such amendment or termination.
 
 
ARTICLE IX
 
BENEFIT CLAIMS
 
9.01           Claims Procedure.  No application is required for the payment of
benefits under the Plan.  However, if any Participant (or beneficiary) believes
he or she is entitled to a benefit from the Plan which differs from the benefit
determined by the Plan Administrator,  then such individual may file a written
claim for benefits with the Plan Administrator.  Each claim shall be acted upon
and approved or disapproved within ninety (90) days following receipt by the
Plan Administrator.
 
9.02           Denial of Benefits.  In the event any claim for benefits is
denied, in whole or in part, the Plan Administrator shall notify the claimant in
writing of such denial and of his or her right to a review by the Plan
Administrator and shall set forth, in a manner calculated to be understood by
the claimant, specific reasons for such denial, specific references to pertinent
provisions of the Plan on which the denial is based, a description of any
additional material or information necessary to perfect the claim, an
explanation of why such material or information is necessary, and an explanation
of the review procedure.
 
 
16

--------------------------------------------------------------------------------

 
 
9.03           Review.
 
A.           Any person whose claim for benefits is denied in whole or in part
may appeal to the Plan Administrator for a full and fair review of the decision
by submitting to the Plan Administrator, within ninety (90) days after receiving
written notice from the Plan Administrator of such denial, a written statement:
 
(i)           requesting a review by the Plan Administrator of his or her claim
for benefits;
 
(ii)          setting forth all of the grounds upon which the request for review
is based and any facts in support thereof; and
 
(iii)         setting forth any issues or comments which the claimant deems
pertinent to his or her claim.
 
B.           The Plan Administrator shall act upon each such appeal within sixty
(60) days after receipt of the claimant’s request for review by the Plan
Administrator, unless special circumstances require an extension of time for
processing.  If such an extension is required, written notice of the extension
shall be furnished to the claimant within the initial sixty (60)-day period, and
a decision shall be rendered as soon as possible, but not later than one hundred
twenty (120) days after receipt of the initial request for review.  The Plan
Administrator shall make a full and fair review of each such appeal and any
written materials submitted by the claimant or the Participating Employer in
connection therewith and may require the Participating Employer or the claimant
to submit such additional facts, documents or other evidence as the Plan
Administrator may, in its sole discretion, deem necessary or advisable in making
such a review.  On the basis of its review, the Plan Administrator shall make an
independent determination of the claimant’s eligibility for benefits under the
Plan.  The decision of the Plan Administrator  on any benefit claim shall be
final and conclusive upon all persons.
 
C.           Should the Plan Administrator deny an appeal in whole or in part,
the Plan Administrator shall give written notice of such decision to the
claimant, setting forth in a manner calculated to be understood by the claimant
the specific reasons for such denial and specific reference to the pertinent
Plan provisions on which the decision was based.  The notice shall also  include
a statement that the claimant has a right to bring a right to bring a civil
action under Section 502(a) of the Employee Retirement Income Security Act of
1974 (as amended from time to time).
 

 
17

--------------------------------------------------------------------------------

 

SCHEDULE A

LIST OF PARTICIPATING EMPLOYERS

 
18

--------------------------------------------------------------------------------

 

EXHIBIT A
 
SPECIAL DEFERRAL ELECTION PLAN
 
DEFERRAL ELECTION FORM
200__ PLAN YEAR

 
 

--------------------------------------------------------------------------------

 

DEFERRAL ELECTION FORM
200__ PLAN YEAR
 
Please check the applicable boxes and complete form as appropriate.
 
£
A.
I hereby elect to participate in the Special Deferral Election Plan (the “Plan”)
for the 200__ plan year

 
I hereby elect to defer payment of a portion of my eligible earnings for
services rendered in the 200__ plan year, in the dollar amount determined in
accordance with the following elections:
 
Base Salary:   ____% (in increments of one percent, with a minimum of 5% and a
maximum of 50%)  of my base salary earned for service rendered during the 200__
plan year.
 
Bonus/Incentive Compensation:  ____% (in increments of 5%, up to a maximum of
100%) of any cash bonus or other cash incentive compensation earned for service
rendered during the 200__ plan year.
 
£
B.
I hereby elect the following commencement date for the distribution of  my
deferral election subaccount for the 200__ plan year:

 
____          January 31 of calendar year _______________  (must be at least
five (5) calendar years after the 200__ calendar year).
 
____          January 31 of the calendar year following the calendar year in
which my separation from service occurs.
 
____          the closing of a Change in Control (as such term is defined in the
Plan)
 
____          the earlier of (i) January 31 of  calendar year _________ (a
calendar year which is at least five (5) calendar years after the 200__ calendar
year) or (ii) January 31 of the calendar year following the calendar year in
which my separation from service occurs.
 
____          the earlier of (i) January 31 of the calendar year following the
calendar year in which my separation from service occurs or (ii) the closing of
a Change in Control.
 
____          the earlier of (i) January 31 of  calendar year ___________ (a
calendar year which is at least five (5) calendar years after the 200__ calendar
year) or (ii) the closing of a Change in Control.
 
 
2

--------------------------------------------------------------------------------

 

_____                      the earliest of (i) January 31 of  calendar year
___________ (a calendar year which is at least five (5) calendar years after the
200__ calendar year), (ii) January 31 of the calendar year following the
calendar year in which my separation from service occurs or (iii) the closing of
a Change in Control.
 
£
C.
I hereby elect the following method of distribution for my deferral election
subaccount for the 200__ plan year:

 
___           lump sum payment
 
___           annual installments over five (5)-year term, or
 
___           annual installments over ten (10)-year term
 
I understand that no distribution shall be made or commence, in connection with
my separation from service, 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 my death, if I am deemed at the time of such separation from
service to be a “specified employee” within the meaning of that term under Code
Section 409A and the applicable regulations thereunder.

As required by the Federal tax laws, my deferral election shall
become  irrevocable on the first day of the 200___  plan year and cannot be
changed or modified under any circumstances after that day.
 
To the extent my rights under law to the earnings deferred pursuant to this
election are greater than the rights of a general unsecured creditor of my
Participating Employer, I hereby waive those rights and agree that I shall have
only the rights of a general unsecured creditor with respect to the payment of
my deferred earnings.
 
I understand I am responsible for the satisfaction of all federal, state and
local employment and other payroll taxes (including FICA taxes) which are
required to be withheld on the compensation I defer under the Plan, and I shall
pay such taxes as and when they become due under applicable law, either by
separate check payable to my Participating Employer or through my Participating
Employer’s withholding of those taxes from other wages and earnings payable to
me.  Accordingly, this deferral election shall be deemed to authorize such tax
withholding by my Participating Employer in the absence of any other arrangement
made by me to satisfy such withholding tax liability.
 
£
D.
I hereby elect not to defer any portion of my base salary for the 200__ Plan
Year under the  Plan.

 
3

--------------------------------------------------------------------------------

 
£
E.
I hereby elect not to defer any portion of my bonus or other incentive
compensation for the 200__ Plan Year under the Plan.

 
£
F.
I hereby elect to have the deferral elections specified in Sections A through C
above continue for each subsequent plan year, until I change my deferral
elections in accordance with the provisions of the Plan.  Any such change shall
become effective for a particular plan year only if the new deferral election is
filed not later than the December 31 immediately prior to the start of that plan
year.

 

 
Printed Name:
   
 
     
Signature:
           
Dated:
 
, 200__

 
 
 

--------------------------------------------------------------------------------

 

EXHIBIT B

SPECIAL  DEFERRAL ELECTION  PLAN
 
DESIGNATION OF BENEFICIARY
 
I hereby designate the following individual or individuals as the beneficiary or
beneficiaries of all my right, title and interest in and to the unpaid vested
balance credited to my account under the Special Deferral Election Plan at the
time of my death, hereby revoking any prior designation of beneficiaries made by
me under such Plan:
 

   
Name
 
Relationship
 
Percent of Total
             
(1)
                         
(2)
                         
(3)
                         
(4)
           

The beneficiary must survive me; otherwise, his or her designated share is to be
divided equally among the beneficiaries who do survive me.

 
Signature:
           
Name:
           
Date:
 
, 20___

 
 

--------------------------------------------------------------------------------