Document:

EXHIBIT 10.2

 

SJW
CORP.

 

RESTRICTED
STOCK UNIT ISSUANCE AGREEMENT

 

AMENDED AND RESTATED EFFECTIVE AS OF JULY 1, 2008

 

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.            The
Board previously made an Award of Restricted Stock Units to Participant on _________,
________, and that Award is evidenced by a Restricted Stock Unit Issuance
Agreement between the Corporation and Participant dated that same date.

 

D.            The Corporation and
Participant wish to execute this Amended and Restated Agreement solely for the
purpose of bringing the Restricted Stock Unit Issuance Agreement into
documentary compliance with the final Treasury Regulations under Section 409A
of the Code, effective July 1, 2008.

 

E.             All capitalized terms in this Agreement shall
have the meaning assigned to them in the attached Appendix A.

 

NOW, THEREFORE, it is hereby agreed as
follows:

 

1.             Grant of Restricted Stock Units.  The
Corporation hereby awards to Participant, as of the Award Date, Restricted
Stock Units under the Plan.  Each
Restricted Stock Unit which vests during Participant’s period of Service shall
entitle Participant to receive one share of Common Stock on the applicable
vesting date.  The number of shares of
Common Stock subject to the awarded Restricted Stock Units, the applicable
vesting schedule for those shares, the applicable date or dates on which those
vested shares shall become issuable to Participant and the remaining terms and
conditions governing the award (the “Award”) shall be as set forth in this
Agreement.

 

	
  Participant

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Award Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of Shares Subject to Award:

  	
   

  	
                 
  shares of Common Stock (the “Shares”)

  
				

 

 

	
  Vesting Schedule:

  	
   

  	
  The Shares shall vest in a series of four (4) successive equal
  annual installments upon Participant’s completion of each year of Service
  over the four (4)-year period measured from the Award Date (the “Normal
  Vesting Schedule”). However, the Shares may be subject to accelerated vesting
  in accordance with the provisions of Paragraphs 4 and 6 below.

  
	
   

  	
   

  	
   

  
	
  Issuance Schedule:

  	
   

  	
  The Shares in which the Participant vests on an annual basis in accordance
  with the Normal Vesting Schedule shall be issued, subject to the
  Corporation’s collection of all applicable Withholding Taxes, on the
  applicable annual vesting date or as soon thereafter as administratively
  practicable (the “Issuance Date”), but in no event later than the close of
  the calendar year in which such annual vesting date occurs or (if later) the
  fifteenth day of the third calendar month following such vesting date. The
  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 applicable Withholding Taxes are to be collected pursuant to
  the procedure set forth in Paragraph 8 of this Agreement.

  

 

2.             Limited Transferability. 
Prior to actual receipt of the Shares which vest and become issuable
hereunder, 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 Participant’s death may be transferred pursuant to the
provisions of Participant’s will or the laws of inheritance or to Participant’s
designated beneficiary or beneficiaries of this Award.  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 Participant and/or his or her family
members.  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 or Paragraph 6 below, should Participant
cease Service for any reason prior to vesting in one or more Shares subject to
this Award, then the Award shall be immediately cancelled with respect to those
unvested Shares, and the number of Restricted Stock Units will be reduced
accordingly.  Participant shall thereupon
cease to have any right or entitlement to receive any Shares under those
cancelled units.

 

4.             Accelerated
Vesting.  Should Participant
cease Employee status by reason of death or Disability, then all of the Shares
at the time subject to this Award shall immediately vest and shall be issued on
the date of the Participant’s Separation from Service or as soon as
administratively practicable thereafter, subject to the Corporation’s
collection of the applicable Withholding Taxes, but in no event later than the
close of the calendar year in which such Separation from Service occurs or (if
later) the fifteenth (15th) day of the third (3rd) calendar month following the
date of such Separation from  Service.

 

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5.             Stockholder Rights.  Participant
shall not have any stockholder rights, including voting rights or dividend
rights, with respect to the Shares subject to the Award until the Shares vest
and Participant becomes the record holder of those Shares upon their actual
issuance following the Company’s collection of the applicable Withholding
Taxes.

 

6.             Change in 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 same vesting and payout provisions that would be
applicable to those Shares in the absence of such Change in Control. In the
event of such assumption or continuation of the Award or such replacement of
the Award with a cash retention program, no accelerated vesting of the
Restricted Stock Units shall occur at the time of the Change in Control.

 

B.            In the event the Award
is assumed or otherwise continued in effect, the Restricted Stock Units subject
to the Award will be adjusted immediately after the consummation of the Change
in Control so as to apply to the number and class of securities into which the
Shares subject to those units immediately prior to the Change in Control would
have been converted in consummation of that Change in Control had those Shares
actually been issued and outstanding at that time.  To the extent the actual holders of the
outstanding Common Stock receive cash consideration for the Common Stock in
consummation of the Change in Control, the successor corporation may, in connection
with the assumption or continuation of the Restricted Stock Units subject to
the Award at that time, substitute one or more shares of its own common stock
with a fair market value equivalent to the cash consideration paid per share of
Common Stock in the Change in Control transaction, provided such shares are
registered under the federal securities laws and readily tradable on an
established securities exchange.

 

C.            Should either of the
following events occur during the period commencing with the earlier of (i) the execution date
of any definitive agreement for a Change in Control transaction or (ii) the
actual occurrence of a Change in Control and ending with the earlier of (x) the expiration
of the twenty-four (24)-month period measured from the effective date of the
Change in Control or, to the extent applicable, (y) the date the
definitive agreement for the Change in Control transaction is terminated or
cancelled without the consummation of the contemplated Change in Control
transaction:

 

(i)            Participant’s
Employee status is terminated other than for Good Cause, or

 

(ii)           Participant
resigns from Employee status for Good Reason,

 

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then all of the Shares at
the time subject to this Award shall immediately vest and shall be issued on
the date of the Participant’s Separation from Service or as soon as
administratively practicable thereafter, subject to the Corporation’s
collection of the applicable Withholding Taxes, but in no event later than the
close of the calendar year in which such Separation from Service occurs or (if
later) the fifteenth (15th) day of the third (3rd) calendar month following the
date of such Separation from Service, unless a further deferral is required
pursuant to Paragraph 9.

 

D.            If the Restricted
Stock Units subject to this Award at the time of the Change in Control are not
assumed or otherwise continued in effect or replaced with a cash retention
program in accordance with Paragraph 6.A above, then those units shall 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 per Share shall be distributed to Participant upon the tenth
(10th) business day following the earliest to
occur of (i) the Issuance Date determined for that Share in accordance
with the Normal Vesting Schedule, (ii) the date of Participant’s
Separation from Service or (iii) the first date following the 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.

 

E.             This Agreement shall
not in any way affect the right of the Corporation to adjust, 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 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/Collection of Withholding Taxes.

 

A.            On each applicable
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.

 

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B.            The Corporation shall
collect the applicable Withholding Taxes with respect to the Shares which vest
and become issuable hereunder through an automatic share withholding procedure
pursuant to which the Corporation will withhold, at the time of such vesting, a
portion of the Shares with a Fair Market Value (measured as of the applicable
vesting 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.

 

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 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 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 this Award shall, to
the extent necessary, be rounded down to the next whole share in order to avoid
the issuance of a fractional share.

 

9.             Deferred
Issuance 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.

 

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10.           Benefit Limit.  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.  The foregoing benefit
limitation of this Paragraph 10 shall only apply in the event Participant is
not otherwise entitled to a Code Section 4999 tax gross-up under the terms
of the Corporation’s Executive Severance Plan.

 

11.           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.

 

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.

 

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.

 

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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 Amended and Restated Agreement on the respective dates indicated below.

 

	
   

  	
  SJW CORP.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [PARTICIPANT]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
						

 

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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 Participant pursuant to
the terms of the 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 that results in such
person or related group beneficially owning securities representing 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 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 thirty-six (36) consecutive months or less such that a majority
of the Board members ceases by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (a) have been
Board members since the beginning of such period or (b) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members who were described in clause (a) or who were
previously so elected or approved and who were still in office at the time the
Board approved such election or nomination; provided, however, that solely for
purposes of determining whether a permissible Section 409A distribution
can be made under Paragraph 6.D in connection with such Change in Control
event, the period for measuring a change in the composition of the Board shall
be limited to a period of twelve (12) consecutive months or less;

 

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 held securities representing more than
thirty percent (30%) 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 the 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.              Disability
shall mean the Participant’s permanent and total disability as determined
pursuant to Section 22(e)(3) of the Code.

 

J.             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 Employee 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.

 

K.            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.

 

L.             Good
Cause shall mean:

 

(i)            Any
act or omission by the Participant that results 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’s
conviction 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.

 

M.           Good
Reason  shall be deemed to exist with respect to Participant if and only if,
without Participant’s express written consent:

 

(i)            there
is a significant change in the nature or the scope of Participant’s authority
or in his or her overall working environment;

 

(ii)           Participant
is assigned duties materially inconsistent with his or her present duties,
responsibilities and status;

 

(iii)          there is a reduction in the sum of Participant’s
rate of base salary and target bonus; or

 

(iv)          the
Corporation changes by fifty-five (55) miles or more the principal location in
which Participant  is required to perform
services;

 

provided that, in the case of each such reason, that
the Corporation has not cured such condition within thirty (30) days after written
notice by Participant to the Corporation that such condition exists and
constitutes Good Reason.

 

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

 

 

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

 

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

 

S.             Restricted
Stock Unit  shall mean each unit subject to the Award which shall
entitle Participant to receive one (1) share of Common Stock upon the
vesting of that unit.

 

T.            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
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.  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.

 

 

U.            Service
shall mean 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 or a consultant or independent advisor.  Participant shall be deemed to cease Service
immediately upon the occurrence of 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:

 

(i)            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).

 

(ii)           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
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.

 

(iii)          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.

 

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

 

W.           Subsidiary
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

 

X.            Withholding
Taxes  shall mean the federal, state and local income and employment
taxes required to be withheld by the Corporation in connection with the vesting
and issuance of the shares of Common Stock (or any other property) under the
Award.Exhibit 10.1

 

STOCK REDEMPTION AGREEMENT

 

THIS
STOCK REDEMPTION AGREEMENT (“Agreement”) is made and entered into as of the 4th day of November, 2008 by and between Afilias Limited, an Irish
company limited by shares (“Afilias”) and Tucows, Inc., a Delaware. USA
corporation (“Seller”).

 

W I T N E S S E T H:

 

WHEREAS, Seller is the registered and beneficial owner of 353,722 Class A
ordinary shares of US$0.25 each in the capital of Afilias (the “Shares”); and

 

WHEREAS, Seller desires to sell to Afilias, and Afilias desires to redeem and
acquire from Seller, the Shares pursuant to the terms and conditions set forth
herein.

 

WHEREAS, this Agreement is made pursuant to Part XI  of the Companies
Act 1990 and the articles of association of Afilias which enable it to purchase
its own shares and was the subject of a special resolution adapted by the
Afilias shareholders at an extraordinary general meeting (“EGM”) of Afilias
held on the 2nd day of November
2008.

 

NOW, THEREFORE, in consideration of the covenants and agreements herein set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are acknowledged by the parties hereto, and intending to be legally bound
hereby, the parties agree as follows:

 

1.             Purchase and Sale of Stock.

 

1.1           Shares. Seller hereby agrees to sell to Afilias, and Afilias hereby agrees to
redeem and purchase, the Shares, free from any encumbrance charge, lien,
equities or claims and together with all accrued benefits and rights, subject
to the following terms and conditions:

 

1.2           Redemption Price. The total redemption price for the Shares to
be paid by Afilias to Seller shall be US$7,502,443.62 (based upon a per share
price of US$21.21 per share), less US$37,512.21 (which represents one-half of
the stamp duty required to be paid under Irish law), for a final aggregate
redemption price of Seven Million Four Hundred Sixty-Four Thousand Nine Hundred
Thirty-One and 41/100 U.S. Dollars (US$7,464,931.41) (the “Redemption Price”).
Afilias shall be responsible for payment of all stamp duties required under
Irish law on account of the transfer of the Shares to Afilias hereunder. The
credit to the purchase price in the amount of US$37,512.21 represents the
agreement of the parties to bear the cost of the stamp duty in equal shares.

 

1.3           Purchase Schedule. The redemption of the Shares is scheduled to
be completed in three transactions:

 

1.3.1.       First Transaction.
Closing on the purchase of the first 153,722 shares (“First Block”) shall be
completed within 30 days following the date of this Agreement (the “First
Closing Date”);

 

1.3.2        Second Transaction. On
or before 30 June 2009 (the “Second Closing Date”), Afilias shall acquire
a second block of shares equal to 100,000 shares (the “Second Block”).
Provided, however, that Afilias’ obligation to purchase the Second Block is
contingent upon Afilias having distributable reserves (within the meaning of Part IV
of the Companies (Amendment) Act 1983) sufficient to complete the acquisition
of the Second Block as of the Second Closing Date. If Afilias shall be unable
to purchase the entire Second Block as of the Second Closing Date due to
distributable reserve

 

 

restrictions,
the rights and obligations of the parties with respect to all unpurchased
Shares as of such date shall lapse and be of no further force or effect.

 

1.3.3        Third Transaction. On or before 31 December 2009 (the “Third
Closing Date”), Afilias shall acquire a third block of shares equal to 100,000
shares (the “Third Block”). Provided, however, that Afilias’ obligation to purchase
the Third Block is contingent upon Afilias having distributable reserves
(within the meaning of Part IV of the Companies (Amendment) Act 1983)
sufficient to complete the acquisition of the Third Block as of the Third
Closing Date. If Afilias shall be unable to purchase the entire Third Block as
of the Third Closing Date due to distributable reserve restrictions, the rights
and obligations of the parties with respect to all unpurchased Shares as of
such date shall lapse and be of no further force or effect.

 

1.4           Closing on Respective Transactions.

 

1.4.1        First Block Closing. Within ten (10) days following full
execution of this Agreement, Afilias shall cause to be prepared and delivered
to Seller all documents as Afilias or its corporate counsel shall reasonably
deem necessary to effect the redemption of the First Block by Afilias. No later
than five (5) days after receipt by the Seller from Afilias or Afilias’
counsel of such redemption documents, Seller shall execute such documents and
return them to Afilias’ corporate counsel; provided that such redemption
documents are acceptable to Seller acting reasonably. Closing on the sale of
the First Block hereunder (the “First Block Closing”) shall be held at a time
and place mutually agreed between Seller and Afilias, but not later than the
First Closing Date. At the First Block Closing, (i) Afilias shall arrange
for stamping of the executed stock transfer form with the Irish Revenue
Commissioners in respect of the Stamp Duty payable and carry out any further
actions necessary to effect the transfer of the First Block to Afilias and (ii) Afilias
shall deliver to Seller by wire transfer an amount equal to the pro-rata
portion of the Redemption Price allocable to the First Block (i.e.,
US$3,244,141.40). Seller and Afilias shall cooperate in all reasonable respects
with Afilias’ corporate counsel to have all required transfer and stamp duty
forms duly filed in Ireland.

 

1.4.2        Second Block Closing. Assuming that the distributable reserve
conditions (set forth in sections 1.3.2) have been met with respect to the
Second Block, closing on the Second Block shall proceed as follows: No later
than 30 days prior to the Second Closing Date, Afilias shall cause to be
prepared and delivered to Seller all documents as Afilias or its corporate
counsel shall reasonably deem necessary to effect the redemption of the Second
Block by Afilias. No later than five (5) days after receipt by the Seller
from Afilias or Afilias’ counsel of such redemption documents, Seller shall
execute such documents and return them to Afilias’ corporate counsel; provided
that such redemption documents are acceptable to Seller acting reasonably.
Closing on the sale of the Second Block hereunder (the “Second Block Closing”)
shall be held at a time and place mutually agreed between Seller and Afilias,
but not later than the Second Closing Date. At the Second Block Closing, (i) Afilias
shall arrange for stamping of the executed stock transfer form with the Irish
Revenue Commissioners in respect of the Stamp Duty payable and carry out any
further actions necessary to effect the transfer of the Second Block to Afilias
and (ii) Afilias shall deliver to Seller by wire transfer an amount equal
to the pro-rata portion of the Redemption Price allocable to the Second Block
(i.e., US$2,110,395.00). Seller and Afilias shall cooperate in all reasonable
respects with Afilias’ corporate counsel to have all required transfer and
stamp duty forms duly filed in Ireland.

 

1.4.3        Third Block Closing. Assuming that the distributable reserve
conditions (set forth in sections 1.3.3) have been met with respect to the
Third Block, closing on the Third Block shall proceed as follows: No later than
30 days prior to the Third Closing Date, Afilias shall cause to be prepared and
delivered to Seller all documents as Afilias or its corporate counsel shall
reasonably deem necessary to effect the redemption of the Third Block by
Afilias. No later than five (5) days after receipt by the Seller from Afilias
or Afilias’ counsel of such redemption documents, Seller shall execute such
documents and return them to Afilias’ corporate counsel; provided that such
redemption documents are

 

2

 

acceptable
to Seller acting reasonably. Closing on the sale of the
Third Block hereunder (the “Third Block Closing”) shall be held at a time and
place mutually agreed between Seller and Afilias, but not later than the Third
Closing Date. At the Third Block Closing, (i) Afilias shall arrange for
stamping of the executed stock transfer form with the Irish Revenue
Commissioners in respect of the Stamp Duty payable and carry out any further
actions necessary to effect the transfer of the Third Block to Afilias and (ii) Afilias
shall deliver to Seller by wire transfer an amount equal to the pro-rata
portion of the Redemption Price allocable to the Third Block (i.e.,
US$2,110,395.00). Seller and Afilias shall cooperate in all reasonable respects
with Afilias’ corporate counsel to have all required transfer and stamp duty
forms duly filed in Ireland.

 

2.             Rights Prior to Transfer. Seller shall retain all rights with respect
to any given portion of the Shares, including, without limitation, all voting
rights and the right to receive dividends paid on account of such Shares, until
such date as they are transferred to Afilias. Once any portion of the Shares is
transferred to Afilias, all rights with respect to such portion of the Shares
shall transfer to Afilias.

 

3.             Representations and Warranties of Seller. Seller represents and warrants to Afilias as
follows:

 

3.1           Enforceability. Seller has full power and authority to
execute and deliver this Agreement and all documents provided for herein and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement and all documents provided for herein have been duly authorized
by all necessary corporate action on the part of Seller, and this Agreement has
been duly executed and delivered by a duly authorized officer of Seller. This
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable in accordance with its terms.

 

3.2           No Conflict. The execution, delivery and performance of this Agreement by Seller and
the consummation of the transactions contemplated hereunder will not violate the
organizational documents or bylaws of Seller, or any provision of law
applicable to Seller, and will not conflict with, or result in the breach or
termination of any provision of, or constitute a default under, or result in
the creation of any lien, charge or encumbrance upon any of the Shares by
reason of, any provision of any instrument or agreement to which Seller is a
party or by which Seller is bound.

 

3.3           Title. Seller is the sole registered and beneficial owner of all of the
Shares and has, and at the time of delivery of each block of the Shares by
Seller to Afilias hereunder, shall have, (i) good and marketable title to
such Shares, free and clear of any liens, encumbrances, charges, equities or
claims and (ii) full right, power and authority to effect the sale and
delivery of such Shares to Afilias hereunder; and upon the delivery of such
Shares to Afilias, Afilias will acquire good and marketable title thereto, free
and clear of any liens, encumbrances, charges, equities or claims.

 

4.             Representations and Warranties of Afilias. Afilias represents and warrants to Seller as
follows:

 

4.1           Enforceability. Afilias has full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate action on the part of Afilias, and this
Agreement has been duly executed and delivered by a duly authorized officer of
Afilias. This Agreement constitutes the legal, valid and binding obligation of
Afilias, enforceable in accordance with its terms.

 

4.2           No Conflict.  The execution, delivery and performance of this Agreement
by Seller and the consummation of the transactions contemplated hereunder will
not violate the organizational documents or bylaws of Afilias, or any provision
of law applicable to Afilias, and will not conflict with, or result in the
breach or termination of any provision of, or constitute a default under, any
provision of any instrument or agreement to which Afilias is a party or by
which Afilias is bound.

 

3

 

4.3           Authority for Redemption. All requirements of Part XI of the
Companies Act 1990 relating to an ‘off-market purchase’ by a company of its own
shares have been complied with.

 

5.             Conditions to Closing.

 

5.1           Conditions to Obligations of Afilias. The obligations of Afilias to close
hereunder are subject to the fulfillment (or waiver, in writing) at or prior to
each Closing hereunder of the following conditions:

 

5.1.1        The representations and warranties of Seller herein contained shall have
been true in all material respects when made and, in addition, shall be true in
all material respects on and as of the First Closing Date, the Second Closing
Date and the Third Closing Date with the same force and effect as though made
on and as of such closing date; and

 

5.1.2        Each and all of the agreements and covenants of Seller to be performed
on or before the First Closing Date, the Second Closing Date and the Third Closing
Date pursuant to the terms hereof shall have been duly performed.

 

5.2           Conditions to Obligations of Seller. The obligations of Seller to close hereunder are
subject to the fulfillment (or waiver, in writing), at or prior to the First
Closing Date, the Second Closing Date and the Third Closing Date, of the
following conditions:

 

5.2.1        The representations and warranties of Afilias herein contained shall
have been true in all material respects when made and, in addition, shall be
true in all material respects on and as of First Closing Date, the Second
Closing Date and the Third Closing Date with the same force and effect as
though made on and as of such closing date; and

 

5.2.2        Each and all of the agreements and covenants of Afilias to be performed
on or before the pursuant to the terms hereof shall have been duly performed.

 

6.             Survival; Indemnification.

 

6.1           Survival. All of the representations, warranties and continuing obligations of
the parties contained in this Agreement shall survive the execution, the First
Closing Date, the Second Closing Date,
the Third Closing Date and
delivery of this Agreement

 

6.2           Indemnification by Seller. Seller shall indemnify and hold harmless
Afilias from and against any and all claims, damages, losses, liabilities, costs
and expenses (including reasonable legal fees and disbursements) caused by or
arising out of the breach by Seller of any of its representations, warranties,
covenants, obligations or agreements contained in this Agreement.

 

6.3           Indemnification by Afilias.  Afilias shall indemnify and hold harmless
Seller from and against any and all claims, damages, losses, liabilities, costs
and expenses (including reasonable legal fees and disbursements) caused by or
arising out of the breach by Afilias of any of its representations, warranties,
covenants, obligations or agreements contained in this Agreement.

 

7.             Miscellaneous.

 

7.1           Further Assurances.
The parties hereto agree to
execute and deliver or cause to be executed and delivered upon execution of
this Agreement, or at other reasonable times, such additional instruments as
Afilias, or its counsel, may reasonably request for the purpose of carrying out
the transactions contemplated by this Agreement.

 

4

 

7.2           Notice. Any notice or other
communication required or permitted to be delivered to any party under this
Agreement will be in writing and will be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express
delivery service, or by e-mail) to the address set forth beneath the name of
such party below, unless party has given a notice of a change of address in writing:

 

if
to Seller: [Seller to Complete].

 

	
   

  	
  Tucows Inc

  	
   

  
	
   

  	
  96 Mowat Avenue

  	
   

  
	
   

  	
  Toronto ON Canada

  	
   

  
	
   

  	
  M6K 3M1

  	
   

  
	
   

  	
  Attn:
  Elliot Noss

  	
   

  
	
   

  	
  e-mail: enoss@tucows.com

  	
   

  

 

With
a copy to:

 

	
   

  	
  Tucows Inc

  	
   

  
	
   

  	
  96 Mowat Avenue

  	
   

  
	
   

  	
  Toronto ON Canada

  	
   

  
	
   

  	
  M6K 3M1

  	
   

  
	
   

  	
  Attn:
  Michael Cooperman

  	
   

  
	
   

  	
  e-mail: mcooperman@tucows.com

  	
   

  

 

if
to Afilias:

 

	
   

  	
  Afilias
  Limited

  	
   

  
	
   

  	
  Office
  110, 52 Broomhill Road 

  	
   

  
	
   

  	
  Tallaght

  	
   

  
	
   

  	
  Dublin
  24

  	
   

  
	
   

  	
  Ireland

  	
   

  
	
   

  	
  Attn:
  CEO

  	
   

  
	
   

  	
  e-mail:
  hlubsen@afilias.info

  	
   

  

 

With
copy to:

 

	
   

  	
  Afilias
  Limited

  	
   

  
	
   

  	
  c/o
  Afilias USA, Inc.

  	
   

  
	
   

  	
  300
  Welsh Road

  	
   

  
	
   

  	
  Building
  3, Suite 105

  	
   

  
	
   

  	
  Horsham,
  PA 19044

  	
   

  
	
   

  	
  Attn:
  Legal Department

  	
   

  
	
   

  	
  e-mail:
  legal@afilias.info

  	
   

  

 

7.3             Confidentiality.
The terms of this Agreement are confidential and no disclosure thereof shall be
made by any party hereto without the consent of the other party unless required
by law or otherwise required to effect the transaction contemplated hereby.

 

5

 

7.4             Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement between the parties with respect to the
subject matter hereof, and all prior negotiations, whether oral or in writing,
are merged herein to the extent they relate to the subject matter hereof in any
way.

 

7.5             Amendment. No change, amendment or modification of this Agreement shall be binding
unless set forth in writing and signed by all of the parties hereto.

 

7.6             Binding Effect; Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns. Neither this Agreement nor any interest
in or benefit under this Agreement may be assigned by any party without the
prior written consent of the other party hereto.

 

7.7             Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of Ireland.

 

7.8             Severability.  Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.

 

7.9             Remedies. Seller acknowledges that Seller’s breach of its obligations to close hereunder
may result in irreparable and continuing harm to Afilias for which there may be
no adequate remedy at law. In the event of a breach of this Agreement by
Seller, Afilias shall have the right to seek injunctive relief to prevent or
restrain such breach of this Agreement and to compel the transfer of the
Shares, in addition to all other remedies available to Afilias at law or in
equity.

 

7.10           Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall be deemed to
be one and the same instrument.

 

6

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

 

	
   

  	
  SELLER:
  TUCOWS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elliot Noss

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
  Elliot Noss

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President & CEO

  
						

 

 

AFILIAS LIMITED:

 

	
  PRESENT
  when the common seal

  of AFILIAS LIMITED

  was affixed hereto:

  	
  /s/
  [illegible]

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  [illegible]

  
	
   

  	
  Print
  name

  
	
   

  	
   

  
	
   

  	
  /s/
  [illegible]

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  [illegible]

  
	
   

  	
  Print
  name

  

 

7

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