SJW CORP (Form: 10-K, Received: 03/09/2009 06:51:31)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-8966

SJW CORP.

(Exact name of registrant as specified in its charter)


California		77-0066628
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

110 West Taylor Street, San Jose, California		95110
(Address of principal executive offices)		(Zip Code)

408-279-7800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Common Stock, $0.521 par value per share		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of June 30, 2008, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $402,116,088 based on the closing sale price as reported on the New York Stock Exchange.

Indicate the number of shares outstanding of registrant’s common stock, as of the latest practicable date.


Class		Outstanding at February 9, 2009
Common Stock, $0.521 par value per share		18,464,692

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement relating to the registrant’s Annual Meeting of Shareholders, to be held on May 6, 2009, are incorporated by reference into Part III of this Form 10-K where indicated.

TABLE OF CONTENTS


		Page
PART I

Forward-Looking Statements		3
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	16
Item 4.	Submission of Matters to a Vote of Security Holders	16

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8.	Financial Statements and Supplementary Data	35
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	67
Item 9A.	Controls and Procedures	67
Item 9B.	Other Information	68

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	68
Item 11.	Executive Compensation	69
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	69
Item 13.	Certain Relationships and Related Transactions, and Director Independence	69
Item 14.	Principal Accountant Fees and Services	69

PART IV

Item 15.	Exhibits and Financial Statement Schedules	70

Exhibit Index		71

Signatures		74

PART I

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws relating to future events and future results of SJW Corp. and its subsidiaries that are based on current expectations, estimates, forecasts, and projections about SJW Corp. and the industries in which SJW Corp. operates and the beliefs and assumptions of the management of SJW Corp. Such forward-looking statements are identified by words such as “expect”, “estimate”, “anticipate”, “intends”, “seeks”, “plans”, “projects”, “may”, “should”, “will”, variation of such words, and similar expressions. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Important factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report under Item 1A, “Risk Factors,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere, and in other reports SJW Corp. files with the Securities and Exchange Commission (the “SEC”), specifically the most recent reports on Form 10-Q and Form 8-K filed with the SEC, each as it may be amended from time to time.

SJW Corp. undertakes no obligation to update or revise the information contained in this report, including the forward-looking statements for any reason.

Item 1.

Business

General Development of Business

SJW Corp. was incorporated in California on February 8, 1985. SJW Corp. is a holding company with three subsidiaries:

•

San Jose Water Company, a wholly owned subsidiary of SJW Corp., with its headquarters located at 110 West Taylor Street in San Jose, California 95110, was originally incorporated under the laws of the State of California in 1866. As part of a reorganization on February 8, 1985, San Jose Water Company became a wholly owned subsidiary of SJW Corp. San Jose Water Company is a public utility in the business of providing water service to approximately 226,000 connections that serve a population of approximately one million people in an area comprising approximately 138 square miles in the metropolitan San Jose area. San Jose Water Company’s web site can be accessed via the Internet at http://www.sjwater.com .

•

SJW Land Company, a wholly owned subsidiary of SJW Corp., was incorporated in 1985. SJW Land Company owns undeveloped land in the states of California and Tennessee, owns and operates commercial buildings in the states of California, Florida, Connecticut, Texas, Arizona and Tennessee, and has a 70% limited partnership interest in 444 West Santa Clara Street, L.P.

•

SJWTX, Inc., doing business as Canyon Lake Water Service Company (“CLWSC”), a wholly owned subsidiary of SJW Corp., was incorporated in September 2005. CLWSC provides service to approximately 8,700 connections that serve approximately 36,000 residents in a service area comprising more than 153 square miles in the growing region between San Antonio and Austin, Texas, as of December 31, 2008.

SJW Corp. also owns 1,099,952 shares of California Water Service Group, which represents approximately 5% of that company’s outstanding shares as of December 31, 2008 and it is accounted for under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” as an available-for-sale marketable security.

On January 31, 2007, the rental equipment and existing inventory of Crystal Choice Water Service LLC, a 75% owned subsidiary engaged in the sale and rental of water conditioning and purification equipment, was sold for $635,000. Crystal Choice Water Service LLC was liquidated in August 2007.

Together, San Jose Water Company and CLWSC are referred to as “Water Utility Services.”

Regulation and Rates

San Jose Water Company’s rates, service and other matters affecting its business are subject to regulation by the California Public Utilities Commission (“CPUC”).

Ordinarily, there are two types of rate increases that affect San Jose Water Company’s business: general rate increases and offset rate increases. General rate increases are authorized in case decisions, which usually authorize an initial rate increase followed by two annual step increases designed to maintain the authorized return on equity over a three-year period. General rate applications are normally filed and processed during the last year covered by the most recent rate case as required by the CPUC so that regulatory lag is avoided.

The purpose of an offset rate increase is to compensate utilities for increases in specific pre-authorized offsettable capital investments or expenses, primarily for purchased water, groundwater extraction charges and purchased power.

Pursuant to Section 792.5 of the California Public Utilities Code, a balancing account must be maintained for each expense item for which such revenue offsets have been authorized. The purpose of a balancing account is to track the under-collection or over-collection associated with expense changes and the revenue authorized by the CPUC to offset those expense changes.

CLWSC is subject to the regulation of the Texas Commission on Environmental Quality (“TCEQ”). The TCEQ authorizes rate increases after the filing of an Application for a Rate/Tariff Change. Such filings may be filed twelve months following the resolution of the previous filing.

On January 21, 2009, San Jose Water Company filed an application with the CPUC requesting general rate increases of $36,207,000, or 18.44% in 2010, $15,171,000, or 6.52% in 2011, and $19,899,000, or 8.10% in 2012. San Jose Water Company is proposing this rate increase due to escalating operating expenses as well as significant system infrastructure replacement requirements over the next several years. The capital budgets for the years noted above are also increasing due to significantly higher construction costs. The infrastructure improvements such as water main and well replacements, improvements to pumping stations, well fields, water tanks and replacements throughout San Jose Water Company’s 138 square mile service area are necessary in order to maintain safe and reliable water service to customers. The application is currently under review by the CPUC and a decision on the request is expected in late 2009, with new rates becoming effective January 1, 2010.

Please also see Item 1A, “Risk Factors,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Financial Information about Industry Segments

See Part II, Item 7 for information regarding SJW Corp.’s business segments.

Description of Business

General

The principal business of the Water Utility Services consists of the production, purchase, storage, purification, distribution, and retail sale of water. San Jose Water Company provides water service to approximately 226,000 connections that serve customers in portions of the cities of Cupertino and San Jose and in the cities of Campbell, Monte Sereno, Saratoga and the Town of Los Gatos, and adjacent unincorporated territory, all in the County of Santa Clara in the State of California. It distributes water to customers in accordance with accepted water utility methods. CLWSC provides water service to approximately 8,700 connections that serve approximately 36,000 residents in a service area comprising more than 153 square miles in the growing region between San Antonio and Austin, Texas.

San Jose Water Company also provides nonregulated water related services under agreements with municipalities. These nonregulated services include full water system operations, cash remittances and maintenance contract services.

In October 1997, San Jose Water Company commenced operation of the City of Cupertino municipal water system under terms of a 25-year lease. The system is adjacent to the existing San Jose Water Company service area and has approximately 4,500 service connections. Under the terms of the lease, San Jose Water Company paid an up-front $6.8 million concession fee to the City of Cupertino that is amortized over the contract term. San Jose Water Company is responsible for all aspects of system operation including capital improvements.

The operating results from the water business fluctuate according to the demand for water, which is often influenced by seasonal conditions, such as summer temperatures or the amount and timing of precipitation in the Water Utility Services service areas. Revenue, production costs and income are affected by the changes in water sales and availability of surface water supply. Overhead costs, such as payroll and benefits, depreciation, interest on long-term debt, and property taxes, remain fairly constant despite variations in the amount of water sold. As a result, earnings are highest in the higher use, warm weather summer months and lowest in the cool winter months.

Water Supply

San Jose Water Company’s water supply consists of groundwater from wells, surface water from watershed run-off and diversion, and imported water purchased from the Santa Clara Valley Water District (“SCVWD”) under the terms of a master contract with SCVWD expiring in 2051. Purchased water provides approximately 40% to 45% of San Jose Water Company’s annual production. Surface supply, which during a year of normal rainfall satisfies about 6% to 8% of San Jose Water Company’s annual needs, provides approximately 1% of its water supply in a dry year and approximately 14% in a wet year. In dry years, the decrease in water from surface run-off and diversion, and the corresponding increase in purchased and pumped water, increases production costs substantially. San Jose Water Company pumps the remaining 40% to 50% of its water supply from the underground basin and pays a groundwater extraction charge to SCVWD.

The pumps and motors at San Jose Water Company’s groundwater production facilities are propelled by electric power. Over the last few years, San Jose Water Company has installed standby power generators at 18 of its strategic water production sites. In addition, the commercial office and operations control centers are equipped with standby generators that allow critical distribution and customer service operations to continue during a power outage. SCVWD has informed San Jose Water Company that its filter plants, which deliver purchased water to San Jose Water Company, are also equipped with standby generators. In the event of a power outage, San Jose Water Company believes it will be able to prevent an interruption of service to customers for a limited period by pumping water with its standby generators and by using the purchased water from SCVWD.

In 2008, the level of water in the Santa Clara Valley groundwater basin, which is the responsibility of SCVWD, remained comparable to the 30-year average level. On December 29, 2008, SCVWD’s 10 reservoirs were 45.4% full with 76,671 acre-feet of water in storage. The rainfall from July 1, 2008 to December 29, 2008 was about 66% of the 30-year average. In addition, the rainfall at San Jose Water Company’s Lake Elsman was measured at 12.77 inches for the period from July 1, 2008 through January 28, 2009, which is 49% of the five-year average. The delivery of California and federal contract water to SCVWD may be reduced, resulting in target deliveries to retail agencies being rolled back to 90% of contract amounts. SCVWD has also stated that there will not be any physical restriction as it is SCVWD’s expectation that San Jose Water Company will be able to manage its various sources of water supply to stay within the 90% of contract amounts. San Jose Water Company believes that its various sources of water supply, including an increased reliance on groundwater, are sufficient to meet customer demand for the remainder of 2009.

The continuing dry weather in California and concerns about the San Joaquin-Sacramento River Delta prompted Governor Schwarzenegger on June 3, 2008 to issue an Executive Order (S-06-08) declaring a state-wide water emergency. The order directed state agencies to take immediate action to address drought conditions and water delivery reductions that may exist by expediting grant programs, technical assistance, and water conservation outreach. The order did not mandate water use restrictions or reductions.

On December 15, 2008, the U.S. Fish and Wildlife Service issued a new Biological Opinion (BiOp) and Incidental Take Statement for the Central Valley Project (CVP) and the State Water Project (SWP) on the Delta smelt. The operating requirements of BiOp immediately replace the interim remedy ordered by Federal Judge Oliver Wanger in December 2007. The BiOp prescribes a range of operational criteria that are determined based on hydrology, fish distribution, abundance, and other factors. Under a “most likely” scenario, the California Department of Water Resources (DWR) and United States Bureau of Reclamation (USBR) estimate that SWP and CVP supplies to SCVWD could be reduced by approximately 17% to 18% of the supply amount they currently receive. Under a “worst case” BiOp scenario, SWP and CVP supplies to SCVWD could be reduced by approximately 32% to 33% of the current supply amount they receive. While there is some overlap with the California Fish and Game Commission’s restrictions to protect longfin smelt, the longfin pumping restrictions, if triggered, could cause significant supply impacts beyond those estimated to comply with Delta smelt requirements.

The SCVWD announced that at their March 24, 2009 meeting, they will determine whether to recommend mandatory conservation. To effect mandatory water restrictions, SCVWD must work with other political subdivisions that possess the authority to enact and enforce drought ordinances in order to effect such restrictions. Additionally, water systems subject to the jurisdiction of the CPUC must receive approval from the CPUC for changes in tariffs and other matters related to the implementation of water restrictions. During the interim, SCVWD is continuing to ask the public to voluntarily reduce water usage by 10%.

Except for a few isolated cases when service had been interrupted or curtailed because of power or equipment failures, construction shutdowns, or other operating difficulties, San Jose Water Company has not had any interrupted or imposed mandatory curtailment of service to any type or class of customer with the exception of the summer of 1989 through March 1993, when rationing was imposed intermittently on customers at the request of SCVWD.

California faces long-term water supply challenges. San Jose Water Company actively works with SCVWD to meet the challenges by continuing to educate customers on responsible water use practices and to conduct long-range water supply planning.

CLWSC’s water supply consists of groundwater from wells and purchased raw water from the Guadalupe-Blanco River Authority (“GBRA”). CLWSC has long-term agreements with GBRA, which expire in 2044 and 2050. The agreements provide CLWSC with 6,000 acre-feet of water per year from Canyon Lake at prices to be adjusted periodically by GBRA.

Please also see further discussion under Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Franchises

Franchises granted by local jurisdictions permit the Water Utility Services to construct, maintain, and operate a water distribution system within the streets and other public properties of a given jurisdiction. San Jose Water Company holds the necessary franchises to provide water in portions of the cities of San Jose and Cupertino and in the cities of Campbell, Monte Sereno and Saratoga, the town of Los Gatos and the unincorporated areas of Santa Clara County. None of the franchises have a termination date, other than the franchise for the unincorporated areas of Santa Clara County, which terminates in 2020.

Seasonal Factors

Water sales are seasonal in nature. The demand for water, especially by residential customers, is generally influenced by weather conditions. The timing of precipitation and climatic conditions can cause seasonal water consumption by residential customers to vary significantly.

Competition

San Jose Water Company and CLWSC are public utilities regulated by CPUC and TCEQ, respectively, and operate within a service area approved by the regulators. The statutory laws provide that no other investor-owned public utility may operate in the public utilities’ service areas without first obtaining from the regulator a certificate of public convenience and necessity. Past experience shows such a certificate will be issued only after demonstrating that service in such area is inadequate.

California law also provides that whenever a public agency constructs facilities to extend utility service to the service area of a privately-owned public utility, like San Jose Water Company, such an act constitutes the taking of property and is conditioned upon payment of just compensation to the private utility.

Under the statutory constitution, municipalities, water districts and other public agencies have been authorized to engage in the ownership and operation of water systems. Such agencies are empowered to condemn properties operated by privately-owned public utilities upon payment of just compensation and are further authorized to issue bonds (including revenue bonds) for the purpose of acquiring or constructing water systems. To the company’s knowledge, no municipality, water district or other public agency has pending any action to condemn any part of its water systems.

Environmental Matters

The Water Utility Services’ procedures produce potable water in accordance with all applicable county, state and federal environmental rules and regulations. Additionally, public utilities are subject to environmental regulation by various other state and local governmental authorities.

The Water Utility Services are currently in compliance with all of the United States Environmental Protection Agency’s (the “EPA”) surface water treatment performance standards, drinking water standards for disinfection by-products and primary maximum contaminant levels. These standards have been adopted and are enforced by the California Department of Public Health (“CDPH”) and the TCEQ for San Jose Water Company and CLWSC, respectively.

Other state and local environmental regulations apply to the Water Utility Services operations and facilities. These regulations relate primarily to the handling, storage and disposal of hazardous materials and discharges to waterways. As part of routine replacement of infrastructure, San Jose Water Company identified legacy equipment containing mercury which had leaked into the surrounding soil. San Jose Water Company has determined there is no risk of contamination to the water supply, has notified the appropriate authorities and is also working with an environmental consulting firm to remediate the effected area and assess other potential sites. SJW Corp. believes there will be no material financial impact.

San Jose Water Company is currently in compliance with all state and local regulations governing hazardous materials, point and non-point source discharges and the warning provisions of the California Safe Drinking Water and Toxic Enforcement Act of 1986. Please also see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Employees

As of December 31, 2008, SJW Corp. had 379 employees, of whom 342 were San Jose Water Company employees and 37 were CLWSC employees. At San Jose Water Company, 101 were executive, administrative or supervisory personnel, and 241 were members of unions. On February 7, 2008, San Jose Water Company

reached a two-year collective bargaining agreement with the Utility Workers of America, representing the majority of all employees, and the International Union of Operating Engineers, representing certain employees in the engineering department, covering the period from January 1, 2008 through December 31, 2009. Both groups are affiliated with the AFL-CIO. The agreements include a wage adjustment of approximately 3.3% for union workers for the calendar year 2009 and minor benefit modifications. As of December 31, 2008, CLWSC had 37 employees, of whom 10 were exempt and 27 were non-exempt employees. Non-exempt employees are subject to overtime but are not union represented.

Officers of the Registrant


Name	Age	Offices and Experience
G.J. Belhumeur	63	San Jose Water Company—Senior Vice President, Operations. Mr. Belhumeur has served as Senior Vice President of Operations since 2004. From 1996 to 2003, Mr. Belhumeur was Vice President of Operations. Mr. Belhumeur has been with San Jose Water Company since 1970.
D. Drysdale	53	San Jose Water Company—Vice President, Information Systems. Mr. Drysdale has served as Vice President of Information Systems since 2000. From 1998 to 1999, Mr. Drysdale was Director of Information Systems. From 1994 to 1998, Mr. Drysdale was Data Processing Manager. Mr. Drysdale joined San Jose Water Company in 1992.
D.A. Green	46	SJW Corp. and San Jose Water Company—Chief Financial Officer and Treasurer. Mr. Green has served as Chief Financial Officer and Treasurer since August 11, 2008. He is also Chief Financial Officer and Treasurer of SJW Land Company and SJWTX, Inc. Prior to his employment with SJW Corp., Mr. Green served as the Chief Financial Officer, Treasurer and Vice President for Specialized Health Products International, Inc. and Managing Director of Investment Banking for Duff & Phelps.
C.S. Giordano	52	San Jose Water Company—Officer, Chief Engineer. Mr Giordano has served as Chief Engineer since January 2008. From June 2007 to January 2008, Mr. Giordano was Chief Engineer. From August 2000 to June 2007, Mr. Giordano was Director of Engineering and Construction. From January 1994 to August 2000, Mr. Giordano was Assistant Chief Engineer. Mr. Giordano has been with San Jose Water Company since 1994.
P. L. Jensen	49	San Jose Water Company—Vice President, Regulatory Affairs. Mr. Jensen has served as Vice President of Regulatory Affairs since July 2007. From 1995 to July 2007, Mr. Jensen was Director of Regulatory Affairs. Mr. Jensen has been with San Jose Water Company since 1995.
S. Papazian	33	SJW Corp. and San Jose Water Company—Corporate Secretary and Attorney. Ms. Papazian has served as Corporate Secretary and Attorney since February 14, 2005. She is also Corporate Secretary of SJW Land Company and SJWTX, Inc. She was admitted to the California State Bar in January 2000 and thereafter was an Associate Attorney at The Corporate Law Group from March 2000 until February 2005.
B. J. Schmidt	60	San Jose Water Company—Controller. Ms. Schmidt has served as Controller since October 22, 2008. Previously Ms. Schmidt was a financial consultant since 2007. From 2001 to 2006, Ms. Schmidt was Vice President of Finance and Controller for Siemens Medical Solutions USA Inc., Ultrasound Division. Ms. Schmidt is a certified public accountant.


Name	Age	Offices and Experience
W.R. Roth	56	SJW Corp.—President and Chief Executive Officer of SJW Corp., San Jose Water Company, SJW Land Company, and SJWTX, Inc. Mr. Roth was appointed Chief Executive Officer of SJW Corp. in 1999 and President in 1996. Mr. Roth has been with San Jose Water Company since 1990.
A. Yip	55	SJW Corp. and San Jose Water Company—Executive Vice President of Finance. Ms. Yip has served as Executive Vice President of Finance since August 2008. From October 1996 to August 2008, Ms. Yip served as Chief Financial Officer and Treasurer of SJW Corp., and Senior Vice President of Finance, Chief Financial Officer and Treasurer of San Jose Water Company since April 2004. From January 1999 to April 2004, Ms. Yip served as Vice President of Finance, Chief Financial Officer and Treasurer of San Jose Water Company. She is also Executive Vice President, Finance of SJWTX, Inc. and SJW Land Company. Ms. Yip has been with San Jose Water Company since 1986. Ms. Yip is a certified public accountant.
R.S. Yoo	58	San Jose Water Company—Chief Operating Officer. Mr. Yoo has served as Chief Operating Officer since July 2005. From April 2003 to July 2005, Mr. Yoo was Senior Vice President of Administration. From April 1996 to April 2003, Mr. Yoo was Vice President of Water Quality. Mr. Yoo has served as President of Crystal Choice Water Service LLC from January 2001 to August 2005 and Manager from January 2001 to January 2007. Mr. Yoo was appointed Vice President of SJWTX, Inc. from September 2005 to April 2008. Mr. Yoo has been with San Jose Water Company since 1985.

Financial Information about Foreign and Domestic Operations and Export Sales

SJW Corp.’s revenue and expense are derived substantially from Water Utility Services’ operations located in the County of Santa Clara in the State of California and Comal County in the State of Texas.

Website Access to Reports

SJW Corp.’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, are made available free of charge through SJW Corp.’s website at http://www.sjwater.com , as soon as reasonably practicable, after SJW Corp. electronically files such material with, or furnish such material to, the SEC. The content of SJW Corp.’s website is not intended to be incorporated by reference or part of this report.

Item 1A.

Risk Factors

Investors should carefully consider the following risk factors and warnings before making an investment decision. The risks described below are not the only ones facing SJW Corp. Additional risks that SJW Corp. does not yet know of or that it currently thinks are immaterial may also impair its business operations. If any of the following risks actually occur, SJW Corp.’s business, operating results or financial condition could be materially harmed. In such case, the trading price of SJW Corp.’s common stock could decline and you may lose all or part of your investment. Investors should also refer to the other information set forth in this Form 10-K, including the financial statements and the notes thereto.

The business of SJW Corp. and its subsidiaries may be adversely affected by new and changing legislation, policies and regulations.

New legislation and changes in existing legislation by federal, state and local governments and administrative agencies can affect the operations of SJW Corp. and its subsidiaries. The operating revenue of San Jose Water Company results from the sale of water at rates authorized by CPUC. The operating revenue of CLWSC results from the sale of water at rates authorized by TCEQ. The CPUC and TCEQ set rates that are intended to provide revenues sufficient to recover operating expenses and produce a reasonable return on common equity.

On November 11, 2006, CPUC issued its final decision in San Jose Water Company’s 2006 General Rate Case proceeding. The decision authorized San Jose Water Company rate increases of approximately $3,500,000, or 2.0%, for 2007, $5,400,000, or 3.0%, for 2008, and $4,000,000, or 2.2%, for 2009. The rate increases for 2008 and 2009 are subject to adjustments based upon the inflation escalation factors realized at the time of the increase. The decision also authorizes additional rate recoveries to be phased in as capital projects are completed over the three-year period and the recovery of approximately $450,000 from San Jose Water Company’s balancing and memorandum accounts. These rate increases are designed to produce a return on common equity of 10.13%, which is comparable with recent authorized returns for water utilities in California.

On November 17, 2008, CLWSC filed a request for a general rate increase for Canyon Lake with the TCEQ. The filing contains a request for an increase in revenue of approximately $775,000, or about 14%. The rates became effective subject to refund on January 16, 2009. A final resolution is expected from the TCEQ in the summer of 2009.

On November 19, 2008, San Jose Water Company implemented an increasing block rate structure for residential customers as required by CPUC D.08-08-030. This change is not a revenue increase, but rather it is a change in rate design that is applicable to all residential customers. All other customer classes remain on the original uniform rate structure.

Although the Water Utility Services believe that the rates currently in effect provide it with a reasonable rate of return, there is no guarantee such rates will be sufficient to provide a reasonable rate of return in the future. There is no guarantee that the Water Utility Service’s future rate filings will be able to obtain a satisfactory rate of return in a timely manner.

In addition, the Water Utility Services rely on policies and regulations promulgated by the regulators in order to recover capital expenditures, maintain favorable treatment on gains from the sale of real property, offset its production and operating costs, recover the cost of debt, maintain an optimal equity structure without over-leveraging, and have financial and operational flexibility to engage in nonregulated operations. If the regulators implement policies and regulations that will not allow San Jose Water Company and CLWSC to accomplish some or all of the items listed above, the Water Utility Services future operating results may be adversely affected.

Recovery of regulatory assets is subject to adjustment by the regulatory agency and could impact the operating results of the Water Utility Services.

Changes in water supply, water supply costs or the mix of water supply could adversely affect the operating results and business of the Water Utility Services.

San Jose Water Company’s supply of water primarily relies upon three main sources: water purchased from SCVWD, surface water from its Santa Cruz Mountains Watershed, and pumped underground water. Changes and variations in quantities from each of these three sources affect the overall mix of the water supply, thereby affecting the cost of the water supply. Surface water is the least costly source of water. If there is an adverse change to the mix of water supply and San Jose Water Company is not allowed by the CPUC to recover the additional or increased water supply costs, its operating results may be adversely affected.

SCVWD receives an allotment of water from state and federal water projects. If San Jose Water Company has difficulties obtaining a high quality water supply from SCVWD due to availability, environmental or legal restrictions (see also Part I, Item 1, “Water Supply”), it may not be able to fully satisfy customer demand in its service area and its operating results and business may be adversely affected. Additionally, the availability of water from San Jose Water Company’s Santa Cruz Mountains Watershed depends on the weather and fluctuates with each season. In a normal year, surface water supply provides 6% to 8% of the total water supply of the system. In a season with little rainfall, water supply from surface water sources may be low, thereby causing San Jose Water Company to increase the amount of water purchased from outside sources at a higher cost than surface water, thus increasing water production costs.

In addition, San Jose Water Company’s ability to use surface water is subject to regulations regarding water quality and volume limitations. If new regulations are imposed or existing regulations are changed or given new interpretations, the availability of surface water may be materially reduced. A reduction in surface water could result in the need to procure more costly water from other sources, thereby increasing the water production costs and adversely affecting the operating results of San Jose Water Company.

Because the extraction of water from the groundwater basin and the operation of the water distribution system require a significant amount of energy, increases in energy prices could increase operating expenses of San Jose Water Company. In the aftermath of the attempt to deregulate the California energy market, energy costs still remain in flux, with resulting uncertainty in San Jose Water Company’s ability to contain energy costs into the future.

San Jose Water Company continues to utilize Pacific Gas & Electric’s time of use rate schedules to minimize its overall energy costs primarily for groundwater pumping. During the winter months, typically 90% or more of the groundwater is produced during off-peak hours when electrical energy is consumed at the lowest rates. Optimization and energy management efficiency is achieved through the implementation of Supervisory Control and Data Acquisition system software applications that control pumps based on demand and cost of energy. An increase in demand or a reduction in the availability of surface water or import water could result in the need to pump more water during peak hours adversely affecting the operating results of San Jose Water Company.

CLWSC’s primary water supply is 6,000 acre-feet of water which is pumped from Canyon Lake at two lake intakes, in accordance with the terms of its contracts with the GBRA, which are long-term take-or-pay contracts. This supply is supplemented by groundwater pumped from wells. Texas, similar to California, faces similar operating challenges as described above and long-term water supply constraints. (See also Part I, Item 1, “Water Supply.”)

Fluctuations in customer demand for water due to seasonality, restrictions of use, weather, and lifestyle can adversely affect operating results.

The Water Utility Services’ operations are seasonal. Thus, results of operations for one quarter do not indicate results to be expected in subsequent quarters. Rainfall and other weather conditions also affect the operations of the Water Utility Services. Most water consumption occurs during the third quarter of each year

when weather tends to be warm and dry. In drought seasons, if customers are encouraged and required to conserve water due to a shortage of water supply or restriction of use, revenue tends to be lower. Similarly, in unusually wet seasons, water supply tends to be higher and customer demand tends to be lower, again resulting in lower revenues. Furthermore, certain lifestyle choices made by customers can affect demand for water. For example, a significant portion of residential water use is for outside irrigation of lawns and landscaping. If there is a decreased desire by customers to maintain landscaping for their homes, residential water demand could decrease, which may result in lower revenues. Conservation efforts and construction codes, which require the use of low-flow plumbing fixtures, could diminish water consumption and result in reduced revenue.

A contamination event or other decline in source water quality could affect the water supply of the Water Utility Services and therefore adversely affect the business and operating results.

The Water Utility Services are required under environmental regulations to comply with water quality requirements. Through water quality compliance programs, the Water Utility Services continually monitor for contamination and pollution of its sources of water. In addition, a Watershed Management Program provides a proactive approach to minimize potential contamination activities. There can be no assurance that we will continue to comply with all applicable water quality requirements. In the event a contamination is detected, the Water Utility Services will either have to commence treatment to remove the contaminant or procure water from an alternative source. Either of these results may be costly, may increase future capital expenditures and there can be no assurance that the regulators would approve a rate increase to enable us to recover the costs arising from these remedies.

The Water Utility Services are subject to litigation risks concerning water quality and contamination.

Although the Water Utility Services have not been and are not a party to any environmental and product-related lawsuits, such lawsuits against other water utilities have increased in frequency in recent years. If the Water Utility Services are subject to an environmental or product-related lawsuit, they might incur significant legal costs and it is uncertain whether they would be able to recover the legal costs from ratepayers or other third parties. Although the Water Utility Services have product liability insurance coverage for bodily injury and property damage, pollution is excluded from this coverage. In additions, our pollution liability policy does not extend coverage for product liability.

New or more stringent environmental regulations could increase the Water Utility Services’ operating costs and affect its business.

The Water Utility Services’ operations are subject to water quality and pollution control regulations issued by the EPA and environmental laws and regulations administered by the respective states and local regulatory agencies.

Stringent environmental and water quality regulations could increase the Water Utility Services’ water quality compliance costs, hamper the Water Utility Services’ available water supplies, and increase future capital expenditure.

Under the federal Safe Drinking Water Act, the Water Utility Services are subject to regulation by the EPA of the quality of water it sells and treatment techniques it uses to make the water potable. The EPA promulgates nationally applicable standards, including maximum contaminant levels for drinking water. The Water Utility Services are currently in compliance with all of the 87 primary maximum contaminant levels promulgated to date. Additional or more stringent requirements may be adopted by each state. There can be no assurance that the Water Utility Services will be able to continue to comply with all water quality requirements.

The Water Utility Services have implemented monitoring activities and installed specific water treatment improvements enabling it to comply with existing maximum contaminant levels and plan for compliance with future drinking water regulations. However, the EPA and the respective state agencies have continuing authority

to issue additional regulations under the Safe Drinking Water Act. It is possible that new or more stringent environmental standards could be imposed that will raise the Water Utility Services’ operating costs. Future drinking water regulations may require increased monitoring, additional treatment of underground water supplies, fluoridation of all supplies, more stringent performance standards for treatment plants and procedures to further reduce levels of disinfection by-products. The Water Utility Services continues to seek mechanisms for recovery of government-mandated environmental compliance costs. There are currently limited regulatory mechanisms and procedures available to the company for the recovery of such costs and there can be no assurance that such costs will be fully recovered.

Costs associated with security precautions may have an adverse effect on the operating results of the Water Utility Services.

Water utility companies have generally been on a heightened state of alert since the threats to the nation’s health and security in September of 2001. San Jose Water Company has taken steps to increase security at its water utility facilities and continues to implement a comprehensive security upgrade program for production and storage facilities, pump stations and company buildings. San Jose Water Company also coordinates security and planning information with SCVWD, other Bay Area water utilities and various governmental and law enforcement agencies.

San Jose Water Company conducted a system-wide vulnerability assessment in compliance with federal regulations Public Law 107-188 imposed on all water utilities. The assessment report was filed with the EPA on March 31, 2003. San Jose Water Company has also actively participated in the security vulnerability assessment training offered by the American Water Works Association Research Foundation and the EPA.

The vulnerability assessment identified system security enhancements that impact water quality, health, safety, and continuity of service totaling approximately $2,300,000. These improvements were incorporated into the capital budgets and were completed as of December 31, 2006. San Jose Water Company has and will continue to bear costs associated with additional security precautions to protect its water utility business and other operations. While some of these costs are likely to be recovered in the form of higher rates, there can be no assurance that CPUC will approve a rate increase to recover all or part of such costs and, as a result, the company’s operating results and business may be adversely affected.

CLWSC evaluated its security measures and has completed and implemented a new risk management plan. As a result, CLWSC replaced all building and chemical vessel locks, installed new fences at the Park Shores Water Treatment Plant and several wells, repaired fences at other well sites, improved exterior lighting at the water treatments plants and installed new network firewalls for its computer systems.

The Water Utility Services rely on information technology and systems that are key to business operations, therefore a disruption in service could adversely effect business operations.

Information technology is key to the operation of the Water Utility Services, including but not limited to bill remittance processing, providing customer service and the use of Supervisory Control and Data Acquisition systems to operate the distribution system. A disruption of a business system that supports any of these functions could significantly impact our ability to provide services to our customers.

SJW Land Company’s significant increase in its real estate portfolio.

SJW Land Company owns a diversified real estate portfolio in multiple states. The risks in investing directly in real estate vary depending on the investment strategy and investment objective.

•

Liquidity risk—real estate investment is illiquid. The lag time to build or reduce its portfolio is long.

•

Obsolescence risk—real estate property is location specific. Location obsolescence can occur due to a decline of a particular sub-market or neighborhood. Functional obsolescence can also occur from physical depreciation, wear and tear, and other architectural and physical features which could be curable or incurable.

•

Market and general economic risks—real estate investment is tied to overall domestic economic growth and, therefore, carries market risk which cannot be eliminated by diversification. Generally, all property types benefit from national economic growth, though the benefits range according to local factors, such as local supply and demand and job creation. Because real estate leases are typically staggered and last for multiple years, there is generally a lag effect in the performance of real estate in relation to the overall economy. This lag effect can insulate or deteriorate the financial impact to SJW Land Company in a downturn or an improved economic environment.

Vacancy rates can climb and market rents can be impacted and weakened by general economic forces, therefore affecting income to SJW Land Company.

The value of real estate can drop materially due to a deflationary market, decline in rental income, market cycle of supply and demand, long lag time in real estate development, legislative and governmental actions, environmental concerns, and fluctuation of interest rates, eroding any unrealized capital appreciation and, potentially, invested capital.

•

Credit risk—the risk of a tenant declaring bankruptcy and seeking relief from its contractual rental obligation could affect the income and the financial results of SJW Land Company. Diversification of many tenants across many properties may mitigate the risk, but can never eliminate it. This risk is most prevalent in a recessionary environment.

In the first quarter of 2009, SJW Land Company was informed that one of its tenants filed a Chapter 11 bankruptcy and intends to liquidate its operations through the United States Bankruptcy Court in Delaware. Such tenant currently leases a 148,000 square foot office building and a 346,000 square foot distribution building from SJW Land Company in Knoxville, Tennessee under triple net leases which have been paid through February 2009. Pursuant to applicable bankruptcy laws and bankruptcy court rules, the tenant will have a limited period of time to decide whether it will terminate its office and distribution leases or sell its rights under the leases. In the event that the leases are terminated, SJW Land Company will incur all holding costs and will seek to re-lease the premises. However, there will be no assurance that SJW Land Company will be able to secure a new tenant; or if it is able to secure a new tenant, when this will occur or whether the leases will be under similar terms.

The success of SJW Land Company’s real estate investment strategy depends largely on ongoing local, state and federal land use development activities and regulations, future economic conditions, the development and fluctuations in the sale of the undeveloped properties, the ability to identify the developer/potential buyer of the available for-sale real estate, the timing of the transaction, favorable tax law, the ability to identify and acquire high quality, relatively low risk replacement property at reasonable terms and conditions, and the ability to maintain and manage the replacement property.

Potential impact of the economy on operations.

SJW Corp.’s financial performance could be impacted by the recent turmoil in the United States credit markets and recessionary economic environment. The United States credit markets began to tighten significantly in late 2007 and continued that trend through 2008. The tightening of the credit markets eventually led to a complete freeze in lending in 2008. Since SJW Corp. is dependent upon debt financing to supplement its cash flow from operations to fund its capital investment program, a freeze in lending could impair SJW Corp.’s capital spending plans, which could impact our ability to grow our utility asset base and earnings.

In addition to the constraints resulting from a challenging credit market, the United States economy entered a recession in late 2007. The recession can be largely attributable to a steep decline in consumer spending which has been driven largely by declining real estate values together with the general lack of consumer credit availability. The decline in consumer spending has led to substantial lay-offs, with approximately 2 million jobs shed from United States companies. Due to this weak economic scenario and high unemployment rates, SJW Corp. may experience a decline in usage, which could negatively impact our revenue growth expectations. Further, due to the large fixed cost structure of our business, a decline in revenue could negatively impact expected earnings.

Other factors that could affect operating results.

Other factors that could adversely affect the operating results of SJW Corp. and its subsidiaries include the following:

•

SJW Corp.’s growth strategy depends on its ability to acquire water systems in order to broaden its service areas, SJW Land Company’s ability to continue to develop and invest in real estate investments at favorable terms, and San Jose Water Company’s ability to continue to broaden and expand its nonregulated contract services in the metropolitan San Jose area. The execution of SJW Corp.’s growth strategy will expose it to different risks than those associated with the current utility operations. Costs are incurred in connection with the execution of the growth strategy and risks are involved in potential integration of acquired businesses/properties which could require significant costs and cause diversion of management’s time and resources. Any future acquisition SJW Corp. decides to undertake may involve risks and have a material adverse effect on SJW Corp.’s core business, impact SJW Corp.’s ability to finance its business and affect its compliance with regulatory requirements. Any businesses SJW Corp. acquires may not achieve sales, customer growth and projected profitability that would justify the investment. Any difficulties SJW Corp. encounters in the integration process, including the integration of controls necessary for internal control and financial reporting, could interfere with its operations, reduce its operating margins and adversely affect its internal controls.

•

The level of labor and non-labor operating and maintenance expenses as affected by inflationary forces and collective bargaining power could adversely affect the operating and maintenance expenses of SJW Corp.

•

The City of Cupertino lease operation could be adversely affected by: (1) the level of capital requirements, (2) the ability of San Jose Water Company to raise rates through the Cupertino City Council, and (3) the level of operating and maintenance expenses.

Item 1B.

Unresolved Staff Comments

None.

Item 2.

Properties

The properties of San Jose Water Company consist of a unified water production system located in the County of Santa Clara in the State of California. In general, the property is comprised of franchise rights, water rights, necessary rights-of-way, approximately 7,000 acres of land held in fee (which is primarily non-developable watershed), impounding reservoirs with a capacity of approximately 2.256 billion gallons, diversion facilities, wells, distribution storage of approximately 236 million gallons, and all water facilities, equipment, office buildings and other property necessary to supply its customers.

San Jose Water Company maintains all of its properties in good operating condition in accordance with customary practice for a water utility. San Jose Water Company’s groundwater pumping stations have a production capacity of approximately 238 million gallons per day and the present capacity for taking purchased water is approximately 172 million gallons per day. The surface water collection system has a physical delivery capacity of approximately 35 million gallons per day. During 2008, a maximum and average of 191 million gallons and 134 million gallons of water per day, respectively, were delivered to the system.

The Water Utility Services hold all its principal properties in fee, subject to current tax and assessment liens, rights-of-way, easements, and certain minor defects in title which do not materially affect their use.

SJW Land Company owns approximately 92 acres of property in the states of Connecticut, Florida, Texas, Arizona and Tennessee and approximately five undeveloped acres of land and two acres of land with commercial properties primarily in the San Jose metropolitan area. In February 2007, SJW Land Company purchased a warehouse building, commercial building and undeveloped land in the State of Tennessee. SJW Land Company

also owns a 70% limited partnership interest in 444 West Santa Clara Street, L.P., a real estate limited partnership that owns and operates an office building. SJW Land Company consolidates its limited partnership interest in 444 West Santa Clara Street, L.P. as a variable interest entity under Financial Accounting Standards Board Interpretation No. 46R (“FIN46R”), “Consolidation of Variable Interest Entities.” The following table is a summary of SJW Land Company properties described above:


Description	Location	Acreage	Square Footage	Percentage of SJW Land Company Revenue
2 Commercial buildings	San Jose, California	2	28,000	13	%
Warehouse building	Windsor, Connecticut	17	170,000	11	%
Warehouse building	Orlando, Florida	8	147,000	7	%
Retail building	El Paso, Texas	2	14,000	5	%
Warehouse building	Phoenix, Arizona	11	176,000	13	%
Warehouse building	Knoxville, Tennessee	29	346,000	23	%
Commercial building	Knoxville, Tennessee	15	148,000	28	%
Undeveloped land	Knoxville, Tennessee	10	N/A	N/A
Undeveloped land	San Jose, California	5	N/A	N/A

Item 3.

Legal Proceedings

SJW Corp. is subject to litigation incidental to its business. However, there are no pending legal proceedings to which SJW Corp. or any of its subsidiaries is a party or to which any of its properties is the subject that are expected to have a material effect on SJW Corp.’s financial position, results of operations or cash flows.

Item 4.

Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

SJW Corp.’s common stock is traded on the New York Stock Exchange under the symbol SJW. Information as to the high and low sales prices for SJW Corp.’s common stock for each quarter in the 2008 and 2007 fiscal years is contained in the section captioned “Market price range of stock” in the tables set forth in Note 16 of “Notes to Consolidated Financial Statements” in Part II, Item 8.

As of December 31, 2008, there were 531 record holders of SJW Corp.’s common stock.

Dividends

Dividends have been paid on SJW Corp.’s and its predecessor’s common stock for 261 consecutive quarters and the annual dividend amount has increased in each of the last 41 years. Additional information as to the cash dividends paid on common stock in 2008 and 2007 is contained in the section captioned “Dividend per share” in the tables set forth in Note 16 of “Notes to Consolidated Financial Statements” in Part II, Item 8. Future dividends will be determined by the Board of Directors after consideration of various financial, economic and business factors.

Five-Year Performance Graph

The following performance graph compares the changes in the cumulative shareholder return on SJW Corp.’s common stock with the cumulative total return on the Water Utility Index and the Standard & Poor’s 500 Index during the last five years ended December 31, 2008. The comparison assumes $100 was invested on December 31, 2003 in SJW Corp.’s common stock and in each of the foregoing indices and assumes reinvestment of dividends.

LOGO

The following descriptive data is supplied in accordance with Rule 304(d) of Regulation S-T:


	2003	2004	2005	2006	2007	2008
SJW Corp.	100	126	162	282	256	226
Water Utility Index	100	114	145	144	135	124
S&P 500 Index	100	111	116	135	142	90

The Water Utility Index is the 11 water company Water Utility Index prepared by Wachovia.

Item 6.

Selected Financial Data

FIVE YEAR STATISTICAL REVIEW

SJW Corp. and Subsidiaries


	2008			2007		2006	2005		2004
CONSOLIDATED RESULTS OF OPERATIONS (in thousands)

Operating revenue	$	220,347		206,601		189,238	180,105		166,911
Operating expense:
Purchased water		48,291		48,596		44,896	44,953		41,220
Power		7,559		7,532		5,170	4,318		5,511
Groundwater extraction charges		34,368		30,141		18,737	17,362		21,773
Administrative and general		23,688		22,334		21,108	20,697		17,285
Other		16,390		14,907		15,095	14,183		12,892
Maintenance		13,123		11,628		10,189	9,475		8,674
Property taxes and other nonincome taxes		6,793		6,307		5,893	5,673		5,314
Depreciation and amortization		24,043		22,854		21,299	19,654		18,481
Income taxes		13,198		12,549		15,298	14,773		11,644

Total operating expense		187,453		176,848		157,685	151,088		142,794

Operating income		32,894		29,753		31,553	29,017		24,117
Interest expense, other income and deductions		(11,433	)	(10,430	)	7,028	(7,177	)	(4,331	)

Net income		21,461		19,323		38,581	21,840		19,786
Dividends paid		11,875		11,089		10,549	9,777		9,319

Invested in the business	$	9,586		8,234		28,032	12,063		10,467

CONSOLIDATED PER SHARE DATA (BASIC)

Net income	$	1.17		1.05		2.11	1.20		1.08
Dividends paid	$	0.65		0.60		0.57	0.53		0.51
Shareholders’ equity at year-end	$	13.81		12.92		12.48	10.73		10.11

CONSOLIDATED BALANCE SHEET (in thousands)

Utility plant and intangible assets	$	878,743		816,310		740,419	664,117		619,590
Less accumulated depreciation and amortization		272,562		255,025		234,173	208,909		189,221

Net utility plant		606,181		561,285		506,246	455,208		430,369

Real estate investment		88,000		84,195		40,565	34,850		31,987
Total assets		850,877		767,326		705,864	587,709		552,152
Capitalization:
Shareholders’ equity		254,326		236,934		228,182	195,908		184,691
Long-term debt		216,613		216,312		163,648	145,279		143,604

Total capitalization	$	470,939		453,246		391,830	341,187		328,295

OTHER STATISTICS—WATER UTILITY SERVICES

Customers at year-end		234,300		233,300		231,700	222,400		220,800
Average revenue per customer	$	914.46		860.23		809.56	792.08		733.76
Investment in utility plant per customer	$	3,751		3,499		3,196	2,986		2,806
Miles of main at year-end		2,814		2,743		2,739	2,447		2,434
Water production (million gallons)		51,961		51,922		49,302	48,198		51,082
Maximum daily production (million gallons)		204		205		229	201		192
Population served (estimate)		1,056,100		1,051,600		1,044,400	1,002,400		995,000

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Description of Business

SJW Corp. is a publicly traded company and is a holding company with three subsidiaries:

San Jose Water Company, a wholly owned subsidiary, is a public utility in the business of providing water service to approximately 226,000 connections that serve a population of approximately one million people in an area comprising approximately 138 square miles in the metropolitan San Jose, California area. The United States water utility industry is largely fragmented and is dominated by municipal-owned water systems. The water industry is regulated, and provides a life-sustaining product. This makes water utilities subject to lower business cycle risks than nonregulated industries.

SJW Land Company, a wholly owned subsidiary, owns undeveloped land in the states of California and Tennessee, owns and operates commercial buildings in the states of California, Florida, Connecticut, Texas, Arizona and Tennessee and has a 70% limited partnership interest in 444 West Santa Clara Street, L.P.

SJWTX, Inc., doing business as Canyon Lake Water Service Company, a wholly owned subsidiary, was incorporated in September 2005. CLWSC provides service to approximately 8,700 connections that serve approximately 36,000 residents in a service area comprising more than 153 square miles in the growing region between San Antonio and Austin, Texas, as of December 31, 2008.

SJW Corp. also owns 1,099,952 shares or approximately 5% of California Water Service Group as of December 31, 2008.

Business Strategy

SJW Corp. focuses its business initiatives in four strategic areas:

(1)

Regional regulated water utility operations.

(2)

Regional nonregulated water utility related services provided in accordance with the guidelines established by the CPUC.

(3)

Real estate investment activities in SJW Land Company.

(4)

Out-of-region water and utility related services, primarily in the Western United States.

Regional Regulated Activities

SJW Corp.’s regulated utility operation is conducted through San Jose Water Company, a wholly owned water utility subsidiary that provides water service to the greater metropolitan San Jose area, and CLWSC, a wholly owned regulated utility subsidiary in the State of Texas. SJW Corp. plans and applies a diligent and disciplined approach to maintaining and improving its water system infrastructure. It also seeks to acquire regulated water systems adjacent to or near its existing service territory.

Regional Nonregulated Activities

Operating in accordance with guidelines established by the CPUC, San Jose Water Company provides nonregulated water services under agreements with municipalities and other utilities. Nonregulated services include water system operations, billings and cash remittance processing, maintenance services, and telecommunication antenna leasing.

San Jose Water Company also seeks appropriate nonregulated business opportunities that complement its existing operations or that allow it to extend its core competencies beyond existing operations. San Jose Water Company seeks opportunities to fully utilize its capabilities and existing capacity by providing services to other regional water systems, benefiting its existing regional customers through increased efficiencies.

Real Estate Investment

SJW Land Company’s real estate investments diversify SJW Corp.’s asset base and balances SJW Corp.’s concentration in regulated assets. SJW Land Company implements its real estate investment strategy by exchanging selected real estate assets for investments with a capital structure and risk and return profile that is consistent with SJW Corp.’s consolidated capital structure and risk and return profile.

Out-of-Region Opportunities

SJW Corp. also from time to time pursues opportunities to participate in out-of-region water and utility related services, particularly regulated water businesses, in the Western United States. SJW Corp. evaluates out-of-region and out-of-state opportunities that meet SJW Corp.’s risk and return profile.

The factors SJW Corp. considers in evaluating such opportunities include:

•

regulatory environment;

•

synergy potential;

•

general economic conditions;

•

potential profitability;

•

additional growth opportunities within the region;

•

water supply, water quality and environmental issues; and

•

capital requirements.

SJW Corp. cannot be certain it will be successful in consummating any transactions relating to such opportunities. In addition, any transaction will involve numerous risks. Some of the risks include the possibility of paying more than the value derived from the acquisition, the assumption of certain known and unknown liabilities related to the acquired assets, the risk of diverting management’s attention from normal daily operations of the business, the potential for a negative impact to SJW Corp.’s financial condition and operating results, the risks of entering markets in which SJW Corp. has no or limited direct prior experience and the potential loss of key employees of any acquired company. SJW Corp. cannot be certain that any transaction will be successful and will not materially harm its operating results or financial condition.

Critical Accounting Policies

SJW Corp. has identified accounting policies delineated below as the policies critical to its business operations and the understanding of the results of operations. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. SJW Corp. bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances. The impact and any associated risks related to these policies on SJW Corp.’s business operations are discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect SJW Corp.’s reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 1 of “Notes to Consolidated Financial Statements.” SJW Corp.’s critical accounting policies are as follows:

Revenue Recognition

SJW Corp. recognizes its regulated and nonregulated revenue when services have been rendered, in accordance with SEC Staff Accounting Bulletin 104, “Revenue Recognition.”

Metered revenue of the Water Utility Services includes billing to customers based on meter readings plus an estimate of water used between the customers’ last meter reading and the end of the accounting period. The Water Utility Services read the majority of its customers’ meters on a bi-monthly basis and records its revenue based on its meter reading results. Unbilled revenue from the last meter reading date to the end of the accounting period is estimated based on the most recent usage patterns, production records and the effective tariff rates. Actual results could differ from those estimates, which would result in adjusting the operating revenue in the period which the revision to the Water Utility Services’ estimates are determined. As of December 31, 2008 and 2007, accrued unbilled revenue was $12,896,000 and $12,654,000, respectively. Unaccounted for water for 2008 and 2007 approximated 7.4% and 7.2%, respectively, as a percentage of production. The estimate is based on the results of past experience, the trend and efforts in reducing the Water Utility Services’ unaccounted-for water through customer conservation, main replacements and lost water reduction programs.

Revenues also include a surcharge collected from regulated customers that are paid to the CPUC. This surcharge is recorded in operating revenues and administrative and general expenses. For the years ended December 31, 2008, 2007 and 2006, the surcharge was $2,999,000, $2,708,000 and $2,505,000, respectively.

SJW Corp. recognizes its nonregulated revenue based on the nature of the nonregulated business activities. Revenue from San Jose Water Company’s nonregulated utility operations and billing or maintenance agreements are recognized when services have been rendered. Revenue from SJW Land Company properties is generally recognized ratably over the term of the leases.

Recognition of Regulatory Assets and Liabilities

Generally-accepted accounting principles for water utilities include the recognition of regulatory assets and liabilities as permitted by Statement of Financial Accounting Standards (SFAS) No. 71, “Accounting for the Effects of Certain Types of Regulation.” In accordance with SFAS No. 71, the Water Utility Services, to the extent applicable, record deferred costs and credits on the balance sheet as regulatory assets and liabilities when it is probable that these costs and credits will be recognized in the ratemaking process in a period different from when the costs and credits are incurred. Accounting for such costs and credits is based on management’s judgment and prior historical ratemaking practices, and it occurs when management determines that it is probable that these costs and credits will be recognized in the future revenue of the Water Utility Services through the ratemaking process. The regulatory assets and liabilities recorded by the Water Utility Services, in particular, San Jose Water Company, primarily relate to the recognition of deferred income taxes for ratemaking versus tax accounting purposes and the postretirement pension benefits, medical costs, accrued benefits for vacation and asset retirement obligation that have not been passed through rates. The disallowance of any asset in future ratemaking, including deferred regulatory assets, would require San Jose Water Company to immediately recognize the impact of the costs for financial reporting purposes. No disallowance was recognized at December 31, 2008 and December 31, 2007. The net regulatory assets recorded by San Jose Water Company were $73,778,000 and $44,712,000 as of December 31, 2008 and 2007, respectively. As of December 31, 2006, San Jose Water Company has recorded its expected postretirement benefit plan liabilities and a corresponding regulatory asset relating to the implementation of the SFAS No. 158, “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans,” including a reclassification of benefit obligations previously recorded to comprehensive income, in the amount of $3,666,000, resulting in an increase to regulatory assets of $38,410,000. The change in regulatory assets from 2006 to 2007 and 2007 to 2008 was primarily attributable to the funded status of pensions and other postretirement benefit plans based on the projected benefit obligations and the gross-up for taxes.

Pension Accounting

San Jose Water Company offers a defined benefit plan, an Executive Supplemental Retirement Plan and certain postretirement benefits other than pensions to employees retiring with a minimum level of service. Accounting for pensions and other postretirement benefits requires an extensive use of assumptions about the discount rate applied to expected benefit obligations, expected return on plan assets, the rate of future compensation increases received by the employees, mortality, turnover and medical costs. See assumptions and disclosures detailed in Note 10 of “Notes to Consolidated Financial Statements.”

The Pension Plan is administered by a committee that is composed of an equal number of Company and Union representatives (the “Committee”). Investment decisions have been delegated by the Committee to an Investment Manager, presently Wachovia Securities, LLC. Investment guidelines provided to the Investment Manager require that at least 25% of plan assets be invested in bonds or cash. As of December 31, 2008, the plan assets consist of approximately 45% bonds, 3% cash and 52% equities. Furthermore, equities are to be diversified by industry groups and selected to achieve preservation of capital coupled with long-term growth through capital appreciation and income. They may not invest in commodities and futures contracts, private placements, options, letter stock, speculative securities, or hold more than 5% of assets of any one private corporation. They may only invest in bonds, commercial paper, and money market funds with acceptable ratings by Moody’s or Standard & Poor’s. The Investment Manager is reviewed regularly regarding performance by the Investment Consultant who provides quarterly reports to the Committee for review.

The market values of the plan assets are marked to market at the measurement date. The investment trust assets incur unrealized market gains or losses from time to time. As a result the pension expense in 2008 included the amortization of unrealized market losses on pension assets. Both unrealized market gains and losses on pension assets are amortized over 13.25 years for actuarial expense calculation purposes. Market losses in 2007 increased pension expense by approximately $142,000 in 2008 and market gains in 2006 decreased pension expense by approximately $223,000 in 2007.

Income Taxes

SJW Corp. estimates its federal and state income taxes as part of the process of preparing the financial statements. The process involves estimating the actual current tax exposure together with assessing temporary differences resulting from different treatment of items for tax and accounting purposes, including the evaluation of the treatment acceptable in the water utility industry and regulatory environment. These differences result in deferred tax assets and liabilities, which are included on the balance sheet. If actual results, due to changes in the regulatory treatment, or significant changes in tax-related estimates or assumptions or changes in law, differ materially from these estimates, the provision for income taxes will be materially impacted.

Balancing Account

Pursuant to Section 792.5 of the California Public Utilities Code, a balancing account must be maintained for each expense item for which revenue offsets have been authorized. The purpose of a balancing account is to track the under-collection or over-collection associated with expense changes and the revenue authorized by CPUC to offset those expense changes.

A separate balancing account must be maintained for each offset expense item (e.g., purchased water, purchased power and groundwater extraction charges). The balancing account balance varies with the seasonality of the water utility business such that, during the summer months when the demand for water is at its peak, the account tends to reflect an under-collection while, during the winter months when demand for water is relatively lower, the account tends to reflect an over-collection. Since the balances have to be approved by the CPUC before they can be incorporated into rates, San Jose Water Company does not recognize the balancing account in its revenue until the CPUC authorizes the change in customers’ rates. However, had the balancing account been recognized in San Jose Water Company’s financial statements, San Jose Water Company’s retained earnings would be decreased by the amount of the account over-collection or increased by the amount of the account under-collection, less applicable taxes. Please also see Item 1A, “Risk Factors.”

As of December 31, 2008 and 2007, the total accrued balance in San Jose Water Company’s balancing account was an over-collection of $1,977,000 and $1,656,000, respectively, including interest. All balancing accounts will be reviewed by the CPUC in San Jose Water Company’s next general rate case.

Recognition of Gain/Loss on Utility, Nonutility Property and Real Estate Investments

In conformance with generally-accepted accounting principles for rate-regulated public utilities, the cost of retired utility plant, including retirement costs (less salvage), is charged to accumulated depreciation and no gain or loss is recognized for utility plant used and useful in providing water utility services to customers.

Utility property in the Water Utility Services is property that is used and useful in providing water utility services to customers and is included in rate base for rate-setting purposes. In California, real estate type utility property is subject to CPUC Code Section 851, which states any gain recognized will be divided with two-thirds going to the customers and one-third to the shareholders. Net gains or losses from the sale of utility property are recorded as a component of other (expense) income in the consolidated statement of income and comprehensive income.

Nonutility property in the Water Utility Services is property that is neither used nor useful in providing water utility services to customers and is excluded from the rate base for rate-setting purposes. San Jose Water Company recognizes gain/loss on disposition of nonutility property in accordance with CPUC Code Section 790.

SJW Land Company owns real estate investment property, which consists primarily of land and buildings. Net gains and losses from the sale of real estate investments are recorded as a component of other (expense) income in the consolidated statement of income and comprehensive income.

Results of Operations

SJW Corp.’s consolidated net income for the 12 months ending December 31, 2008 was $21,461,000, compared to $19,323,000 for the same period in 2007. The increase of $2,138,000 or 11% includes an after tax gain of $1,224,000 from the sale of Water Utility Services properties in 2008. Please refer to Note 12, “Sale of Real Estate Investments” under Notes to Consolidated Financial Statements.

SJW Land Company and its consolidated variable interest entity, 444 West Santa Clara Street, L.P., which operates commercial building rentals, are collectively referred to as “Real Estate Services.”

Operating Revenue

Operating revenue by segment was as follows:

Operating Revenue


	2008		2007	2006
	(in thousands)
Water Utility Services	$	213,801	200,004	183,809
Real Estate Services		6,546	6,486	4,317
All Other		—	111	1,112

	$	220,347	206,601	189,238

Operating revenue increased $13,746,000 or 7% in 2008 compared to 2007, and $17,363,000 or 9% in 2007 compared to 2006.

The change in consolidated operating revenue was due to the following factors:


	2008 vs. 2007 Increase/(decrease)					2007 vs. 2006 Increase/(decrease)
	(in thousands)
Water Utility Services:
Consumption changes	$	(735	)	—		$	2,784		1	%
New customers increase		574		—			3,002		2	%
Rate increases		13,958		7	%		10,409		5	%
Real Estate Services		60		—			2,169		1	%
All Other		(111	)	—			(1,001	)	—

	$	13,746		7	%	$	17,363		9	%

2008 vs. 2007

Consolidated operating revenue increased by $13,746,000 in 2008 or 7% in comparison to 2007. The revenue increase consists of $13,797,000 from Water Utility Services and $60,000 from Real Estate Services. The revenue increases were offset by an $111,000 decrease in other revenues primarily due to the sale of the assets of Crystal Choice Water Service LLC on January 31, 2007.

The revenue increase for the Water Utility Services was primarily the result of increases in rates of $13,958,000 and new customers of $574,000 which was offset by a decrease in consumption of $735,000.

As noted in Item 1A, “Risk Factors”, the tenant of the buildings in Tennessee filed Chapter 11 bankruptcy. The tenant will have a limited period of time to decide whether it will terminate its leases or sell its rights under the leases. In the event the leases are terminated and a new tenant is not identified, Real Estate Services revenue for 2009 would be approximately $3,300,000 less than what was recognized in 2008. Further, if the buildings are vacant, Real Estate Services expects to incur holding costs for taxes, insurance, utilities and other miscellaneous expenses.

2007 vs. 2006

Consolidated operating revenue increased by $17,363,000 in 2007 or 9% in comparison to 2006. The revenue increase consists of $16,195,000 from Water Utility Services and $2,169,000 from Real Estate Services. The revenue increases were offset by a $1,001,000 decrease in other revenues primarily due to the sale of the assets of Crystal Choice Water Service LLC on January 31, 2007.

The revenue increase for the Water Utility Services was primarily the result of increases in rates, consumption, customers and a full year of operation at CLWSC. The increase in SJW Land Company was primarily due to a $3,122,000 increase in rental income from the Tennessee warehouse and commercial property acquired in February 2007 and $404,000 is attributable to a full year of rental income from the Arizona warehouse property acquired in June 2006. The SJW Land Company revenue increases were offset by a $1,357,000 decrease in parking and rental revenue as a result of the sale of parking facilities in December 2006.

Water Utility Services Operating Revenue and Customer Counts

The following tables present operating revenues and number of customers by customer group of the Water Utility Services:

Operating Revenue by Customer Group


	2008		2007	2006
	(in thousands)
Residential and business	$	195,901	182,917	169,251
Industrial		1,067	1,287	1,115
Public authorities		11,227	10,469	8,903
Others		5,606	5,331	4,540

	$	213,801	200,004	183,809

Number of Customers


	2008	2007	2006
Residential and business	228,794	227,789	226,332
Industrial	77	79	83
Public authorities	1,591	1,715	1,725
Others	3,838	3,717	3,560

	234,300	233,300	231,700

Operating Expense

Operating expense by segment was as follows:

Operating Expense


	2008		2007	2006
	(in thousands)
Water Utility Services	$	183,774	172,698	153,199
Real Estate Services		2,995	2,994	2,403
All Other		684	1,156	2,083

	$	187,453	176,848	157,685

Operating expense increased $10,605,000 or 6% in 2008 compared to 2007, and $19,163,000 or 12% in 2007 compared to 2006.

The change in operating expense was due to the following:


	2008 vs. 2007 Increase/(decrease)					2007 vs. 2006 Increase/(decrease)
	(in thousands)
Water Production Costs:
Change in surface water supply	$	(2,090	)	(1	)%	$	8,685		6	%
Change in usage and new customers		(8	)	—			3,967		2	%
Purchased water and groundwater extraction charge and energy price increase		6,047		3	%		4,814		3	%

Total water production costs		3,949		2	%		17,466		11	%
Administrative and general		1,354		1	%		1,226		1	%
Other operating expense		1,483		1	%		(188	)	—
Maintenance		1,495		1	%		1,439		1	%
Property taxes and other non-income taxes		486		—			414		—
Depreciation and amortization		1,189		1	%		1,555		1	%
Income taxes		649		—			(2,749	)	(2	)%

	$	10,605		6	%	$	19,163		12	%

The various components of operating expenses are discussed below.

Water production costs

2008 vs. 2007

Water production costs increased $3,949,000 primarily due to $6,047,000 in purchased water and groundwater extraction charge price increases, offset by $2,090,000 in decreased surface water supply costs due to increased availability of surface water supply in 2008 compared to 2007.

2007 vs. 2006

The lack of precipitation in 2007 adversely impacted the Water Utility Services’ operating results. Water production costs increased $17,466,000 primarily due to a decreased surface water supply necessitating $8,685,000 in additional purchased water, $4,393,000 in purchased water unit price increases and additional groundwater extraction charges and $3,967,000 due to increased usage by customers and new customers.

Sources of Water Supply

The Water Utility Services water supply consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water and water purchased from regional wholesalers. Surface water is the least expensive source of water. The following table presents the sources of water supply for the Water Utility Services:


	Source of Water Supply
	2008		2007	2006
	(million gallons) (MG)
Purchased water		26,436	28,688	27,722
Groundwater		22,839	21,766	14,488
Surface water		2,283	1,051	6,684
Reclaimed water		404	417	408

		51,962	51,922	49,302

Average water production cost per MG	$	1,736	1,661	1,396

Water production in 2008 for the Water Utility Services increased 40 million gallons from 2007. Water production in 2007 increased 2,620 million gallons from 2006. The increases are primarily attributable to an increase in consumption by customers. The changes in operating expenses are consistent with the related water production changes.

The following table represents the cost of purchased water and the groundwater extraction charge for water pumped from the ground basin, per million gallons, as of December 31:


	2008		2007	2006
Purchased water	$	1,903	1,765	1,642
Groundwater extraction charge	$	1,596	1,458	1,335

Other Operating Expense

The following table represents components of other operating expense:


	2008		2007	2006
	(in thousands)
Water supply	$	1,139	1,137	1,197
Water treatment and quality		2,924	2,512	2,131
Pumping		2,257	2,066	1,913
Transmission and distribution		3,551	3,541	3,430
Customer accounts		6,273	5,416	4,820
Other		246	235	1,604

Total other operating expenses	$	16,390	14,907	15,095

2008 vs. 2007

Other operating expense increased $1,483,000 in 2008 or 10% in comparison to 2007. The increase consisted primarily of: (1) $556,000 due to salary increases and new hires, (2) $315,000 in contracted work due to increased repair activity, (3) $235,000 increase in materials, supplies and postage, (4) $191,000 due to an increase in uncollectible accounts, and (5) $186,000 in miscellaneous expenses.

2007 vs. 2006

Other operating expense decreased $188,000 in 2007 or 1% in comparison to 2006. The decrease consisted primarily of: (1) $745,000 due to the sale of Crystal Choice Water Service in January 2007, (2) $252,000 due to the sale of SJW Land Company parking lots in 2006 and (3) $64,000 in miscellaneous expenses. These decreases were offset by: (1) $436,000 increase in CLWSC due to an additional five months of activity and (2) $437,000 in San Jose Water Company due to salary increases and new hires.

Administrative and General Expense

2008 vs. 2007

Administrative and general expense increased $1,354,000 in 2008 or 6% in comparison to 2007. The increase consisted primarily of: (1) $833,000 due to salary increases and new hires, (2) $348,000 due to legal fees and uninsured losses, (3) $325,000 due to the increased cost of health insurance, (4) $126,000 in increased workman’s compensation insurance, and (5) $340,000 in miscellaneous expenses. These increases were offset by a $618,000 decrease in pension and retirement expenses. While SJW Corp. experienced a decrease in the expense for its pension plans in 2008, it anticipates this expense to increase in 2009 due primarily to a decline in the value of the assets held by the pension plan. The decrease in the value of the assets held by the pension plan reflects the 41% decline in the S&P 500 Index for 2008.

2007 vs. 2006

Administrative and general expense increased $1,226,000 in 2007 or 6% in comparison to 2006. The increase consisted primarily of: (1) $558,000 in group insurance costs due to a greater number of employees and higher premiums, (2) $387,000 in salaries and wages due to a greater number of employees and the wage increases for the year, (3) $212,000 in property and liability insurance, (4) $204,000 in regulatory commission expense as a result of increased sales and (5) $116,000 in miscellaneous expenses. These increases were offset by a $251,000 decrease in legal and accounting fees.

Maintenance Expense

2008 vs. 2007

Maintenance expense increased $1,495,000 in 2008 or 13% in comparison to 2007, and $1,439,000 in 2007 or 14% in comparison to 2006. The increase in 2008 consisted primarily of: (1) $696,000 due to salary increases and new employees, (2) $582,000 in contracted work, paving, and materials and supplies due to increased maintenance and repairs, (3) $183,000 in transportation expenses due to the increased cost of fuel, and (4) $34,000 in miscellaneous expenses. In addition, the level of maintenance expense varies with the level of public work projects instituted by the government, weather conditions and the timing and nature of general maintenance as needed for SJW Corp.’s facilities.

2007 vs. 2006

Maintenance expense increased $1,439,000 in 2007 or 14% in comparison to 2006. The increase in 2007 was primarily due to increased labor costs and an increase in water main and service leaks of approximately 41%.

Property Taxes and Other Non-income Taxes

Property taxes and other non-income taxes for 2008 and 2007 increased $486,000 and $414,000, respectively, primarily due to increased utility property placed in service.

Depreciation

Depreciation expense increased $1,189,000 in 2008 or 5% in comparison to 2007 due to an increase in depreciable assets consisting primarily of the purchase of an office building, main additions and pumping equipment. Depreciation expense increased $1,555,000 in 2007 or 7% in comparison to 2006 due to an increase in depreciable assets, of which $769,000 is applicable to the purchase by SJW Land Company, of an office and distribution facility in Knoxville, Tennessee.

Income Tax Expense

Income tax expense for 2008 was $13,198,000, compared to $12,549,000 in 2007, excluding taxes on the gain on sale of real estate investments and utility plant of $836,000 for 2008.

The effective consolidated income tax rates for 2008, 2007 and 2006 were 40%, 40% and 41%, respectively. Please refer to Note 5, “Income Taxes,” of Notes to Consolidated Financial Statements for the reconciliation of actual income tax expense to expected income taxes.

Other Income and Expense

Interest expense, including interest on long-term debt and mortgages, increased $1,718,000 or 13% in 2008 compared to 2007. In December 2007, San Jose Water Company issued a senior note in the amount of $20,000,000. In addition, SJW Corp. experienced a higher level of borrowing on the line of credit for which the cost of borrowing averaged 3.68% for 2008. SJW Corp.’s consolidated weighted-average cost of long-term debt, including the mortgages and the amortization of debt issuance costs was 6.9%, 6.9% and 7.3% for the years ended December 31, 2008, 2007 and 2006, respectively.

Other income for the year ended December 31, 2008 included an after-tax gain of $1,224,000 related to the sale of properties. In January 2006, SJW Land Company and San Jose Water Company sold approximately one acre of nonutility property, resulting in an after-tax gain of $1,535,000. In December 2006, SJW Land Company sold two real estate investment properties totaling approximately 6.7 acres resulting in an after-tax gain of $14,820,000. Please refer to Note 12, “Sale of Real Estate Investments,” under Notes to Consolidated Financial Statements.

Other comprehensive income in 2008 was $6,107,000, net of tax, which was primarily due to an increase in the market value of the investment in California Water Service Group. Other comprehensive loss in 2007 was $2,201,000, net of tax, which was primarily due to a decrease in the market value of the investment in California Water Service Group.

Liquidity and Capital Resources

The Water Utility Services business derives the majority of its revenue directly from residential and business customers. The Water Utility Services bills the majority of its customers’ on a bi-monthly basis. Payments from customers are impacted by the general economic conditions in the areas where SJW Corp. operates. The current United States recession and related high unemployment rate may have the effect of increasing payment delinquencies. However, such delinquencies are mitigated by service interruptions due to non-payment and the related customer policies. Because California is a high cost of living state, it is possible that Californian’s may migrate to other states with a lower cost of living during this recessionary environment. As of December 31, 2008, the decline in the number of customers is minimal and write-offs for uncollectible accounts have been less than 1% of total revenue.

Funds collected from the Water Utility Service’s customers are used to pay for water production costs, in addition to all costs associated with general operations. Funds are also generated by the issuance of new debt. From these amounts, SJW Corp. paid cash dividends of approximately $11,875,000 and funded its working capital. The remaining amount is available to fund SJW Corp.’s capital expenditure program. In addition to using such internally generated funds, we also fund our capital program with the issuance of new debt.

In 2008, the common dividends declared and paid on SJW Corp.’s common stock represented 55% of net income for 2008. Dividends have been paid on SJW Corp.’s and its predecessor’s common stock for 261 consecutive quarters and the annual dividend amount has increased in each of the last 41 years. While historically SJW Corp. has paid dividends equal to approximately 50% to 60% of its earnings, we cannot guarantee that trend will continue in the future.

Cash Flow from Operations

In 2008, SJW Corp. generated cash flow from operations of approximately $51,800,000, compared to $42,000,000 in 2007 and $44,300,000 in 2006. Cash flow from operations is primarily generated by net income adjusted for non-cash expenses such as depreciation and amortization, deferred income taxes and gains on the sale of assets, offset by working capital changes. The increase in 2008 of cash flow from operations of approximately $9,800,000 was affected by an increase of approximately $9,900,000 in net income adjusted for non-cash items and approximately a $200,000 decrease in working capital. The increase in net income adjusted for non-cash items is primarily related to a decrease in taxes paid of $8,700,000 in 2008 due to bonus depreciation allowed in 2008 but not in 2007 and working capital uses were due to changes in various accruals and a decrease in pension expense from 2007 to 2008. Cash flow from operations in 2007 decreased approximately $2,300,000, which was largely attributable to the decline in operating income in that period.

Cash Flow from Investing Activities

In 2008, SJW Corp. used approximately $68,900,000 of cash for company funded capital expenditures and received approximately $3,300,000 from the sale of real estate investments. In 2007, SJW Corp. used approximately $73,200,000 of cash for company funded capital expenditures and $48,200,000 for the purchase of real estate investments, of which approximately $31,200,000 was due to the sale proceeds held in a trust account from the sale of real estate investments in 2006.

The Water Utility Services’ budgeted capital expenditures for 2009, exclusive of capital expenditures financed by customer contributions and advances is as follows:


	Budgeted Capital Expenditures 2009
	(in thousands)
Water treatment	$	1,839	2	%
Source of supply		3,661	5	%
Reservoirs and tanks		4,431	6	%
Pump stations and equipment		6,606	9	%
Equipment and other		7,529	11	%
Green and alternative energy		8,974	13	%
Distribution system		38,374	54	%

	$	71,414	100	%

The 2009 capital expenditures budget is concentrated in main replacements. Included in the distribution system budgeted capital expenditures of $38,374,000 is approximately $28,000,000 that is planned to be spent to replace the Water Utility Services’ pipes and mains.

The Water Utility Services’ capital expenditures are incurred in connection with normal upgrading and expansion of existing facilities and to comply with environmental regulations. Over the next five years, the Water Utility Services expects to incur approximately $386,885,000 in capital expenditures, which includes replacement of pipes and mains, and maintaining water systems. The Water Utility Services actual capital expenditures may vary from their projections due to changes in the expected demand for services, weather patterns, actions by governmental agencies and general economic conditions. Total additions to utility plant normally exceed company-financed additions as a result of new facilities construction funded with advances from developers and contributions in aid of construction.

A substantial portion of San Jose Water Company’s distribution system was constructed during the period from 1945 to 1980. Expenditure levels for renewal and modernization of this part of the system will grow at an increasing rate as these components reach the end of their useful lives. In most cases, replacement cost will significantly exceed the original installation cost of the retired assets due to increases in the costs of goods and services.

Cash Flow from Financing Activities

In 2008, borrowings on the line of credit were slightly lower than 2007 and 2006. Repayments on the line of credit were also lower in 2008 compared to 2007 and 2006. In 2007, San Jose Water Company issued two senior notes each in the amount of $20,000,000. In 2006, SJW Land Company obtained a mortgage loan of approximately $3,825,000 and SJWTX, Inc. issued a senior note in the amount of $15,000,000.

The availability on SJW Corp.’s line of credit is $13,600,000 as of December 31, 2008. SJW Corp. expects to draw down on this line of credit and continue its practice of issuing long-term debt to fund its capital expenditure program. See also “Sources of Capital—Water Utility Services” below.

Sources of Capital

Water Utility Services

San Jose Water Company’s ability to finance future construction programs and sustain dividend payments depends on its ability to attract external financing and maintain or increase internally generated funds. The level of future earnings and the related cash flow from operations is dependent, in large part, upon the timing and outcome of regulatory proceedings.

San Jose Water Company’s financing activity is designed to achieve a capital structure consistent with regulatory guidelines of approximately 50% debt and 50% equity. The average borrowing rate of San Jose Water Company’s long-term debt is 7.05%.

Company internally-generated funds, which include allowances for depreciation and deferred income taxes, have provided approximately 50% of the future cash requirements for San Jose Water Company’s capital expenditure. Funding for its future capital expenditure program will be provided primarily through internally-generated funds and long-term debt and will be consistent with the regulator’s guidelines.

San Jose Water Company has outstanding $170,000,000 of unsecured senior notes as of December 31, 2008. The senior note agreements of San Jose Water Company generally have terms and conditions that restrict the company from issuing additional funded debt if (1) the funded debt would exceed 66-2/3% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar month period would be less than 175% of interest charges. As of December 31, 2008, San Jose Water Company’s funded debt was 48% of total capitalization and the net income available for interest charges was 384% of interest charges.

On February 2, 2009, San Jose Water Company issued $10,000,000 of Senior Notes Series J, with an interest rate of 6.54%. Proceeds from the sales of Senior Notes Series J will be used to repay short-term borrowings.

San Jose Water Company has received two loans in the aggregate principal amount of $3,076,000 from the California Department of Water Resources’ Safe Drinking Water State Revolving Fund (“SDWSRF”) for the retrofit of San Jose Water Company’s water treatment plants. Terms of these loans require semi-annual payments over 20 years of principal and interest at an annual rate of 2.39% and 2.60%. The outstanding balance as of December 31, 2008 is $2,812,000.

SJWTX, Inc., doing business as Canyon Lake Water Service Company, has outstanding $15,000,000 of senior notes as of December 31, 2008. The senior note agreement has terms and conditions that restrict the

company from issuing additional funded debt if (1) the funded debt would exceed 66-2/3% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar month period would be less than 175% of interest charges. In addition, SJW Corp. is a guarantor of SJWTX, Inc.’s senior note which has terms and conditions that restrict SJW Corp. from issuing additional funded debt if (1) the funded debt would exceed 66-2/3% of total capitalization, and, (2) the minimum net worth of SJW Corp. becomes less than $125,000,000 plus 30% of the Water Utility Services cumulative net income, since December 31, 2005.

Real Estate Services

As of December 31, 2008, SJW Land Company’s outstanding balance of mortgages related to acquiring properties in various states totaled $25,601,000. The mortgages have various payments, interest and amortization terms and all are secured by the respective properties. The average borrowing rate of SJW Land Company mortgages is 6.07%.

As of December 31, 2008, SJW Land Company also had an outstanding mortgage loan in the amount of $3,905,000 borrowed by its subsidiary, 444 West Santa Clara Street, L.P. The mortgage loan is due April 2011 and is amortized over 25 years with an interest rate of 7.8%. The mortgage loan is secured by the partnership’s real property and is non-recourse to SJW Land Company.

SJW Corp. and its Subsidiaries

SJW Corp. and its subsidiaries consolidated long-term debt was 46% of total capitalization as of December 31, 2008. Management believes that SJW Corp. is capable of obtaining future long-term capital to fund regulated and nonregulated growth opportunities and capital expenditure requirements.

SJW Corp. and its subsidiaries have an unsecured line of credit available that allows aggregate short-term borrowings of up to $35,000,000 at rates that approximate the bank’s prime or reference rate. At December 31, 2008, SJW Corp. and its subsidiaries had available unused short-term bank line of credit of $13,600,000. The cost of borrowing averaged 3.68% for 2008. The line of credit expires on June 1, 2010.

Off-Balance Sheet Arrangement/Contractual Obligations

SJW Corp. has no significant contractual obligations not fully recorded on its Consolidated Balance Sheet or not fully disclosed in the Notes to Consolidated Financial Statements.

SJW Corp.’s contractual obligation and commitments as of December 31, 2008 are as follows:


	Contractual Obligations Due in
	Total		Less than 1 Year	1-5 Years	After 5 Years
	(in thousands)
Senior notes, Water Utility Services	$	185,000	—	—	185,000
SJW Land Company mortgages		25,601	511	9,733	15,357
Advances for construction, San Jose Water Company		74,787	2,256	8,828	63,703
SDWSRF loan, San Jose Water Company		2,812	127	539	2,146
444 West Santa Clara Street, L.P. long-term debt (non-recourse to SJW Land Company)		3,905	109	3,796	—

Total contractual cash obligation	$	292,105	3,003	22,896	266,206

Total interest on contractual obligations	$	271,975	14,711	57,459	199,805

In addition to the obligations listed above, San Jose Water Company issued a standby letter of credit with a commercial bank in the amount of $2,000,000 and $1,000,000 in support of its $1,763,000 and $1,049,000 SDWSRF loans which were funded in 2005 and 2008. The letter of credit automatically renews for one year each December and the amount of coverage can be reduced as the principal balance decreases.

San Jose Water Company purchases water from SCVWD under terms of a master contract expiring in 2051. Delivery schedules for purchased water are based on a contract year beginning July 1, and are negotiated every three years under terms of the master contract with SCVWD. For the years ending December 31, 2008, 2007 and 2006, San Jose Water Company purchased from SCVWD 22,500 million gallons ($41,500,000), 22,600 million gallons ($38,500,000) and 21,500 million gallons ($34,500,000), respectively. Based on current prices and estimated deliveries, San Jose Water Company expects to purchase from SCVWD a minimum of 90% of the delivery schedule, or 23,700 million gallons ($45,000,000) of water at the current contract water rate of $1,903 per million gallons in the contract year ending June 30, 2009. Additionally, San Jose Water Company purchases non-contract water from SCVWD on an “as needed” basis if the water supply is available from SCVWD. The contract water rates are determined by SCVWD. These rates are adjusted periodically and coincide with SCVWD’s fiscal year, which ends annually on June 30. The contract water rates for SCVWD’s fiscal year ended 2009, 2008 and 2007 were $1,903, $1,765 and $1,642, per million gallons, respectively.

San Jose Water Company also pumps water from the local groundwater basin. There are no delivery schedules or contractual obligations associated with the purchase of groundwater. SCVWD determines the groundwater extraction charge and it is applied on a per unit basis. In addition to the SCVWD groundwater extraction charge, San Jose Water Company also incurs power costs to pump the groundwater from the basin.

San Jose Water Company sponsors a noncontributory defined benefit pension plan and provides health care and life insurance benefits for retired employees. In 2008, San Jose Water Company contributed $3,000,000 to the pension plan. In 2009, San Jose Water Company expects to make a contribution of $3,300,000 and $394,000 to the pension plan and other post retirement benefit plan, respectively. The amount of required contributions for years thereafter is not actuarially determinable.

San Jose Water Company’s other benefit obligations include employees’ and directors’ postretirement contracts, an Executive Supplemental Retirement Plan and an Executive Special Deferral Election Plan. Under these benefit plans, San Jose Water Company is committed to pay approximately $365,000 annually to former officers and directors. Future payments may fluctuate depending on the life span of the retirees and as current officers and executives retire.

CLWSC purchases water from GBRA under terms of agreements expiring in 2044 and 2050. The agreements, which are take-or-pay contracts, provide CLWSC 6,000 acre-feet per year of water supply from GBRA. The water rate may be adjusted by GBRA at any time, provided they give CLWSC 60-day written notice on the proposed adjustment.

444 West Santa Clara Street, L.P.

SJW Land Company owns a 70% limited partnership interest in 444 West Santa Clara Street, L.P., a real estate limited partnership. A real estate development firm, which is partially owned by the Chairman of the Board of SJW Corp., owns the remaining 30% limited partnership interest. A commercial building is constructed on the property of 444 West Santa Clara Street, L.P. and is leased to an international real estate firm under a 12-year lease. The partnership is being accounted for under FIN46R.

Impact of Recent Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 (“SFAS 160”), “Noncontrolling Interests in Consolidated Financial Statements.” SFAS 160 requires noncontrolling interests, previously referred to as minority interests, to be reported as a component of equity, net income and comprehensive income to be displayed for both the controlling and noncontrolling interests, along with other required disclosures and reconciliations. SFAS 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008. SJW Corp. has evaluated the impact of SFAS 160 and the effect is considered not material to SJW Corp.’s financial position, results of operations and cash flow.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141R (“SFAS 141R”), “Business Combinations.” SFAS 141R clarifies the information that a reporting entity provides in its financial reports about a business combination and it replaces SFAS 141. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. SJW Corp. has evaluated the impact of SFAS 141R and the effect is considered not material to SJW Corp.’s financial position, results of operations and cash flow.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

SJW Corp. is subject to market risks in the normal course of business, including changes in interest rates and equity prices. Future financing is subject to the exposure to changes in interest rates. SJW Corp. also owns 1,099,952 shares of California Water Service Group and is exposed to the risk of changes in equity prices.

SJW Corp. has no material derivative financial instruments, financial instruments with significant off-balance sheet risks, or financial instruments with concentrations of credit risk. There is no material sensitivity to changes in market rates and prices.

Item 8.

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors

SJW Corp.:

We have audited the accompanying consolidated balance sheets of SJW Corp. and subsidiaries (the Company) as of December 31, 2008 and 2007, and the related consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2008. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SJW Corp. and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in note 5 to the consolidated financial statements, effective January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of internal control over financial reporting of the Company as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 6, 2009 expressed an unqualified opinion on the effective operation of internal control over financial reporting.

/s/ KPMG LLP

Mountain View, California

March 6, 2009

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors

SJW Corp.:

We have audited SJW Corp.’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). SJW Corp.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting appearing under item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and board of directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, SJW Corp. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of SJW Corp. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2008, and our report dated March 6, 2009 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Mountain View, California

March 6, 2009

SJW Corp. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	December 31,
	2008		2007
Assets
Utility plant:
Land	$	8,134	5,695
Depreciable plant and equipment		855,427	778,277
Construction in progress		7,142	24,298
Intangible Assets		8,040	8,040

		878,743	816,310
Less accumulated depreciation and amortization		272,562	255,025

		606,181	561,285

Real estate investment		88,000	88,029
Less accumulated depreciation and amortization		5,511	3,834

		82,489	84,195

Current assets:
Cash and cash equivalents		3,406	2,354
Accounts receivable:
Customers, net of allowances for uncollectible accounts of $279 in 2008 and $196 in 2007		11,622	10,390
Income tax		657	2,557
Other		1,154	1,222
Accrued unbilled utility revenue		12,896	12,654
Materials and supplies		933	782
Prepaid expenses		1,293	1,632

		31,961	31,591

Other assets:
Investment in California Water Service Group		51,071	40,720
Unamortized debt issuance and reacquisition costs		3,162	3,345
Regulatory assets		73,778	44,712
Other		2,235	1,478

		130,246	90,255

	$	850,877	767,326

See accompanying notes to consolidated financial statements.

SJW Corp. and Subsidiaries

CONSOLIDATED BALANCE SHEETS (Continued)

(in thousands, except share and per share data)


	December 31,
	2008		2007
Capitalization and Liabilities
Capitalization:
Shareholders’ equity:
Common stock, $0.521 par value; authorized 36,000,000 shares; issued and outstanding 18,452,447 shares in 2008 and 18,361,733 shares in 2007	$	9,611	9,564
Additional paid-in capital		20,548	18,723
Retained earnings		204,744	195,331
Accumulated other comprehensive income		19,423	13,316

Total shareholders’ equity		254,326	236,934
Long-term debt, less current portion		216,613	216,312

		470,939	453,246

Current liabilities:
Line of credit		18,400	5,000
Current portion of long-term debt		705	622
Accrued groundwater extraction charges and purchased water		5,256	5,595
Purchased power		563	514
Accounts payable		5,758	9,268
Accrued interest		4,567	4,522
Accrued taxes		855	791
Accrued payroll		3,325	2,583
Other current liabilities		3,894	4,059

		43,323	32,954

Deferred income taxes		97,038	74,643
Unamortized investment tax credits		1,675	1,735
Advances for construction		74,787	74,518
Contributions in aid of construction		114,082	100,649
Deferred revenue		1,247	1,313
Postretirement benefit plans		42,331	23,357
Other noncurrent liabilities		5,455	4,911
Commitments and contingencies		—	—

	$	850,877	767,326

See accompanying notes to consolidated financial statements.

SJW Corp. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Years ended December 31 (in thousands, except share and per share data)


	2008			2007		2006
Operating revenue	$	220,347		206,601		189,238
Operating expense:
Operation:
Purchased water		48,291		48,596		44,896
Power		7,559		7,532		5,170
Groundwater extraction charges		34,368		30,141		18,737

Total production costs		90,218		86,269		68,803
Administrative and general		23,688		22,334		21,108
Other		16,390		14,907		15,095
Maintenance		13,123		11,628		10,189
Property taxes and other nonincome taxes		6,793		6,307		5,893
Depreciation and amortization		24,043		22,854		21,299
Income taxes		13,198		12,549		15,298

Total operating expense		187,453		176,848		157,685

Operating income		32,894		29,753		31,553

Other (expense) income:
Interest on senior notes		(12,358	)	(10,912	)	(9,292	)
Mortgage and other interest expense		(2,369	)	(2,097	)	(1,833	)
Gain on sale of real estate investments, net of taxes of $567 in 2008 and $11,248 in 2006		832		—		16,355
Gain on the sale of utility property, net of taxes of $269		392		—		—
Dividends		1,287		1,276		1,265
Other, net		783		1,303		533

Net income	$	21,461		19,323		38,581

Other comprehensive income (loss):
Unrealized income (loss) on investment, net of taxes of $4,244 in 2008, $1,529 in 2007 and $984 in 2006		6,107		(2,201	)	1,415
Minimum pension liability adjustment, net of taxes of $2,521 in 2006		—		—		3,666

Other comprehensive income (loss)		6,107		(2,201	)	5,081

Comprehensive income	$	27,568		17,122		43,662

Earnings per share
—Basic	$	1.17		1.05		2.11
—Diluted	$	1.15		1.04		2.08
Weighted average shares outstanding
—Basic		18,410,122		18,334,352		18,275,505
—Diluted		18,609,836		18,552,228		18,528,896

See accompanying notes to consolidated financial statements.

SJW Corp. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands, except share and per share data )


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
	Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Balances, December 31, 2005	18,270,882	$	9,516	$	15,368	$	160,588		$	10,436		$	195,908
Cumulative effect of adoption of SAB 108 (see Note 1)							(1,744	)					(1,744	)

Adjusted balances as of January 1, 2006	18,270,882		9,516		15,368		158,844			10,436			194,164
Net income							38,581						38,581
Other comprehensive income
Unrealized gain on investment, net of tax effect of $984										1,415			1,415
Reclassification of minimum pension liability to Regulatory Asset, net of tax effect of $2,521, in conjunction with the implementation of SFAS 158 (see Note 11)										3,666			3,666

Comprehensive income													43,662
Stock-based compensation					633		(223	)					410
Exercise of stock options and similar instruments	1,939		1		35								36
Employee stock purchase plan	8,948		5		231								236
Dividends paid ($.57 per share)							(10,326	)					(10,326	)

Balances, December 31, 2006	18,281,769	$	9,522	$	16,267	$	186,876		$	15,517		$	228,182
Cumulative effect of adoption of FASB Interpretation No. 48 (see Note 5)							444						444

Adjusted balances as of January 1, 2007	18,281,769		9,522		16,267		187,320			15,517			228,626
Net income							19,323						19,323
Other comprehensive income
Unrealized loss on investment, net of tax effect of $1,529										(2,201	)		(2,201	)

Comprehensive income													17,122
Stock-based compensation					655		(223	)					432
Exercise of stock options and similar instruments	65,223		34		1,316								1,350
Employee stock purchase plan	14,741		8		485								493
Dividends paid ($.60 per share)							(11,089	)					(11,089	)

Balances, December 31, 2007	18,361,733		9,564		18,723		195,331			13,316			236,934
Net income							21,461						21,461
Other comprehensive income
Unrealized gain on investment, net of tax effect of $4,244										6,107			6,107

Comprehensive income													27,568
Stock-based compensation					601		(173	)					428
Exercise of stock options and similar instruments	61,230		32		716								748
Employee stock purchase plan	17,807		9		487								496
Issuance of stock to minority interest holder of CLWSC	11,677		6		21								27
Dividends paid ($.65 per share)							(11,875	)					(11,875	)

Balances, December 31, 2008	18,452,447		9,611		20,548		204,744			19,423			254,326

See accompanying notes to consolidated financial statements.

SJW Corp. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31 (in thousands)


	2008			2007		2006
Operating activities:
Net income	$	21,461		19,323		38,581
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		24,043		22,854		21,299
Deferred income taxes		6,079		(1,778	)	10,773
Stock-based compensation		601		655		436
Gain on sale of real estate investments, net of taxes		(832	)	—		(16,355	)
Gain on sale of utility property, net of taxes		(392	)	—		—
Changes in operating assets and liabilities:
Accounts receivable and accrued unbilled utility revenue		(1,406	)	(2,310	)	(1,570	)
Accounts payable, purchased power and other current liabilities		(1,107	)	(731	)	1,488
Accrued groundwater extraction charges and purchased water		(339	)	1,352		260
Accrued taxes		542		(1,760	)	(1,697	)
Accrued interest		45		652		253
Accrued payroll		892		(272	)	(95	)
Prepaid expenses and materials and supplies		188		55		(176	)
Postretirement benefits		713		1,921		478
Other noncurrent assets and noncurrent liabilities		(302	)	873		(9,016	)
Other changes, net		1,606		1,197		(361	)

Net cash provided by operating activities		51,792		42,031		44,298

Investing activities:
Additions to utility plant		(68,943	)	(73,217	)	(58,028	)
Additions to real estate investment		—		(48,245	)	(12,718	)
Cost to retire utility plant, net of salvage		(2,594	)	(1,160	)	(1,013	)
Payments for business acquisitions, net of cash acquired		—		—		4,083
Proceeds from sale of real estate investment		3,304		—		33,632
Proceeds from sale of utility property		1,582		—		—
Sale proceeds held in trust account		—		31,261		(31,261	)

Net cash used in investing activities		(66,651	)	(91,361	)	(65,305	)

Financing activities:
Cancellation of Canyon Lake Water Supply Corporation bonds		—		—		(19,951	)
Borrowings from line of credit		25,950		31,400		37,000
Repayments of line of credit		(12,550	)	(41,900	)	(21,500	)
Long-term borrowings		1,069		53,500		18,855
Repayments of long-term borrowings		(685	)	(699	)	(334	)
Dividends paid		(11,875	)	(11,089	)	(10,326	)
Exercise of stock options and similar instruments		890		1,298		226
Tax benefits realized from share options exercised		381		545		10
Receipts of advances and contributions in aid of construction		15,025		17,016		13,443
Refunds of advances for construction		(2,294	)	(2,175	)	(2,026	)

Net cash provided by financing activities		15,911		47,896		15,397

Net change in cash and cash equivalents		1,052		(1,434	)	(5,610	)
Cash and cash equivalents, beginning of year		2,354		3,788		9,398

Cash and cash equivalents, end of year	$	3,406		2,354		3,788

Cash paid during the year for:
Interest	$	15,249		13,142		11,332
Income taxes	$	6,304		15,018		17,158
Supplemental disclosure of non-cash activities:
Accrued payables for additions to utility plant	$	(2,626	)	2,849		—
Decrease in real estate investments due to transfer to utility property	$	—		3,035		—
Utility property installed by developers	$	4,049		—		—

See accompanying notes to consolidated financial statements.

SJW CORP. AND SUBSIDIAIRES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2008, 2007 and 2006

(Dollars in thousands, except share data)

Note 1. Summary of Significant Accounting Policies

The accompanying consolidated financial statements include the accounts of SJW Corp. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. A subsidiary in which SJW Corp. has a controlling interest is consolidated in the financial statements with the minority interest included as “other” in the Consolidated Statements of Income and Comprehensive Income and in “other non-current liabilities” in the Consolidated Balance Sheets.

SJW Corp.’s principal subsidiary, San Jose Water Company, is a regulated California water utility providing water service to the greater metropolitan San Jose area. San Jose Water Company’s accounting policies comply with the applicable uniform system of accounts prescribed by the CPUC and conform to generally accepted accounting principles for rate-regulated public utilities. Approximately 92% of San Jose Water Company’s revenues are derived from the sale of water to residential and business customers.

SJWTX, Inc., doing business as Canyon Lake Water Service Company (“CLWSC”), a wholly owned subsidiary, was incorporated in September 2005. On May 31, 2006, CLWSC purchased substantially all the assets of Canyon Lake Water Supply Corporation. CLWSC provides service to approximately 8,700 connections that serve approximately 36,000 residents in a service area comprising more than 153 square miles in the region between San Antonio and Austin, Texas, as of December 31, 2008.

SJW Land Company owned and operated parking facilities, which are located adjacent to San Jose Water Company’s headquarters and the HP Pavilion in San Jose, California, until December 15, 2006 when the real estate investments were sold to Adobe Systems Incorporated for an aggregate purchase price of $32,500. SJW Land Company also owns commercial properties, several undeveloped real estate properties, and warehouse properties in the states of California, Florida, Connecticut, Arizona, Texas and Tennessee and holds a 70% limited partnership interest in 444 West Santa Clara Street, L.P., which is accounted for under the Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R), “Consolidation of Variable Interest Entities” (see Note 9).

Together, San Jose Water Company and CLWSC are referred to as “Water Utility Services.”

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Utility Plant

The cost of additions, replacements and betterments to utility plant is capitalized. The amount of interest capitalized in 2008, 2007 and 2006 was $461, $527 and $458, respectively. Construction in progress was $7,142 and $24,298 at December 31, 2008 and 2007, respectively.

The major components of depreciable plant and equipment as of December 31, 2008 and 2007 are as follows:


	2008		2007
Equipment	$	164,672	145,188
Transmission and distribution		641,344	597,281
Office buildings and other structures		49,411	35,808

Total depreciable plant and equipment	$	855,427	778,277

Depreciation is computed using the straight-line method over the estimated service lives of the assets, ranging from 5 to 75 years. The estimated service lives of depreciable plant and equipment are as follows:


		Useful Lives
Equipment		5 to 35 years
Transmission and distribution plant		35 to 75 years
Office buildings and other structures		7 to 50 years

For the years 2008, 2007 and 2006, depreciation expense was approximately 3.5%, 3.6% and 3.6%, respectively, of the beginning of the year balance of depreciable plant for all years excluding certain items credited to depreciation expense. The cost of utility plant retired, including retirement costs (less salvage), is charged to accumulated depreciation and no gain or loss is recognized. Depreciation expense for utility plant for the years ended December 31, 2008, 2007 and 2006 was $22,067, $20,956 and $20,095, respectively.

Utility Plant Intangible Assets

All intangible assets are recorded at cost and are amortized using the straight-line method over the legal or estimated economic life of the asset, ranging from 5 to 70 years (see Note 6).

Real Estate Investments

Real estate investments are recorded at cost and consist primarily of land and buildings. The major components of real estate investments as of December 31, 2008 and 2007 are as follows:


	2008		2007
Land	$	22,381	22,369
Buildings and improvements		65,388	65,429
Intangibles		231	231

Total real estate investment	$	88,000	88,029

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 5 to 39 years.

Land and buildings and improvements include assets held for lease of $86,641 as of December 31, 2008 and 2007. The following schedule shows the future minimum rental payments required under operating leases that have remaining noncancelable lease terms in excess of one year as of December 31, 2008:


Year ending December 31:	Rental Payments
2009	$	3,598
2010		3,192
2011		3,204
2012		2,641
2013		2,370
Thereafter		24,729

Impairment of Long-Lived Assets

In accordance with the requirements of Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the long-lived assets of SJW Corp. are reviewed for impairment when changes in circumstances or events require adjustments to the carrying values of the assets. Long-lived assets consist primarily of utility plant in service, real estate investments, intangible assets, and regulatory assets.

Financial Instruments

The carrying amount of SJW Corp.’s current assets and liabilities that are considered financial instruments approximates their fair value as of the dates presented due to the short maturity of the instruments (see Note 14). The fair market value of long-term debt is discussed in Note 4.

Investment in California Water Service Group

SJW Corp.’s investment in California Water Service Group is accounted for under SFAS 115, “Accounting for Marketable Securities,” as an available-for-sale marketable security. The investment is recorded on the Consolidated Balance Sheet at quoted market price with the change in unrealized gain or loss reported, net of tax, as a component of other comprehensive income.

Other Assets

Debt reacquisition costs are amortized over the term of the related debt. Debt issuance costs are amortized to interest expense in the Consolidated Statements of Income and Comprehensive Income.

Regulatory Assets and Liabilities

Generally-accepted accounting principles for water utilities include the recognition of regulatory assets and liabilities as permitted by Statement of Financial Accounting Standards (SFAS) No. 71, “Accounting for the Effects of Certain Types of Regulation.” In accordance with SFAS No. 71, the Water Utility Services, to the extent applicable, records deferred costs and credits on the balance sheet as regulatory assets and liabilities when it is probable that these costs and credits will be recognized in the ratemaking process in a period different from when the costs and credits are incurred. San Jose Water Company records regulatory assets for future revenues expected to be realized in customers’ rates when certain items are recognized as expenses for ratemaking purposes. The income tax temporary differences relate primarily to the difference between book and income tax depreciation on utility plant that was placed in service before CPUC adopted normalization for ratemaking purposes. Previously the tax effect was passed onto customers. In the future, when such timing differences reverse, San Jose Water Company believes it is probable that it will be able to include the impact of the deferred tax reversal in customer rates. The differences will reverse over the remaining book lives of the related assets. Although realization is not assured, management believes it is more likely than not that all of the regulatory asset will be realized. In addition, regulatory assets include items that are not recognized for ratemaking purposes, such as certain expenses related to postretirement benefits, accrued vacation obligation and asset retirement obligations which are expected to be recoverable in future customer rates.

Rate-regulated enterprises are required to charge a regulatory asset to earnings if and when that asset no longer meets the criteria for being recorded as a regulatory asset. San Jose Water Company continually evaluates the recoverability of regulatory assets by assessing whether the amortization of the balance over the remaining life can be recovered through expected and undiscounted future cash flows.

Regulatory liabilities reflect temporary differences provided at higher than the current tax rate, which will flow through to future ratepayers, and unamortized investment tax credits.

Regulatory assets and liabilities are comprised of the following as of December 31:


	2008		2007
Regulatory assets:
Income tax temporary differences	$	10,927	12,135
Postretirement pensions and other medical benefits		61,347	30,349
Other obligations		3,876	4,089

Total regulatory assets	$	76,150	46,573

Regulatory liabilities:
Future tax benefits to ratepayers	$	2,372	1,861

Net Regulatory Assets included in Balance Sheet	$	73,778	44,712

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the effect of temporary differences between financial and tax reporting. Deferred tax assets and liabilities are measured using current tax rates in effect. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

To the extent permitted by CPUC, investment tax credits resulting from utility plant additions are deferred and amortized over the estimated useful lives of the related property.

Advances for Construction and Contributions in Aid of Construction

In California, advances for construction received after 1981 are being refunded ratably over 40 years. Estimated refunds for the next five years and thereafter are shown below:


	Estimated Refunds
2009	$	2,256
2010		2,211
2011		2,209
2012		2,204
2013		2,204
Thereafter		63,703

Contributions in aid of construction represent funds received from developers that are not refundable under applicable regulations. Depreciation applicable to utility plant constructed with these contributions is charged to contributions in aid of construction.

Customer advances and contributions in aid of construction received subsequent to 1986 and prior to June 12, 1996 generally must be included in federal taxable income. Taxes paid relating to advances and contributions are recorded as deferred tax assets for financial reporting purposes and are amortized over 40 years for advances, and over the tax depreciable life of the related asset for contributions. Receipts subsequent to June 12, 1996 are generally exempt from federal taxable income, unless specifically prescribed under treasury regulations.

Advances and contributions received subsequent to 1991 and prior to 1997 are included in state taxable income.

Asset Retirement Obligation

SJW Corp.’s asset retirement obligation is recorded as a liability included in other non-current liabilities. It reflects principally the retirement costs of wells, which by law, must be remediated upon retirement. Retirement costs have historically been recovered through rates at the time of retirement. As a result, the liability is offset by a regulatory asset. For the years ended December 31, 2008 and 2007, the asset retirement obligation is as follows:


	2008			2007
Retirement obligation	$	3,745		3,698
Discount rate		6	%	6	%
Present value		1,023		1,000
Deferred tax		704		688

Regulatory asset	$	1,727		1,688

Revenue

SJW Corp. recognizes its regulated and nonregulated revenue when services have been rendered, in accordance with SEC Staff Accounting Bulletin 104, “Revenue Recognition.”

Metered revenue of the Water Utility Services include billings to customers based on meter readings plus an estimate of water used between the customers’ last meter reading and the end of the accounting period. The Water Utility Services read the majority of its customers’ meters on a bi-monthly basis and record its revenue based on its meter reading results. Unbilled revenue from the last meter reading date to the end of the accounting period is estimated based on the most recent usage patterns, production records and the effective tariff rates. Actual results could differ from those estimates, which would result in adjusting the operating revenue in the period which the revision to Water Utility Services estimates are determined. Operating revenue in 2008, 2007 and 2006 includes $4,612, $4,561 and $4,045, respectively, from the operation of the City of Cupertino municipal water system.

Revenue from San Jose Water Company’s nonregulated utility operations and billing or maintenance agreements are recognized when services have been rendered. Revenue from SJW Land Company is recognized ratably over the term of the leases.

Balancing Account

For California, the CPUC has established a balancing account mechanism for the purpose of tracking the under-collection or over-collection associated with expense changes and the revenue authorized by CPUC to offset those expense changes. Since the balances have to be approved by CPUC before they can be incorporated into rates, San Jose Water Company does not recognize the balancing account in its revenue until CPUC authorizes the change in customers’ rates. As of December 31, 2008 and 2007, the total accrued in San Jose Water Company’s balancing account was an over-collection of $1,977 and $1,656, respectively, including interest.

Pension Accounting

In September 2006, the Financial Accounting Standards Board issued FASB Statement No. 158 (“Statement 158”), “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans.” As of December 31, 2006, SJW Corp. adopted Statement 158. Statement 158 requires employers to recognize on their balance sheets the funded status of pensions and other postretirement benefit plans based on the projected benefit obligations.

Share-Based Payment

SJW Corp. utilizes the Black-Scholes option-pricing model, which requires the use of subjective assumptions, to compute the fair value of options at grant date, the fair value of options granted and is the basis for the share-based compensation for financial reporting purposes. In addition, SJW Corp. estimates forfeitures for the share-based awards that are not expected to vest.

Maintenance Expense

Planned major maintenance projects are charged to expense as incurred. SJW Corp. does not accrue maintenance costs prior to periods in which they are incurred.

Earnings per Share

Basic earnings per share is calculated using income available to common shareholders, divided by the weighted average number of shares outstanding during the year. Diluted earnings per share is calculated based upon the weighted average number of common shares including both shares outstanding and shares potentially issued in connection with stock options and restricted common stock units granted under SJW Corp.’s Long-Term Incentive Plan, and income available to common shareholders. Anti-dilutive restricted common stock units and stock options of 2,909, 146 and 104 as of December 31, 2008, 2007 and 2006, respectively, were excluded from the dilutive earnings per share calculation.

Note 2. Capitalization

SJW Corp. is authorized to issue 36,000,000 shares of common stock of $0.521 par value per share. At December 31, 2008 and 2007, 18,452,447 and 18,361,733, respectively, shares of common stock were issued and outstanding.

At December 31, 2008 and 2007, 176,407 shares of preferred stock of $25 par value per share were authorized and none were outstanding.

Note 3. Line Of Credit

SJW Corp. and its subsidiaries have available an unsecured bank line of credit, allowing aggregate short-term borrowings of up to $35,000. This line of credit bears interest at variable rates and expires on June 1, 2010. As of December 31, 2008 and 2007, SJW Corp. has an outstanding balance on the line of credit of $18,400 and $5,000, respectively. Cost of borrowing averaged 3.68% and 6.19%, respectively, as of December 31, 2008 and 2007.

San Jose Water Company issued two standby letters of credit with a commercial bank in the amount of $3,000 in support of its Safe Drinking Water State Revolving Fund (“SDWSRF”) loans which was funded in 2005 and 2008. The letters of credit automatically renews for one year each December unless the issuing bank elects not to renew it, and the amount of coverage can be reduced as the loan principal balance decreases.

Note 4. Long-Term Debt

Long-term debt as of December 31 was as follows:


Description	Due Date	2008		2007
Senior notes, San Jose Water Company:
A 8.58%	2022	$	20,000	20,000
B 7.37%	2024		30,000	30,000
C 9.45%	2020		10,000	10,000
D 7.15%	2026		15,000	15,000
E 6.81%	2028		15,000	15,000
F 7.20%	2031		20,000	20,000
G 5.93%	2033		20,000	20,000
H 5.71%	2037		20,000	20,000
I 5.93%	2037		20,000	20,000
SJWTX, Inc. Series A 6.27%	2036		15,000	15,000

Total senior notes		$	185,000	185,000

Mortgage loans 5.61% - 6.09%	2017		25,601	26,081
444 West Santa Clara Street, L.P. 7.80% (non-recourse to SJW Land Company)	2011		3,905	4,006
SDWSRF loans 2.39% and 2.60%, San Jose Water Company	2027		2,812	1,847

Total debt		$	217,318	216,934
Less: Current portion			705	622

Total long-term debt, less current portion		$	216,613	216,312

Senior notes held by institutional investors are unsecured obligations of San Jose Water Company and SJWTX, Inc. (“SJWTX”) and require interest-only payments until maturity. To minimize issuance costs, all of the companies’ debt has historically been privately placed.

The senior note agreements of San Jose Water Company generally have terms and conditions that restrict the company from issuing additional funded debt if (1) the funded debt would exceed 66-2/3% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar month period would be less than 175% of interest charges.

The senior note agreement of SJWTX has terms and conditions that restrict SJWTX from issuing additional funded debt if (1) the funded debt would exceed 66-2/3% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar month period would be less than 175% of interest charges. In addition, SJW Corp. is a guarantor of the senior note which has terms and conditions that restrict SJW Corp. from issuing additional funded debt if (1) the funded debt exceeds 66-2/3% of total capitalization, and (2) the minimum net worth of SJW Corp. becomes less than $125,000 plus 30% of the Water Utility Services cumulative net income since December 31, 2005. As of December 31, 2008, SJW Corp. does not face any restrictions in issuing any future indebtedness as a result of these terms and conditions.

The mortgage loans, which are the obligations of SJW Land Company, are due in 2013, 2016 and 2017. These loans amortize over 25 years, are secured by four leased properties and carry a fixed interest rate with 120 monthly principal and interest payments. The loan agreements generally restrict the company from prepayment in the first three years and require submission of periodic financial reports as part of the loan covenants. An amortization schedule of the mortgage loans is as follows:


	Amortization Schedule
Year	Total Payment	Interest	Principal
2009	1,992	1,481	511
2010	1,992	1,450	542
2011	1,992	1,418	574
2012	1,992	1,385	607
2013	9,096	1,086	8,010
Thereafter	17,962	2,605	15,357

444 West Santa Clara Street, L.P., in which SJW Land Company owns a 70% limited partnership interest, has a mortgage loan in the outstanding amount of $3,905 as of December 31, 2008. The mortgage loan is due in April 2011 and amortized over 25 years with a fixed interest rate of 7.8%. The loan is secured by the partnership’s real property and is non-recourse to SJW Land Company. An amortization schedule of the mortgage loan is as follows:


	Amortization Schedule
Year	Total Payment	Interest	Principal
2009	410	301	109
2010	410	292	118
2011	3,820	142	3,678

San Jose Water Company has two loans from the SDWSRF at a rate of 2.39% and 2.60%. The outstanding loan balances as of December 31, 2008 is $2,812. San Jose Water Company issued standby letters of credit with a commercial bank in the amount of $3,000 in support of these loans. The letters of credit automatically renew for one year each December unless the issuing bank elects not to renew it. The amount of coverage can be reduced as the principal balances decrease. An amortization schedule of the SDWSRF loans is as follows:


	Amortization Schedule
Year	Total Payment	Interest	Principal
2009	196	69	127
2010	196	66	130
2011	196	63	133
2012	196	60	136
2013	196	56	140
Thereafter	2,529	383	2,146

The fair value of long-term debt as of December 31, 2008 and 2007 was approximately $206,845 and $238,005, respectively, using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration.

Note 5. Income Taxes

The components of income tax expense were:


	2008			2007		2006
Current:
Federal	$	4,546		10,981		12,157
State		3,409		3,346		3,616
Deferred:
Federal		6,788		(1,148	)	8,768
State		(709	)	(630	)	2,005

	$	14,034		12,549		26,546

The following table reconciles income tax expense to the amount computed by applying the federal statutory rate of 35% to income before income taxes:


	2008			2007		2006
“Expected” federal income tax	$	12,151		11,155		22,795
Increase (decrease) in taxes attributable to:
State taxes, net of federal income tax benefit		2,061		1,831		3,742
Dividend received deduction		(309	)	(313	)	(310	)
Other items, net		131		(124	)	319

	$	14,034		12,549		26,546


	2008		2007	2006
Income taxes included in operating expenses	$	13,198	12,549	15,298
Income taxes included in gain on sale of utility property		269	—	—
Income taxes included in gain on sale of real estate investments		567	—	11,248

	$	14,034	12,549	26,546

The components of the net deferred tax liability as of December 31 was as follows:


	2008		2007
Deferred tax assets:
Advances and contributions	$	15,992	15,463
Unamortized investment tax credit		901	934
Pensions and postretirement benefits		4,367	4,058
California franchise tax		980	1,077
Other		941	670

Total deferred tax assets	$	23,181	22,202
Deferred tax liabilities:
Utility plant	$	58,503	50,930
Pension and postretirement benefits		25,004	12,370
Investment in stock		18,684	14,440
Deferred gain-property transfer		16,061	16,678
Debt reacquisition costs		744	793
Other		1,223	1,634

Total deferred tax liabilities		120,219	96,845

Net deferred tax liabilities	$	97,038	74,643

Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, management believes it is more likely than not SJW Corp. will realize the benefits of these deductible differences.

SJW Corp. adopted the provisions of Financial Accounting Standards Board Interpretation No. 48 (“FASB Interpretation 48”), “Accounting for Uncertainty in Income Taxes,” on January 1, 2007. As a result, SJW Corp. recognized a decrease in its liability for unrecognized tax benefits of approximately $444 which was recorded as an increase to the January 1, 2007, balance of retained earnings. The total amount of unrecognized tax benefits, before the impact of deductions for state taxes, excluding interest and penalties was $1,228 and $1,438 as of December 31, 2008 and 2007, respectively. The amount of tax benefits, net of any federal benefits for state taxes and inclusive of interest that would impact the effective rate, if recognized, is approximately $647 and $669 as of December 31, 2008 and 2007, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


Balance at December 31, 2007	$	1,497
Additions based on tax position related to the current year, including interest		108
Reductions for tax positions of prior year, including interest		(262	)

Balance at December 31, 2008	$	1,343

SJW Corp.’s policy is to classify interest and penalties associated with unrecognized tax benefits, if any, in tax expense. Accrued interest expense, net of the benefit of tax deductions which would be available on the payment of such interest, is approximately $68 as of December 31, 2008. SJW Corp. has not accrued any penalties for unrecognized tax benefits.

SJW Corp. anticipates that its unrecognized tax benefits balance will be reduced by approximately $174 within the next 12 months following December 31, 2008 due to the lapsing statute of limitations. Through December 31, 2008, since the adoption of FASB Interpretation 48, a cumulative reduction of $464 was recorded to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations.

SJW Corp. files U.S. federal income tax returns and income tax returns in various states. The open tax years for the jurisdictions in which SJW Corp. files are as follows:


Jurisdiction		Years Open
Federal		2005 – 2007
California		2004 – 2007
Arizona		2006 – 2007
Connecticut		2005 – 2007
Florida		2005 – 2007
Tennessee		2007
Texas		2005 – 2007

Note 6. Intangible Assets

Intangible assets consist of a concession fee paid to the City of Cupertino of $6,800 for operating the City of Cupertino municipal water system, and other intangibles of $1,240 primarily incurred in conjunction with Santa Clara Valley Water District (“SCVWD”) water contracts related to the operation of San Jose Water Company. All intangible assets are recorded at cost and are amortized using the straight-line method over the legal or estimated economic life of the asset ranging from 5 to 70 years.

Amortization expense for the intangible assets was $299 for the year ended December 31, 2008, $299 for the year ended December 31, 2007 and $294 for the year ended December 31, 2006. Amortization expense for 2009, 2010, 2011, 2012 and 2013 is anticipated to be $299 per year.

The costs of intangible assets as of December 31, 2008 and 2007 are as follows:


	2008		2007
Concession fees	$	6,800	6,800
Other intangibles		1,240	1,240

Intangible assets		8,040	8,040
Less: Accumulated amortization
Concession fees		3,060	2,788
Other intangibles		473	446

Net intangible assets	$	4,507	4,806

Note 7. Commitments

San Jose Water Company purchases water from SCVWD. Delivery schedules for purchased water are based on a contract year beginning July 1 of each year, and are negotiated every three years under terms of a master contract with SCVWD expiring in 2051. For the years ending December 31, 2008, 2007 and 2006, San Jose Water Company purchased from SCVWD 22,500 million gallons ($41,500), 22,600 million gallons ($38,500) and 21,500 million gallons ($34,500), respectively, of contract water. Based on current prices and estimated deliveries, San Jose Water Company expects to purchase a minimum of 90% of the delivery schedule, or 23,700 million gallons ($45,000) of water at the current contract water rate of $1,903 per million gallons, from SCVWD in the contract year ending June 30, 2009. Additionally, San Jose Water Company purchases non-contract water from SCVWD on an “as needed” basis and if the water supply is available from SCVWD.

The contract water rates are determined by SCVWD. These rates are adjusted periodically and coincide with SCVWD’s fiscal year, which ends annually on June 30. The contract water rates, per million gallons, for SCVWD’s fiscal year ended 2009, 2008 and 2007 were $1,903, $1,765 and $1,642, respectively.

In 1997, San Jose Water Company entered into a 25-year contract agreement with the City of Cupertino to operate the City’s municipal water system. San Jose Water Company paid a one-time, up-front concession fee of $6,800 to the City of Cupertino which is amortized over the contract term. Under the terms of the contract agreement, San Jose Water Company assumed responsibility for all maintenance, operating and capital costs, while receiving all payments for water service. Water service rates are subject to approval by the Cupertino City Council.

CLWSC has long-term contracts with the Guadalupe-Blanco River Authority (“GBRA”). The terms of the agreements expire in 2044 and 2050. The agreements, which are take-or-pay contracts, provide CLWSC with 6,000 acre-feet of water from Canyon Lake. The water rate may be adjusted by GBRA at any time, provided they give CLWSC 60 day’s written notice on the proposed adjustment.

As of December 31, 2008, San Jose Water Company had 342 employees, of whom 101 were executive, administrative or supervisory personnel, and of whom 241 were members of unions. On February 7, 2008, San Jose Water Company reached a two-year collective bargaining agreement with the Utility Workers of America, representing the majority of all employees, and the International Union of Operating Engineers, representing certain employees in the engineering department, covering the period from January 1, 2008 through December 31, 2009. Both groups are affiliated with the AFL-CIO. The agreements include a wage adjustment of approximately 3.3% for union workers for the calendar year 2009 and minor benefit modifications.

Note 8. Contingency

SJW Corp. is subject to litigation incidental to its business. There are no pending legal proceedings to which SJW Corp. or any of its subsidiaries is a party or to which any of its properties is the subject that are expected to have a material effect on the SJW Corp.’s financial position, results of operations or cash flows.

Note 9. Partnership Interest

In September 1999, SJW Land Company formed 444 West Santa Clara Street, L.P., a limited partnership, with a real estate development firm whereby SJW Land Company contributed real property in exchange for a 70% limited partnership interest. The real estate development firm is partially owned by an individual who also serves as the Chairman of the Board of SJW Corp. A commercial building was constructed on the partnership property and is leased to an international real estate firm under a 12-year long-term lease.

The consolidated financial statements of SJW Corp. at December 31, 2008 and 2007 include the operating results of 444 West Santa Clara Street, L.P. Intercompany balances were eliminated. Minority interest of $64, $72 and $62 was included in other income in the Consolidated Statements of Income and Comprehensive Income at December 31, 2008, 2007 and 2006, respectively. Included in other non-current liabilities of SJW Corp.’s Consolidated Balance Sheet is minority interest of $15 and $23 at December 31, 2008 and 2007, respectively.

Note 10. Employee Benefit Plans

Pension Plans

San Jose Water Company sponsors noncontributory defined benefit pension plans. Benefits under the plans are based on an employee’s any three twelve consecutive month periods of employment. San Jose Water Company’s policy is to contribute the net periodic pension cost to the plans to the extent it is tax deductible.

The Pension Plan is administered by a committee that is composed of an equal number of company and union representatives. Investment decisions have been delegated by the committee to an Investment Manager, presently Wachovia Securities, LLC. Investment guidelines set forth in the Investment Policy Statement (“IPS”) require that at least 25% of plan assets be invested in bonds. Furthermore, equities are to be diversified by industry groups and selected to achieve preservation of capital coupled with long-term growth through capital appreciation and income. Since the Pension Plan’s inception in 1984, the plan has achieved 10.1% return on their investments while the applicable benchmark was 11.1% for the same period. For the fiscal year 2008, the Investment Manager, following the required investment guidelines, achieved a (22.8%) loss on their investments, while the applicable benchmark was (22.7%) for the same period.

General restrictions have been placed on the Investment Manager. They may not invest in commodities and futures contracts, private placements, options, letter stock, speculative securities, subprime mortgages, or hold more than 5% of assets of any one private corporation. They may only invest in bonds, commercial paper, and money market funds with acceptable ratings by Moody’s or Standard & Poor’s. The Investment Manager is reviewed regularly regarding performance by the Investment Consultant who provides at least quarterly reports to the committee for review.

San Jose Water Company has an Executive Supplemental Retirement Plan, which is a defined benefit plan under which San Jose Water Company will pay supplemental pension benefits to key executives in addition to the amounts received under the retirement plan. The annual cost of this plan has been included in the determination of the net periodic benefit cost shown below. The plan, which is unfunded, had a projected benefit obligation of $7,585 and $6,791 as of December 31, 2008 and 2007, respectively, and net periodic pension cost of $780, $767 and $547 for 2008, 2007 and 2006, respectively.

Other Postretirement Benefits

In addition to providing pension and savings benefits, San Jose Water Company provides health care and life insurance benefits for retired employees. The plan is a flat dollar plan which is unaffected by variations in health care costs.

Flexible Spending Plan

Effective February 1, 2004, San Jose Water Company established a Flexible Spending Account for its employees for the purpose of providing eligible employees with the opportunity to choose from among the fringe benefits available under the plan. The flexible spending plan is intended to qualify as a cafeteria plan under the provisions of the Internal Revenue Code Section 125. The flexible spending plan allows employees to save pre-tax income in a Health Care Spending Account (“HCSA”) and/or a Dependent Care Spending Account (“DCSA”) to help defray the cost of out-of-pocket medical and dependent care expenses. The annual maximum limit under the HCSA and DCSA plans is $2.5 and $5, respectively.

Medicare

In December 2003, federal legislation was passed reforming Medicare and introducing the Medicare Part D prescription drug program. San Jose Water Company determined that the new legislation has no impact on its postretirement benefit plan under SFAS No. 116, “Employers’ Accounting for Postretirement Benefits—Other Than Pensions.” Because San Jose Water Company has a union contract with its employees whereby San Jose Water Company provides medical benefits at a fixed cost to its retirees, San Jose Water Company’s medical costs for postretirement benefits would not be affected by cost fluctuations resulting from the Medicare Part D prescription drug program.

Deferral Plan

San Jose Water Company sponsors a salary deferral plan that allows employees to defer and contribute a portion of their earnings to the plan. Contributions, not to exceed set limits, are matched by the San Jose Water Company. San Jose Water Company contributions were $940, $896 and $846 in 2008, 2007 and 2006, respectively.

Executive Special Deferral Election Plan

SJW Corp. adopted an Executive Special Deferral Election Plan effective January 1, 2005, which was amended effective January 1, 2008. The plan allows certain executives and directors to defer a portion of their earnings each year and to realize an investment return on those funds during the deferral period. Executives and directors have to make an election on the distribution and payment method of the deferrals before services are rendered. San Jose Water Company records the investment return on the deferred funds as compensation expense once the deferrals are made. Executives and directors had deferred $1,489, $1,192 and $778 to the plan as of December 31, 2008, 2007 and 2006, respectively. San Jose Water Company recorded an investment return of $69, $52 and $37 as of December 31, 2008, 2007 and 2006, respectively, on the deferred funds as compensation expense.

Assumptions Utilized on Actuarial Calculations

Net periodic cost for the defined benefit plans and other postretirement benefits was calculated using the following weighted-average assumptions:


	Pension Benefits			Other Benefits
	2008	2007	2006	2008	2007	2006
	%	%	%	%	%	%
Discount rate	6.50	6.00	5.75	6.50	6.00	5.75
Expected return on plan assets	8.00	8.00	8.00	8.00	8.00	8.00
Rate of compensation increase	4.00	4.00	4.00	N/A	N/A	N/A

Benefit obligations for the defined benefit plans and other postretirement benefits were calculated using the following weighted-average assumptions as of December 31:


	Pension Benefits		Other Benefits
	2008	2007	2008	2007
	%	%	%	%
Discount rate	6.06	6.50	6.20	6.50
Rate of compensation increase	4.00	4.00	N/A	N/A

Generally, it is expected of the Investment Manager that the performance of the Pension Plan Fund, computed on a total annual rate of return basis, should meet or exceed specific performance standards over a three-to-five-year period and/or full market cycle. As stated earlier, since the Pension Plan’s inception in 1984, the plan has achieved 10.1% return on their investments while the applicable benchmark was 11.1% for the same period. In 2008, the Investment Manager, following the required investment guidelines, achieved a (22.8%) loss on their investments, while the applicable benchmark was (22.7%) for the same period.

On August 17, 2006, the Pension Protection Act (the “Act”) was signed into law. The Act eliminates the scheduled expiration of changes to qualified pension plan rules that were enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). These changes included increases to the amount of plan compensation taken into account for benefit purposes and to the maximum limit on benefits payable under pension plans. SJW Corp. evaluated the impact of the Act on its defined pension benefit plans and has determined that the effect is not considered material.

Net Periodic Pension Costs

Net periodic costs for the defined benefit plans and other postretirement benefits for the years ended December 31 was as follows:


	Pension Benefits							Other Benefits
	2008			2007		2006		2008			2007		2006
Components of Net Periodic Benefit Cost
Service cost	$	2,050		2,282		2,113		$	176		193		172
Interest cost		4,248		3,946		3,525			353		328		306
Expected return on assets		(3,653	)	(3,445	)	(2,997	)		(121	)	(97	)	(79	)
Amortization of transition obligation		—		—		—			57		57		57
Amortization of prior service cost		411		451		467			151		166		173
Recognized actuarial loss		445		802		955			—		—		—

Net periodic benefit cost	$	3,501		4,036		4,063		$	616		647		629

Reconciliation of Funded Status

For the defined benefit plans and other postretirement benefits, the benefit obligation is the projected benefit obligation and the accumulated benefit obligation, respectively. The actuarial present value of benefit obligations and the funded status of San Jose Water Company’s defined benefit pension and other postretirement plans as of December 31 were as follows:


	Pension Benefits					Other Benefits
	2008			2007		2008			2007
Change in Benefit Obligation
Benefit obligation at beginning of year	$	66,146		65,992		$	5,517		5,608
Service cost		2,050		2,282			176		193
Interest cost		4,248		3,946			353		328
Amendments		857		—			—		—
Actuarial (gain) loss		3,900		(3,690	)		266		(407	)
Benefits paid		(2,571	)	(2,384	)		(234	)	(205	)

Benefit obligation at end of year	$	74,630		66,146		$	6,078		5,517

Change in Plan Assets
Fair value of assets at beginning of year	$	46,555		43,939		$	1,418		1,124
Actual return on plan assets		(10,669	)	2,699			39		52
Employer contributions		3,330		2,301			—		362
Benefits paid		(2,571	)	(2,384	)		(161	)	(120	)

Fair value of plan assets at end of year		36,645		46,555			1,296		1,418

Funded status at end of year	$	(37,985	)	(19,591	)	$	(4,782	)	(4,099	)

The amounts recognized on the balance sheet as of December 31 were as follows:


	Pension Benefits			Other Benefits
	2008		2007	2008		2007
Current liabilities	$	393	333		46	—
Noncurrent liabilities		37,595	19,258	$	4,736	4,099

	$	37,988	19,591	$	4,782	4,099

Upon implementation of Statement 158, San Jose Water Company recorded a regulatory asset, including a gross-up for taxes, on the projected benefit obligation of the postretirement benefit plans. The following table summarizes the change in regulatory assets:


	2008			2007
Funded status of obligation	$	42,767		23,690
Accrued benefit cost		(6,424	)	(5,711	)

Amount to be recovered in future rates		36,343		17,979
Tax gross-up		25,004		12,370

Regulatory asset	$	61,347		30,349

The estimated amortization for the year ended December 31, 2009 is as follows:


	Pension Benefits		Other Benefits
Amortization of prior service cost	$	448	—
Amortization of loss		1,760	—

Total	$	2,208	—

Plan Assets

Plan assets for the years ended December 31 were as follows:


	Pension Benefits					Other Benefits
	2008			2007		2008			2007
Fair value of assets at end of year:
Debt securities	$	16,590		18,120			—		—
		45.3	%	38.9	%		—		—
Equity securities	$	18,990		27,731			—		—
		51.8	%	59.6	%		—		—
Cash and equivalents	$	1,065		704		$	1,296		1,418
		2.9	%	1.5	%		100	%	100	%

Total	$	36,645		46,555		$	1,296		1,418

In 2009, San Jose Water Company expects to make a contribution of $3,300 and $394 to the pension plan and other post retirement benefit plan, respectively.

Benefits expected to be paid in the next five years are:


	Pension Plan		Other Postretirement Benefit Plan
2009	$	2,908	$	225
2010		3,067		242
2011		3,387		272
2012		3,636		312
2013		4,058		344
2014 – 2018		24,967		2,218

Note 11. Long-Term Incentive Plan and Share-Based Payments

Common Shares

SJW Corp. has a Long-Term Stock Incentive Plan (the “Plan”), which has 1,800,000 common shares reserved for issuance. The Plan was initially adopted by the Board of Directors on March 6, 2002. The Plan was subsequently amended, and the new amended and restated Plan was adopted by the Board on January 30, 2008 and became effective on April 30, 2008. The Plan allows SJW Corp. to provide employees, non-employee Board members or the Board of Directors, consultants, and other independent advisors who provide services to the company or any parent or subsidiary the opportunity to acquire an equity interest in SJW Corp. The special incentive compensation programs previously established for the non-employee Board members under the Plan, namely, the Deferral Election Program and Deferred Restricted Stock Program, each amended effective January 1, 2008, shall continue in effect under the Plan.

A participant in the Plan generally may not receive Plan awards covering an aggregate of more than 600,000 common shares in any calendar year. Additionally, awards granted under the Plan may be conditioned upon the attainment of specified performance goals. The types of awards included in the Plan are restricted stock awards, restricted stock units, performance shares, or other stock-based awards. In addition, shares are issued under the Employee Stock Purchase Plan (ESPP). As of December 31, 2008, 2007 and 2006, 150,866, 87,700 and 20,001 shares have been issued pursuant to the Plan, and 340,186, 367,404 and 400,659 shares are issuable upon the exercise of outstanding options, restricted stock units, and deferred restricted stock units for the years ended 2008, 2007 and 2006, respectively. The remaining shares available for issuance under the Plan are 1,308,948, 1,344,896, and 1,379,340 for the years ended 2008, 2007 and 2006, respectively. The compensation costs

charged to income was recognized on a straight-line basis over the requisite service period. The total compensation costs charged to income under the Plan were $601, $655 and $436 for 2008, 2007 and 2006, respectively. A summary of compensation costs charged to income, the exercise of stock options and similar instruments and the tax benefit realized from share options exercised, by award type, are presented below for the three years ended December 31, 2008, 2007 and 2006:


	2008		2007	2006
Compensation costs charged to income:
Stock options	$	58	105	130
Restricted stock and deferred restricted stock		543	550	306

Total compensation costs charged to income	$	601	655	436

Exercise of stock options and similar instruments:
Stock options	$	243	648	25
ESPP		496	485	201
Restricted stock and deferred restricted stock		123	165	—
Other		28	—	—

Total exercise of stock options and similar instruments	$	890	1,298	226

Tax benefits realized from share options exercised:
Stock options	$	80	395	10
Restricted stock and deferred restricted stock		301	150	—

Total tax benefits realized from share options exercised	$	381	545	10

Stock Options

SJW Corp. has adopted Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment (Statement 123R) since 2006, for all existing and new share-based compensation plans in accordance with the modified prospective transition method. Previously, SJW Corp. followed SFAS 123, Accounting for Stock-Based Compensation (Statement 123), in accounting for its share-based compensation plans. To estimate the fair value of options at grant date as the basis for the stock-based compensation awards, SJW Corp. utilizes the Black-Scholes option-pricing model, which requires the use of subjective assumptions. Further, as required under Statement 123R, SJW Corp. estimates forfeitures for the share-based awards that are not expected to vest. Changes in these inputs and assumptions can affect the measure of estimated fair value of our share based compensation.

Awards in the form of stock option agreements under the Plan allow executives to purchase common shares at a specified price. Options are granted at an exercise price that is not less than the per share market price on the date of the grant. Options vest at a 25% rate on each annual date over four years and are exercisable over a 10 year period.

No options were granted for the years ending December 31, 2008, 2007 and 2006. For the years ended 2008, 2007 and 2006, options covering 17,020, 45,794 and 1,858 shares of common stock and options covering 4,704, 5,849 and 81 shares of common stock from vested dividend equivalent rights were exercised, respectively.

SFAS 123R requires the cash flows resulting from the tax benefits for tax deduction in excess of the compensation expense recorded for those options (excess tax benefits) to be classified as cash from financing activities. For the years ended December 31, 2008, 2007 and 2006, total cash received on exercise of options amounted to $327, $1,072 and $36 and the tax benefit realized from stock options exercised amounted to $80, $395 and $10. Shares subject to outstanding options under the Plan were 85,166, 116,348 and 162,142 as of December 31, 2008, 2007 and 2006, respectively.

For the year ended 2008, after taking into consideration the relevant facts and circumstances, SJW Corp. does not project any foreseeable terminations which could lead to forfeiture of unvested options. SJW Corp. has recognized share based compensation expense of $58, $105 and $130 for the stock options granted under the Incentive Plan for the years ended December 31, 2008, 2007 and 2006, respectively.

Stock Options


	Shares		Weighted Average Exercise Price		Weighted Average Remaining Life In Years	Aggregate Intrinsic Value
Outstanding as of January 1, 2006	165,902		$	16.38	8.20	$	1,056,796
Granted	—		$	—	—		—
Exercised	(1,858	)	$	14.12	—		—
Forfeited	(1,902	)		—	—		—

Outstanding as of December 31, 2006	162,142		$	16.40	7.18	$	3,624,737

Granted	—			—	—		—
Exercised	(45,794	)	$	14.13	—		—
Forfeited	—			—	—		—

Outstanding as of December 31, 2007	116,348		$	17.30	6.49	$	2,020,924

Granted	—			—	—		—
Exercised	(17,020	)		14.28	—		—
Forfeited	—			—	—		—

Outstanding as of December 31, 2008	99,328		$	17.82	5.65	$	1,204,024

Options exercisable at December 31, 2008	85,166		$	17.44	5.56	$	1,064,900

Range of exercise prices			$	14.00 – 27.69
Weighted-average fair value of options granted during the year	—			—	—		—

A summary of the status of SJW Corp.’s nonvested stock options as of December 31, 2008 and changes during the three years ended December 31, 2008, are presented below:


	Shares		Weighted Grant-Date Fair Value
Nonvested as of January 1, 2006	125,540		$	2.02
Granted	—			—
Vested	(41,272	)	$	2.19
Forfeited	(1,902	)	$	1.46

Nonvested as of December 31 2006	82,366		$	1.95

Granted	—			—
Vested	(41,267	)	$	3.16
Forfeited	—			—

Nonvested as of December 31, 2007	41,099		$	3.65

Granted	—			—
Vested	(26,937	)	$	3.42
Forfeited	—			—

Nonvested as of December 31, 2008	14,162		$	4.09

As of December 31, 2008, total unrecognized compensation costs related to stock options amounted to $11. These costs are expected to be recognized over a weighted-average period of 0.58 years.

Restricted Stock and Deferred Restricted Stock Plans

Under SJW Corp.’s Amended and Restated Deferred Restricted Stock Program (the “Deferred Restricted Stock Program”), SJW Corp. granted deferred restricted stock units to non-employee Board members. This program was amended effective January 1, 2008. As a result of that amendment, no new awards of deferred restricted stock units were granted under the Deferred Restricted Stock Program with respect to service after December 31, 2007. In addition, SJW Corp.’s Deferral Election Program, as amended (the “Deferral Program”), includes retainer fees and meeting fees earned for the calendar year 2007 to be deferred into deferred restricted stock units. Prior to 2007, only retainer fees were allowed to be converted under the Deferral Program. The retainer fees and meeting fees are collectively referred to as the “Annual Service Fees.” For any post-2007 calendar year, the Annual Service Fees that are deferred were credited as a dollar amount to a deferred election account, and were no longer deferred into deferred restricted stock units.

On January 2, 2008, 2,180 deferred restricted stock units were granted to non-employee Board members pursuant to outstanding dividend equivalent rights.

On April 28, 2008 and May 9, 2008 a total of 34,512 shares of common stock were distributed to retired members of SJW Corp.’s Board of Directors. Additionally, SJW Corp. paid cash in the amount of $4 to settle the dividend equivalent rights earned for those shares with a lump-sum distribution arrangement. The tax benefit realized from the stock issuance was $158.

During 2008, 10,150 restricted stock units were granted to several executives of SJW Corp. and its subsidiaries. These units will vest in four equal successive installments upon completion of each year of service with no dividend equivalent rights. The restricted stock units were valued at market prices of $33.75, $28.80 and $27.01 per share at various dates of grant. Share-based compensation expenses are being recognized at grant date fair values of $31.32, $26.35 and $24.58 per unit over the vesting period beginning in 2008.

On January 25, 2008 and January 30, 2008, 5,833 of restricted stock units granted to a key employee of SJW Corp. in 2006 and 2007 were vested and issued, and the tax deduction available from realizing the stock issuance was less than the deferred tax asset previously recognized by $3.

On January 30, 2008, a total of 21,000 restricted and deferred restricted stock units were awarded to a key employee of SJW Corp., which includes 7,000 performance-based restricted stock units that will convert into shares of SJW Corp.’s common stock upon vesting at the end of a three year period if specific performance goals set are attained. These units do not include dividend equivalent rights. The fair value of the performance-based restricted award was estimated using the fair value of SJW Corp.’s common stock with the effect of market conditions and no dividend yield on the date of grant, and assumes the performance goals are probable of attainment. Share-based compensation expense is recognized at $11.71 per unit over approximately 2.5 years.

On December 29, 2008, the second annual installment of restricted stock units for 1,097 shares, granted to several executives of SJW Corp. in 2006, were vested, and the tax deduction available from realizing the stock issuance was less than the deferred tax asset previously recognized by $4.

As of December 31, 2008, 2007 and 2006, SJW Corp. has recognized an aggregate share-based compensation expense of $543, $550 and $306, respectively, related to restricted and deferred restricted stock awards to the employees. As of December 31, 2008, 2007 and 2006, SJW Corp. has recognized an aggregate share-based compensation expense of $0, $220, and $225, respectively, related to restricted and deferred restricted stock awards to the non-employee Board members of SJW Corp. As of December 31, 2008, 2007 and 2006, the tax benefit realized from restricted and deferred restricted stock awards amounted to $301, $150 and $0.

Restricted and Deferred Restricted Stock


	Units		Weighted- Average Issue Price
Outstanding as of January 1, 2006	194,186		$	14.28
Issued	23,646		$	27.15
Exercised	—			—
Forfeited	—			—

Outstanding as of January 1, 2007	217,832		$	15.68

Issued	28,742		$	32.29
Exercised	(15,308	)	$	19.55
Forfeited	(2,052	)	$	38.76

Outstanding as of January 1, 2008	229,214		$	17.36

Issued	31,150		$	24.38
Exercised	(38,355	)	$	17.93
Forfeited	(980	)	$	33.45

Outstanding as of December 31, 2008	221,029		$	18.18

Shares vested as of December 31, 2008	164,945		$	15.47

A summary of the status of SJW Corp.’s nonvested restricted and deferred restricted stock plans as of December 31, 2008, and changes during the three year period ended December 31, 2008, are presented below:


	Units		Weighted Grant-Date Fair Value
Nonvested as of January 1, 2006	49,677		$	14.12
Granted	23,646		$	27.15
Vested	(54,421	)	$	14.87

Nonvested as of January 1, 2007	18,902		$	28.25

Granted	28,742		$	32.29
Vested	(10,415	)	$	38.76
Forfeited	(2,052	)	$	38.76

Nonvested as of January 1, 2008	35,177		$	29.64

Granted	31,150		$	24.38
Vested	(9,263	)	$	32.71
Forfeited	(980	)	$	33.45

Nonvested as of December 31, 2008	56,084		$	26.14

As of December 31, 2008, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $950. This cost is expected to be recognized over a weighted-average period of 1.67 years.

Dividend Equivalent Rights

Under the Plan, holders of options, restricted stock and deferred restricted stock awards have the right to receive dividend rights each time a dividend is paid on common shares after the grant date. Stock compensation on dividend equivalent rights is recognized as a liability and recorded against retained earnings on the date dividends are issued.

The Deferred Restricted Stock and Deferral Programs for non-employee Board members were amended as of January 1, 2008, and became effective on April 30, 2008 to allow the DERs’ with respect to the deferred shares to remain in effect only through December 31, 2017. Accordingly, the last DERs’ conversion into deferred restricted stock units will occur on the first business day in January 2018. Previously, no such time limitation was placed in the Deferral Program.

On January 2, 2008, the final dividend equivalent rights related to the 2004 option grants were converted to common stock units and 959 shares were credited into the participants’ option deferred stock unit accounts. Accordingly, on this same date, 4,704 shares of common stock attributed to the 2004 option grant were fully vested and issued under the Plan to participants. The tax benefit realized from the stock issuance was $42.

As of December 31, 2008, 2007 and 2006, a cumulative of 34,828, 29,050 and 21,296 dividend equivalent rights were converted, since inception, to deferred restricted stock awards, respectively. For the years ended December 31, 2008, 2007 and 2006, $173, $223 and $224 related to dividend equivalent rights was recorded against retained earnings and were accrued as a liability.

Employee Stock Purchase Plan

The ESPP allows eligible employees to purchase shares of SJW Corp’s common stock at 85% of the fair market value of shares on the purchase date. Under the ESPP, employees can designate up to a maximum of 10% of their base compensation for the purchase of shares of common stock, subject to certain restrictions. A total of 270,400 shares of common stock have been reserved for issuance under the ESPP.

Since its inception, there have been five purchase intervals. As of December 31, 2008, 2007 and 2006, a total of 17,807, 14,741 and 8,948 shares, respectively, have been issued under the ESPP. The ESPP has no look-back provisions. As of December 2008, 2007 and 2006, cash received from employees towards the ESPP amounted to $472, $424 and $179, respectively.

After considering the estimated employee terminations or withdrawals from the plan before the purchase date, for the years ended December 31, 2008, 2007 and 2006, SJW Corp. recorded expense of $75, $74 and $61 related to the ESPP.

As of December 31, 2008, total unrecognized compensation costs related to the semi-annual offering period that ends January 31, 2009, for the ESPP is approximately $8. This cost is expected to be recognized during the first quarter of 2009.

Note 12. Sale of Real Estate Investments and Utility Property

On January 20, 2006, SJW Land Company and San Jose Water Company sold approximately one acre of property and a building for $2,850. SJW Corp. recognized a gain on the sale of the property of approximately $1,535, net of tax of approximately $1,056. On February 1, 2006, San Jose Water Company reinvested the proceeds by purchasing utility property at a purchase price of $2,668.

On December 15, 2006, SJW Land Company sold a 2.2 acre property and a 4.5 acre property located in San Jose, California for an aggregate purchase price of $32,500. SJW Corp. recognized a gain on sale of real estate investment of $14,820, net of tax of $10,192. On February 9, 2007, SJW Land Company reinvested the proceeds from the sale of real estate investment by purchasing approximately 54 acres of real estate investment property with an office and distribution facilities in Knoxville, Tennessee for approximately $47,625.

On November 21, 2008, San Jose Water Company sold approximately one-half acre of property for $1,500. SJW Corp. recognized a gain on the sale of real estate investment of $796, net of taxes of approximately $548.

On April 17, 2006, San Jose Water Company entered into an agreement with Adobe Systems Incorporated (“Adobe”) for Adobe to purchase approximately one acre of property and buildings located in San Jose, California for a total purchase price of approximately $4,000. The transaction required approval by the CPUC since the property and buildings are utility plant assets. On October 2, 2008, the CPUC authorized San Jose Water Company to sell the property with approximately $1,525 of the proceeds being distributed to San Jose Water Company customers through a monthly surcredit for a period not to exceed one year. Subsequently on December 4, 2008, SJW Corp. recognized a gain on the sale of utility property of $392, net of taxes of approximately $269.

Note 13. Segment and Nonregulated Businesses Reporting

SJW Corp. is a holding company with three subsidiaries: (i) San Jose Water Company, a water utility operation with both regulated and nonregulated businesses, (ii) SJW Land Company and its consolidated variable interest entity, 444 West Santa Clara Street, L.P., which operates commercial building rentals (“Real Estate Services”) and (iii) SJWTX, Inc. which is doing business as Canyon Lake Water Service Company, a regulated water utility located in Canyon Lake, Texas. In accordance with Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information,” SJW Corp. has determined that it has two reportable business segments. The first segment is that of providing water utility and utility-related services to its customers through SJW Corp.’s subsidiaries, San Jose Water Company and Canyon Lake Water Service Company, together referred to the “Water Utility Services.” The second segment is property management and investment activity conducted by SJW Land Company, the “Real Estate Services.”

SJW Corp.’s reportable segments have been determined based on information used by the chief operating decision maker. SJW Corp.’s chief operating decision maker is its President and Chief Executive Officer (“CEO”). The CEO reviews financial information presented on a consolidated basis that is accompanied by disaggregated information about operating revenue, net income and total assets, by subsidiaries.

The tables below set forth information relating to SJW Corp.’s reportable segments and distribution of regulated and nonregulated business activities within the reportable segments. Certain allocated assets, revenue and expenses have been included in the reportable segment amounts. Other business activity of SJW Corp. not included in the reportable segments is included in the “All Other” category.


	For twelve months ended December 31, 2008
	Water Utility Services		Real Estate Services	All Other*		SJW Corp.
	Regulated	Non regulated	Non regulated	Non regulated		Regulated	Non regulated	Total
Operating revenue	209,189	4,612	6,546	—		209,189	11,158	220,347
Operating expense	179,980	3,794	2,995	684		179,980	7,473	187,453
Operating income (loss)	29,209	818	3,551	(684	)	29,209	3,685	32,894
Net income (loss)	19,779	758	1,437	(513	)	19,779	1,682	21,461
Depreciation and amortization	22,044	322	1,677	—		22,044	1,999	24,043
Interest expense	12,552	—	1,890	285		12,552	2,175	14,727
Income tax expense (benefit) in operations income	12,009	520	910	(241	)	12,009	1,189	13,198
Assets	710,284	5,521	83,239	51,833		710,284	140,593	850,877


	For twelve months ended December 31, 2007
	Water Utility Services		Real Estate Services	All Other*		SJW Corp.
	Regulated	Non regulated	Non regulated	Non regulated		Regulated	Non regulated	Total
Operating revenue	195,444	4,560	6,486	111		195,444	11,157	206,601
Operating expense	169,062	3,636	2,994	1,156		169,062	7,786	176,848
Operating income (loss)	26,382	924	3,492	(1,045	)	26,382	3,371	29,753
Net income	16,515	824	1,843	141		16,515	2,808	19,323
Depreciation and amortization	20,935	320	1,592	7		20,935	1,919	22,854
Interest expense	10,772	272	1,847	118		10,772	2,237	13,009
Income tax expense (benefit) in operations income	11,206	561	1,081	(299	)	11,206	1,343	12,549
Assets	636,220	5,836	84,493	40,777		636,220	131,106	767,326


	For twelve months ended December 31, 2006
	Water Utility Services		Real Estate Services	All Other*		SJW Corp.
	Regulated	Non regulated	Non regulated	Non regulated		Regulated	Non regulated	Total
Operating revenue	179,765	4,044	4,317	1,112		179,765	9,473	189,238
Operating expense	149,990	3,209	2,403	2,083		149,990	7,695	157,685
Operating income (loss)	29,775	835	1,914	(971	)	29,775	1,778	31,553
Net income (loss)	21,941	630	16,104	(94	)	21,941	16,640	38,581
Depreciation and amortization	20,069	320	831	79		20,069	1,230	21,299
Interest expense	9,479	409	1,225	12		9,479	1,646	11,125
Income tax expense (benefit) in operations income	14,504	436	887	(529	)	14,504	794	15,298
Assets	585,693	6,110	70,856	43,883		585,693	120,849	706,542

*	The “All Other” category includes Crystal Choice Water Service LLC, which was sold and liquidated in 2007 and, without regard to its subsidiaries, SJW Corp.

Note 14. Fair Value Measurement

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS 157”), “Fair Value Measurements”, which is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. It also applies under other accounting pronouncements that require or permit fair value measurements. The fair value hierarchy for disclosure of fair value measurements under SFAS 157 is as follows:


Level 1:		Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:		Quoted prices, other than quoted prices included in Level 1, that are observable for the assets or liabilities, either directly or indirectly.
Level 3:		Inputs that are unobservable for the assets or liabilities.

The following table summarizes the assets and liabilities measured at fair value on a recurring basis as required by SFAS 157, as of December 31, 2008:


	Balance as of December 31, 2008		Level 1		Level 2	Level 3
Assets:
Investment in California Water Service Group	$	51,071	$	51,071	—	—

The FASB has also issued FASB Staff Positions (“FSP”) 157-1 and 157-2. FSP 157-1 amends SFAS 157 to exclude SFAS No. 13 “Accounting for Leases,” and other accounting pronouncements that address fair value measurements for purposes of lease classification or measurement. FSP 157-2 defers the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Nonfinancial assets and nonfinancial liabilities would include all assets and liabilities other than those meeting the definition of a financial asset or financial liability as defined in paragraph 6 of SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” FSP 157-2 defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of FSP 157-2. SJW Corp. has evaluated the impact of FSP 157-2 and has determined that it will not have a material impact on SJW Corp.’s financial position, results of operations or cash flows.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (“SFAS 159”), “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, provided the entity also elects to apply the provisions of SFAS 157. SJW Corp. has adopted SFAS 159 and have elected not to measure any additional financial instruments and other items at fair value. SJW Corp.’s adoption of SFAS 159 did not have a material impact on SJW Corp.’s financial position, results of operations or cash flows.

Note 15. Subsequent Events

On January 13, 2009, SJW Land Company was informed that one of its tenants filed a Chapter 11 bankruptcy and intends to liquidate its operations through the United States bankruptcy court in Delaware. The tenant currently leases a 148,000 square foot office building and a 346,000 square foot distribution building from SJW Land Company in Knoxville, Tennessee under triple net leases. The leases have been paid through February 2009. Based on the applicable bankruptcy laws and court rules, the tenant will have a limited period of time to decide whether it will terminate its leases or sell its rights under the leases. In the event that the leases are terminated, SJW Land Company will incur all holding costs and will seek to re-lease the properties. SJW Corp. has reviewed the Tennessee properties for impairment in accordance with the requirements of SFAS No. 144 (see Note 1). Based upon our review, the carrying amount of the Tennessee properties does not exceed its fair value and as a result, no adjustment has been made to the carrying value.

On February 2, 2009, San Jose Water Company issued $10,000 of Senior Notes Series J, with an interest rate of 6.54%. Proceeds from the sales of Senior Notes Series J will be used to repay short-term borrowings.

On February 6, 2009, SJWTX, Inc. acquired from the City of Bulverde, Texas (“City”) and the GBRA, the right and obligation to provide water service within the retail water service area of the City, certain areas outside the City and substantially all of the retail water service assets of the GBRA associated with the GBRA’s existing facilities located within such service area. The agreements by which the GBRA had a long-term right to construct and operate a retail water system within such service area were also terminated. The purchase price for the assets is approximately $2,800 and $900 to the GBRA and City, respectively. With the addition of the City’s service area, CLWSC’s service area is now approximately 250 square miles.

Note 16. Unaudited Quarterly Financial Data

Summarized quarterly financial data is as follows:


	2008 Quarter Ended
	March		June	September	December
Operating revenue	$	41,253	60,058	69,507	49,529
Operating income		5,770	9,532	11,465	6,127
Net income		2,718	6,278	8,257	4,208
Comprehensive income		3,451	2,787	11,975	9,355
Earnings per share:
—Basic		0.15	0.34	0.45	0.23
—Diluted		0.15	0.34	0.44	0.23
Market price range of stock:
—High		34.20	32.46	29.97	29.94
—Low		28.05	26.40	23.65	21.71
Dividend per share		0.16	0.16	0.16	0.16


	2007 Quarter Ended
	March		June	September	December
Operating revenue	$	39,017	55,135	64,847	47,602
Operating income		4,409	8,060	10,731	6,553
Net income		2,122	5,406	8,011	3,784
Comprehensive income		772	4,867	8,653	2,830
Earnings per share:
—Basic		0.12	0.30	0.44	0.21
—Diluted		0.11	0.29	0.43	0.20
Market price range of stock:
—High		43.00	40.10	38.80	38.50
—Low		33.74	28.48	28.19	31.62
Dividend per share		0.15	0.15	0.15	0.15

SJW CORP.

FINANCIAL STATEMENT SCHEDULE

Schedule II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Years ended December 31, 2008 and 2007


Description	2008			2007
Allowance for doubtful accounts:
Balance, beginning of period	$	195,851		176,686
Charged to expense		469,970		286,038
Accounts written off		(431,181	)	(305,052	)
Recoveries of accounts written off		44,345		38,179

Balance, end of period	$	278,985		195,851

Reserve for litigation and claims:
Balance, beginning of period	$	271,822		170,000
Charged to expense		526,279		255,365
Revision to accrual, due to settlements		(25,280	)	(38,439	)
Payments		(104,882	)	(115,104	)

Balance, end of period	$	667,939		271,822

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Control and Procedures

SJW Corp.’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of SJW Corp.’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the “Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that SJW Corp.’s disclosure controls and procedures as of the end of the period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by SJW Corp. in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. SJW Corp. believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Management’s Report on Internal Control over Financial Reporting

SJW Corp.’s management is responsible for establishing and maintaining an adequate internal control structure over financial reporting and for an assessment of the effectiveness of internal control over financial reporting, as such items are defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

Management has utilized the criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to evaluate the effectiveness of internal control over financial reporting.

SJW Corp.’s management has performed an assessment of the effectiveness of internal control over financial reporting as of December 31, 2008. Based on this assessment, management has concluded SJW Corp.’s internal control over financial reporting as of December 31, 2008 is effective.

KPMG LLP has audited the effectiveness of the company’s internal control over financial reporting as of December 31, 2008. Their report is included in Item 8 of this report.

Changes in Internal Controls

There has been no change in internal control over financial reporting during the fourth fiscal quarter of 2008 that has materially affected, or is reasonably likely to materially affect, the internal controls over financial reporting of SJW Corp.

Item 9B.

Other Information

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

The information required by this item is contained in part under the caption “Officers of the Registrant” in Part I, Item 1, of this report, and the remainder is contained in SJW Corp.’s Proxy Statement for its 2009 Annual Meeting of Shareholders to be held on May 6, 2009 (the “2009 Proxy Statement”) under the captions “Proposal No. 1—Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

Code of Ethics

SJW Corp. has adopted a code of ethics that applies to SJW Corp.’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. The text of the code of ethics is available at the company’s website at http://www.sjwater.com . SJW Corp. intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of its code of ethics by posting such information on its website.

Corporate Governance Guidelines and Board Committee Charters

The Corporate Governance Guidelines and the Charters for the board committees—the Audit Committee, Executive Compensation Committee, Real Estate Committee, and Nominating & Governance Committee—are available at the company’s website at http://www.sjwater.com . Shareholders may also request a free hard copy of the Corporate Governance Guidelines and the charters from the following address and phone number:

SJW Corp.

110 West Taylor Street

San Jose, CA 95110

Attn: Corporate Secretary

Phone: 800-250-5147

In 2008, SJW Corp. submitted an Annual CEO Certification to the New York Stock Exchange (“NYSE”), dated May 19, 2008 as required by Section 303A.12(a) of the NYSE Listed Company Manual.

SJW Corp. is filing as an exhibit to this Form 10-K for the year ended December 31, 2008, certifications pursuant to Sarbanes-Oxley Action Section 302 regarding the quality of its public disclosure.

Item 11.

Executive Compensation

The information required by this item is contained in the 2009 Proxy Statement under the captions “Compensation of Directors,” “Executive Compensation and Related Information,” “Compensation Committee Interlocks and Insider Participation,” and “Committee Reports” and is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is contained in the 2009 Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans” and is incorporated herein by reference.

Item 13.

Certain Relationships and Related Transaction and Director Independence

The information required by this item is contained in the 2009 Proxy Statement under the caption “Certain Relationships and Related Transactions” and “Independent Directors” and is incorporated herein by reference.

Item 14.

Principal Accountant Fees and Services

The information required by this item is contained in the 2009 Proxy Statement under the caption “Principal Independent Accountants’ Fees and Services” and is incorporated herein by reference.

PART IV

Item 15.

Exhibits and Financial Statement Schedules


		Page
(a)(1) Financial Statements

Reports of Independent Registered Public Accounting Firm		35

Consolidated Balance Sheets as of December 31, 2008 and 2007		37

Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2008, 2007 and 2006		39

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2008, 2007 and 2006		40

Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006		41

Notes to Consolidated Financial Statements		42

(a)(2) Financial Statement Schedule

Valuation and Qualifying Accounts and Reserves, Years ended December 31, 2008 and 2007		67

All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

(a)(3) Exhibits required to be filed by Item 601 of Regulation S-K.

See Exhibit Index located immediately following this Item 15.

The exhibits filed herewith are attached hereto (except as noted) and those indicated on the Exhibit Index which are not filed herewith were previously filed with the Securities and Exchange Commission as indicated.

EXHIBIT INDEX


Exhibit No.		Description
3.1		Restated Articles of Incorporation of SJW Corp. Incorporated by reference to Exhibit 3.1 to Form 10-K for year ended December 31, 2001.

3.2		Certificate of Amendment of the Restated Articles of Incorporation of SJW Corp., as filed with the Secretary of State of the State of California on February 22, 2006. Incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 27, 2006.

3.3		By-Laws of SJW Corp., as amended on April 26, 2007. Incorporated by reference to Exhibit 3.3 to Form 10-K for year ended December 31, 2007.

4		Instruments Defining the Rights of Security Holders, including Indentures: No current issue of the registrant’s long-term debt exceeds 10 percent of its total assets. SJW Corp. hereby agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of unregistered senior and subordinated debt of the company.

10.1		Water Supply Contract, dated January 27, 1981, between San Jose Water Works and the Santa Clara Valley Water District, as amended. Incorporated by reference to Exhibit 10.1 to Form 10-K for the year ended December 31, 2001.

10.2		Limited Partnership Agreement of 444 West Santa Clara Street, L.P., entered into as of September 2, 1999, between SJW Land Company and Toeniskoetter & Breeding, Inc. Development. Incorporated by reference to Exhibit 10.18 to Form 10-Q for the quarter ended September 30, 1999.

10.3		Asset Purchase Agreement by and between SJWTX, Inc. to purchase the assets of Canyon Lake Water Supply Corporation, a Texas nonprofit water supply corporation, dated October 4, 2005. Incorporated by reference to Exhibit 10.1 to Form 10-Q for quarter ending September 30, 2005.

10.4		Form of Letter Amendment to SJW Corp. Director Pension Plan. Incorporated by reference as Exhibit 10.25 to Form 10-K for the year ended December 31, 2007. (2)

10.5		San Jose Water Company Executive Supplemental Retirement Plan, as amended and restated effective January 1, 2008. Incorporated by reference as Exhibit 10.7 to Form 10-K for the year ended December 31, 2007. (2)

10.6		First Amendment to San Jose Water Company Executive Supplemental Retirement Plan, effective July 23, 2008. Incorporated by reference as Exhibit 10.1 to Form 8-K filed on July 24, 2008. (2)

10.7		San Jose Water Company Cash Balance Executive Supplemental Retirement Plan, dated July 23, 2008. Incorporated by reference as Exhibit 10.2 to Form 8-K filed on July 24, 2008. (2)

10.8		SJW Corp. Long-Term Incentive Plan, as amended and restated January 30, 2008. Incorporated by reference as Exhibit 10.1 to Form 8-K filed on May 1, 2008. (2)

10.9		Chief Executive Officer Employment Agreement amended and restated, effective January 1, 2008. (1) (2)

10.10		Standard Form of Stock Option Agreement, as adopted by SJW Corp. Board of Directors on April 29, 2003. Incorporated by reference to Exhibit 10.22 to Form 10-Q for the quarter ended June 30, 2003. (2)

10.11		SJW Corp. Executive Officer Short-Term Incentive Plan, effective as of April 30, 2008. Incorporated by reference to Exhibit 10.2 to Form 8-K filed on May 1, 2008. (2)

10.12		SJW Corp. Executive Severance Plan, amended and restated, effective October 22, 2008. (1) (2)


Exhibit No.		Description
10.13		SJW Corp. Executive Severance Plan, as amended and restated, effective January 1, 2009. (1) (2)

10.14		San Jose Water Company Special Deferral Election Plan, as amended and restated, effective January 1, 2008. (1) (2)

10.15		SJW Corp. Amended and Restated Deferred Restricted Stock Program, effective January 1, 2008. Incorporated by reference as Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2008. (2)

10.16		SJW Corp. Deferral Election Program for Non-Employee Board Members, as amended and restated, effective January 1, 2008. Incorporated by reference as Exhibit 10.22 to Form 10-K for the year ended December 31, 2007. (2)

10.17		SJW Corp. Director Compensation and Expense Reimbursement Policies, amended and restated, effective as of January 1, 2008. Incorporated by reference as Exhibit 10.23 to Form 10-K for the year ended December 31, 2007. (2)

10.18		Form of Stock Option Dividend Equivalent Rights Agreement, effective as of January 1, 2008. (1) (2)

10.19		Chief Operating Officer Stock Option Dividend Equivalent Rights Agreement, as amended and restated effective as of January 1, 2008. (1) (2)

10.20		Restricted Stock Unit Issuance Agreement, amended and restated, effective as of July 1, 2008. Incorporated by reference as Exhibit 10.2 to Form 10-Q for the quarter ended September 30, 2008. (2)

10.21		Deferred Restricted Stock Award Agreement, amended and restated, as of October 22, 2008. (1) (2)

10.22		Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated effective October 22, 2008. (1) (2)

10.23		Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated effective October 22, 2008. (1) (2)

10.24		Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated, effective October 22, 2008. (1) (2)

10.25		Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated effective October 22, 2008. (1) (2)

10.26		Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated, effective October 22, 2008. (1) (2)

10.27		Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated, effective October 22, 2008. (1) (2)

10.28		Form of Restricted Stock Unit Issuance Agreement Award, amended and restated, effective October 22, 2008. (1) (2)

10.29		Form of Restricted Stock Unit Issuance Agreement, amended and restated, effective October 22, 2008. (1) (2)

21.1		Subsidiaries of SJW Corp. as of December 31, 2008. (1)

23		Consent of Independent Registered Public Accounting Firm. (1)

31.1		Certification Pursuant to Rule 13a-14(a)/15d-14(a) by President and Chief Executive Officer. (1)

31.2		Certification Pursuant to Rule 13a-14(a)/15d-14(a) by Chief Financial Officer and Treasurer. (1)


Exhibit No.		Description
32.1		Certification Pursuant to 18 U.S.C. Section 1350 by President and Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1)

32.2		Certification Pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer and Treasurer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1)

(1)	Filed currently herewith.

(2)	Management contract or compensatory plan or agreement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	SJW CORP.

Date: March 4, 2009	By	/s/ Charles J. Toeniskoetter
		CHARLES J. TOENISKOETTER,
		Chairman, Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Date: March 4, 2009	By	/s/ W. Richard Roth
		W. RICHARD ROTH,
		President, Chief Executive Officer and Member, Board of Directors

Date: March 4, 2009	By	/s/ David A. Green
		DAVID A. GREEN,
		Chief Financial Officer and Treasurer

Date: March 4, 2009	By	/s/ Bonnie J. Schmidt
		BONNIE J. SCHMIDT,
		Controller

Date: March 4, 2009	By	/s/ Mark L. Cali
		MARK L. CALI,
		Member, Board of Directors

Date: March 4, 2009	By	/s/ J. Philip DiNapoli
		J. PHILIP DINAPOLI,
		Member, Board of Directors

Date: March 4, 2009	By	/s/ Douglas R. King
		DOUGLAS R. KING,
		Member, Board of Directors

Date: March 4, 2009	By	/s/ Norman Y. Mineta
		NORMAN Y. MINETA,
		Member, Board of Directors

Date: March 4, 2009	By	/s/ Charles J. Toeniskoetter
		CHARLES J. TOENISKOETTER,
		Member, Board of Directors



Date: March 4, 2009	By	/s/ Frederick R. Ulrich, Jr.
		FREDERICK R. ULRICH, JR.
		Member, Board of Directors

Date: March 4, 2009	By	/s/ Robert A. Van Valer
		ROBERT A. VAN VALER,
		Member, Board of Directors

Exhibit 10.9

December 9, 2008

W. Richard Roth

C/o SJW Corp.

110 W. Taylor Street

San Jose, CA 95110

Dear Rich:

It gives me great pleasure to present you with this amended and restated agreement concerning your continued employment with SJW Corp. (“SJW”) and its three majority-owned subsidiaries, San Jose Water Company, SJW Land Company and SJWTX, Inc. (the four entities collectively referred to as the “Company”). This new agreement will replace your existing employment agreement with the Company which was effective as of January 1, 2003. This new agreement is effective retroactive to January 1, 2008.

1. Positions and Duties . You will continue in the positions of President and Chief Executive Officer of SJW, San Jose Water Company, SJW Land Company and SJWTX, Inc. and will report directly to Board of Directors of SJW (the “Board”). Your duties and responsibilities will be those assigned from time to time by the Board and will be commensurate with your positions. You will be expected to perform all such assigned duties and responsibilities, to devote substantially all of your time, attention and effort to the business and affairs of the Company, and to use your reasonable best efforts to promote the best interests of the Company. Your principal place of employment will be the Company’s corporate offices in San Jose, California, subject to travel associated with your duties. During your period of continued employment with the Company, you must not render any services for any other person, firm or entity that represents a conflict of interest with the business of the Company. SJW hereby agrees to continue, for so long as you remain Chief Executive Officer, to nominate you as a member of the Board at each meeting of the SJW shareholders at which Board members are to be elected. You shall serve in such capacity at no additional compensation.

2. Term . The initial term of this amended and restated agreement shall commence on January 1, 2008 and end on the second business day of January, 2010. At the end of each calendar year within such term, the term shall automatically be extended for an additional one-year period, unless the Company gives prior written notice of non-renewal no later than November 30, 2008 or November 30th of each successive year thereafter; provided, however, that the term of this agreement shall in no event extend beyond November 16, 2017.

3. At-Will Employment . Although this agreement has a term as set forth above, your employment with the Company may be terminated by you or by the Company at any time during or after the term of the agreement, for any reason, with or without notice, subject to the payment of any benefits which may be owed you hereunder based on the circumstances of such termination. The at-will nature of your employment relationship with the Company, as described immediately above, may only be changed by express written approval of a disinterested majority of the Board.

4. Salary and Bonus .

(a) Your base salary will be at a rate of $455,000 per year, effective January 1, 2008, to be paid according to the Company’s standard payroll practices for salaried employees. Your base salary will be reviewed periodically as set forth below, and your annual rate of base salary as in effect from time to time during the term of this agreement will be referred to as “Base Salary.”

(b) You will also be entitled to an annual bonus (“Annual Bonus”) for each fiscal year of the Company based on achievement of reasonable Company and individual performance goals established for each such fiscal year by the Executive Compensation Committee of the Board after consultation with you. Effective January 1, 2008, your targeted Annual Bonus will be twenty-five percent (25%) of your Base Salary, but your actual Annual Bonus for any fiscal year within the term of this agreement may range from 0 to 150% of such target, based on the Executive Compensation Committee’s determination of the level of achievement of the applicable performance goals for the year. Your target Annual Bonus will be reviewed periodically as set forth below. The actual Annual Bonus you earn for each fiscal year will be paid as soon as practicable after the end of that fiscal year, recognizing a reasonable time to calculate performance for the measurement period, but in no event later than March 15 of the fiscal year immediately succeeding the fiscal year for which that Annual Bonus is earned. In no event shall the Annual Bonus you earn for any fiscal year be paid to you at any time during that year.

(c) Payment of your Base Salary and Annual Bonus will be subject to all applicable withholdings and deductions, and you will only receive the amount remaining after such withholdings and deductions have been made.

5. Annual Review .

(a) The Executive Compensation Committee of the Board will review annually your performance. Your performance will be evaluated based upon mutually approved written criteria to be developed jointly by the Executive Compensation Committee and you. In connection with that review, the Executive Compensation Committee shall also review and consider appropriate adjustments to your Base Salary, target Annual Bonus, long-term incentives and other compensation in order to further the objective of maintaining your total compensation at a competitive level and may, as part of that process, retain the services of a professional compensation consultant. However, neither your Base Salary nor the sum of your Base Salary

and target Annual Bonus will decrease from any previous level in effect under this agreement, except for a reduction of not more than fifteen percent (15%) effected as part of, and consistent with, any across-the-board reduction in the salaries or target annual bonuses of senior officers of the Company to which you and the Executive Compensation Committee have mutually agreed and which occurs prior to a change in control of the Company.

(b) Unless you expressly agree otherwise, you will be eligible to participate in the Company’s current long-term incentive programs, including the Company’s Long-Term Incentive Plan, as amended from time to time (the “Long-Term Incentive Plan), and any other cash or equity incentive programs hereafter established for senior officers of the Company (subject to such modifications to such programs as the Executive Compensation Committee shall determine to be necessary and appropriate to preserve the income tax deductibility of the compensation paid under those programs) at participation levels determined each fiscal year in connection with your annual performance review.

6. Initial Stock Options and DERs .

(a) On April 29, 2003 the Company granted you an option to purchase Seven Thousand Six Hundred and Four (7,604) shares of the Company’s common stock (the “Initial Option”) under and subject to the terms of the Long-Term Incentive Plan. The Initial Option is a non-statutory stock option with a maximum term of ten (10) years, subject to earlier termination as set forth below, and is evidenced by a formal stock option agreement between you and the Company. The exercise price of the Initial Option was $84.00 per share, the fair market value per share of the Company’s common stock (the “Common Stock”) on the grant date, as determined under the Long-Term Incentive Plan. The number of shares of Common Stock subject to the Initial Option and the exercise price payable per share as set forth above have each been subsequently adjusted to reflect stock splits of the outstanding Common Stock that have been effected to date and will continue to be adjusted, from time to time, to reflect subsequent splits of the outstanding Common Stock and other similar changes to the Common Stock effected without the Company’s receipt of consideration.

(b) The Initial Option has vested and become exercisable with respect to all of the shares of Common Stock for which it was granted. Should your employment terminate by reason of your death, disability or retirement (i.e., after age fifty-five (55) and ten (10) years of service), your Initial Option shall, to the extent outstanding at that time, remain exercisable until the earlier of (i) the expiration of the four (4)-year period measured from your termination date or (ii) the remainder of the initial ten (10) year term. Otherwise, the Initial Option shall expire ninety (90) days after your termination date (or immediately upon your termination if for Good Cause), but in no event will the Initial Option remain exercisable after the expiration of the ten (10)-year term.

(c) You were credited with dividend equivalent rights (“DERs”), awarded under the Long-Term Incentive Plan, with respect to the shares of Common Stock subject to the Initial Option. Those DERs terminated upon the earlier of the quarterly dividend record date sixteen (16) quarters after the grant date of the Initial Option or the date that the

Initial Option was exercised for such shares. The shares of Common stock attributable to your DERs, together with any unconverted cash amounts, were distributed to you in the 2007 calendar year, and you no longer have any further DERs with respect to your Initial Option.

(d) You have also received other stock option grants and stock-based awards during your period of employment with the Company, and those grants and awards, to the extent outstanding on the date this amended and restated agreement is executed, will continue in effect in accordance with the agreements evidencing those grants and awards; provided, however, that the June 2003 SERP Deferred Restricted Stock Award Agreement evidencing the establishment of the SERP Deferred Stock Account referred to in Section 7 below will be replaced by the terms and provisions set forth in Section 7(c) below and shall cease to be outstanding, or to have any force or effect, upon the execution of this amended and restated agreement.

In addition, you shall be eligible for such other stock option, restricted stock unit and DER awards, or other forms of equity or equity-like compensation, as the Executive Compensation Committee may determine each year. The Committee shall consider your personal performance, competitive practice for comparable positions outside the Company, grants to other senior officers of the Company, availability of shares in the Long-Term Incentive Plan, and other relevant factors.

7. SERP .

(a) You shall continue to participate in the Company’s Executive Supplemental Retirement Plan (“SERP”). In consideration, in part, of your agreement to the amendment made to the SERP on April 29, 2003 to eliminate the minimum benefit equal to 55% of your Final Average Compensation, you were granted on April 29, 2003 the right to receive a number of shares of Common Stock, awarded under the restricted stock unit provisions of the Long-Term Incentive Plan, determined as follows: a SERP Deferred Stock Account was established for you and credited on April, 29, 2003 with thirteen thousand eight hundred ninety (13,890) units, with each unit representing the right to receive one share of Common Stock. In addition, each time a cash dividend is paid on the outstanding Common Stock, you will be credited with a dollar amount equal to the dividend paid per share multiplied by the number of units credited, as of the record date for that dividend, to your SERP Deferred Stock Account (including any additional units resulting from the annual crediting mechanism set forth in the next sentence). As of the first business day in January each year, your SERP Deferred Stock Account will be credited with that number of additional units determined by dividing (i) the cash dividend equivalent amounts so credited to you in the previous year by (ii) the average of the fair market value per share of the Common Stock on each of the dates in the immediately preceding year on which dividends were paid.

(b) The units credited to your SERP Deferred Stock Account vested in thirty-six (36) monthly installments on the first day of each month over the thirty-six (36)-month period measured from January 1, 2003 and are now fully vested. Any units credited to your SERP Deferred Stock Account on or after January 1, 2006 as a result of the dividend rights described above will also be fully vested.

(c) The units credited to your SERP Deferred Stock Account in accordance with Paragraph 7(a) were subsequently adjusted to reflect stock splits of the outstanding Common Stock effected to date and will continue to be adjusted, from time to time, to reflect subsequent splits of the outstanding Common Stock and other similar changes to the Common Stock effected without the Company’s receipt of consideration. Such units shall be payable in shares of Common Stock. For those units which were vested as of December 31, 2004, the distribution will commence on the later of your termination of employment or attainment of age 55. For those units which vest after December 31, 2004, the distribution will be commence on the later of (i) the date of your Separation from Service or (ii) your attainment of age 55. You may elect to receive the shares of Common Stock attributable to your units either in a single lump sum or in up to ten (10) annual installments. For those units which were vested as of December 31, 2004, you may make your election no later than one (1) year prior to the later of your termination of employment or attainment of age 55. For the units which vested after December 31, 2004, you must make your election by December 31, 2008. In the absence of a timely election, the shares will be distributed in a lump sum. Any cash amounts credited to your SERP Deferred Stock Account but not converted to stock units at the time of distribution shall be paid in cash. The provisions of this Section 7(c) shall supersede and replace the terms and provisions of your June 2003 SERP Deferred Restricted Stock Award Agreement evidencing the establishment of your SERP Deferred Stock Account, and that agreement shall no longer have any independent force or effect.

(d) The issuance of shares of Company Common Stock under the SERP Deferred Stock Account shall be subject to satisfaction of all tax withholding obligations with respect to such shares. In order to satisfy all such tax withholding obligations, the number of shares of Common Stock which you would otherwise be entitled to receive will be reduced by that number of shares which, as of the date of distribution, has an aggregate Fair Market Value (as defined in the Long-Term Incentive Plan) equal to the total amount of tax withholding obligations applicable to the shares issuable on that date.

(e) If the distribution event for the units which vest after December 31, 2004 is your Separation from Service, then that distribution will be subject to the deferral provisions of Section 12(a) below.

8. Expense Reimbursement . The Company will reimburse you for the reasonable expenses you incur in connection with the performance of your duties, consistent with Company policy and practice. You must submit appropriate evidence of each such business expense within one hundred twenty (120) days after the later of (i) your incurrence of that expense or (ii) your receipt of the invoice or billing statement for such expense, and the Company will provide you with the requisite reimbursement within thirty (30) business days thereafter. In no event, however, will any expense be reimbursed later than the close of the calendar year following the calendar year in which that expense is incurred.

9. Perquisites and Other Benefits . Except as otherwise precluded by applicable law or regulations, you will continue to be entitled, during the term of this amended and restated agreement, to receive the same level of perquisites in effect for you as of the effective date of this amended and restated agreement, including a Company-provided luxury motor vehicle (with replacement at every three or four-year interval), vehicle maintenance, first

class business travel, Company-paid club memberships, financial support for your participation in community activities (and authority to bind the Company at a level to be agreed upon from time to time), training and continuing education, single assignment of an Executive Assistant and reimbursement of home office expenses attributable to the services required of you pursuant to this amended and restated agreement. You must submit appropriate evidence of each reimbursable expense you incur pursuant to this Section 9 within one hundred twenty (120) days after the later of (i) your incurrence of that expense or (ii) your receipt of the invoice or billing statement for such expense. The Company will provide you with the requisite reimbursement within thirty (30) business days thereafter. In no event, however, will any expense be reimbursed later than the close of the calendar year following the calendar year in which that expense is incurred.

10. Conditions to Reimbursement . Any amounts to which you become entitled pursuant to Section 8 or 9 (whether by way of reimbursement or in-kind benefits) in each calendar year within the term of this agreement and any other reimbursement to which you become entitled pursuant to the provisions of this agreement during such calendar year shall not reduce the amounts (or in-kind benefits) to which you may become entitled hereunder in any other calendar year within the term of this agreement. In addition, none of your rights to reimbursement or in-kind benefits hereunder may be liquidated or exchanged for any other benefit.

11. Severance Benefits .

(a) You shall continue to be eligible for benefits under the Company’s Executive Severance Plan (which provides benefits in the event of a qualifying termination of your employment in connection with a Change in Control, as defined therein). In addition, if (i) the Company involuntarily terminates your employment for any reason other than death, disability or Good Cause or you resign from the Company’s employ for Good Reason and (ii) you are not entitled to benefits under the Executive Severance Plan in connection with such termination of your employment, you will be entitled to the following contractual severance benefits pursuant to this amended and restated agreement:

•

Cash severance equal to three and nine-tenths (3.9) times your annual rate of Base Salary (at the level in effect at the time of such termination of employment or at such higher level as was in effect at any time during the immediately preceding twelve months), payable in a single lump sum on the first business day of the first calendar month, within the sixty (60) day period measured from the date you incur a Separation from Service by reason of such termination of employment, that is coincident with or next following the date on which your required release under Section 11(b) below first becomes effective following the expiration of any applicable revocation period. In no event, however, shall such lump sum payment be made later than the last day of such sixty (60)-day period on which the release is so effective, unless a further deferral is required pursuant to Section 12 of this restated agreement.

•

Provided you and your spouse and eligible dependents elect to continue medical care coverage under the Company’s group health care plans pursuant to the applicable COBRA provisions, the Company will reimburse you for the costs you incur to obtain such continued coverage for yourself, your spouse and your eligible dependents (collectively, the “Coverage Costs”) until the earlier of (x) the end of the thirty-six (36)-month period measured from the date your employment terminates or (y) the first date on which you are covered under another employer’s health benefit program without exclusion for any pre-existing medical condition. During the period for which your COBRA coverage rights are in effect, such coverage shall be obtained under the Company’s group health care plans. For the period (if any) following the completion of such COBRA coverage and continuing through the completion of the limited period for which medical care coverage is to be provided you hereunder, such coverage shall continue under the Company’s group health plans or pursuant to one or more other plans or insurance policies providing equivalent coverage. In order to obtain reimbursement for your Coverage Costs under each applicable plan or policy, you must submit appropriate evidence to the Company of each periodic payment of your Coverage Costs within one hundred twenty (120) days after the required payment date for those Coverage Costs, and the Company shall within thirty (30) days after such submission reimburse you for that payment. To the extent you incur any other medical care expenses reimbursable pursuant to the coverage obtained in accordance herewith, you shall submit appropriate evidence of each such expense to the plan administrator within one hundred twenty (120) days after incurrence of that expense and shall receive reimbursement of the documented expense within thirty (30) days after such submission or after any additional period that may be required to perfect the claim. During the period such medical care coverage remains in effect hereunder, the following provisions shall govern the arrangement: (a) the amount of Coverage Costs or other medical care expenses eligible for reimbursement in any one calendar year of such coverage shall not affect the amount of Coverage Costs or other medical care expenses eligible for reimbursement in any other calendar year for which such reimbursement is to be provided hereunder; (ii) no Coverage Costs or other medical care expenses shall be reimbursed after the close of the calendar year following the calendar year in which those Coverage Costs or expenses were incurred; and (iii) your right to the reimbursement of such Coverage Costs or other medical care expenses cannot be liquidated or exchanged for any other benefit. To the extent the reimbursed Coverage Costs or other medical care expenses are treated as taxable income to you, the Company shall report the reimbursement as taxable W-2 wages and collect the applicable withholding taxes, and the resulting tax liability shall be your sole responsibility.

(b) Your receipt of such contractual severance benefits shall be conditioned upon (i) your execution and delivery to the Company, within twenty-one days (or forty-five (45) days if such longer period is required under applicable law) after the date your

employment with the Company terminates, of a general release in substantially the form of general release required under the Executive Severance Plan, and (ii) such release becoming effective in accordance with applicable law following the expiration of any applicable revocation period.

•

“Good Cause” shall be deemed to exist if, and only if (i) you engage in acts or omissions that result in substantial harm to the business or property of the Company or its affiliates and that constitute dishonesty, intentional breach of a fiduciary obligation or intentional wrongdoing, or (ii) you are convicted of a criminal violation involving fraud or dishonesty.

•

“Good Reason” shall exist if, and only if, without your express written consent (i) there is a significantly adverse change in the nature or scope of your authority or in your overall working environment; (ii) you are removed from any of the positions specified for you in Section 1 of this agreement; (iii) you are assigned duties materially inconsistent with your present duties, responsibilities and status; (iv) there is a reduction in your rate of Base Salary or target Annual Bonus, other than a reduction in an amount not in excess of fifteen percent (15%) of either your Base Salary or the sum of your Base Salary and target Annual Bonus pursuant to a uniform reduction in the base salary or target bonus payable to all senior executives of the Company to which you and the Executive Compensation Committee have mutually agreed and which occurs prior to a change in control of the Company; (v) the Company changes by fifty-five (55) miles or more the principal location at which you are required to perform your services hereunder or (vi) there is a material breach by the Company of any of its obligations hereunder which remains uncured for more than thirty (30) days following your written notice to the Board in which you specifically identify the material breach which has occurred.

•

“Separation from Service” shall be deemed to have occurred at such time as the level of your bona fide services 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 you rendered as an Employee during the immediately preceding thirty-six (36) months. Any such determination, 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 you are on a 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 you are provided with a right to reemployment with one or more members of the Employer Group by either statute or contract; provided, however, that in the event of 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 that causes you to be unable to perform your 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 you are not provided with a right to reemployment by either statute or contract, then you will be deemed to have Separated from Service on the first day immediately following the expiration of the applicable six (6)-month or twenty-nine (29)-month period.

•

You will be deemed to remain an “Employee” for so long as you remain 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.

•

“Employer Group” means the Company and each member of the group of commonly controlled corporations or other businesses that include the Company, 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) of the Code 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 1.414(c)-2 of the Treasury Regulations.

(d) In the event of your death during the term of this amended and restated agreement, your employment will terminate under this agreement. The Company shall make payments of any salary and/or bonus that is earned but unpaid as of the date of death to your legal representative, subject to any applicable deferral elections in effect for those amounts under Section 409A of the Code.

12. Deferral of Payment.

(a) Notwithstanding any provision to the contrary in this amended and restated agreement (other than Section 12(b) below), no payments or benefits to which you become entitled hereunder in connection with your Separation from Service (other than the reimbursement of your Coverage Costs during the applicable period of COBRA coverage) shall

be made or paid to you prior to the earlier of (i) the first day of the seventh (7th) month following the date of your Separation from Service or (ii) the date of your death, if you are deemed, pursuant to the procedures established by the Executive Compensation Committee in accordance with the applicable standards of Internal Revenue Code Section 409A (“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 Section 409A, to be a “specified employee” at the time of such Separation from Service and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Section 409A(a)(2). Upon the expiration of the applicable deferral period, all payments deferred pursuant to this Section 12 shall be paid to you in a lump sum, and any remaining payments due under this agreement shall be paid in accordance with the normal payment dates specified for them herein. The specified employees subject to such a delayed commencement date shall be identified on December 31 of each calendar year and shall include any person who is a “key employee” (within the meaning of that term under Code Section 416(i)) of the Employer Group at any time during the twelve (12)-month period ending with such date. If you are so identified on any such December 31, you shall have specified employee status for the twelve (12)-month period beginning on April 1 of the following calendar year.

(b) The deferral provisions of Section 12(a) shall not apply to any payments or benefits in which your vested on December 31, 2004, except to the extent those payments or benefits are materially modified after October 3, 2004.

13. Non-Solicitation . During the term of your employment and or one (1) year thereafter, you hereby agree that you will not (i) encourage any employee, consultant, or person who was employed by the Company on the date of termination of your employment (or at any time during the six (6) month period prior to termination of your employment) to leave the Company for any reason, nor will you solicit their services; or (ii) assist any other person or entity in such encouragement or solicitation. This provision is not intended to restrict you from performing the duties of your employment in the best interest of the Company.

14. Confidential and Proprietary Information . You agree to comply with the Company’s standard policies regarding disclosure of confidential and proprietary information, both during and subsequent to the term of this agreement.

15. Section 409A Compliance . To the extent there is any ambiguity as to whether any provision of this restated and amended agreement would otherwise contravene one or more requirements or limitations of Code Section 409A, such provision shall be interpreted and applied in a manner that does not result in a violation of the applicable requirements or limitations of Code Section 409A and the Treasury Regulations thereunder.

16. Integration . The terms and conditions set forth in this amended and restated agreement (together with the Executive Severance Plan and all other documents referenced herein and all documents evidencing outstanding awards made to you under the Company’s Long-Term Incentive Plan or any other incentive plan) will constitute the entire agreement between you and the Company with regard to your employment with the Company

and the termination of that employment. This amended and restated agreement supersedes your previous employment agreement with the Company, and that agreement shall cease to have any further force or effect. This amended and restated agreement shall be governed by the laws of the State of California, without regard to choice of law rules.

Please contact me should you wish to discuss any of the provisions of your amended and restated employment agreement. I have enclosed a duplicate original of such agreement. Please sign both copies and return one signed copy to me and retain the second copy for your records.


Sincerely,

SJW Corp.

By:
		Mark L. Cali,
		Chair, Executive Compensation Committee of the SJW Corp. Board of Directors

I HAVE READ THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT CAREFULLY AND UNDERSTAND AND ACCEPT ITS TERMS. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY:



				Date: , 2008
W. Richard Roth

Exhibit 10.12

SJW CORP.

EXECUTIVE SEVERANCE PLAN

AS AMENDED AND RESTATED EFFECTIVE OCTOBER 22, 2008

* * *

The SJW Corp. Executive Severance Plan (the “Plan”), originally adopted as of January 28, 1999 by SJW Corp. (“Company”) for the benefit of the Officers (as defined below) of the Company and/or other members of the Employer Group (as defined below) and as previously amended as of September 21, 1999, May 1, 2003 and January 1, 2008, is hereby further amended and restated effective as of October 22, 2008. The purpose of such restatement is 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 and effect certain administrative revisions to the Plan.

W I T N E S S E T H :

WHEREAS , the Officers are currently employed by the Company and/or one or more other members of the Employer Group (collectively referred to as the “Employer”); and

WHEREAS , the Employer wishes to retain the services of the Officers and to encourage the Officers to remain with the Employer; and

WHEREAS , the Company desires to maintain this Plan to provide security for the Officers in the event their employment with the Employer is affected under certain circumstances in connection with a Change in Control (as defined below) affecting Employer; and

WHEREAS, the benefits provided under the Plan may be deemed to constitute a deferred compensation arrangement subject to Section 409A of the Internal Revenue Code and the applicable Treasury Regulations thereunder; and

WHEREAS, the Company deems it advisable to amend and restate the provisions of the Plan so that those provisions comply with the applicable requirements of Section 409A of the Internal Revenue Code and the Treasury Regulations thereunder.

NOW, THEREFORE , the Plan is hereby amended and restated as set forth below.

1.	DEFINITIONS. For purposes of this Plan:

(a) “Beneficiary” shall mean the person or persons whom the Officer shall designate in writing (on the form attached hereto as Exhibit B) to receive any benefits to which such Officer becomes entitled hereunder but which have not been paid or provided prior to the time of his or her death. Such designation shall be valid only if it is made on such form, and the Employer receives that form prior to the Officer’s death.

(b) “Change in Control” shall be deemed to take place upon the occurrence of any 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 Company or a person that directly or indirectly controls, is controlled by, or is under, control with the Company or an employee benefit plan maintained by the Company or such person, of beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of securities of the Company that results in such person or related group of persons beneficially owning securities representing 30% or more of the combined voting power of the Company’s then-outstanding securities;

(ii) A merger, recapitalization, consolidation, or other similar transaction to which the Company 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 Company’s outstanding voting securities immediately before the transaction;

(iii) A sale, transfer or disposition of all or substantially all of the Company’s assets, unless securities representing at least 50% of the combined voting power of the then-outstanding securities of the entity acquiring the Company’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 Company’s outstanding voting securities immediately before the transaction;

(iv) A merger, recapitalization, consolidation or other transaction to which the Company is a party or the sale, transfer or other disposition of all or substantially all of the Company’s assets if, in either case, the members of the Company’s Board of Directors 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 Company’s assets, as the case may be, or a parent thereof (for this purpose, any change in the composition of the Company’s 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); or

(v) A change in the composition of the Company’s Board of Directors 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 no Change in Control shall be deemed to occur for purposes of this Plan if the result of the transaction is to give more ownership or control of the Company to any person or related group of persons who held securities representing more than thirty percent (30%) of the combined voting power of the Company’s outstanding securities as of March 3, 2003.

(d) “Employee” means 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.

(e) “Employer Group” means the Company and each member of the group of commonly controlled corporations or other businesses that include the Company, 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.

(f) “Employer” shall mean collectively the Company and each of the other members of the Employer Group.

(g) “Good Cause” shall be deemed to exist with respect to an Officer if, and only if:

(1)

The Officer engages in acts or omissions that result in substantial harm to the business or property of Employer and that constitute dishonesty, intentional breach of fiduciary obligation or intentional wrongdoing;

(2)

The Officer is convicted of a criminal violation involving fraud or dishonesty; or

(3)

The Officer intentionally and knowingly participates in the preparation or release of false or materially misleading financial statements relating to the Company’s operations and financial condition or the Officer intentionally and knowingly submits any false or erroneous certification required of him or her under the Sarbanes-Oxley Act of 2002 or any securities exchange on which shares of the Company’s common stock are at the time listed for trading.

(h) “Good Reason” shall exist with respect to an Officer if and only if, without the Officer’s express written consent:

(1)

there is a significantly adverse change in the nature or the scope of the Officer’s authority or in his or her overall working environment;

(2)

the Officer is assigned duties materially inconsistent with his or her present duties, responsibilities and status;

(3)

there is a reduction in the sum of the Officer’s rate of base salary and target bonus; or

(4)

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

provided, however , that, before the Officer may resign for any Good Reason event, the Officer must first provide written notice to the Employer identifying such Good Reason event within ninety (90) days after the occurrence of such event and the Employer shall have failed to cure such event within thirty (30) days after receipt of such written notice.

(i) “Officer” shall mean (i) any individual who has been elected as an officer of SJW Corp. or San Jose Water Company by the Board of Directors and is serving in such capacity at any time during the applicable time period set forth in Section 2(a) of the Plan, unless expressly excluded from coverage under the Plan by the Board of Directors at the time of such election, and (ii) any individual who has been elected as an officer of any other member of the Employer Group and has been expressly designated by the Executive Compensation Committee of the Board of Directors as a participant in the Plan and is serving in such capacity at any time during the applicable time period set forth in Section 2(a) of the Plan. The persons who are Officers as of October 1, 2008 are set forth on Exhibit A.

(j) “Plan Administrator” shall mean the Executive Compensation Committee of the Company’s Board of Directors.

(k) “Salary” shall mean the annual rate of base salary in effect for the Officer on (l) the date of the Change in Control or, if greater, (2) the date the Officer’s employment with the Employer terminates.

(l) “Separation from Service” shall mean the Officer’s cessation of Employee status and shall be deemed to occur for purposes of the Plan 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 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 an Employee 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 Employee is, either by statute or contract, provided with a right to reemployment with one or more members of the Employer Group; provided, however, that in the event of an Employee’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 Employee is not provided with a right to reemployment 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.

(m) “Specified Employee” shall mean an Officer who is, pursuant to procedures established 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, deemed at the time of his or her Separation from Service to be a “specified employee” under Code Section 409A. The Specified Employees shall be identified on December 31 of each calendar year and shall include each Officer who is a “key employee” (within the meaning of that term under Code Section 416(i)) at any time during the twelve (12)-month period ending with such date. An Officer who is so identified as a Specified Employee will have that status for the twelve (12)-month period beginning on April 1 of the following calendar year.

2.	BENEFITS UPON TERMINATION OF EMPLOYMENT.

(a) If (i) at any time during the period beginning with the execution of a definitive agreement to effect a Change in Control and ending with the earlier of (x) the termination of that agreement without a Change in Control or (y) the expiration of the twenty-four (24)-month period measured from the effective date of the Change in Control contemplated by that agreement, an Officer incurs a Separation from Service because his or her Employee status is involuntarily terminated by his or her Employer for any reason other than Good Cause, or (ii) at any time within the twenty-four (24)-month period measured from the effective date of a Change in Control, the Officer incurs a Separation from Service as a result of his or her resignation from Employee status for Good Reason, then the Employer shall provide that Officer with the following benefits (collectively the “Change in Control Benefit”), provided and only if such Officer timely delivers the requisite release under Section 2(b) and such release become effective in accordance with applicable law:

(1)

A cash amount equal to the Applicable Multiple of the sum of the Officer’s annual rate of Salary and annual target bonus (each at the level in effect in the fiscal year of such cessation of Employee status or, if higher, immediately before the Change in Control) shall be paid (less any customary taxes and withholdings) in a series of successive equal annual installments over the period of years equal to the Applicable Multiple. Unless otherwise specified in attached Exhibit A, the Applicable Multiple for each Officer shall be three (3). The first such annual installment shall be paid on the first day of the first month, within the sixty (60)-day period measured from the date of the Officer’s Separation from Service, that is coincident with or next following the date on which the release required of the Officer under Section 2(b) below first becomes effective following the

expiration of any applicable revocation period. In no event, however, shall such initial payment be made later than the last day of such sixty (60)-day period on which the release is so effective. Each subsequent installment shall be paid on each successive one-year anniversary of the initial payment date.

(2)

If the Officer elects to continue medical care coverage under the Company’s group health care plans pursuant to COBRA, the Employer will reimburse the Officer for the costs such Officer incurs to obtain such continued coverage for himself or herself and his or her spouse and eligible dependents (collectively, the “Coverage Costs”) until the earlier of (x) the date of the last annual installment payable under Section 2(a)(1) above or (y) the first date on which the Officer is covered under another employer’s health benefit program without exclusion for any pre-existing medical condition. During the period for which the Officer’s COBRA coverage rights are in effect, such coverage shall be obtained under the Company’s group health care plans. For the period (if any) following the completion of such COBRA coverage and continuing through the completion of the limited period for which medical care coverage is to be provided hereunder, such coverage shall continue under the Company’s group health plans or pursuant to one or more other plans or insurance policies providing equivalent coverage. In order to obtain reimbursement for the Officer’s Coverage Costs under each applicable plan or policy, the Officer must submit appropriate evidence to the Employer of each periodic payment of his or her Coverage Costs within ninety (90) days after the payment date, and the Employer shall within thirty (30) days after such submission reimburse the Officer for that payment. To the extent the Officer incurs any other medical care expenses reimbursable pursuant to the coverage obtained in accordance herewith, the Officer shall submit appropriate evidence of each such expense to the plan administrator within ninety (90) days after incurrence of that expense and shall receive reimbursement of the documented expense within thirty (30) days after such submission or after any additional period that may be required to perfect the claim. During the period such medical care coverage remains in effect hereunder, the following provisions shall govern the arrangement: (a) the amount of Coverage Costs or other medical care expenses eligible for reimbursement in any one calendar year of such coverage shall not affect the amount of Coverage Costs or other medical care expenses eligible for reimbursement in any other calendar year for which such reimbursement is to be provided hereunder; (ii) no Coverage Costs or other medical care expenses shall be reimbursed after the close of the calendar year following the calendar year in which those Coverage Costs or expenses were incurred; and (iii) the Officer’s right to the reimbursement of such Coverage Costs or other medical care expenses cannot be liquidated or exchanged for any other benefit. To the extent the

reimbursed Coverage Costs are treated as taxable income to the Officer, the Employer shall report the reimbursement as taxable W-2 wages and collect the applicable withholding taxes, and the resulting tax liability shall be the Officer’s sole responsibility.

(3)

The Company will make provisions in its Supplemental Executive Retirement Plan (SERP) so that the Officer will, upon a Separation from Service under the circumstances set forth in Section 2(a), be credited for purposes of computing such Officer’s benefits under the SERP with an additional number of Years of Service and years of age equal to the number of years of continued Salary to which such Officer is, upon his or her Separation from Service, entitled by reason of the Applicable Multiple in effect for him or her pursuant to Section 2(a)(1) above. In no event, however, shall any benefit be payable under the SERP earlier than it otherwise would have been paid in the absence of such additional Years of Service and age credits.

(4)

All outstanding stock options held by the Officer will immediately vest and become exercisable in full and may be exercised for any or all of the underlying shares until the expiration or sooner termination of the option term. Except as otherwise expressly provided in the agreement evidencing such award, each restricted stock unit or other stock award held by the Officer will also immediately vest, and the underlying shares will become issuable, in accordance with the terms of the applicable award agreement. All outstanding Dividend Equivalent Rights held by the Officer at such time will immediately vest, and any shares or cash amounts attributable to those rights will be paid to the Officer at the same time those shares and amounts would have otherwise been payable in the absence of such vesting acceleration.

(5)

The Officer shall, to the extent applicable, also be entitled to the special Tax Gross-Up under Section 14 of this Plan as part of his or her Change in Control Benefit.

(b) The Officer shall be entitled to only one Change in Control Benefit under this Plan. The Change in Control Benefit will be provided only if Officer delivers to the Employer an executed Release Agreement (in substantially the form attached hereto as Exhibit C) within twenty-one (21) days (or forty-five (45) days if such longer period is required by applicable law) following his or her Separation from Service under the circumstances set forth in Section 2(a), and no portion of the Change in Control Benefit will be provided or paid prior to the expiration of any applicable revocation period for such Release. No payments will be made under the Plan to the Officer if such Officer revokes the delivered Release. In the event that the Officer dies before receiving the full Change in Control Benefit to which he or she becomes entitled hereunder, his or her Beneficiary shall be paid the remaining payments as they become due.

(c) No portion of the Change in Control Benefit to which the Officer becomes entitled under this Plan (other than the reimbursement of Coverage Costs during the applicable period of COBRA coverage) shall actually be paid or provided to the Officer prior to the earlier of (i) the first day of the seventh month following the month in his or her Separation from Service occurs or (ii) the date of his or her death, if the Officer is a Specified Employee at the time of such Separation from Service and such delay 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 or benefits deferred pursuant to this Paragraph 2(c) shall be paid, reimbursed or provided in a lump sum to the Officer, and any remaining payments or benefits shall be paid or provided in accordance with the normal payment dates specified for them herein.

(d) If an Officer ceases Employee status under circumstances other than those set forth in Section 2(a), then the Employer shall have no further obligation with respect to the Officer under this Plan, and that Officer shall accordingly not be entitled to any Change in Control Benefit hereunder.

(e) A cessation of Employee status in connection with a Change in Control will not qualify an Officer for benefits hereunder if the Officer is offered continuing employment with a successor or controlling entity involved in the Change in Control, provided that (i) such successor or controlling entity has assumed the Company’s obligations hereunder with respect to such Officer and (ii) the terms of such continuing employment would not constitute a Good Reason event if offered by the Company.

3.	NO SOLICITATION OF REPRESENTATIVES AND OFFICERS.

No Officer shall, directly or indirectly, in his or her individual capacity or otherwise, induce, cause, persuade, or attempt to induce, cause or, persuade, any representative, agent or employee of the Company or any of its affiliates to terminate such person’s employment relationship with the Company or any other member of the Employer Group, or to violate the terms of any agreement between such representative, agent or employee and the Company or any other member of the Employer Group.

4.	CONFIDENTIALITY.

Preservation of a continuing business relationship between the Company or other members of the Employer Group and their respective customers, representatives, and employees is of critical importance to the continued business success of the Company and the other members of the Employer Group, and it is the active policy of the Company and the other members of the Employer Group to guard as confidential certain information not available to the public relating to the business affairs of the Company and the other members of the Employer Group. In view of the foregoing, no Officer shall, without the prior written consent of the Company, disclose to any person or entity any such confidential information that was obtained by the Officer in the course of his or her employment with the Company or any other member of the Employer Group. This Section 4 shall not be applicable if and to the extent the Officer is required to testify in a legislative, judicial or regulatory proceeding pursuant to an order of Congress, any state or local legislature, a judge or an administrative law judge or is otherwise required by law to disclose such information.

5.	FORFEITURE.

If an Officer shall at any time violate any obligation under Section 3 or 4 in a manner that results in material damage to the Company or any other member of the Employer Group or its business, such Officer shall immediately forfeit his or her right to any benefits under this Plan, and the Employer shall thereafter have no further obligation hereunder to the Officer or his or her Beneficiary or any other person.

6.	OFFICER ASSIGNMENT.

Neither the Officer nor his or her Beneficiary shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of such benefits be subject to seizure for the payment of any debts, judgments, alimony, or separate maintenance owed by the Officer or his or her Beneficiary, or be transferable by operation of law in the event of bankruptcy, insolvency, or otherwise.

7.	BENEFITS UNFUNDED.

The Plan is intended to be unfunded for purposes of Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code. The Employer’s obligation under this Plan shall be that of an unfunded and unsecured promise by the Employer to pay money in the future. All distributions under this Plan shall be paid from the general assets of the Employer. The right of the Officer or any Beneficiary to receive a distribution under this Plan shall be an unsecured claim against the general assets of the Employer, and neither the Officer nor any Beneficiary shall have any priority rights in or against any assets of the Employer or Company and its Affiliates and Associates.

8.	APPLICABLE LAW.

Except to the extent preempted by ERISA or other federal laws, the Plan and all matters arising under it shall be governed by the laws of the State of California.

To the extent there is any ambiguity as to whether any provision of this Plan would otherwise contravene one or more requirements or limitations of Code Section 409A, such provision shall be interpreted and applied in a manner that does not result in a violation of the applicable requirements or limitations of Code Section 409A and the Treasury Regulations thereunder.

9.	NO EMPLOYMENT CONTRACT.

This Plan shall not be deemed to constitute a contract of employment between an Officer and his or her Employer, nor shall any provision hereof restrict the right of the Employer to discharge the Officer, or restrict the right of the Officer to terminate his or her employment.

10.

SEVERABILITY.

In the event any provision of this Plan is held illegal or invalid, the remaining provisions of this Plan shall not be affected thereby.

11.

SUCCESSORS.

The Plan shall be binding upon and inure to the benefit of the Company and the other members of the Employer Group participating in the Plan, the Officers and their respective heirs, representatives and successors. As a condition to any Change in Control, the new controlling organization or any other person described in Section 1(b) must agree to assume and to discharge the obligations of the Employer under this Plan. Upon the occurrence of such event, the term “Employer” as used in the Plan shall be deemed to refer to such new controlling organization or other person.

12.

CLAIMS PROCEDURE.

(a) The Plan shall be administered by the Plan Administrator. The Plan Administrator shall have the power, in its discretion, to interpret and make all determinations as to the eligibility if an Officer to participate in this Plan, any right of an Officer to benefits under this Plan and the amount of benefits (if any) to which an Officer may become entitled under this Plan, and its interpretation or determination thereof in good faith shall be final and conclusive on the Officer and his or her Beneficiary and shall be subject to review only to the extent a court concludes that such interpretation or determination is arbitrary and capricious. The Plan Administrator may, from time to time, allocate to one or more of its members (or to any other person or persons or organizations) any of its power with respect to the interpretation and determination as to rights to benefits under the Plan.

(b) If a claim for benefits under the Plan is denied in whole or in part, the claimant will be notified by the Plan Administrator or its delegate within 90 days after the date the claim is delivered to the Employer, or 180 days if the claimant is told that additional time is needed. The notification will be written in understandable language and will state (i) specific reasons for denial of the claim, (ii) specific references to Plan provisions on which the denial is based, (iii) a description (if appropriate) of any additional material or information necessary for the claimant to perfect the claim and why such material or information is necessary, and (iv) an explanation of the procedure for reviewing the denied claim. A claim that is not acted upon within 90 days (or 180 days in the case of an extension) may be deemed by the claimant to have been denied.

(c) Within 60 days after a claim has been denied, or deemed denied, the claimant or his or her authorized representative may make a request for a review by submitting to the Plan Administrator a written statement (a) requesting a review of the denial of the claim; (b) setting forth all of the grounds upon which the request for review is based and any facts in support thereof; and (c) setting forth any issues or comments which the claimant deems relevant to the claim. The claimant may review pertinent documents relating to the denial.

(d) The Plan Administrator shall make a decision on review within 60 days after the receipt of the claimant’s request for review or receipt of all additional materials reasonably requested by the Plan Administrator from the claimant, unless an extension of time for processing a review is required, in which case the claimant will be notified, and a decision will be made within 120 days after receipt of the request for review. The decision will be in writing, and in understandable language. It will give specific references to the Plan provisions on which the decision is based. The decision of the Plan Administrator on review shall be final and conclusive upon all persons except to the extent it is found by a court to be arbitrary or capricious.

13.

AMENDMENT AND TERMINATION.

(a) The Company shall have the right to amend this Plan from time to time and may terminate this Plan at any time; provided that (i) within twenty-four (24) months following a Change in Control, no amendment may be made that diminishes any Officer’s right to benefits under this Plan in the event of a Separation from Service under the circumstances set forth in Section 2(a) and (ii) no amendment or termination may adversely affect an Officer’s rights to benefits that he or she would have received under this Plan with respect to a Change in Control (as defined herein immediately before such amendment or termination) that occurs (or with respect to which a definitive agreement is executed) within twenty-four (24) months after the date of such amendment or termination.

(b) This Section 13 may not be amended in any manner that would adversely affect any Officer’s rights hereunder without his or her consent. In addition, no amendment or termination of this Plan shall modify the distribution and payment provisions (including the form and timing of such distribution or payment) in effect for the Change in Control Benefit or any other amount to be provided hereunder.

14.

TAXES; SPECIAL TAX GROSS-UP.

(a) It is intended that this Plan shall be a non-qualified deferred compensation plan and that any right to payments hereunder shall not be treated as taxable income to the Officer or any Beneficiary prior to distribution thereof. Any payments made under this Plan shall be subject to the Employer’s collection of all applicable withholding taxes, and the Officer shall only receive the net amount remaining after such withholding taxes have been collected.

(b) If an Officer qualifies for a Change in Control Benefit hereunder, he or she shall receive as part of such Change in Control Benefit a special cash payment (the “Tax Gross-Up”) sufficient to reimburse him or her on an after-tax basis for any excise tax imposed, pursuant to Code Section 4999 or any successor provision or similar tax (“Excise Tax”), on such Officer with respect to the entire Change in Control Benefit and any other compensation from his or her Employer deemed to constitute a parachute payment under Code Section 280G, so that such Officer does not incur any out-of-pocket cost with respect to such Excise Tax. The amount of any such Tax Gross-Up will be determined pursuant to the following formula and will be subject to the Employer’s collection of all applicable federal, state and local income and employment with withholding taxes and any Excise Tax:

X = Y / (1 - ( A + B + C )), where

X is the total dollar amount of the Tax Gross-Up payable to the Officer.

Y is the total Excise Tax imposed on the Officer.

A is the Excise Tax rate in effect at the time.

B is the highest combined marginal federal income and applicable state income tax rate in effect for the Officer, after taking into account the deductibility of state income taxes against federal income taxes to the extent allowable, for the calendar year in which the Tax Gross-Up is paid.

C is the applicable Hospital Insurance (Medicare) Tax Rate in effect for the Officer for the calendar year in which the Tax Gross-Up is paid.

(c) Within thirty (30) days after any Change in Control transaction in which one or more of the Change in Control Benefits paid or provided to the Officer constitute, in the opinion of the Officer’s tax advisor, parachute payments under Code Section 280G for which the Officer is liable for an Excise Tax, the Officer shall identify the nature of those parachute payments to the Company and submit to the Company the calculation of the Excise Tax attributable to those payments and the Tax Gross-Up to which the Officer is entitled with respect to such tax liability. Within thirty (30) days after the date of the Officer’s Separation from Service under the circumstances set forth in Section 2(a), the Officer shall identify to the Company the nature of any additional parachute payments which such Officer is to receive pursuant to this Plan in connection with such Separation from Service and submit to the Company the calculation of the Excise Tax attributable to those payments and the Tax Gross-Up to which the Officer is entitled with respect to such tax liability. In each such instance, the Company will pay the applicable Tax Gross-Up to the Officer (net of all applicable withholding taxes, including any taxes required to be withheld under Code Section 4999) within ten (10) business days after the Officer’s submission of the calculation of such Excise Tax and the resulting Tax Gross-Up or (if later) at the time such Excise Tax is remitted to the appropriate tax authorities, provided that (i) such calculations represent a reasonable interpretation of the applicable law and regulations and (ii) to the extent the Tax Gross-Up relates to any Change in Control Benefit attributable to the Officer’s Separation from Service, that portion of the Tax Gross-Up shall be subject to the delayed payment provisions of Section 2(c).

shall pay the Officer the additional Tax Gross-Up attributable to that excess Excise Tax liability within ten (10) business days thereafter or (if later) at the time the additional Excise Tax is remitted to the appropriate tax authorities, provided that (i) such calculations represent a reasonable interpretation of the applicable law and regulations and (ii) to the extent the Tax Gross-Up is attributable to any Change in Control Benefit triggered by the Officer’s Separation from Service, that portion of the Tax Gross-Up shall be subject to the delayed payment provisions of Section 2(c).

(e) In the event that the Officer’s actual Excise Tax liability is determined by a Final Determination to be less than the Excise Tax liability taken into account for purposes of the Tax Gross-Up paid to the Officer pursuant to the preceding provisions of this Section 14, then the Officer shall refund to the Company, promptly upon receipt, any federal or state tax refund attributable to the Excise Tax overpayment.

(f) For purposes of this Section 14, a “Final Determination” means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Officer (or his or her estate) and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Officer and the Company concur (such concurrence by the Company to be not unreasonably withheld) or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed.

(g) In order to assure that the Tax Gross-Up provisions of this Section 14 comply with the applicable requirements of Code Section 409A, the following limitations shall be controlling, notwithstanding anything to the contrary in the preceding provisions of this Section 14:

(i) In no event shall any Tax Gross-Up to which the Officer becomes entitled pursuant to this Section 14 be made later than the close of the calendar year following the calendar year in which the Excise Tax triggering the right to such payment is remitted to the appropriate tax authorities.

(ii) To the extent the Officer may become entitled to any reimbursement of expenses incurred by him or her at the direction of the Company in connection with any tax audit or litigation addressing the existence or amount of the Excise Tax, such reimbursement shall be paid to the Officer no later than the close of the calendar year following the calendar year in which the Excise Tax that is the subject of such audit or litigation is remitted to the appropriate tax authorities or, if no Excise Tax is found to be due as a result of such audit or litigation, no later than the close of the calendar year following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.

IN WITNESS WHEREOF, the Company has caused this Amended and Restated Executive Severance Plan to be executed in its name by its duly authorized officer, all as of this 22 ^nd day of October, 2008.


		SJW CORP.

By:
		W. Richard Roth, President and
		Chief Executive Officer

EXHIBIT A

OFFICERS

W. Richard Roth,

President and Chief Executive Officer, SJW Corp., San Jose Water Company, SJW Land Company and SJWTX, Inc.

R. Scott Yoo,

Chief Operating Officer, San Jose Water Company

George J. Belheumeur,

Senior Vice President - Operations, San Jose Water Company

Angela Yip,

Executive Vice President of Finance, SJW Corp., San Jose Water Company, SJW Land Company and SJWTX, Inc.

David A. Green,

Chief Financial Officer and Treasurer, SJW Corp., San Jose Water Company, SJW Land Company and SJWTX, Inc.

Palle L. Jensen,

Vice President - Regulatory Affairs, San Jose Water Company

Suzy Papazian,

Corporate Secretary, SJW Corp., San Jose Water Company, SJW Land Company and SJWTX, Inc.

Dana R. Drysdale,

Vice President – Information Systems, San Jose Water Company

Janelle McCombs,

Vice President, SJW Land Company

Thomas Hodge,

Vice President, SJWTX, Inc.

Craig S. Giordano,

Chief Engineer, San Jose Water Company

EXHIBIT B

DESIGNATION OF BENEFICIARIES

I, hereby designate the following person(s) as my Beneficiary(ies) under the SJW Corp. Executive Severance Plan (the “Plan”) to receive any amounts that might be payable as of the date of my death:




Name:	Percentage:	%

Address:

Name:	Percentage:	%

Address:

This designation supersedes all prior Beneficiary designations I have made under the Plan.

DATED: , 20

EXHIBIT C

RELEASE AGREEMENT

This Release Agreement (“Release”) was given to me, (“Officer”), this day of , 20 , by (the “Employer”). At such time as this Release becomes effective and enforceable (i.e., the revocation period discussed below has expired), and assuming Officer is otherwise eligible for payments under the terms of the SJW Corp. Executive Severance Plan (the “Plan”), Employer agrees to pay Officer pursuant to the terms of the Plan an amount equal to $ payable in ( ) equal annual installments (minus customary payroll taxes and withholdings).

In consideration of the receipt of the promise to pay such amount, Officer hereby agrees, for himself or herself, his or her heirs, executors, administrators, successors and assigns (hereinafter referred to as the “Releasors”), to fully release and discharge the Employer and its officers, directors, employees, agents, insurers, underwriters, subsidiaries, parents, affiliates, associates, successors and assigns (hereinafter referred to as the “Releasees”) from any and all actions, causes of action, claims, obligations, costs, losses, liabilities, damages and demands under any federal, state or local law or laws, or common law, whether or not known, suspected or claimed, which the Releasors have, or hereafter may have, against the Releasees arising out of or in any way related to Officer’s employment with the Employer or the termination of that employment, including (without limitation) claims of wrongful discharge, emotional distress, defamation, fraud, breach of contract, breach of the covenant of good faith and fair dealing, discrimination claims based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, as amended, the California Fair Employment and Housing Act, the Federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”), the Americans with Disability Act, contract claims, tort claims, and wage or benefit claims, including (without limitation) claims for salary, bonuses, commissions, stock grants, stock options, vacation pay, fringe benefits, severance pay or any other form of compensation (other than the payments and benefits to which Officer is entitled under the Plan, his or her vested rights under the San Jose Water Company Section 401(k) Plan, the San Jose Water Company Retirement Plan, the San Jose Water Company Supplemental Executive Retirement Plan and any worker’s compensation benefits under any workers’ compensation insurance policy or fund).

In releasing claims unknown to Officer at present, Officer is waiving all rights and benefits under Section 1542 of the California Civil Code, and any law or legal principle of similar effect in any jurisdiction: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

This Release and Waiver does not pertain to any claims which may subsequently arise in connection with the Employer’s default in any of its payment obligations under the Plan.

Officer acknowledges that, among other rights subject to his or her Release and Waiver, Officer is hereby waiving and releasing any rights he or she may have under ADEA, that this Release and Waiver is knowing and voluntary, and that the consideration given for this Release and Waiver is in addition to anything of value to which Officer was already entitled from the Employer. Officer further acknowledges that he or she has been advised, as required by the Older Workers Benefit Protection Act, that: (a) the release and waiver granted herein does not relate to claims which may arise after this Release and Waiver is executed; (b) he or she has the right to consult with an attorney prior to executing this Release and Waiver (although Officer may choose voluntarily not to do so); and if Officer is over 40 years old upon execution of this; (c) Officer has twenty-one (21) days from the date of termination of his or her employment with the Employer in which to consider this Release and Waiver (although Officer may choose voluntarily to execute this Release and Waiver earlier); (d) Officer has seven (7) days following the execution of this Release and Waiver to revoke his or her consent to this Release and Waiver; and (e) this Release and Waiver shall not be effective until the seven (7)-day revocation period has expired.

In case any part of this Release is later deemed to be invalid, illegal or otherwise unenforceable, Officer agrees that the legality and enforceability of the remaining provisions of this Release will not be affected in any way.




Dated: ,
				(“Officer”)

Exhibit 10.13

SJW CORP.

EXECUTIVE SEVERANCE PLAN

AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2009

* * *

The SJW Corp. Executive Severance Plan (the “Plan”), originally adopted as of January 28, 1999 by SJW Corp. (“Company”) for the benefit of the Officers (as defined below) of the Company and/or other members of the Employer Group (as defined below) and as previously amended as of September 21, 1999, May 1, 2003, January 1, 2008 and October 22, 2008, is hereby further amended and restated effective as of January 1, 2009. The purpose of the October 22, 2008 restatement was 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 and effect certain administrative revisions to the Plan. The purpose of the January 1, 2009 restatement is to modify the formula provisions of the Plan governing the cash severance benefits payable thereunder.

W I T N E S S E T H :

WHEREAS , the Officers are currently employed by the Company and/or one or more other members of the Employer Group (collectively referred to as the “Employer”).

WHEREAS , the Employer wishes to retain the services of the Officers and to encourage the Officers to remain with the Employer.

WHEREAS, the Company has previously amended and restated the provisions of the Plan so that those provisions comply with the applicable requirements of Section 409A of the Internal Revenue Code and the Treasury Regulations thereunder.

WHEREAS, the Company now desires to revise the formula provisions of the Plan governing the calculation of the cash severance benefits payable under the Plan so that a separate formula calculation will be utilized for the Company’s Chief Executive Officer solely for that purpose.

NOW, THEREFORE , the Plan is hereby amended and restated as set forth below.

1.	DEFINITIONS. For purposes of this Plan:

(b) “Change in Control” shall be deemed to take place upon the occurrence of any of the following events:

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;

(e) “Employer Group” means the Company and each member of the group of commonly controlled corporations or other businesses that include the Company, 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) of the Code 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.

(f) “Employer” shall mean collectively the Company and each of the other members of the Employer Group.

(g) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(h) “Good Cause” shall be deemed to exist with respect to an Officer if, and only if:

(1)

The Officer engages in acts or omissions that result in substantial harm to the business or property of the Employer and that constitute dishonesty, intentional breach of fiduciary obligation or intentional wrongdoing;

(2)

The Officer is convicted of a criminal violation involving fraud or dishonesty; or

(3)

(i) “Good Reason” shall exist with respect to an Officer if and only if, without the Officer’s express written consent:

(1)

there is a significantly adverse change in the nature or the scope of the Officer’s authority or in his or her overall working environment;

(2)

the Officer is assigned duties materially inconsistent with his or her present duties, responsibilities and status;

(3)

there is a reduction in the sum of the Officer’s rate of base salary and target bonus; or

(4)

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

(j) “Officer” shall mean (i) any individual who has been elected as an officer of SJW Corp. or San Jose Water Company by the Board of Directors and is serving in such capacity at any time during the applicable time period set forth in Section 2(a) of the Plan, unless expressly excluded from coverage under the Plan by the Board of Directors at the time of such election, and (ii) any individual who has been elected as an officer of any other member of the Employer Group and has been expressly designated by the Executive Compensation Committee of the Board of Directors as a participant in the Plan and is serving in such capacity at any time during the applicable time period set forth in Section 2(a) of the Plan. The persons who are Officers as of October 1, 2008 are set forth on Exhibit A.

(k) “Plan Administrator” shall mean the Executive Compensation Committee of the Company’s Board of Directors.

(l) “Salary” shall mean the annual rate of base salary in effect for the Officer on (l) the date of the Change in Control or, if greater, (2) the date the Officer’s employment with the Employer terminates.

(m) “Separation from Service” shall mean the Officer’s cessation of Employee status and shall be deemed to occur for purposes of the Plan 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 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 an Employee 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 Employee is, either by statute or contract, provided with a right to reemployment with one or more members of the Employer Group; provided, however, that in the event of an Employee’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 Employee is not provided with a right to reemployment 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.

(n) “Specified Employee” shall mean an Officer who is, pursuant to procedures established 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, deemed at the time of his or her Separation from Service to be a “specified employee” under Code Section 409A. The Specified Employees shall be identified on December 31 of each calendar year and shall include each Officer who is a “key employee” (within the meaning of that term under Code Section 416(i)) at any time during the twelve (12)-month period ending with such date. An Officer who is so identified as a Specified Employee will have that status for the twelve (12)-month period beginning on April 1 of the following calendar year.

2.	BENEFITS UPON TERMINATION OF EMPLOYMENT.

(1)

A cash amount determined in accordance with the formula provisions set forth below shall be paid (less any customary taxes and withholdings) in a series of successive equal annual installments over the period of years equal to the Applicable Multiple in effect for the Officer. Unless otherwise specified in attached Exhibit A, the Applicable Multiple for each Officer shall be three (3). The first such annual installment shall be paid on the first day of the first month, within the sixty (60)-day period measured from the date of the Officer’s Separation from Service, that is coincident with or next following the date on which the release required of the Officer under Section 2(b) below first becomes effective following the expiration of any applicable revocation period. In no event, however, shall such initial payment be made later than the last day of such sixty (60)-day period on which the release is so effective. Each subsequent installment shall be paid on each successive one-year anniversary of the initial payment date, and the right to each installment payment hereunder shall be treated as a right to a series of separate payments for purposes of Section 409A. The applicable cash amount shall be determined as follows:

for the Company’s Chief Executive Officer, an amount equal to the Adjusted Applicable Multiple of such Officer’s annual rate of Salary (at the level in effect in the fiscal year of such cessation of Employee status or, if higher, immediately before the Change in Control), with the Adjusted Applicable Multiple to be three and three quarters (3.75) and to be used solely for purposes of calculating such cash severance payment, and for all other calculations and determinations under the Plan, the Applicable Multiple of three (3) shall be used for the Chief Executive Officer, including (without limitation) the number of annual installments in which the Salary amount calculated hereunder is to be paid; and

for each of the other Officers participating in the Plan, an amount equal to the Applicable Multiple of the sum of the Officer’s annual rate of Salary and annual target bonus (each at the level in effect in the fiscal year of such cessation of Employee status or, if higher, immediately before the Change in Control)

(2)

coverage rights are in effect, such coverage shall be obtained under the Company’s group health care plans. For the period (if any) following the completion of such COBRA coverage and continuing through the completion of the limited period for which medical care coverage is to be provided hereunder, such coverage shall continue under the Company’s group health plans or pursuant to one or more other plans or insurance policies providing equivalent coverage. In order to obtain reimbursement for the Officer’s Coverage Costs under each applicable plan or policy, the Officer must submit appropriate evidence to the Employer of each periodic payment of his or her Coverage Costs within ninety (90) days after the required payment date of those Coverage Costs, and the Employer shall within thirty (30) days after such submission reimburse the Officer for that payment. To the extent the Officer incurs any other medical care expenses reimbursable pursuant to the coverage obtained in accordance herewith, the Officer shall submit appropriate evidence of each such expense to the plan administrator within ninety (90) days after incurrence of that expense and shall receive reimbursement of the documented expense within thirty (30) days after such submission or after any additional period that may be required to perfect the claim. During the period such medical care coverage remains in effect hereunder, the following provisions shall govern the arrangement: (a) the amount of Coverage Costs or other medical care expenses eligible for reimbursement in any one calendar year of such coverage shall not affect the amount of Coverage Costs or other medical care expenses eligible for reimbursement in any other calendar year for which such reimbursement is to be provided hereunder; (ii) no Coverage Costs or other medical care expenses shall be reimbursed after the close of the calendar year following the calendar year in which those Coverage Costs or expenses were incurred; and (iii) the Officer’s right to the reimbursement of such Coverage Costs or other medical care expenses cannot be liquidated or exchanged for any other benefit. To the extent the reimbursed Coverage Costs are treated as taxable income to the Officer, the Employer shall report the reimbursement as taxable W-2 wages and collect the applicable withholding taxes, and the resulting tax liability shall be the Officer’s sole responsibility.

(3)

The Company will make provisions in its Supplemental Executive Retirement Plan (SERP) so that the Officer will, upon a Separation from Service under the circumstances set forth in Section 2(a), be credited for purposes of computing such Officer’s benefits under the SERP with an additional number of Years of Service and years of age equal to the number of years for which such Officer is, upon his or her Separation from Service, to receive continued Salary by reason of the Applicable Multiple in effect for him or her pursuant to Section 2(a)(1) above (for purposes of clarification, the Applicable Multiple to be utilized for the Company’s

Chief Executive Officer under this Section 2(a)(3) shall be three (3). In no event, however, shall any benefit be payable under the SERP earlier than it otherwise would have been paid in the absence of such additional Years of Service and age credits.

(4)

(5)

The Officer shall, to the extent applicable, also be entitled to the special Tax Gross-Up under Section 14 of this Plan as part of his or her Change in Control Benefit.

3.	NO SOLICITATION OF REPRESENTATIVES AND OFFICERS.

No Officer shall, directly or indirectly, in his or her individual capacity or otherwise, induce, cause, persuade, or attempt to induce, cause or persuade, any representative, agent or employee of the Company or any of its affiliates to terminate such person’s employment relationship with the Company or any other member of the Employer Group, or to violate the terms of any agreement between such representative, agent or employee and the Company or any other member of the Employer Group.

4.	CONFIDENTIALITY.

5.	FORFEITURE.

6.	OFFICER ASSIGNMENT.

7.	BENEFITS UNFUNDED.

8.	APPLICABLE LAW.

Except to the extent preempted by ERISA or other federal laws, the Plan and all matters arising under it shall be governed by the laws of the State of California.

9.	NO EMPLOYMENT CONTRACT.

10.

SEVERABILITY.

In the event any provision of this Plan is held illegal or invalid, the remaining provisions of this Plan shall not be affected thereby.

11.

SUCCESSORS.

organization or any other person described in Section 1(b) must agree to assume and to discharge the obligations of the Employer under this Plan. Upon the occurrence of such event, the term “Employer” as used in the Plan shall be deemed to refer to such new controlling organization or other person.

12.

CLAIMS PROCEDURE.

13.

AMENDMENT AND TERMINATION.

14.

TAXES; SPECIAL TAX GROSS-UP.

X = Y / (1 - ( A + B + C )), where

X is the total dollar amount of the Tax Gross-Up payable to the Officer.

Y is the total Excise Tax imposed on the Officer.

A is the Excise Tax rate in effect at the time.

C is the applicable Hospital Insurance (Medicare) Tax Rate in effect for the Officer for the calendar year in which the Tax Gross-Up is paid.

(d) In the event that the Officer’s actual Excise Tax liability is determined by a Final Determination to be greater than the Excise Tax liability taken into account for purposes of the Tax Gross-Up paid to the Officer pursuant to the preceding provisions of this Section 14, then within ninety (90) days following the Final Determination, the Officer shall submit to the Company a new Excise Tax calculation based upon that Final Determination. The Company shall pay the Officer the additional Tax Gross-Up attributable to that excess Excise Tax liability within ten (10) business days thereafter or (if later) at the time the additional Excise Tax is remitted to the appropriate tax authorities, provided that (i) such calculations represent a reasonable interpretation of the applicable law and regulations and (ii) to the extent the Tax Gross-Up is attributable to any Change in Control Benefit triggered by the Officer’s Separation from Service, that portion of the Tax Gross-Up shall be subject to the delayed payment provisions of Section 2(c).

IN WITNESS WHEREOF, the Company has caused this Amended and Restated Executive Severance Plan to be executed in its name by its duly authorized officer, all as of this day of , 2008.


SJW CORP.

By:
		W. Richard Roth, President and
		Chief Executive Officer

EXHIBIT A

OFFICERS

W. Richard Roth,

President and Chief Executive Officer, SJW Corp., San Jose Water Company,

SJW Land Company and SJWTX, Inc.

R. Scott Yoo,

Chief Operating Officer, San Jose Water Company

George J. Belheumeur,

Senior Vice President - Operations, San Jose Water Company

Angela Yip,

Executive Vice President of Finance, SJW Corp., San Jose Water Company,

SJW Land Company and SJWTX, Inc.

David A. Green,

Chief Financial Officer and Treasurer, SJW Corp., San Jose Water Company,

SJW Land Company and SJWTX, Inc.

Palle L. Jensen,

Vice President - Regulatory Affairs, San Jose Water Company

Suzy Papazian,

Corporate Secretary, SJW Corp., San Jose Water Company, SJW Land

Company and SJWTX, Inc.

Dana R. Drysdale,

Vice President – Information Systems, San Jose Water Company

Janelle McCombs,

Vice President, SJW Land Company

Thomas Hodge,

Vice President, SJWTX, Inc.

Craig S. Giordano,

Chief Engineer, San Jose Water Company

EXHIBIT B

DESIGNATION OF BENEFICIARIES


Name:	Percentage:	%

Address:

Name:	Percentage:	%

Address:

This designation supersedes all prior Beneficiary designations I have made under the Plan.


DATED: , 20

EXHIBIT C

RELEASE AGREEMENT

This Release and Waiver does not pertain to any claims which may subsequently arise in connection with the Employer’s default in any of its payment obligations under the Plan.

Officer acknowledges that, among other rights subject to his or her Release and Waiver, Officer is hereby waiving and releasing any rights he or she may have under ADEA, that this release and waiver is knowing and voluntary, and that the consideration given for this release and waiver is in addition to anything of value to which Officer was already entitled from the Employer. Officer further acknowledges that he or she has been advised, as required by the Older Workers Benefit Protection Act, that: (a) the release and waiver granted herein does not relate to claims which may arise after this release and waiver is executed; (b) he or she has the right to consult with an attorney prior to executing this release and waiver (although Officer may choose voluntarily not to do so); and if Officer is over 40 years old upon execution of this (c) Officer has twenty-one (21) days from the date of termination of his or her employment with the Employer in which to consider this release and waiver (although Officer may choose voluntarily to execute this release and waiver earlier); (d) Officer has seven (7) days following the execution of this release and waiver to revoke his or her consent to this release and waiver; and (e) this release and waiver shall not be effective until the seven (7)-day revocation period has expired.


Dated: ,
				(“Officer”)

Exhibit 10.14

SAN JOSE WATER COMPANY

SPECIAL DEFERRAL ELECTION PLAN

OCTOBER 22, 2008 AMENDMENT AND RESTATEMENT

EFFECTIVE AS OF 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. This amendment and restatement of the Plan was adopted by the Executive Compensation Committee of the Company’s Board of Directors on October 22, 2008, effective as of 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;

(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, 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, 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, by the persons who beneficially owned the outstanding voting securities of SJW Corp. immediately before the transaction;

(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, 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 held 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 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.

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.

3.18 “ Specified Employee ” shall mean any employee of the Employer Group who is, pursuant to procedures established 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, deemed at the time of his or her Separation from Service to be a “specified employee” under Code Section 409A. The Specified Employees shall be identified on December 31 of each calendar year and shall include each employee who is a “key employee” (within the meaning of that term under Code Section 416(i)) of the Employer Group at any time during the twelve (12)-month period ending with such date. An individual who is so identified as a Specified Employee will 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 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.

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:

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 Subaccount s. 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.

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:

•

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 be made or begin on the designated commencement date or event or as soon as administratively practicable thereafter, 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.

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 within sixty (60) days after the date of the Participant’s death or 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.

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 402(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 on the date of such Separation from Service or as soon as administratively practical thereafter, whether or not the Participant elected that form of distribution or distribution event, but in no event shall such lump sum distribution be made 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.

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.

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.

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.

8.10 Compliance with Code Section 409A . To the extent there is any ambiguity as to whether any provision of this Plan would otherwise contravene one or more requirements or limitations of Code Section 409A, such provision shall be interpreted and applied in a manner that does not result in a violation of the applicable requirements or limitations of Code Section 409A and the Treasury Regulations thereunder.

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.

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 civil action under Section 502(a) of the Employee Retirement Income Security Act of 1974 (as amended from time to time).

SCHEDULE I

LIST OF PARTICIPATING EMPLOYERS

San Jose Water Company

EXHIBIT A

SPECIAL DEFERRAL ELECTION PLAN

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.

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.

¨ 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

Exhibit 10.18

SJW CORP.

STOCK OPTION

DIVIDEND EQUIVALENT RIGHTS AGREEMENT

AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2005

AS SUBSEQUENTLY AMENDED ON FEBRUARY 27, 2008 AND OCTOBER 22, 2008

EFFECTIVE AS OF JANUARY 1, 2008

RECITALS

A. Participant has been granted one or more stock options to purchase shares of the Corporation’s Common Stock under the Plan (the “Options”). The Options also provide Participant with dividend equivalent rights with respect to the shares of Common Stock subject to those Options. Each such option is evidenced by a Notice of Grant and Stock Option Agreement (collectively, the “Option Agreement”).

B. The Options with such dividend equivalent rights are more particularly identified in attached Schedule A.

C. The terms and conditions governing those dividend rights were originally set forth in a Dividend Equivalent Rights Agreement for each such Option (or other written document evidencing those dividend equivalent rights with respect to one or more of the Options). Each such agreement or other written document shall hereinafter be referred to collectively as the “Rights Agreements.”

D. Each of those separate Rights Agreements was first amended and restated on February 28, 2006 through one consolidated agreement effective as of January 1, 2005 and thereafter amended and restated on February 27, 2008 effective as of January 1, 2008 in order to bring the provisions of those Rights Agreements, to the extent they pertained to Options that were not vested and exercisable as of December 31, 2004, into compliance with the requirements of the proposed Treasury Regulations under Section 409A of the Internal Revenue Code (the “Code”) applicable to the payment of dividend equivalent rights.

E. The purpose of this amendment is to (i) bring each of the Rights Agreements, as previously amended and restated retroactive to January 1, 2005, into compliance with the applicable distribution requirements of Code Section 409A and the final Treasury Regulations thereunder, effective as of January 1, 2008, and (ii) terminate each of those Rights Agreements, effective with the distribution date provided herein.

F. All capitalized terms in this Agreement shall have the meaning assigned to them in the Plan and the applicable Option Agreements.

NOW, THEREFORE , it is hereby agreed as follows:

1. Each of the Rights Agreements pertaining to the Options, to the extent those agreements pertain to Options (or portions thereof) which were not vested and exercisable as of December 31, 2004 is hereby amended and restated as follows, retroactive to January 1, 2008, with respect to each covered Option (or portion thereof):

(i) An Option Deferred Stock Account with respect to each Option shall continue to be maintained for the Participant on the books and records of the Corporation.

(ii) Each time a dividend is paid on the Corporation’s outstanding shares of Common Stock after the Grant Date of that Option, the Option Deferred Stock Account will be credited with a dollar amount equal to the amount of that dividend paid per share multiplied by the number of shares of Common Stock at the time subject to such Option (plus the number of shares previously credited to the Option Deferred Stock Account pursuant to the dividend equivalent rights hereunder) as of the record date for the dividend; provided, however, that no further amounts shall be credited with respect to such option shares after the earliest to occur of (x) the fourth anniversary of the Grant Date of that Option, (y) the date that Option is first exercised or (z) December 31, 2008.

(iii) As of the first business day in January each year, the cash dividend amounts credited to the Option Deferred Stock Account during the immediately preceding calendar year shall be converted into a book entry of an additional number of shares of Common Stock (rounded up to the next whole share) determined by dividing (i) those cash dividend equivalent amounts by (ii) the average of the Fair Market Value per share of Common Stock on each of the dates in the immediately preceding calendar year on which those dividend amounts were credited to the Option Deferred Stock Account.

(iv) The shares credited to the Option Deferred Stock Account will vest at the same time and in the same manner as the Option Shares to which they are attributable vest. The shares which so vest shall be distributed to the Participant in the form of actual shares of Common Stock issued under the Plan on the earliest to occur of the following dates (the “Distribution Date”): (x) the fourth anniversary of the Grant Date of the Option, (y) the date of the Participant’s Separation from Service or (z) January 7, 2009; provided, however , that in the event of a Distribution Date under (x) or (y), the distribution shall be made on such Distribution Date or as soon as administratively practicable thereafter, but in no event later than the end of the calendar year in which such Distribution Date occurs or (if later) the fifteenth day of the third calendar month following such date. In the event of a Distribution Date under (z), the vested shares at the time credited to the Option Deferred Stock Account will be distributed, whether or not the Option is exercised before that date.

(v) The distribution of the shares shall be subject to the Corporation’s collection of all applicable withholding taxes. In no event shall any shares of Common Stock credited to the Option Deferred Stock Account be distributed to the Participant if and to the extent those shares do not vest in accordance with the foregoing provisions.

(vi) Notwithstanding any provision to the contrary in the Plan, the Option Agreement or this Agreement, no distribution which becomes due and payable hereunder by reason of the Participant’s Separation from Service shall be made to the 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 his or her death, if the Participant is a Specified Employee at the time of such Separation from Service 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 distributions deferred pursuant to this subparagraph (v) shall be paid in a lump sum to the Participant.

2. For purposes of this Agreement, the following definitions shall be in effect:

(i) Participant shall be deemed to be an Employee 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.

(ii) Employer Group means (i) the Corporation and (ii) each of the other members of the controlled group that includes the Corporation, as determined in accordance with Sections 414(b) and (c) of the Code, 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.

(iii) Separation from Service means 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 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 an Employee 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 Employee is provided, either by statute or contract, with a right to reemployment with one or more members of the Employer Group; provided,

however, that in the event of an Employee’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 Employee’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.

(iv) Specified Employee means any employee of the Employer Group who is, pursuant to procedures established by Executive Compensation Committee of the Board 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, deemed at the time of his or her Separation from Service to be a “specified employee” under Code Section 409A. The Specified Employees shall be identified on December 31 of each calendar year and shall include each employee who is a “key employee” (within the meaning of that term under Code Section 416(i)) of the Employer Group at any time during the twelve (12)-month period ending with such date. An individual who is so identified as a Specified Employee will have that status for the twelve (12)-month period beginning on April 1 of the following calendar year.

3. This Amended and Restated Dividend Equivalent Rights Agreement shall, with respect to each Option identified in attached Schedule A, replace the Rights Agreement in effect for that Option immediately prior hereto, but only to the extent that Option was not vested and exercisable as of December 31, 2004. Except for the modifications effected by this Agreement, all the terms and provisions of each Option shall continue in full force and effect and shall continue to be governed by the terms of the Plan and the applicable Option Agreement and (to the extent that Option was vested and exercisable as of December 31, 2004) the Dividend Equivalent Rights Agreement in effect for that Option on December 31, 2004.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the _______ day of _______________, 2008 to be effective as of January 1, 2008.


SJW CORP.

By:
Title:


		PARTICIPANT

SCHEDULE A

LIST OF COVERED OPTIONS*

Grant

Date

Exercise Price

Per Share ($)

Option

Shares (#) Award

Option Shares

Unexercised As

Of 9/30/2008

Expiration

Date

*	*The listed options are subject to this Amended and Restated Dividend Equivalent Rights Agreement only to the extent those options were not vested and exercisable as of December 31, 2004.*

Exhibit 10.19

SJW CORP.

STOCK OPTION

DIVIDEND EQUIVALENT RIGHTS AGREEMENT

AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2005

AS SUBSEQUENTLY AMENDED ON FEBRUARY 27, 2008 AND OCTOBER 22, 2008

EFFECTIVE AS OF JANUARY 1, 2008

RECITALS

B. The Options with such dividend equivalent rights are more particularly identified in attached Schedule A.

F. All capitalized terms in this Agreement shall have the meaning assigned to them in the Plan and the applicable Option Agreements.

NOW, THEREFORE , it is hereby agreed as follows:

(i) An Option Deferred Stock Account with respect to each Option shall continue to be maintained for the Participant on the books and records of the Corporation.

(v) On January 7, 2009, there shall also be distributed to the Participant the cash amount of $4,500 in full and complete satisfaction of any and all further dividend equivalents that might otherwise, in the absence of this Agreement, be credited to one or more of his or her Option Deferred Stock Accounts at any time after that date and converted into additional shares of Common Stock.

(vi) The distribution of the shares and the cash amount shall be subject to the Corporation’s collection of all applicable withholding taxes. In no event shall any shares of Common Stock credited to the Option Deferred Stock Account be distributed to the Participant if and to the extent those shares do not vest in accordance with the foregoing provisions.

2. For purposes of this Agreement, the following definitions shall be in effect:

thirty-six (36) months (or such shorter period for which he or she may have rendered such 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 an Employee 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 Employee is provided, either by statute or contract, with a right to reemployment with one or more members of the Employer Group; provided, however, that in the event of an Employee’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 Employee’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.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the 18 ^th day of November, 2008 to be effective as of January 1, 2008.


		SJW CORP.

By:
		W. Richard Roth, President and Chief Executive Officer

		PARTICIPANT

SCHEDULE A

LIST OF COVERED OPTIONS*


Grant Date	Exercise Price Per Share ($)	Option Shares (#) Award	Option Shares Unexercised As Of 9/30/2008	Expiration Date

*	*The listed options are subject to this Amended and Restated Dividend Equivalent Rights Agreement only to the extent those options were not vested and exercisable as of December 31, 2004.*

Exhibit 10.21

DEFERRED RESTRICTED STOCK AWARD AGREEMENT

AMENDED AND RESTATED EFFECTIVE OCTOBER 22, 2008

A. The Corporation has implemented the Deferred Restricted Stock Program (the “Deferred Stock Program”) as a special equity incentive program under the Plan for the purpose of attracting and retaining qualified individuals to serve as non-employee members of the Board.

B. Participant is a non-employee member of the Board, and this Agreement is executed pursuant to, and is intended to carry out the purposes of the Plan in connection with a deferred stock award made to the Participant under the Plan.

C. Participant previously received an Award of Restricted Stock Units to Participant on January 2, 2007, 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 October 22, 2008.

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

NOW, THEREFORE , it is hereby agreed as follows:

1. Deferred Stock Award . The Participant was awarded 826 deferred shares of the Common Stock (the “Deferred Shares”) under the Deferred Stock Program on the 2nd day of January 2007 (the “Award Date”).

2. Deferred Stock Account . The Deferred Shares shall not be issued as actual shares of Common Stock on the Award Date but shall instead be credited as phantom shares of Common Stock to the Deferred Stock Account established for the Participant on the Corporation’s books. The Participant’s right to receive the actual shares of Common Stock underlying the Deferred Shares credited to the Deferred Stock Account shall be an unfunded and unsecured right of a general creditor.

3. Dividend Equivalent Rights . Each time a dividend is paid on or before December 31, 2017 on the outstanding Common Stock while one or more Deferred Shares remain credited to the Participant’s Deferred Stock Account, that account will be credited with a dollar amount equal to the dividend paid per share multiplied by the number of Deferred Shares credited to that account as of the record date for that dividend, including any Deferred Shares resulting from the dividend equivalent rights provided by this Paragraph 3. As of the first business day in January each year, the cash dividend equivalents so credited to the Deferred Stock Account for the immediately preceding calendar year will be converted into additional Deferred Shares by dividing (i) those cash dividend equivalent amounts by (ii) the average of the Fair Market Value per share of the Common Stock on each of the dates in the immediately

preceding year on which dividends were paid. Should Participant cease Board service prior to the conversion of any such credited dividend equivalents, those unconverted amounts shall be payable solely in cash. In no event shall any such dividend equivalents be credited to the Participant’s Deferred Stock Account after the earlier of (i) December 31, 2017, with the conversion of any dividend equivalents credited to the Deferred Stock Account during the 2017 calendar year to be converted into additional Deferred Shares on the first business day in January 2018, or (ii) the date the Deferred Shares are distributed to the Participant in accordance with Paragraph 6.

4. Vested Shares . The Participant shall at all times be fully vested in the Deferred Shares credited to his Deferred Stock Account.

5. Adjustment in Shares .

a. Should any change be made to the outstanding 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 at the time credited to the Deferred Stock Account in order to reflect such change. In making such adjustments, the Plan Administrator shall take into account any dividend equivalents credited to the Deferred Stock Account in connection with such transaction, and the determination of the Plan Administrator shall be final, binding and conclusive.

b. In the event of a Change in Control, the shares of Common Stock at the time credited to the Deferred Stock Account will be adjusted immediately after the consummation of that Change in Control so as to apply to the number and class of securities into which the shares of Common Stock credited to the Deferred Stock Account 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.

6. Distribution of Shares . Distribution of the Deferred Shares credited to the Participant’s Deferred Stock Account (including any additional Deferred Shares resulting from the dividend equivalent rights provided by Paragraph 3 of this Agreement) shall be made in a lump sum on the thirtieth (30th) day following the Participant’s cessation of service as a Board member for any reason or as soon as administratively practicable after such scheduled distribution date, but in no event later than the end of the calendar year in which such cessation of Board service occurs or (if later) the fifteenth (15th) day of the third (3rd) calendar month following the date of such cessation of service. Except as otherwise provided in Paragraph 3, the lump sum distribution shall be in the form of shares of Common Stock. All shares of Common Stock distributed under the Deferred Stock Program shall be drawn from the Common Stock reserved for issuance under the Plan.

7. Compliance with Laws and Regulations . The issuance of actual shares of Common Stock pursuant to the provisions of Paragraph 6 of this Agreement 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.

8. 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. Except to the extent electronic notice is expressly authorized hereunder, 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 electronic delivery to the extent authorized hereunder) or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

9. 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 the Participant, the Participant’s assigns, the legal representatives, heirs and legatees of the Participant’s estate and any beneficiaries of the Deferred Stock Account designated by this Participant.

10. 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.

11. 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.

IN WITNESS WHEREOF , the parties have executed this Amended and Restated Agreement on the dates indicated below.


SJW CORP .

By:
		W. Richard Roth, President and Chief Executive Officer

Dated:		, 2008

		PARTICIPANT


		Robert A. Van Valer

Dated:		, 2008

Address:

APPENDIX

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Deferred Stock Award Agreement, as amended and restated.

B. Award shall mean the award of Deferred Shares made to Participant pursuant to the terms of the Agreement.

C. Award Date shall mean the date the Deferred Shares were awarded to Participant pursuant to the terms of 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 have the meaning assigned to such term in the Plan

F. Common Stock shall mean shares of the Corporation’s common stock.

G. 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.

H. Deferred Shares shall mean (i) the shares of Common Stock subject to the Award which are credited to the Deferred Stock Account as phantom shares of Common Stock and (ii) any additional phantom shares of Common Stock credited to such account as a result of the dividend equivalent rights provided under Paragraph 3 of the Agreement. The Deferred Shares shall be issued to the Participant as actual shares of Common Stock in accordance with the distribution provisions of Paragraph 6 of the Agreement.

I. Deferred Stock Account shall mean the account on the Corporation’s books to which the Deferred Shares, including the Deferred Shares resulting from the dividend equivalent rights provided under Paragraph 3 of the Agreement, are credited in accordance with Paragraphs 3 and 5 of the Agreement.

J. Fair Market Value shall mean the closing price of the Common Stock on the New York Stock Exchange on each relevant date under the Agreement.

K. Participant shall mean the person to whom the Award is granted pursuant to the terms of the Agreement.

L. Plan shall mean the Corporation’s Long Term Incentive Plan, as amended and restated from time to time.

M. Plan Administrator shall mean the Executive Compensation Committee of the Board.

Exhibit 10.22

SJW CORP.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

AMENDED AND RESTATED EFFECTIVE OCTOBER 22, 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 January 30, 2006, and that Award is evidenced by a Restricted Stock Unit Issuance Agreement between the Corporation and Participant dated that same date.

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


Participant		W. Richard Roth

Award Date:		January 30, 2006

Number of Shares Subject to Award:		14,000 shares of Common Stock (“the Shares”), as adjusted to reflect the two-for-one split of the Common effect in March 2006.



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

Issuance Schedule		The Shares in which the Participant vests on an annual basis in accordance with the Normal Vesting Schedule shall be issued, subject to the Corporation’s collection of all applicable Withholding Taxes, on the applicable annual vesting date (the “Issuance Date”) or as soon thereafter as administratively practicable, but in no event later than the close of the calendar year in which such annual vesting date occurs. 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, the Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of the Participant’s death may be transferred pursuant to the provisions of the Participant’s will or the laws of inheritance or to the Participant’s designated beneficiary or beneficiaries of this Award. The Participant may also direct the Corporation to re-issue the stock certificates for any Shares which in fact vest and become issuable under the Award during his lifetime to one or more designated family members or a trust established for the Participant and/or his family members. The Participant may make such a beneficiary designation or certificate directive at any time by filing the appropriate form with the Plan Administrator or its designee.

3. Cessation of Service . Except as otherwise provided in Paragraph 4 below, should the Participant cease Service for any reason prior to vesting in one or more Shares subject to this Award, then the Award will be immediately cancelled with respect to those unvested Shares, and the number of Restricted Stock Units will be reduced accordingly. The Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units. Accordingly, if the Participant’s Service is terminated by the Corporation for Good Cause or if Participant voluntarily terminates his Service other than for Good Reason, then this Award will be immediately cancelled with respect to all Restricted Stock Units which are not otherwise vested at that time, and the Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled Restricted Stock Units.

4. Accelerated Vesting . The following special vesting acceleration provisions shall be in effect for the Award and shall be in addition to the vesting acceleration provisions of Paragraph 6 of this Agreement:

(a) Upon (i) the Participant’s cessation of Employee status by reason of death or Permanent Disability, (ii) the Participant’s resignation from Employee status for Good Reason or (iii) the Corporation’s termination of the Participant’s Employee status other than for Good Cause, the Restricted Stock Units at the time subject to this Award, together with all the underlying Shares, shall immediately vest.

(b) The Shares to which the Participant becomes entitled pursuant to the vesting provisions of this Paragraph 4 shall be issued on the date of the Participant’s Separation from Service in connection with such cessation of Employee status or as soon as administratively practicable thereafter, subject to the Corporation’s collection of the applicable Withholding Taxes, but in no event later than the close of the calendar year in which such Separation from Service occurs or (if later) the fifteenth (15th) day of the third calendar month following the date of such Separation from Service, unless a further deferral is required pursuant to Paragraph 9 of this Agreement.

(c) The accelerated vesting provisions of this Paragraph 4 shall apply and be effective whether such cessation or termination of Employee status occurs before or after the consummation of a Change in Control transaction.

(d) Each Share in which Participant may be deemed, by reason of the vesting acceleration provisions of this Paragraph 4, to vest prior to the actual termination or cessation of his Employee status shall in no event be issued prior to the earlier of (i) the Issuance Date applicable to that Share in accordance with the Normal Vesting Schedule or (ii) the date determined in accordance with Paragraph 4(b).

5. Stockholder Rights and Dividend Equivalents

(a) The holder of this Award shall not have any stockholder rights, including voting or dividend rights, with respect to the Shares subject to the Award until the Participant becomes the record holder of those Shares upon their actual issuance following the Corporation’s collection of the applicable Withholding Taxes.

(b) Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary and whether payable in cash, securities or other property, be declared and paid on the outstanding Common Stock while one or more Shares remain subject to this Award (i.e., those Shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account shall be established for the Participant and credited with a phantom dividend equal to the actual dividend or distribution which would have been paid on the Shares at the time subject to this Award had those Shares been issued and outstanding and entitled to that dividend or distribution. The phantom dividend equivalents so credited shall vest at the same time as the Shares to which they relate and shall be distributed to the Participant (in the same form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution) concurrently with the issuance of those Shares in accordance with the applicable vesting and issuance provisions of this Agreement. However, each such distribution shall be subject to the Corporation’s collection of the Withholding Taxes applicable to that distribution.

6. Change of Control .

(a) Any Restricted Stock Units subject to this Award at the time of a Change in Control may be assumed by the successor entity or otherwise continued in full force and effect or may be replaced with a cash 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 incentive program, no accelerated vesting of the Restricted Stock Units shall occur at the time of the Change in Control.

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

(c) If the Restricted Stock Units subject to this Award at the time of the Change in Control are not 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 on 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.

(d) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

7. Adjustment in Shares . Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Plan Administrator to the total number and/or class of securities issuable 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.

(b) The Corporation shall collect the applicable Withholding Taxes with respect to each distribution of phantom dividend equivalents under Paragraph 5(b) by withholding a portion of that distribution equal to the amount of those taxes, with the cash portion of the distribution to be the first portion so withheld. The Corporation shall collect the applicable Withholding Taxes with respect to 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 issuance date) equal to the amount of those taxes; provided, however , that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes that are applicable to supplemental taxable income.

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

(d) Except as otherwise provided in Paragraph 6 and Paragraph 8(b), the settlement of all Restricted Stock Units which vest under the Award shall be made solely in shares of Common Stock. In no event, however, shall any fractional shares be issued. Accordingly, the total number of shares of Common Stock to be issued pursuant to the Award shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.

9. Deferred 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.

10. Benefit Limit. The benefit limitation of this Paragraph 10 shall apply only to the extent Participant is not otherwise entitled to a Code Section 4999 tax gross-up, pursuant to the terms of the Corporation’s Executive Severance Plan, with respect to the Shares that vest on an accelerated basis in connection with a Change in Control or subsequent cessation of Employee status:

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

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.

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 Amendment and Restated Agreement on the respective dates indicated below.


		SJW CORP.

By:
		David A. Green, Chief Financial Officer and Treasurer

Dated:		, 2008

		W. Richard Roth

Signature:

Address:



Dated:		, 2008

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Restricted Stock Unit Issuance Agreement.

B. Award shall mean the award of Restricted Stock Units made to the Participant pursuant to the terms of this Agreement.

C. Award Date shall mean the date the Restricted Stock Units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

D. Board shall mean the Corporation’s Board of Directors.

E. Change in Control shall mean any change in control or ownership of the Corporation which occurs by reason of one or more of the following events:

(i) the acquisition, directly or indirectly by any person or related group of persons (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under, control with the Corporation or an employee benefit plan maintained by any such entity, of beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of securities of the Corporation which, when added to other acquisitions effected by such person or related group during the twelve (12)-month period ending with the most recent acquisition, represent thirty-five percent (35%) or more of the total combined voting power of the Corporation’s then-outstanding securities;

(ii) a merger, recapitalization, consolidation, or other similar transaction to which the Corporation is a party, unless securities representing more than 50% of the combined voting power of the then-outstanding securities of the surviving entity or a parent thereof are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately before the transaction;

(iii) a sale, transfer or disposition of all or substantially all of the Corporation’s assets, unless securities representing at least 50% of the combined voting power of the then-outstanding securities of the entity acquiring the Corporation’s assets or parent thereof are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately before the transaction, or

A-1

(iv) a merger, recapitalization, consolidation, or other transaction to which the Corporation is a party or the sale, transfer, or other disposition of all or substantially all of the Corporation’s assets if, in either case, the members of the Board immediately prior to consummation of the transaction do not, upon consummation of the transaction, constitute at least a majority of the board of directors of the surviving entity or the entity acquiring the Corporation’s assets, as the case may be, or a parent thereof (for this purpose, any change in the composition of the board of directors that is anticipated or pursuant to an understanding or agreement in connection with a transaction will be deemed to have occurred at the time of the transaction, provided such change occurs within twelve (12) months after the effective date of the transaction); or

(v) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases by reason of one or more contested elections for Board membership, to be comprised of individuals who either (a) have been Board members since the beginning of such period or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board members who were described in clause (a) or who were previously so elected or approved and who were still in office at the time the Board approved such election or nomination;

provided that no Change in Control shall occur if the result of the transaction is to give more ownership or control of the Corporation to any person or related group of persons who held securities representing thirty-five percent (35%) or more of the combined voting power of the Corporation’s outstanding securities as of March 3, 2003.

F. Code shall mean the Internal Revenue Code of 1986, as amended.

G. Common Stock shall mean shares of the Corporation’s common stock.

H. Corporation shall mean SJW Corp., a California corporation, and any successor corporation to all or substantially all of the assets or voting stock of SJW Corp. which shall by appropriate action adopt the Plan and/or assume the Award.

I. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance; provided, however, that solely for purposes of determining whether Participant has incurred a Separation from Service, the term “Employee” shall have the meaning assigned to such term in the Separation from Service definition set forth in this Appendix.

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J. Fair Market Value per share of Common Stock on any relevant date shall be the closing selling price per share on the date in question on the Stock Exchange on which the Common Stock is at that time primarily traded, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no reported sale of Common Stock on such Stock Exchange on the date in question, then the Fair Market Value shall be the closing selling price on the exchange on the last preceding date for which such quotation exists.

K. Good Cause shall be deemed to exist if, and only if (i) Participant engages in acts or omissions that result in substantial harm to the business or property of the Corporation or any Parent or Subsidiary and that constitute dishonesty, intentional breach of fiduciary obligation or intentional wrongdoing, or (ii) Participant is convicted of a criminal violation involving fraud or dishonesty.

L. Good Reason shall mean, without Participant’s express written consent, (i) his removal from any of the following positions: President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President and Chief Executive Officer of SJW Land Company, or any other significant change in the nature or the scope of his authority or overall working environment; (ii) the assignment to Participant of duties materially inconsistent with his duties, responsibilities and status as President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President and Chief Executive Officer of SJW Land Company; (iii) a reduction in Participant’s rate of base salary or target annual bonus, other than a reduction in an amount not in excess of fifteen percent (15%) of either his base salary or the sum of his base salary and target annual bonus pursuant to a uniform reduction in the base salary or target bonus payable to all senior executives of the Corporation to which Participant and the Executive Compensation Committee have mutually agreed and which occurs prior to a Change in Control; (iv) a change by the Corporation by fifty-five (55) miles or more of the principal location at which Participant is required to perform Participant’s services hereunder or (v) a material breach by the Corporation of any of its obligations under its existing employment agreement with the Participant (or any successor agreement) which remains uncured for more than thirty (30) days following Participant’s written notice to the Board in which Participant specifically identifies the material breach which has occurred.

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

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

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

P. Permanent Disability shall mean the Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

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

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

S. Restricted Stock Unit shall mean each unit subject to this Award which shall entitle the Participant to receive one share of Common Stock under the Plan at a designated time following the vesting of that unit.

T. Separation from Service shall mean the Participant’s cessation of Employee status by reason of his 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 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 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 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.

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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:

•

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

•

Should the period of a disability leave exceed twenty-nine (29) months, then Participant shall be deemed to cease Service and to incur a Separation from Service upon the expiration of the initial twenty-nine (29)-month period of that leave, unless Participant retains a right to re-employment under 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 position of employment with the Corporation (or any Parent or Subsidiary) or any substantially similar position of employment.

•

Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period Participant is on a leave of absence.

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.

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X. Withholding Taxes shall mean (i) the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting of the shares of Common Stock (or any other property) under the Award and any phantom dividend equivalents relating to those shares and (ii) the federal, state and local income taxes required to be withheld by the Corporation in connection with the issuance of those vested shares (or any other property) and the distribution of any phantom dividend equivalents relating to such shares.

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Exhibit 10.23

SJW CORP.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

AMENDED AND RESTATED EFFECTIVE OCTOBER 22, 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).

C. The Board previously made an Award of Restricted Stock Units to Participant on January 25, 2007, and that Award is evidenced by a Restricted Stock Unit Issuance Agreement between the Corporation and Participant dated that same date.

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 the Participant, as of the Award Date, Restricted Stock Units under the Plan. Except as otherwise provided in this Agreement, the Restricted Stock Units shall vest upon the attainment of a pre-established performance objective tied to total shareholder return measured over a specified period, provided the Participant continues in Service through the completion date of that measurement period. Each Restricted Stock Unit which so vests shall entitle the Participant to receive one share of Common Stock on the specified issue date. The number of shares of Common Stock subject to the awarded Restricted Stock Units, the applicable performance target for the vesting of those shares, the alternative and special vesting provisions which may become applicable to such shares, the date on which the vested shares shall become issuable to Participant and the remaining terms and conditions governing the award (the “Award”) shall be as set forth in this Agreement.

AWARD SUMMARY


Award Date:		January 25, 2007

Number of Shares Subject to Award:		7,000 shares of Common Stock (the “Shares”)

Vesting Schedule:		The Shares shall vest upon the attainment of the Performance Objective set forth in attached Schedule I, provided the Participant continues in Service through the completion of the Measurement Period (the “Normal Vesting Schedule”). However, the Shares may also vest in accordance with the alternative vesting provisions of Paragraph 4 of this Agreement and the special vesting provisions of Paragraph 6 of this Agreement.

Issuance Schedule		The Shares in which the Participant vests in accordance with the Normal Vesting Schedule will become issuable on January 15, 2010 (the “Issuance Date”). The actual issuance of the Shares shall be subject to the Corporation’s collection of all applicable Withholding Taxes and shall be effected on the Issuance Date or as soon as administratively practicable thereafter, but in no event later than the close of the calendar year in which such Issuance Date occurs. The Shares which vest pursuant to Paragraph 4 or Paragraph 6 of this Agreement shall be issued in accordance with the provisions of the applicable Paragraph. The procedures pursuant to which the applicable Withholding Taxes are to be collected are set forth in Paragraph 8 of this Agreement.

2. Limited Transferability . Prior to actual receipt of the Shares which vest and become issuable hereunder, the Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of the Participant’s death may be transferred pursuant to the provisions of the Participant’s will or the laws of inheritance or to the Participant’s designated beneficiary or beneficiaries of this Award. The Participant may also direct the Corporation to re-issue the stock certificates for any Shares which in fact vest and become issuable under the Award during his or her lifetime to one or more designated family members or a trust established for the Participant and/or his or her family members. The Participant may make such a beneficiary designation or certificate directive at any time by filing the appropriate form with the Plan Administrator or its designee.

3. Cessation of Service . Except as otherwise provided in Paragraph 4 below, should the Participant cease Service for any reason prior to the completion of the Measurement Period, then the Restricted Stock Units subject to this Award shall be immediately cancelled, and the Participant shall cease to have any right or entitlement to receive any Shares under those cancelled units.

4. Alternative Vesting .

(a) Should any of the following events occur prior to the completion of the Measurement Period: (i) the Participant’s cessation of Employee status by reason of death or Permanent Disability, (ii) the Participant’s resignation from Employee status for Good Reason or (iii) the Corporation’s termination of the Participant’s Employee status other than for Good Cause, then all the Restricted Stock Units, together with the underlying Shares, shall immediately vest.

(b) The Shares to which the Participant becomes entitled pursuant to the vesting provisions of Paragraph 4(a) shall be issued on the date of his Separation from Service in connection with such cessation of Employee status 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 of this Agreement.

(c) Each Share in which Participant may be deemed, by reason of the vesting acceleration provisions of this Paragraph 4, to vest prior to the actual termination or cessation of his Employee status shall in no event be issued prior to the earlier of (i) the Issuance Date applicable to that Share in accordance with the Normal Vesting Schedule or (ii) the date determined in accordance with Paragraph 4(b).

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

6. Change of Control .

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

such Service vesting period, the securities, cash or other property underlying the vested Award shall be issued on the normal January 15, 2010 Issuance Date or as soon as administratively practicable thereafter, subject to the Corporation’s collection of the applicable Withholding Taxes, but in no event later than the close of the calendar year in which such Issuance Date occurs.

(ii) Should any of the following events occur after such Change in Control but prior to December 31, 2009: (A) the Participant’s cessation of Employee status by reason of death or Permanent Disability, (B) the Participant’s resignation from Employee status for Good Reason or (C) the termination of the Participant’s Employee status other than for Good Cause, then the Award shall immediately vest in full, and the securities, cash or other property underlying the Award shall be distributed on the date of the Participant’s Separation from Service in connection with such cessation of Employee status 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 of this Agreement.

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

(c) If the Restricted Stock Units subject to this Award at the time of the Change in Control are not so assumed or otherwise continued in effect or replaced with a cash retention program under Paragraph 6(a), then those units will vest immediately prior to the closing of the Change in Control. The Shares subject to those vested units shall be converted into the right to receive the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of that Change in Control, and such consideration shall be distributed to Participant on the tenth (10th) business day following the earliest to occur of (i) the January 15, 2010 Issuance Date, (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.

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 of Common Stock/Collection of Withholding Taxes .

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

(b) The Corporation shall collect the applicable Withholding Taxes with respect to the vested Shares issued hereunder through an automatic share withholding procedure pursuant to which the Corporation will withhold, at the time of such issuance, a portion of the Shares with a Fair Market Value (measured as of the applicable issuance date) equal to the amount of those taxes; provided, however , that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes that are applicable to supplemental taxable income. In the event payment is made in a form other than the Shares, the Corporation shall collect from the Participant the applicable Withholding Taxes pursuant to such procedures as the Corporation deems appropriate under the circumstances.

Accordingly, to the extent the applicable issuance date for one or more vested Shares or the distribution date for such other amounts is to occur in a year subsequent to the calendar year in which those Shares or other amounts vest, the Participant shall, on or before the last business day of the calendar year in which the Shares or other amounts vest, deliver to the Corporation a check payable to its order in the dollar amount equal to the Employment Taxes required to be withheld with respect to those Shares or other amounts. The provisions of this Paragraph 8(c) shall be applicable only to the extent necessary to comply with the applicable tax withholding requirements of Code Section 3121(v).

(d) Except as otherwise provided in Paragraph 6(c) and Paragraph 8(b), the settlement of all Restricted Stock Units which vest under the Award shall be made solely in shares of Common Stock. In no event, however, shall any fractional shares be issued. Accordingly, the total number of shares of Common Stock to be issued pursuant to the Award shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.

9. Deferred Issue Date . Notwithstanding any provision to the contrary in this Agreement, no Shares (or other property) which become issuable or payable hereunder by reason of the Participant’s Separation from Service shall actually be issued to the 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.

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.

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.

IN WITNESS WHEREOF , the parties have executed this Amended and Restated Agreement on the respective dates indicated below.


		SJW CORP.

By:
		David A. Green, Chief Financial Officer and Treasurer

Dated:		, 2008

		W. Richard Roth

Signature:

Address:



Dated:		, 2008

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Restricted Stock Unit Issuance Agreement.

B. Award shall mean the award of Restricted Stock Units made to the Participant pursuant to the terms of this Agreement.

C. Award Date shall mean the date the Restricted Stock Units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

D. Board shall mean the Corporation’s Board of Directors.

E. Change in Control shall mean any change in control or ownership of the Corporation which occurs by reason of one or more of the following events:

(i) the acquisition, directly or indirectly by any person or related group of persons (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under control with, the Corporation or an employee benefit plan maintained by any such entity, of beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of securities of the Corporation which, when added to other acquisitions effected by such person or related group during the twelve (12)-month period ending with the most recent acquisition, represent thirty-five percent (35%) or more of the total combined voting power of the Corporation’s then-outstanding securities;

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F. Code shall mean the Internal Revenue Code of 1986, as amended.

G. Common Stock shall mean shares of the Corporation’s common stock.

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K. Good Cause shall be deemed to exist if, and only if: (i) Participant engages in acts or omissions that result in substantial harm to the business or property of the Corporation or any Parent or Subsidiary and that constitute dishonesty, intentional breach of fiduciary obligation or intentional wrongdoing or (ii) Participant is convicted of a criminal violation involving fraud or dishonesty.

L. Good Reason shall mean the occurrence of any of the following events without Participant’s express written consent: (i) his removal from any of the following positions: President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President and Chief Executive Officer of SJW Land Company, or any other significant change in the nature or the scope of his authority or overall working environment; (ii) the assignment to Participant of duties materially inconsistent with his duties, responsibilities and status as President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President of SJW Land Company; (iii) a reduction in Participant’s rate of base salary or target annual bonus, other than a reduction in an amount not in excess of fifteen percent (15%) of either his base salary or the sum of his base salary and target annual bonus pursuant to a uniform reduction in the base salary or target bonus payable to all senior executives of the Corporation to which Participant and the Executive Compensation Committee have mutually agreed and which occurs prior to a Change in Control; (iv) a change by the Corporation by fifty-five (55) miles or more of the principal location at which Participant is required to perform Participant’s services hereunder or (v) a material breach by the Corporation of any of its obligations under its existing employment agreement with the Participant (or any successor agreement) which remains uncured for more than thirty (30) days following Participant’s written notice to the Board in which Participant specifically identifies the material breach which has occurred.

M. Measurement Period shall mean the period over which the Performance Objective is to be measured. That period shall be the three (3)-year period measured from January 1, 2007 to December 31, 2009.

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

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

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

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

R. Permanent Disability shall mean the Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

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

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

U. Restricted Stock Unit shall mean each unit subject to this Award which shall entitle the Participant to receive one share of Common Stock under the Plan at a designated time following the vesting of that unit.

V. Separation from Service shall mean the Participant’s cessation of Employee status by reason of his death, retirement of termination of employment. The Participant shall be deemed to have terminated employment for such purpose at such time as the level of his 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 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 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

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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.

W. 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:

•

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

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Y. 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.

Z. Withholding Taxes shall mean (i) the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting of the shares of Common Stock (or any other property) under the Award and any phantom dividend equivalents relating to those shares and (ii) the federal, state and local income taxes required to be withheld by the Corporation in connection with the issuance of those vested shares (or any other property) and the distribution of any phantom dividend equivalents relating to such shares.

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SCHEDULE I

PERFORMANCE OBJECTIVE

The performance objective which must be attained for all the Restricted Stock Units to vest shall be the realization of a total return to the Corporation’s shareholders for the three (3)-year period measured from January 1, 2007 to December 31, 2009 (the “Measurement Period”) of at least eight percent (8%) per year, compounded annually. Such total shareholder return shall be measured as follows:

first , the base value of the Common Stock at the January 1, 2007 start of the Measurement Period shall be determined by averaging the closing selling prices per share of such Common Stock over the days in December 2006 on which the Common Stock was traded;

then, the ending value of the Common Stock on the December 31, 2009 close of the Measurement Period shall be determined by averaging the closing selling prices per share of Common Stock for the days in December 2009 on which the Common Stock is traded,

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

then , an additional dollar amount (the “Additional Value”) shall be calculated by multiplying (i) the number of shares of Common Stock (including fractional shares) which could have been purchased during the period from January 1, 2007 to December 31, 2009 had the cash dividend paid per share of Common Stock during that period been immediately re-invested in Common Stock at the closing selling price per share on each such dividend payment date by (ii) the average of the closing selling prices per share of Common Stock for the days in December 2009 on which the Common stock is traded; and

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

If the resulting percentage obtained from the foregoing calculation yields a total shareholder return of at least eight percent (8%) per year, compounded annually, then the Performance Objective shall be deemed to have been attained.

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

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Exhibit 10.24

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

AMENDED AND RESTATED EFFECTIVE OCTOBER 22, 2008

RECITALS

A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

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.


Award Date :		January 25, 2007

Number of Shares Subject to Award :		7,000 shares of Common Stock (the “Shares”)

Vesting Schedule :		The Shares shall vest in a series of three (3) successive equal annual installments upon Participant’s completion of each year of Service over the three (3)-year period measured from the Award Date (the “Normal Vesting Schedule”). However, the Shares may be subject to accelerated vesting pursuant to Paragraphs 4 and 6 below.


Issuance Schedule:		The Shares in which Participant vests on an annual basis in accordance with the provisions of the Normal Vesting Schedule shall be issued, subject to the Corporation’s collection of all applicable Withholding Taxes, on the applicable annual vesting date (the “Issuance Date”) or as soon after that scheduled Issuance Date as administratively practicable, but in no event later than the close of the calendar year in which such Issuance Date occurs. The Shares which vest pursuant to Paragraph 4 or Paragraph 6 of this Agreement shall be issued in accordance with the provisions of the applicable Paragraph. The 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 .

A. Upon (i) the Participant’s cessation of Employee status by reason of death or Permanent Disability, (ii) the Participant’s resignation from Employee status for Good Reason or (iii) the Corporation’s termination of the Participant’s Employee status other than for Good Cause, all the Restricted Stock Units at the time subject to this Award, together with the underlying Shares, shall immediately vest.

B. The Shares to which the Participant becomes entitled pursuant to the vesting provisions of Paragraph 4.A shall be issued on the date of his Separation from Service in connection with such cessation of Employee status 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 of this Agreement.

C. The accelerated vesting provisions of this Paragraph 4 shall apply and be effective whether such cessation or termination of Employee status occurs before or after the consummation of a Change in Control transaction.

D. Each Share in which Participant may be deemed, by reason of the vesting acceleration provisions of this Paragraph 4, to vest prior to the actual termination or cessation of his Employee status shall in no event be issued prior to the earlier of (i) the Issuance Date applicable to that Share in accordance with the Normal Vesting Schedule or (ii) the date determined in accordance with Paragraph 4.D.

5. Stockholder Rights .

A. Except as set forth in Paragraph 5.B below, the holder of this Award shall not have any stockholder rights, including voting or dividend rights, with respect to the Shares subject to the Award until the Participant becomes the record holder of those Shares upon their actual issuance following the Corporation’s collection of the applicable Withholding Taxes.

B. Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary and whether payable in cash, securities or other property, be declared and paid on the outstanding Common Stock at any time while the Shares subject to this Award remain unvested and unissued (i.e., those Shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account shall be established for the Participant and credited with a dollar amount equal to the dividend paid per share of outstanding Common Stock multiplied by the number of unvested Shares subject to this Award at the time such dividend was paid. On the last business day of December each year, the dividend equivalent amounts so credited to the account for that year shall be distributed to the Participant, subject to the Corporation’s collection of the applicable Withholding Taxes. In no event shall any dividend equivalents be paid on any Shares subject to this Award which are vested but unissued at the time the dividend or distribution is declared on the outstanding Common Stock.

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 or the underlying Shares 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. 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 on 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.

D. 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.

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.

B. The Corporation shall collect the applicable Withholding Taxes on each distribution of phantom dividend equivalents under Paragraph 5.B by withholding a portion of that distribution equal to the amount of those taxes, with the cash portion of the distribution to be the first portion so withheld. The Corporation shall collect the applicable Withholding Taxes with respect to 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 issuance date) equal to the amount of those taxes; provided, however, that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy the Corporation’s required withholding obligations using the minimum statutory withholding rates for federal and state 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 applicable issuance date for one or more vested Shares or the distribution date for such other amounts is to occur in a year subsequent to the calendar year in which those Shares or other amounts vest, the Participant shall, on or before the last business day of the calendar year in which the Shares or other amounts vest, deliver to the Corporation a check payable to its order in the dollar amount equal to the Employment Taxes required to be withheld with respect to those Shares or other amounts. The provisions of this Paragraph 8(c) shall be applicable only to the extent necessary to comply with the applicable tax withholding requirements of Code Section 3121(v).

D. Except as otherwise provided in Paragraph 6 and Paragraph 8.A, 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 that Award shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.

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.

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 (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such issuance.

IN WITNESS WHEREOF , the parties have executed this Amended and Restated Agreement on the respective dates indicated below.


		SJW CORP .

By:
		David A. Green, Chief Financial Officer and Treasurer

Dated:		, 2008

		W. Richard Roth

Signature:

Address:



Dated:		, 2008

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;

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(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.

I. Disability shall mean the Participant’s permanent and total disability as determined pursuant to Section 22(e)(3) of the Code.

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

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 be deemed to exist if, and only if: (i) Participant engages in acts or omissions that result in substantial harm to the business or property of the Corporation or any Parent or Subsidiary and that constitute dishonesty, intentional breach of fiduciary obligation or intentional wrongdoing, or (ii) Participant is convicted of a criminal violation involving fraud or dishonesty.

M. Good Reason shall mean the occurrence of any of the following events without Participant’s express written consent: (i) his removal from any of the following positions: President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President and Chief Executive Officer of SJW Land Company, or any other significant change in the nature or the scope of his authority or overall working environment; (ii) the assignment to Participant of duties materially inconsistent with his duties, responsibilities and status as President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President and Chief Executive Officer of SJW Land Company; (iii) a reduction in Participant’s rate of base salary or target annual bonus, other than a reduction in an amount not in excess of fifteen percent (15%) of either his base salary or the sum of his base salary and target annual bonus pursuant to a uniform reduction in the base salary or target bonus payable to all senior executives of the Corporation to which Participant and the Executive Compensation Committee have mutually agreed and which occurs prior to a Change in Control; (iv) a change by the Corporation by fifty-five (55) miles or more of the principal location at which Participant is required to perform Participant’s services hereunder or (v) a material breach by the Corporation of any of its obligations under its existing employment agreement with the Participant (or any successor agreement) which remains uncured for more than thirty (30) days following Participant’s written notice to the Board in which Participant specifically identifies the material breach which has occurred.

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.

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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.

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).

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(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 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.

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Exhibit 10.25

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

AMENDED AND RESTATED EFFECTIVE OCTOBER 22, 2008

RECITALS

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 specified issue 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.


Award Date:		January 25, 2007

Number of Shares Subject to Award :		7,000 shares of Common Stock (the “Shares”)

Vesting Schedule :		The Shares shall vest in a series of three (3) successive equal annual installments upon Participant’s completion of each year of Service over the three (3)-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 in accordance with the provisions of the Normal Vesting Schedule will become issuable on the date of the Participant’s Separation from of Service. The actual issuance of the Shares shall be subject to the Corporation’s collection of all applicable Withholding Taxes and shall be effected on the date of such Separation from Service or as soon as administratively practicable thereafter, but in no event later than the close of the calendar year in which such Separation from Service Date 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 of this Agreement. The Shares which vest pursuant to Paragraph 4 or Paragraph 6 of this Agreement shall be issued in accordance with the provisions of the applicable Paragraph. The procedures pursuant to which the applicable Withholding Taxes are to be collected are set forth in Paragraph 8 of this Agreement.

4. Accelerated Vesting .

B. The Shares to which the Participant becomes entitled pursuant to Paragraph 4.A shall be issued on the date of his Separation from Service in connection with such cessation of Employee status 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 of this Agreement.

C. The accelerated vesting provisions of this Paragraph 4 shall apply and be effective whether such cessation of Service occurs before or after the consummation of a Change in Control transaction.

5. Stockholder Rights .

6. Change in Control .

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. 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 on the tenth (10th) business day following the earlier of (i) the date of Participant’s Separation from Service or (ii) 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.

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

A. On the applicable issuance date hereunder, the Corporation shall issue to or on behalf of the Participant a certificate (which may be in electronic form) for the applicable number of underlying shares of Common Stock, subject, however, to the Corporation’s collection of the applicable Withholding Taxes.

B. On each date on which one or more Shares or other amounts subject to this Award vest hereunder, the Participant shall deliver to the Corporation a check payable to its order in the dollar amount equal to the Employment Withholding Taxes which the Corporation must collect from the Participant by reason of the vesting of such Shares or other amounts.

C. The Corporation shall collect the applicable Income Withholding Taxes with respect to the vested Shares issued hereunder through an automatic share withholding procedure pursuant to which the Corporation shall withhold, at the time of such issuance, a portion of the Shares with a Fair Market Value (measured as of the applicable issuance date) equal to the amount of those taxes; provided, however , that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes that are applicable to supplemental taxable income. In the event payment is made in a form other than the Shares, the Corporation shall collect from the Participant the applicable Income Withholding Taxes pursuant to such procedures as the Corporation deems appropriate under the circumstances.

D. Except as otherwise provided in Paragraph 6 and Paragraph 8.C, 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 that Award shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.

9. Deferred Issue Date . Notwithstanding any provision to the contrary in this Agreement, no Shares 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.

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.

IN WITNESS WHEREOF , the parties have executed this Amended and Restated Agreement on the respective dates indicated below.


		SJW CORP .

By:
		David A. Green, Chief Financial Officer and Treasurer

Dated:		, 2008

		W. Richard Roth

Signature:

Address:



Dated:		, 2008

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:

(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;

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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.

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

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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.

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

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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.

(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).

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

X. Withholding Taxes shall mean (i) the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting of the shares of Common Stock under the Award, with such taxes also to be referred to as the Employment Withholding Taxes, and (ii) the federal, state and local income taxes required to be withheld by the Corporation in connection with the issuance of those vested shares, with such taxes also to be referred to as the Income Withholding Taxes.

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Exhibit 10.26

SJW CORP.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

AMENDED AND RESTATED EFFECTIVE AS OF OCTOBER 22, 2008

RECITALS

C. The Board previously made an Award of Restricted Stock Units to Participant on January 30, 2008, and that Award is evidenced by a Restricted Stock Unit Issuance Agreement between the Corporation and Participant dated that same date.

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:


Award Date :		January 30, 2008

Number of Shares
Subject to Award :		14,000 shares of Common Stock (the “Shares”)


Vesting Schedule:		The Shares shall vest in a series of three (3) successive equal annual installments upon Participant’s completion of each year of Service over the three (3)-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 (the “Issuance Date”) or as soon thereafter as administratively practicable, but in no event later than the close of the calendar year in which such annual vesting date occurs or (if later) the fifteenth day of the third calendar month following such vesting date. The 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.

4. Accelerated Vesting .

B. The Shares to which the Participant becomes entitled pursuant to the vesting provisions of Paragraph 4.A shall be issued on the date of his Separation from Service due to such cessation of Employee status 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.

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

6. Change in Control .

8. Issuance of Shares/Collection of Withholding Taxes .

withheld shall not exceed the amount necessary to satisfy the Corporation’s required withholding obligations using the minimum statutory withholding rates for federal and state purposes that are applicable to supplemental taxable income. In the event payment is to be made in a form other than the Shares, the Corporation shall collect from the Participant the applicable Withholding Taxes pursuant to such procedures as the Corporation deems appropriate under the circumstances.

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.

IN WITNESS WHEREOF , the parties have executed this Amended and Restated Agreement on the respective dates indicated below.


		SJW CORP.

By:
		David A. Green, Chief Financial Officer and Treasurer

Dated:		, 2008

		W. Richard Roth

Signature:

Address:



Dated:		, 2008

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 which, when added to other acquisitions effected by such person or related group during the twelve (12)-month period ending with the most recent acquisition, represent thirty-five percent (35%) or more of the total combined voting power of the Corporation’s then-outstanding securities;

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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.

I. Disability shall mean the Participant’s permanent and total disability as determined pursuant to Section 22(e)(3) of the Code.

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M. Good Reason shall mean the occurrence of any of the following events without Participant’s express written consent: (i) his removal from any of the following positions: President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President of SJW Land Company, or any other significant change in the nature or the scope of his authority or overall working environment; (ii) the assignment to Participant of duties materially inconsistent with his duties, responsibilities and status as President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President of SJW Land Company; (iii) a reduction in Participant’s rate of base salary or target annual bonus, other than a reduction in an amount not in excess of fifteen percent (15%) of either his base salary or the sum of his base salary and target annual bonus pursuant to a uniform reduction in the base salary or target bonus payable to all senior executives of the Corporation to which Participant and the Executive Compensation Committee have mutually agreed and which occurs prior to a Change in Control; (iv) a change by the Corporation by fifty-five (55) miles or more of the principal location at which Participant is required to perform Participant’s services hereunder or (v) a material breach by the Corporation of any of its obligations under its employment agreement with the Participant dated January 1, 2003 (or any successor agreement) which remains uncured for more than thirty (30) days following Participant’s written notice to the Board in which Participant specifically identifies the material breach which has occurred.

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.

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

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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 (or such shorter period for which he or she may have rendered such services). Solely for purposes of determining when a Separation from Service occurs, Participant will be deemed to continue in “Employee” status for so long as he or she remains in the employ of one or more members of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. “Employer Group” means the Corporation and any Parent or Subsidiary and any other corporation or business controlled by, controlling or under common control with, the Corporation, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes of Section 414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.4.14(c)-2 of the Treasury Regulations. Any such determination as to Separation from Service, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Section 409A of the Code.

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).

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(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.

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

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Exhibit 10.27

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

AMENDED AND RESTATED EFFECTIVE OCTOBER 22, 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).

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 .

(a) The Corporation hereby awards to the Participant, as of the Award Date indicated below, Restricted Stock Units under the Plan. However, this award of the Restricted Stock Units is subject to the approval by the Corporation’s shareholders of the January 30, 2008 amendment and restatement of the Corporation’s Long-Term Incentive Plan. If such shareholder approval is not obtained at the 2008 Annual Shareholders Meeting, then this award and this Agreement shall become null and void, the Restricted Stock Units shall be cancelled, and the Participant shall cease to have any right or entitlement to receive any Shares under those cancelled units.

(b) Should such shareholder approval be obtained, then this award shall continue in full force and effect, and except as otherwise provided in this Agreement, the Restricted Stock Units shall vest upon the attainment of a pre-established performance objective tied to total shareholder return measured over a specified period, provided the Participant continues in Service through the completion date of that measurement period. Each Restricted Stock Unit which so vests shall entitle the Participant to receive one share of Common Stock on

the specified issuance date. The number of shares of Common Stock subject to the awarded Restricted Stock Units, the applicable performance target for the vesting of those shares, the alternative and special vesting provisions which may become applicable to such shares, the date on which the vested shares shall become issuable to Participant and the remaining terms and conditions governing the award (the “Award”) shall be as set forth in this Agreement.

AWARD SUMMARY


Award Date:		January 30, 2008

Number of Shares Subject to Award:		7,000 shares of Common Stock (“the Shares”)

Vesting Schedule:		The Shares shall vest upon the attainment of the Performance Objective set forth in attached Schedule I, provided the Participant continues in Service through the completion of the Measurement Period (the “Normal Vesting Schedule”). However, the Shares may also vest in accordance with the alternative vesting provisions of Paragraph 4 of this Agreement and the special vesting provisions of Paragraph 6 of this Agreement. In no event shall any Shares vest or become issuable under this Agreement unless the requisite shareholder approval under Paragraph 1(a) is obtained.

Issuance Schedule:		The Shares in which the Participant vests in accordance with the Normal Vesting Schedule will become issuable on January 15, 2011 (the “Issuance Date”). The actual issuance of the Shares shall be subject to the Corporation’s collection of all applicable Withholding Taxes and shall be effected on the Issuance Date or as soon as administratively practicable thereafter, but in no event later than the close of the calendar year in which such Issuance Date occurs. The Shares which vest pursuant to Paragraph 4 or Paragraph 6 of this Agreement shall be issued in accordance with the provisions of the applicable Paragraph. The procedures pursuant to which the applicable Withholding Taxes are to be collected are set forth in Paragraph 8 of this Agreement.

2. Limited Transferability . Prior to actual receipt of the Shares which vest and become issuable hereunder, the Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of the Participant’s death may be transferred pursuant to the provisions of the Participant’s will or the laws of inheritance or to the Participant’s designated beneficiary or beneficiaries of this Award. The Participant may also direct the Corporation to re-issue the stock certificates for any Shares which in fact vest and become issuable under the Award during his or her lifetime to one or more designated family members or a trust established for the Participant and/or his or her family members. The Participant may make such a beneficiary designation or certificate directive at any time by filing the appropriate form with the Plan Administrator or its designee.

4. Alternative Vesting .

(a) Should the Participant cease Employee status by reason of death or Permanent Disability prior to December 31, 2010, then all the Restricted Stock Units, together with the underlying Shares, shall immediately vest. The vested Shares shall be issued on the date of the Participant’s Separation from Service due to such cessation of Employee status 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.

(b) Except to the extent otherwise provided in Paragraph 6, should either of the following events occur prior to the completion of the Measurement Period: (i) the Participant’s resignation from Employee status for Good Reason or (ii) the Corporation’s termination of the Participant’s Employee status other than for Good Cause, then the Participant shall vest in all the Restricted Stock Units, together with the underlying Shares, if the Performance Objective for the Measurement Period is subsequently attained. Should the Participant so vest in the Shares, then those Shares shall be issued on the January 15, 2011 Issuance Date or as soon as administratively practicable thereafter, subject to the Corporation’s collection of the applicable Withholding Taxes, but in no event later than the close of the calendar year in which such Issuance Date occurs.

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

6. Change of Control .

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

(i) The Award (whether in its assumed or continued form or as converted into a cash retention program) shall vest in full upon the Participant’s continuation in Service through December 31, 2010. Following the completion of such Service vesting period, the securities, cash or other property underlying the vested Award shall be issued on the normal January 15, 2011 Issuance Date or as soon as administratively practicable thereafter, subject to the Corporation’s collection of the applicable Withholding Taxes, but in no event later than the close of the calendar year in which such Issuance Date occurs.

(ii) Should the Participant cease Employee status prior to December 31, 2010 by reason of death or Permanent Disability, then the Award shall immediately vest in full, and the securities, cash or other property underlying the Award shall be distributed on the date of the Participant’s Separation from Service due to his death or Permanent Disability 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.

(iii) Should either of the following events occur within twenty-four (24) months after the effective date of such Change in Control but prior to December 31, 2010: (A) the Participant’s resignation from Employee status for Good Reason or (B) the Corporation’s termination of the Participant’s Employee status other than for Good Cause, then the Award shall immediately vest in full, and the securities, cash or other property underlying the Award shall be distributed on the scheduled January 15, 2011 Issuance Date or as soon as administratively practicable thereafter, subject to the Corporation’s collection of the applicable Withholding Taxes, but in no event later than the close of the calendar year in which such Issuance Date occurs.

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

(c) If the Restricted Stock Units subject to this Award at the time of the Change in Control are not so assumed or otherwise continued in effect or replaced with a cash retention program under Paragraph 4(a), then those units will vest immediately prior to the closing of the Change in Control. The Shares subject to those vested units shall be converted into the right to receive the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of that Change in Control, and such consideration shall be distributed to Participant on the tenth (10th) business day following the earlier of (i) the January 15, 2011 Issuance Date or (ii) 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.

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

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

are applicable to supplemental taxable income. In the event payment is made in a form other than the Shares, the Corporation shall collect from the Participant the applicable Withholding Taxes pursuant to such procedures as the Corporation deems appropriate under the circumstances.

10. Compliance with Laws and Regulations . The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which the Common Stock may be listed for trading at the time of such issuance.

11. Benefit Limit . The benefit limitation of this Paragraph 10 shall apply only to the extent Participant is not otherwise entitled to a Code Section 4999 tax gross-up, pursuant to the terms of the Corporation’s Executive Severance Plan, with respect to the Shares that vest on an accelerated basis in connection with a Change in Control or subsequent cessation of Employee status:

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.

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:
		David A. Green, Chief Financial Officer and Treasurer

Dated:		, 2008

		W. Richard Roth

Signature:

Address:



Dated:		, 2008

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Restricted Stock Unit Issuance Agreement.

B. Award shall mean the award of Restricted Stock Units made to the Participant pursuant to the terms of this Agreement.

C. Award Date shall mean the date the Restricted Stock Units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

D. Board shall mean the Corporation’s Board of Directors.

E. Change in Control shall mean any change in control or ownership of the Corporation which occurs by reason of one or more of the following events:

(i) the acquisition, directly or indirectly by any person or related group of persons (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under control with, the Corporation or an employee benefit plan maintained by any such entity, of beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of securities of the Corporation which, when added to other acquisitions effected by such person or related group during the twelve (12)-month period ending with the most recent acquisition, represent thirty-five percent (35%) or more of the total combined voting power of the Corporation’s then-outstanding securities;

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owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately before the transaction;

provided that no Change in Control shall occur if the result of the transaction is to give more ownership or control of the Corporation to any person or related group of persons who hold securities representing thirty-five percent (35%) or more of the combined voting power of the Corporation’s outstanding securities as of March 3, 2003.

F. Code shall mean the Internal Revenue Code of 1986, as amended.

G. Common Stock shall mean shares of the Corporation’s common stock.

I. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance: provided, however, that solely for purposes of determining whether Participant has incurred a Separation from Service, the term “Employee” shall have the meaning assigned to such term in the Separation from Service definition set forth in this Appendix.

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L. Good Reason shall mean the occurrence of any of the following events without Participant’s express written consent: (i) his removal from any of the following positions: President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President and Chief Executive Officer of SJW Land Company, or any other significant change in the nature or the scope of his authority or overall working environment; (ii) the assignment to Participant of duties materially inconsistent with his duties, responsibilities and status as President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of San Jose Water Company and President and Chief Executive Officer of SJW Land Company; (iii) a reduction in Participant’s rate of base salary or target annual bonus, other than a reduction in an amount not in excess of fifteen percent (15%) of either his base salary or the sum of his base salary and target annual bonus pursuant to a uniform reduction in the base salary or target bonus payable to all senior executives of the Corporation to which Participant and the Executive Compensation Committee have mutually agreed and which occurs prior to a Change in Control; (iv) a change by the Corporation by fifty-five (55) miles or more of the principal location at which Participant is required to perform Participant’s services hereunder or (v) a material breach by the Corporation of any of its obligations under its employment agreement with the Participant dated January 1, 2003 (or any successor agreement) which remains uncured for more than thirty (30) days following Participant’s written notice to the Board in which Participant specifically identifies the material breach which has occurred.

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

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

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

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

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

V. 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 (or such shorter period for which he or she may have rendered such services). Solely for purposes of determining when a Separation from Service occurs, Participant will be deemed to continue in “Employee” status for so long as he or she remains in the employ of one or more members of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. “Employer Group” means the Corporation and any Parent or Subsidiary and any other corporation or business controlled by, controlling or under common control with, the Corporation, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections and in applying Section

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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.

W. Service shall mean the Participant’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor. For purposes of this Agreement, Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) Participant no longer performs services in any of the foregoing capacities for the Corporation (or any Parent or Subsidiary) or (ii) the entity for which Participant performs such services ceases to remain a Parent or Subsidiary of the Corporation, even though Participant may subsequently continue to perform services for that entity. Service as an Employee shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that the following special provisions shall be in effect for any such leave:

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

- Should the period of a disability leave exceed twenty-nine (29) months, then Participant shall be deemed to cease Service and to incur a Separation from Service upon the expiration of the initial twenty-nine (29)-month period of that leave, unless Participant retains a right to re-employment under applicable law or by contract with the Corporation (or any Parent or Subsidiary). For such purpose, a disability leave shall be a leave of absence due to any medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not less than six (6) months and causes Participant to be unable to perform the duties of his or her position of employment with the Corporation (or any Parent or Subsidiary) or any substantially similar position of employment.

- Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period Participant is on a leave of absence.

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

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SCHEDULE I

PERFORMANCE OBJECTIVE

The performance objective which must be attained for all the Restricted Stock Units to vest shall be the realization of a total return to the Corporation’s shareholders for the three (3)-year period measured from January 1, 2008 to December 31, 2010 (the “Measurement Period”) of at least eight percent (8%) per year, compounded annually. Such total shareholder return shall be measured as follows:

first , the base value of the Common Stock at the January 1, 2008 start of the Measurement Period shall be determined by averaging the closing selling prices per share of such Common Stock over the days in December 2007 on which the Common Stock was traded;

then, the ending value of the Common Stock on the December 31, 2010 close of the Measurement Period shall be determined by averaging the closing selling prices per share of Common Stock for the days in December 2010 on which the Common Stock is traded,

then , an additional dollar amount (the “Additional Value”) shall be calculated by multiplying (i) the number of shares of Common Stock (including fractional shares) which could have been purchased during the period from January 1, 2008 to December 31, 2010 had the cash dividend paid per share of Common Stock during that period been immediately re-invested in Common Stock at the closing selling price per share on each such dividend payment date by (ii) the average of the closing selling prices per share of Common Stock for the days in December 2010 on which the Common stock is traded; and

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Exhibit 10.28

SJW CORP.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

AMENDED AND RESTATED EFFECTIVE OCTOBER 22, 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).

C. The Executive Compensation Committee of the Board previously made an Award of Restricted Stock Units to Participant on December 29, 2006, and that Award is evidenced by a Restricted Stock Unit Issuance Agreement between the Corporation and Participant dated that same date.

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:

Participant

Award Date:

Number of Shares

Subject to Award:

Vesting Schedule:

Issuance Schedule:

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 the vested Shares shall be issued on the date of the Participant’s Separation from Service due to such cessation of Employee status 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.

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 .

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,

then all of the Shares at the time subject to this Award shall immediately vest, and those vested Shares and shall be issued on the date of the Participant’s Separation from Service due to such termination or resignation 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.

8. Issuance of Shares/Collection of Withholding Taxes.

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 issuance date) equal to the amount of those taxes; provided, however, that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes that are applicable to supplemental taxable income.

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

D. Except as otherwise provided in Paragraph 6 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.

IN WITNESS WHEREOF , the parties have executed this Amended and Restated Agreement on the respective dates indicated below.


SJW CORP.

By:

Title:

Date:



Signature:

Address:



Date: