UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 30, 2008 (November 30, 2007)
Connecticut Water Service, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Connecticut
(State or Other Jurisdiction of Incorporation)
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0-8084
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06-0739839
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(Commission File Number)
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(IRS Employer Identification No.)
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93 West Main Street, Clinton, Connecticut
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06413-0562
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(Address of Principal Executive Offices)
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(Zip Code)
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(860) 669-8630
(Registrants Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (
see
General
Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements for Certain Officers
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On November 30, 2007, the Compensation Committee of the Board of Directors of Connecticut
Water Service, Inc. adopted new forms of executive compensation agreements with the Companys
executive officers. On January 24, 2008, the full Board of Directors ratified the adoption of
these amended and restated executive compensation agreements.
Accordingly, on January 24, 2008, Connecticut Water Service, Inc. and its principal operating
subsidiary, The Connecticut Water Company, (collectively, the Company) entered into an Amended
and Restated Employment Agreement, an Amended and Restated Supplemental Executive Retirement
Agreement and an Amended and Restated Deferred Compensation Agreement (collectively, the Revised
Agreements) with its senior management team, including each of the following officers of the
Company:
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Name
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Title
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Peter J. Bancroft
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Director, Rates & Forecasting, Assistant Treasurer
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David C. Benoit
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Vice President Finance and Chief Financial Officer
and Treasurer
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Kristen A. Johnson
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Vice President Human Resources
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Thomas R. Marston
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Vice President Business Development
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Daniel J. Meaney
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Corporate Secretary
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Terrance P. ONeill
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Vice President Operations and Engineering
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Nicholas A. Rinaldi
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Controller
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Eric W. Thornburg
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Chairman, President and Chief Executive Officer
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Maureen P. Westbrook
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Vice President Administration and Government
Affairs
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The principal purpose of the Revised Agreements is to conform them to the substantive and
procedural requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the
Code). The terms of the Revised Agreements are substantially similar to the officers prior
agreements. A description of the material terms of the officers prior agreements was included in
the proxy statement dated March 28, 2007, under the heading Change in Control Agreements, which
description is hereby incorporated herein by reference.
All officers employment agreements provide the officers with certain compensation and other
benefits under certain circumstances following a change in control of the Company. Consistent with
the prior version of these agreements, the Amended and Restated Employment Agreements for all
officers except Messrs. Meaney and Rinaldi and Ms. Johnson continue to contain additional provisions
with respect to: 1) a stay-on bonus payable to these officers under certain circumstances
following a
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change in control of the Company and 2) additional gross-up payments payable to these
officers in the event that taxes are due under Section 280G of the Code following a change in
control of the Company. Consistent with the prior agreements,
the employment agreements of Messrs. Meaney and Rinaldi and Ms. Johnson listed above do not contain
these provisions.
In order to conform to Section 409As requirements, the Amended and Restated Employment
Agreements were revised to provide that 1) generally, payments made to an officer following a
separation from service from the Company are delayed for a period of six months following such
separation, if the officer is a key employee at the time of separation from service; 2) cash
payments have been substituted for continuation of various benefits following separation from
service from the Company; and 3) certain payments were to be made following the expiration of the
agreements non-competition period (generally, two years), have now been fixed at two years
following separation from service from the Company.
Similar changes were made to the forms of the Companys Amended and Restated SERP Agreement
and the Amended and Restated Deferred Compensation Agreement, in order to conform these agreements
to the requirements of Section 409A of the Code.
Copies of the forms of the Amended and Restated Employment Agreement with the Companys
officers, the Amended and Restated Employment Agreement with Messrs. Meaney and Rinaldi and Ms.
Johnson, the Amended and Restated SERP Agreement, and the Amended and Restated Deferred
Compensation Agreement are attached hereto as
Exhibits 10.1
,
10.2
,
10.3
and
10.4
, respectively, and are each hereby incorporated herein by reference.
Item 8.01
Other Events
Amendments to the Companys Performance Stock Plans
At its November 30, 2007 meeting, the Compensation Committee approved second amendments to the
Companys 1994 and 2004 Performance Stock Programs in order to conform these Programs to the
requirements of Section 409A of the Code. Under the terms of each Second Amendment, payments to
participants on account of awards made under the Programs are generally delayed for a six-month
period following separation of service with the Company. In addition, provisions in the Programs
related to: 1) the early withdrawal of shares from a participants performance share account (after
payment of a forfeiture penalty); 2) deferral of the receipt of restricted shares; 3) deferral of
delivery of shares issued upon exercise of options; and 4) the voluntary surrender of non-qualified
stock options in exchange for new stock options, have all been removed in order to comply with
Section 409A of the Code.
Copies of the Second Amendments to each of the Performance Stock Programs are attached hereto
as
Exhibits 10.5
and
10.6
, respectively, and are each hereby incorporated herein by
reference.
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Adoption of the Amended and Restated Directors Deferred Compensation Plan
At its January 24,
2008 meeting, the Board approved the Amended and Restated
Directors Deferred Compensation Plan, to conform the plan to the requirements of Section 409A of
the Code. Under the Amended and Restated Directors Deferred Compensation Plan, a directors
election to defer receipt of the directors fees must be made before the year in which the
directors compensation is earned. In addition, deferred payments will be made to participating
directors in all events in a lump sum 60 days following separation from service/death; installment
payments are no longer permitted.
A copy of the Amended and Restated Directors Deferred Compensation Plan, dated as of January
1, 2008, is attached hereto as
Exhibit 10.7
and is hereby incorporated by reference.
Amendment of the Charter of the Audit Committee
On November 16, 2007, the Audit Committee of the Companys Board recommended changes to the
Audit Committees written charter, subject to approval by the full Board. Effective January 24,
2008, the Companys Board of Directors approved these changes to the Audit Committees charter. A
copy of the Audit Committees charter, dated as of January 24, 2008, will be available on the
Companys website, www.ctwater.com, under the heading Investor Information Corporate
Governance. A copy of the revised Charter is also attached hereto as
Exhibit 99.1
and is
hereby incorporated by reference.
Officer Matters
On January 24, 2008, the Board approved the following changes to the status of two Company
executives:
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the Companys Director of Human Resources, Kristen A. Johnson, was promoted to the
officer position of Vice President Human Resources, and is now considered to be an
executive officer of the Company under the Securities Exchange Act of 1934. Effective
January 24, 2008, Ms. Johnson entered into Amended and Restated Employment Agreement, an
Amended and Restated Employment Agreement, and an Amended and Restated SERP Agreement with
the Company.
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Thomas R. Marston, the Companys Vice President Planning and Treatment, was given the
new officer position of Vice President Business Development. Mr. Marstons former
planning and treatment duties were assigned to the Companys other officers. As noted
above, Mr. Marston, along with the Companys other officers, has entered into Amended and
Restated Employment, SERP and Deferred Compensation Agreements with the Company.
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As previously disclosed on November 9, 2007, the Company appointed Nicholas A. Rinaldi as its
Controller. On January 24, 2008, the Board designated Mr. Rinaldi as an officer of the Company.
The Company also entered into an amended and Restated Employment Agreement, Amended and Restated
SERP Agreement and Amended and Restated Deferred Compensation Agreement with Mr. Rinaldi in
connection with his officer appointment.
Item 9.01
Financial Statements and Exhibits
The following are filed herewith as exhibits hereto:
(c) Exhibits
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10.1
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Form of Amended and Restated Employment Agreement with officers
(version A), dated as of January 24, 2008.
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10.2
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Form of Amended and Restated Employment Agreement with officers
(version B), dated as of January 24, 2008.
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10.3
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Form of Amended and Restated SERP Agreement, dated as of January 24,
2008.
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10.4
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Form of Amended and Restated Deferred Compensation Agreement, dated
as of January 24, 2008.
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10.5
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Second Amendment, dated January 1, 2008, to the Companys 1994
Performance Stock Program (as amended and restated on April 26, 2002
and further amended on December 1, 2005).
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10.6
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Second Amendment, dated January 1, 2008, to the Companys 2004
Performance Stock Program (as previously amended on December 1,
2005).
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10.7
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Amended and Restated Directors Deferred Compensation Plan, dated as
of January 1, 2008.
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99.1
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Audit Committee Charter, dated as of January 24, 2008.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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CONNECTICUT WATER SERVICE, INC.
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a Connecticut corporation
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Date: January 30, 2008
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By:
Name:
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/s/ David C. Benoit
David C. Benoit
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Title:
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Vice President Finance and Chief
Financial Officer
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EXHIBIT INDEX
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Exhibit No.
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Description
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10.1
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Form of Amended and Restated Employment Agreement with officers
(version A), dated as of January 24, 2008.
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10.2
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Form of Amended and Restated Employment Agreement with officers
(version B), dated as of January 24, 2008.
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10.3
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Form of Amended and Restated SERP Agreement, dated as of January 24,
2008.
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10.4
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Form of Amended and Restated Deferred Compensation Agreement, dated
as of January 24, 2008.
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10.5
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Second Amendment, dated January 1, 2008, to the Companys 1994
Performance Stock Program (as amended and restated on April 26, 2002
and further amended on December 1, 2005).
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10.6
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Second Amendment, dated January 1, 2008, to the Companys 2004
Performance Stock Program (as previously amended on December 1,
2005).
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10.7
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Amended and Restated Directors Deferred Compensation Plan, dated as
of January 1, 2008.
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99.1
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Audit Committee Charter, dated as of January 24, 2008.
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Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated this 24th day of January, 2008, is made by and between The Connecticut
Water Company, a Connecticut corporation having its principal place of business in Clinton,
Connecticut, (Company), Connecticut Water Service, Inc., a Connecticut corporation and holder of
all of the outstanding capital stock of Company (Parent) and [
], a resident
of [
] (Employee).
WITNESSETH:
WHEREAS, Company and Parent desire to reward Employee for Employees valuable, dedicated
service to Company and Parent should Employees service be terminated under circumstances
hereinafter described; and
WHEREAS, Employee and Company entered into an Employment Agreement dated
[
], amended and restated as of [
]; and
WHEREAS, the parties wish to amend the Agreement to comply with Section 409A of the Internal
Revenue Code of 1986, as amended and regulations issued thereunder (collectively the Code); and
WHEREAS, Employee, Company and Parent are willing to enter into this Amended and Restated
Employment Agreement (Agreement) on the terms herein set forth;
NOW, THEREFORE, to assure Company and Parent of Employees continued dedication and the
availability of Employees advice and counsel in the event of any such proposal, to induce Employee
to remain in the employ of Company and Parent and to reward Employee for Employees valuable
dedicated service to Company and Parent should Employees service be terminated under circumstances
hereinafter described, and for other good and valuable consideration, the receipt and adequacy of
which each party acknowledges, effective January 1, 2008, Company, Parent and Employee agree as
follows:
1.
Definitions
. For purposes of this Agreement, the following terms shall have the
following meanings:
(a) Cause shall mean Employees serious, willful misconduct in respect of Employees duties
under this Agreement, including conviction for a felony or perpetration by Employee of a common law
fraud upon Company or Parent which has resulted or is likely to result in material economic damage
to Company or Parent, as determined by a vote of at least seventy-five percent (75%) of all of the
Directors (excluding Employee) of each of Companys and Parents Board of Directors;
(b) Change-in-Control shall be deemed to have occurred if after the date hereof (i) a public
announcement shall be made or a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the Act)
disclosing that any Person (as defined below), other than Company or Parent or any employee benefit
plan sponsored by Company or Parent, is the beneficial owner (as the term is defined in Rule 13d-3
under the Act) directly or indirectly, of twenty percent (20%) or more of the total voting power
represented by Companys or Parents then outstanding voting common stock (calculated as provided
in paragraph (d) of Rule 13d-3 under the Act in the case of rights to acquire voting common stock);
or (ii) any Person, other than Company or Parent or any employee benefit plan sponsored by Company
or Parent, shall purchase shares pursuant to a tender offer or exchange offer to acquire any voting
common stock of Company or Parent (or securities convertible into such voting common stock) for
cash, securities or any other consideration, provided that after consummation of the offer, the
Person in question is the beneficial owner directly or indirectly, of twenty percent (20%) or more
of the total voting power represented by Companys or Parents then outstanding voting common stock
(all as calculated under clause (i)); or (iii) the stockholders of Company or Parent shall approve
(A) any consolidation or merger of Company or Parent in which Company or Parent is not the
continuing or surviving corporation (other than a merger of Company or Parent in which holders of
the outstanding capital stock of Company or Parent immediately prior to the merger have the same
proportionate ownership of the outstanding capital stock of the surviving corporation immediately
after the merger as immediately before), or pursuant to which the outstanding capital stock of
Company or Parent would be converted into cash, securities or other property, or (B) any sale,
lease, exchange or other transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of Company or Parent; or (iv) there shall have been a change in the
composition of the Board of Directors of Company or Parent at any time during any consecutive
twenty-four (24) month period such that continuing directors cease for any reason to constitute
at least a majority of the Board unless the election, or the nomination for election of each new
Director was approved by a vote of at least two-thirds (2/3) of the Directors then still in office
who were Directors at the beginning of such period; or (v) the Board of Directors of Company or
Parent, by a vote of a majority of all the Directors (excluding Employee) adopts a resolution to
the effect that a Change-in-Control has occurred for purposes of this Agreement.
(c) Disability shall mean the incapacity of Employee by illness or any other cause as
determined under the long-term disability insurance plan of Company in effect at the time in
question, or if no such plan is in effect, then such incapacity of Employee as prevents Employee
from performing the essential functions of Employees position with or without reasonable
accommodation for a period in excess of two hundred forty (240) days (whether or not consecutive),
or one hundred eighty (180) days consecutively, as the case may be, during any twelve (12) month
period.
(d) Effective Date shall be the date on which a Change-in-Control occurs. Anything in this
Agreement to the contrary notwithstanding, if Employees employment is terminated prior to the date
on which a Change-in-Control occurs, and it is reasonably demonstrated that such termination (i)
was at the request of a third party who has taken steps
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reasonably calculated to effect a Change-in-Control or (ii) otherwise arose in connection with
or anticipation of a Change-in-Control, then for all purposes of this Agreement the Effective
Date shall mean the date immediately prior to the date of such termination.
(e) Good Reason shall mean the occurrence of any action which (i) removes or changes
Employees title or reduces Employees job responsibilities or base salary; (ii) results in a
significant worsening of Employees work conditions; or (iii) moves Employees place of employment
to a location that increases Employees commute by more than thirty (30) miles over the length of
Employees commute from Employees place of principal residence at the time the move is requested.
For purposes of this subparagraph (e), any good faith determination by Employee that any such
action has occurred shall be conclusive. Notwithstanding the foregoing, at any time during the
period commencing on the Effective Date and ending on the 30
th
day after the first
anniversary of the Effective Date, except for purposes of Paragraph 5(g), Good Reason shall mean
any reason or no reason.
(f) Person shall mean any individual, corporation, partnership, company or other entity,
and shall include a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934.
2.
Employment.
(a) As of the Effective Date, Company hereby agrees to continue to employ Employee and
Employee agrees to remain in the employ of Company for the Term of this Agreement upon the terms
and conditions hereinafter set forth. Subject to the provisions of subparagraph (b) of this
Paragraph 2, and to the provisions of Paragraph 6 below, Term shall mean a continuously
renewing period of three (3) years commencing on the Effective Date.
(b) At any time during the Term, the Board of Directors of Company and Parent may, by written
notice to Employee, advise Employee of their desire to modify or amend any of the terms or
provisions of this Agreement or to delete or add any terms or provisions. Any such notice
(Notice) shall describe the proposed modifications in reasonable detail. In the event a Notice
shall be given to Employee, then Company, Parent and Employee agree to discuss the proposed
modification(s) and to attempt in good faith to reach agreement with respect thereto and to reduce
such agreement to writing in an amendment to be executed by all the parties (Amendment). If a
Notice is given hereunder and an Amendment shall not have been executed on or before the sixtieth
(60th) day following the date on which Notice is given, then the Term shall thereupon be
automatically converted to a fixed period ending three (3) years after the expiration of such sixty
(60) days.
3.
Duties of Employment.
(a) During the Term, Employees position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and assigned at any time
during the ninety (90)-day period immediately preceding the Effective Date and Employees services
shall be performed at such location as Employee shall determine.
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(b) During the Term, Employee will serve Company faithfully, diligently and competently and
will devote full-time to Employees employment and will hold, in addition to the offices held on
the Effective Date, such other Employee offices of Company or Parent, or their respective
subsidiaries and affiliates, to which Employee may be elected, appointed or assigned by the Boards
of Directors of Company or Parent from time to time and will discharge such Employee duties in
connection therewith. Nothing in this Agreement shall preclude Employee, with the prior approval
of the Board of Directors of Company, from devoting reasonable periods of time required for (i)
serving as a director or member of a committee of any organization involving no conflict of
interest with Company or Parent, or (ii) engaging in charitable, religious and community
activities,
provided,
that such directorships, memberships or activities do not materially
interfere with the performance of Employees duties hereunder.
4.
Compensation.
During the Term, Company shall pay to Employee as compensation for
the services to be rendered by Employee hereunder the following:
(a) A base salary at a rate equal to the highest base salary paid or payable to Employee by
Company during the twelve (12)-month period immediately preceding the month in which the Effective
Date occurs, or such larger sum as the Company may from time to time determine in connection with
regular periodic performance reviews pursuant to Companys policies and practices. Such
compensation shall be payable in accordance with the normal payroll practices of Company. Employee
shall receive an annual increase in base salary at each normal pay adjustment date during the Term,
but no later than one (1) year after the date of Employees last increase and annually thereafter
during the Term, of not less than the percentage increase in the cost-of-living since Employees
last pay adjustment, as measured by the Consumer Price Index-All Urban Consumers of the U.S. Bureau
of Labor Statistics.
(b) In addition, Company shall pay to Employee an annual award under the Companys
Performance Stock Program (or other bonus program in effect at the time the Effective Date
occurs) payable in cash or other form of compensation, for which he would have been eligible in
accordance with the Companys practice or plan in effect at that time for annual bonuses for said
employee for the year preceding the fiscal year in which the Effective Date occurs.
5.
Benefits
. During the Term, Employee shall be entitled to the following benefits:
(a)
Incentive, Savings and Retirement Plans
. In addition to base salary and bonus
payable as hereinabove provided, Employee shall be entitled to participate during the Term in all
savings and retirement plans, practices, policies and programs applicable to employees of Company
as may be in effect from time to time. Such plans, practices, policies and programs, in the
aggregate, shall provide Employee with compensation, benefits and reward opportunities at least as
favorable as the most favorable of such compensation, benefits and reward opportunities provided
by Company for Employee under such plans, practices, policies and programs as in effect at any
time during the ninety (90)-day period immediately preceding the Effective Date or, if more
favorable to Employee, as provided at any time thereafter with respect to other key employees of
Company or Parent.
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(b)
Welfare Benefit Plans
. During the Term, Employee and/or Employees family, as
the case may be, shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs applicable to employees of Company
(including, without limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life,) at least as favorable as the most favorable of such plans, practices,
policies and programs in effect at any time during the ninety (90)-day period immediately
preceding the Effective Date or, if more favorable to Employee and/or Employees family, as in
effect at any time thereafter with respect to other key employees of Company or Parent.
(c)
Expenses
. During the Term, Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by Employee in accordance with the most
favorable policies, practices and procedures of Company in effect at any time during the ninety
(90)-day period immediately preceding the Effective Date or, if more favorable to Employee, as in
effect at any time thereafter with respect to other key employees of Company or Parent.
(d)
Fringe Benefits
. During the Term, Employee shall be entitled to fringe benefits,
including use of an automobile and payment of related expenses or payment of an allowance for
automobile related expenses, in accordance with the most favorable plans, practices, programs and
policies of Company in effect at any time during the ninety (90)-day period immediately preceding
the Effective Date or, if more favorable to Employee, as in effect at any time thereafter with
respect to other key employees of Company or Parent.
(e)
Office and Support Staff
. During the Term, Employee shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to secretarial and
other assistance, at least equal to the most favorable of the foregoing provided to Employee by
Company at any time during the ninety (90)-day period immediately preceding the Effective Date or,
if more favorable to Employee, as provided at any time thereafter with respect to other key
employees of Company or Parent.
(f)
Vacation
. During the Term, Employee shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of Company as in effect
at any time during the ninety (90)-day period immediately preceding the Effective Date or, if more
favorable to Employee, as in effect at any time thereafter with respect to other key employees of
Company or Parent.
(g)
Stay-on Bonus
: (i) If Employee is employed on a date on which the Board of
Directors of Company or Parent approves a transaction described in clause (iii) of Paragraph 1(b)
and the shareholders of Company or Parent, as applicable subsequently approve such transaction,
provided that such transaction qualifies as a Change in Control within the meaning of Section
409A of the Code and regulations issued thereunder, Employee shall receive a lump sum equal to the
base salary of Employee, at the rate in effect immediately prior to such date, plus an amount
equal to the target percentage of the midpoint of Employees salary grade under the Companys
Officers Incentive Program for the year in which such date occurs; provided Employee is employed
on the fifth (5
th
) day following the closing of such transaction.
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Payment hereunder shall be made on the fifth (5
th
) business day following the
closing of such a transaction. (ii) If the Employee separates from service from the Company
following such approval by the applicable Board of Directors of a transaction described in
subparagraph (i) of this Paragraph (g) (provided that such transaction qualifies as a Change in
Control within the meaning of Section 409A of the Code and regulations issued thereunder), and
prior to the fifth (5
th
) day following the closing of such transaction for any reason
other than
for Cause, or Employees death, or Employees attainment of age sixty-five
(65), or if Employees employment is terminated during such period by reason of Employees
Disability, or if Employee shall voluntarily terminate Employees employment during such period
for Good Reason, then, in addition to the amounts payable to Employee pursuant to Section 7,
Employee shall be paid a lump sum equal to the base salary of Employee, at the rate in effect
immediately prior to the date of termination, plus an amount equal to the target percentage of the
midpoint of Employees salary grade under the Companys Officers Incentive Program for the year in
which termination occurs. If the Employee is a specified employee, as that term is defined
under Section 409A of the Code at the time [he] incurs a separation from service, prior to payment
under (ii), payment under (ii) shall be made on the later of the first day of the seventh
(7
th
) month following the Employees termination of Employment, or on the fifth
(5
th
) business day following the closing of such transaction. If the Employee is not a
specified employee, payment under (ii) shall be made on the fifth (5
th
) business day
following the closing of such transaction.
6.
End of Term and Notice of Termination
.
(a)
End of Term
. The Term shall end upon the occurrence of any of the following
events:
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(i)
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Termination of Employees employment by Company for Cause.
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(ii)
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The voluntary termination of Employees
employment by Employee other than for Good Reason.
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(iii)
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The death of Employee.
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(iv)
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Employees attainment of age sixty-five (65).
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(v)
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Full compliance by Company with the provisions
of Paragraph 7(e) below, if Employees employment shall have been
terminated by Company during the Term for any reason
other
than
Cause, or if Employees employment shall have been terminated
by reason of Employees Disability, or if Employee shall have
voluntarily terminated Employees employment during the Term for Good
Reason.
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(b)
Notice of Termination
. Any termination by Company for Cause or by Employee for
Good Reason or on account of Employees Disability shall be communicated by notice to the other
party hereto given in accordance with Section 15 of this Agreement. For purposes of this
Agreement, a notice means a written notice which (i) indicates the specific
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termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of Employees employment
under the provision so indicated and (iii) if the date of termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date (which date shall be not
more than fifteen (15) days after the giving of such notice).
(c)
Date of Termination
. The date of termination means the date of receipt of the
notice of termination or any later date specified therein, as the case may be;
provided,
however,
that (i) if Employees employment is terminated by Company other than for Cause
or on account of Employees Disability, the date of termination shall be the date on which Company
notifies Employee of such termination and (ii) if Employees employment is terminated by reason of
death, the date of termination shall be the date of death of Employee.
(d)
Termination of Employment
. In order for the Employee to be considered to have
terminated employment with the Company, the Employee must have incurred a separation from service
from the Company (and all related companies) within the meaning of Section 409A of the Code, and
regulations promulgated thereunder, and the term termination of employment and the like as used in
this Agreement shall be construed to mean separation from service as so defined under Section 409A
of the Code.
7.
Payment Upon Termination
.
(a) If Employees employment is terminated by Company for Cause, as defined in Paragraph
1(a), the obligations of Company under this Agreement shall cease and Employee shall forfeit all
right to receive any compensation or other benefits under this Agreement except only compensation
or benefits accrued or earned and vested (if applicable) by Employee as of the date of
termination, including base salary through the date of termination, benefits payable under the
terms of any qualified or nonqualified retirement plans or deferred compensation plans maintained
by Company, any accrued vacation pay as of the date of termination not yet paid by Company and any
benefits required to be paid by law such as continued health care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (collectively, the Accrued
Obligations).
(b) If Employee shall voluntarily terminate Employees employment during the Term, other than
for Good Reason, as defined in Paragraph 1(e), the obligations of Company under this Agreement
shall cease and Employee shall forfeit all right to receive any compensation or other benefits
under this Agreement except only the Accrued Obligations.
(c) In the event of the death of Employee during the Term, then, in addition to the Accrued
Obligations and any other benefits which may be payable by Company in respect of the death of
Employee, the base salary then payable hereunder shall continue to be paid at the then current
rate for a period of six (6) months after such death to such beneficiary as shall have been
designated in writing by Employee, or if no effective designation exists, then to the estate of
Employee. Such payment shall be made on the first (1
st
) and fifteenth
(15
th
) of each month, beginning on the first day of the first month following
Employees death.
-7-
(d) If Employees employment is terminated by reason of Employees attainment of age
sixty-five (65), the obligations of Company under this Agreement shall cease and Employee shall
forfeit all right to receive any compensation or other benefits under this Agreement except the
Accrued Obligations.
(e) If Employees employment is terminated by Company during the Term for any reason
other
than
for Cause, or Employees death, or Employees attainment of age sixty-five (65), or if
Employees employment is terminated during the Term by reason of Employees Disability, or if
Employee shall voluntarily terminate Employees employment during the Term for Good Reason,
Employee shall be entitled to receive, and Company shall be obligated to pay and provide Employee,
the following amounts:
(i) An amount in consideration of the covenants by Executive set forth in Paragraphs 8 and 9
below to be determined by a nationally recognized independent certified public accounting firm
selected and retained by Company to be the reasonable value of said covenants as of the date of
termination of Employees employment, but in no event shall such amount be greater than the
aggregate value of the benefits provided in subparagraphs (e) (ii), (iii), (iv), (v) and (viii)
herein below. The benefits otherwise payable to Executive pursuant to said subparagraphs shall be
offset by the amount, if any, payable to Executive in respect of the covenants by Employee set
forth in Paragraphs 8 and 9 below. Said amount paid in consideration of the covenants by Executive
set forth in Paragraphs 8 and 9 below shall be paid in accordance with subparagraphs (e)(ii),
(iii), (iv), (v) and (viii) below, and this subparagraph (i) shall not alter the time or form of
payment of such amounts.
(ii) An amount equal to three (3) times the base salary of Employee, at the rate in effect
immediately prior to the date of termination, plus an amount equal to three (3) times the target
percentage of the midpoint of Employees salary grade under the Companys Officers Incentive
Program for the year in which termination occurs if the employee is a participant in such plan at
the time of the Change-in-Control. Such amount so determined shall be divided into thirty-six (36)
equal amounts. If the Employee is not a specified employee as defined under Section 409A of the
Code at the time of termination, payment of such equal amounts shall be made on the first day of
each month, commencing with the first day of the first month following termination. If the
Employee is a specified employee as that term is defined under Section 409A of the Code on the
date of termination, seven (7) such equal amounts shall be paid to the Employee on the date which
is the first day of the seventh (7
th
) month following the date of termination of
employment, and the twenty-nine (29) remaining equal amounts shall be payable on the first day of
each month subsequent to the date of the first payment (one payment per month) until the payments
are completed. Payments shall be treated as supplemental wage payments under applicable Treasury
Regulations subject to federal tax withholding at the flat percentage rate applicable thereto.
(iii) An amount equal to the aggregate amounts that Company would have contributed on behalf
of Employee under Companys qualified defined contribution retirement plan(s), if any such plan(s)
shall be in effect (other than amounts attributable to Employees before-tax contributions to such
plan(s)) plus estimated earnings thereon had Employee continued in the employ of Company for the
three (3)-year period commencing on the
-8-
date of termination and made contributions under said plan(s) equal to the maximum amount that
the Employee could have contributed under the terms of such plan(s) for the plan year immediately
preceding Employees termination, to be payable in a lump sum to Employee on the second anniversary
of the Employees termination of employment, provided that Employee shall not have breached said
non-competition provisions.
(iv) An amount equal to the difference between: (A) benefits which would have been payable to
Employee under any deferred compensation agreement between Company and Employee, if any such
agreement shall be in effect, had Employee continued in the employ of Company for the three
(3)-year period commencing on the date of termination, received compensation at least equal to that
specified in Paragraph 4 of this Agreement during such time, and deferred pursuant to said deferred
compensation agreement the amount of compensation specified therein; and (B) the benefits actually
payable to Employee under such deferred compensation agreement; such amount to be payable in a lump
sum to Employee on the second anniversary of the Employees termination of employment, provided
that Employee shall not have breached said non-competition provisions.
(v) Additional retirement benefits equal to the difference between: (A) the annual pension
benefits that would have been payable to Employee under Companys qualified defined benefit
retirement plan (the Plan) and under any nonqualified supplemental Employee retirement plan
covering Employee (the Supplemental Plan), if any such Plan or Supplemental Plan shall be in
effect, if Employee had been continued in the employ of Company for the three (3)-year period
commencing on the date of termination and had received compensation at least equal to that
specified in Paragraph 4(a) of this Agreement during such time and had been fully vested in the
benefits payable under any such Plan and Supplemental Plan; and (B) the annual benefits actually
payable to Employee under any such Plan and Supplemental Plan. The discounted present value of
such additional benefits, shall be payable to Employee in a lump sum, as calculated by the
independent actuary for the Plan using the assumptions specified in the Plan, on the second
anniversary of the Employees termination of employment, provided that Employee shall not have
breached said non-competition provisions.
(vi) At the date of termination of Employees employment, Employee shall be fully vested in
any form of compensation previously granted to Employee (other than benefits payable under a
qualified retirement plan), such as, by way of example only, restricted stock, stock options, and
performance share awards.
(vii) If Employees employment is terminated by reason of Employees Disability, Employee
shall be entitled to receive, in addition to the other benefits provided under this Paragraph 7(e),
disability benefits payable in accordance with any bona fide disability plan maintained by Company
or Parent, to the extent Employee qualifies for benefits under the terms of such bona fide
disability plan.
(viii) A lump sum cash payment equal to three (3) times the sum of the average of the annual
contributions, payments, credits or allocations made by the Company on behalf of the Employee for
coverage under all life, health, disability and similar welfare benefit plans and programs and
other perquisites maintained by the Company during the three (3)
-9-
calendar year period preceding his termination of employment. Such payment shall be made on
the first day of the seventh (7
th
) month following the Employees termination of
employment, if the Employee is a specified employee as defined under Section 409A of the Code on
the date of termination. If the Employee is not a specified employee on the date of termination,
payment shall be made on the first day of the month following the Employees termination of
employment.
(ix) Company shall reimburse Employee for the amount of any reasonable legal or accounting
fees and expenses incurred by Employee to obtain or enforce any right or benefit provided to
Employee by Company hereunder or as confirmed or acknowledged hereunder, provided that no such
reimbursement shall be made earlier than seven (7) months following the Employees termination, if
the Employee is a specified employee as that term is defined under Section 409A of the Code on
the date of termination, and in no event shall any reimbursement be made any later than December 31
of the calendar year following the year in which the expense is incurred by the Employee.
(x) Company shall provide the Employee with reasonable outplacement services from a firm
selected by the Company for a period of one (1) year commencing on the date of termination, or
until Employee accepts other employment, if earlier.
8.
Confidential Information
. Employee understands that in the course of Employees
employment by Company, Employee will receive or have access to confidential information concerning
the business or purposes of Company and Parent, and which Company and Parent desire to protect.
Such confidential information shall be deemed to include, but not be limited to, Companys
customer lists and information, and employee lists, including, if known, personnel information and
data. Employee agrees that Employee will not, at any time during the period ending two (2) years
after the date of termination of Employees employment, reveal to anyone outside Company or Parent
or use for Employees own benefit any such information without specific written authorization by
Company or Parent. Employee further agrees not to use any such confidential information or trade
secrets in competing with Company or Parent at any time during or in the two (2) year period
immediately following the date of termination of Employees employment with Company.
-10-
9.
Covenants by Employee Not to Compete With Company or Parent
.
(a) Upon the date of termination of Employees employment with Company for any reason,
Employee covenants and agrees that Employee will not at any time during the period of two (2)
years from and after such date of termination directly or indirectly in any manner or under any
circumstances or conditions whatsoever be or become interested, as an individual, partner,
principal, agent, clerk, employee, stockholder, officer, director, trustee, or in any other
capacity whatsoever, except as a nominal owner of stock of a public corporation, in any other
business which, at the date of Employees termination, is a Competitor (as defined herein), either
directly or indirectly, with Company or Parent, or engage or participate in, directly or
indirectly (whether as an officer, director, employee, partner, consultant, holder of an equity or
debt investment, lender or in any other manner or capacity), or lend Employees name (or any part
or variant thereof) to, any business which, at the date of Employees termination, is a
Competitor, either directly or indirectly, with Company or Parent, or as a result of Employees
engagement or participation would become, a Competitor, either directly or indirectly, with any
aspect of the business of Company or Parent as it exists at the time of Employees termination, or
solicit any officer, director, employee or agent of Company or Parent or any subsidiary or
affiliate of Company or Parent to become an officer, director, employee or agent of Employee,
Employees respective affiliates or anyone else. Ownership, in the aggregate, of less than one
percent (1%) of the outstanding shares of capital stock of any corporation with one or more
classes of its capital stock listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a violation of the foregoing provision. For the
purposes of this Agreement, a Competitor is any business which is similar to the business of
Company or Parent or in any way in competition with the business of Company or Parent within any
of the then-existing water utility service areas of Company.
(b) Employee hereby acknowledges that Employees services are unique and extraordinary, and
are not readily replaceable, and hereby expressly agrees that Company and Parent, in enforcing the
covenants contained in Paragraphs 8 and 9 herein, in addition to any other remedies provided for
herein or otherwise available at law, shall be entitled in any court of equity having jurisdiction
to an injunction restraining Employee in the event of a breach, actual or threatened, of the
agreements and covenants contained in these Paragraphs.
(c) The parties hereto believe that the restrictive covenants of these Paragraphs are
reasonable. However, if at any time it shall be determined by any court of competent jurisdiction
that these Paragraphs or any portion of them as written, are unenforceable because the restrictions
are unreasonable, the parties hereto agree that such portions as shall have been determined to be
unreasonably restrictive shall thereupon be deemed so amended as to make such restrictions
reasonable in the determination of such court, and the said covenants, as so modified, shall be
enforceable between the parties to the same extent as if such amendments had been made prior to the
date of any alleged breach of said covenants.
10.
No Obligation to Mitigate
. So long as Employee shall not be in breach of any
provision of Paragraph 8 or 9, Employee shall have no duty to mitigate damages in the event of a
termination and if Employee voluntarily obtains other employment (including self-employment), any
compensation or profits received or accrued, directly or indirectly, from such other
-11-
employment shall not reduce or otherwise affect the obligations of Company and Parent to make
payments hereunder.
11.
Resignation
. In the event that Employees services hereunder are terminated under
any of the provisions of this Agreement (except by death), Employee agrees that Employee will
deliver Employees written resignation as an officer of Company or Parent, or their subsidiaries
and affiliates, to the Board of Directors, such resignation to become effective immediately, or, at
the option of the Board of Directors, on a later date as specified by the Board.
12.
Insurance
. Company shall have the right at its own cost and expense to apply for
and to secure in its own name, or otherwise, life, health or accident insurance or any or all of
them covering Employee, and Employee agrees to submit to the usual and customary medical
examination and otherwise to cooperate with Company in connection with the procurement of any such
insurance, and any claims thereunder.
13.
Release
. As a condition of receiving payments or benefits provided for in this
Agreement, at the request of Company or Parent, Employee shall execute and deliver for the
benefit of Company and Parent, and any subsidiary or affiliate of Company or Parent, a general
release in the form set forth in Attachment A, and such release shall become effective in
accordance with its terms. The failure or refusal of Employee to sign such a release or the
revocation of such a release shall cause the termination of any and all obligations of Company
and Parent to make payments or provide benefits hereunder, and the forfeiture of the right of
Employee to receive any such payments and benefits. Employee acknowledges that Company and
Parent have advised Employee to consult with an attorney prior to signing this Agreement and
that Employee has had an opportunity to do so.
14.
Additional Benefits
. In addition to the other benefits payable to Employee
pursuant to this Agreement, in the event that any payment or benefit received or to be received by
Employee under this Agreement (a Payment) is subject to the excise tax (the Excise Tax)
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the Code), or any
successor to such Section, as determined by a nationally recognized independent certified public
accounting firm selected by the Company (the Tax Advisor), then the Company shall make an
additional payment to Employee in a lump sum equal to all federal, state and local taxes imposed
on the Employee as a result of payments made under this Agreement, including the amount of
additional taxes imposed upon the service provider due to the Companys payment of the initial
taxes on such compensation. Such payment shall be made no later than the end of the calendar year
following the calendar year in which the Employee remits the related taxes and in the case of a
specified employee, as that term is defined under Section 409A of the Code on the date of
termination, shall not be made sooner than the first day of the seventh month following
termination of employment. The determination of the Tax Advisor as provided herein shall be
completed not later than forty-five (45) days following Employees date of termination of
employment, and such determination shall be communicated in writing to Company, with a copy to
Employee within said forty-five (45) day period. The determination of the Tax Advisor as provided
herein shall be deemed conclusive and binding on Company and Employee. Company shall pay the fees
and other costs of the Tax Advisor hereunder.
-12-
15.
Notices
. All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person to Employee or to the Secretary of Company and Parent,
or if mailed, postage prepaid, registered or certified mail, addressed, in the case of Employee,
to Employees last known address as carried on the personnel records of Company, and, in the case
of Company and Parent, to the corporate headquarters, attention of the Secretary, or to such other
address as the party to be notified may specify by notice to the other party.
16.
Successors and Binding Agreement
.
(a) Company and Parent will require any successor, whether direct or indirect, by purchase,
merger, consolidation or otherwise to all or substantially all of the business and/or assets of
Company and/or Parent, as the case may be, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that Company and Parent are required to perform it.
Failure of Company and Parent to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used in this Agreement, Company and
Parent shall include any successor to Companys and/or Parents, as the case may be, business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(b) This Agreement shall inure to the benefit of, and be enforceable by, Employees
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee dies while any amount is still payable hereunder, all such
amounts shall be paid in accordance with the terms of this Agreement to Employees devisee,
legatee or other designee or, if there is no such designee, to Employees estate.
17.
Arbitration
. Any dispute which may arise between the parties hereto may, if both
parties agree, be submitted to binding arbitration in the State of Connecticut in accordance with
the Rules of the American Arbitration Association; provided that any such dispute shall first be
submitted to Companys Board of Directors in an effort to resolve such dispute without resort to
arbitration.
18.
Severability
. If any of the terms or conditions of this Agreement shall be
declared void or unenforceable by any court or administrative body of competent jurisdiction, such
term or condition shall be deemed severable from the remainder of this Agreement, and the other
terms and conditions of this Agreement shall continue to be valid and enforceable.
19.
Amendment
. This Agreement may be modified or amended only by an instrument in
writing executed by the parties hereto.
20.
Construction
. This Agreement shall supersede and replace all prior agreements
and understandings between the parties hereto on the subject
-
matter covered hereby.
This Agreement shall be governed and construed under the laws of the State of Connecticut. Words
of the masculine gender mean and include correlative words of the feminine gender. Paragraph
headings are for convenience only and shall not be considered a part of the terms and provisions
of the Agreement.
-13-
21.
Deferred Compensation
. This Agreement has been prepared with reference to
Section 409A of the Internal Revenue Code and shall be interpreted and administered in a manner
consistent with Section 409A.
22.
Assignment Prohibited
. Benefits hereunder shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the Employee, Employees beneficiary, or estate, and any attempt to
anticipate, alienate, transfer, assign or attach the same shall be void. The Employee, Employees
beneficiary or estate shall only have a contractual right to benefits hereunder and shall have the
status of general unsecured creditors.
* * * * * * *
IN WITNESS WHEREOF, Company and Parent have caused this Agreement to be executed by an
authorized officer, and Employee has hereunto set Employees hand.
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The Connecticut Water Company
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Connecticut Water Service, Inc.
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ATTACHMENT A
RELEASE
We advise you to consult an attorney before you sign this Release. You have until the
date which is seven (7) days after the Release is signed and returned to
(Company) to change your mind and revoke your Release. Your Release shall not become
effective or enforceable until after that date.
In
consideration for the benefits provided under your Employment Agreement dated
with Company and
(Parent), and more specifically enumerated in Exhibit 1 hereto, by your
signature below you agree to accept such benefits and not to make any claims of any kind against
Company, its past and present and future parent corporations, subsidiaries, divisions,
subdivisions, affiliates and related companies or their successors and assigns, including without
limitation Parent, or any and all past, present and future Directors, officers, fiduciaries or
employees of any of the foregoing (all parties referred to in the foregoing are hereinafter
referred to as the Releasees) before any agency, court or other forum, and you agree to release
the Releasees from all claims, known or unknown, arising in any way from any actions taken by the
Releasees up to the date of this Release, including, without limiting the foregoing, any claim for
wrongful discharge or breach of contract or any claims arising under the Age Discrimination in
Employment Act of 1967, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Employee Retirement Income Security Act of 1974, Connecticuts Fair Employment
Practices Act or any other federal, state or local statute or regulation and any claim for
attorneys fees, expenses or costs of litigation.
THE PRECEDING PARAGRAPH MEANS THAT BY SIGNING THIS RELEASE YOU WILL HAVE WAIVED ANY RIGHT YOU
MAY HAVE TO BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM AGAINST THE RELEASEES BASED ON ANY ACTIONS
TAKEN BY THE RELEASEES UP TO THE DATE OF THIS RELEASE.
By signing this Release, you further agree as follows:
1. You have read this Release carefully and fully understand its terms;
2. You have had at least twenty-one (21) days to consider the terms of the Release;
3. You have seven (7) days from the date you sign this Release to revoke it by written
notification to Company. After this seven (7) day period, this Release is final and binding
and may not be revoked;
4. You have been advised to seek legal counsel and have had an opportunity to do so;
5. You would not otherwise be entitled to the benefits provided under your Employment
Agreement with Company and Parent had you not agreed to waive any right you have to bring a lawsuit
or legal claim against the Releasees; and
6. Your agreement to the terms set forth above is voluntary.
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Name:
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Signature:
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Date:
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Received by:
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Date:
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EXHIBIT 1
1.
2.
3.
4.
5.
etc.
NOTE: THIS EXHIBIT IS TO BE COMPLETED AT THE TIME OF TERMINATION TO REFLECT ALL BENEFITS AND
PAYMENTS MADE UNDER THE EMPLOYMENT AGREEMENT.
Acknowledged and Agreed:
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THE CONNECTICUT WATER COMPANY
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EMPLOYEE
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Its
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CONNECTICUT WATER SERVICE, INC.
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Its
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Exhibit 10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated this 24th day of January, 2008, is made by and between The Connecticut
Water Company, a Connecticut corporation having its principal place of business in Clinton,
Connecticut, (Company), Connecticut Water Service, Inc., a Connecticut corporation and holder of
all of the outstanding capital stock of Company (Parent) and [
], a resident
of [
], (Employee).
WITNESSETH:
WHEREAS, Company and Parent desire to reward Employee for Employees valuable, dedicated
service to Company and Parent should Employees service be terminated under circumstances
hereinafter described; and
WHEREAS, Employee and Company entered into an Employment Agreement dated [
],
amended and restated as of [
]; and
WHEREAS, the parties wish to amend the Agreement to comply with Section 409A of the Internal
Revenue Code of 1986, as amended and regulations issued thereunder (collectively the Code); and
WHEREAS, Employee, Company and Parent are willing to enter into this Amended and Restated
Employment Agreement (Agreement) on the terms herein set forth;
NOW, THEREFORE, to assure Company and Parent of Employees continued dedication and the
availability of Employees advice and counsel in the event of any such proposal, to induce Employee
to remain in the employ of Company and Parent and to reward Employee for Employees valuable
dedicated service to Company and Parent should Employees service be terminated under circumstances
hereinafter described, and for other good and valuable consideration, the receipt and adequacy of
which each party acknowledges, effective January 1, 2008, Company, Parent and Employee agree as
follows:
1.
Definitions
. For purposes of this Agreement, the following terms shall have the
following meanings:
(a) Cause shall mean Employees serious, willful misconduct in respect of Employees duties
under this Agreement, including conviction for a felony or perpetration by Employee of a common law
fraud upon Company or Parent which has resulted or is likely to result in material economic damage
to Company or Parent, as determined by a vote of at least seventy-five percent (75%) of all of the
Directors (excluding Employee) of each of Companys and Parents Board of Directors;
(b) Change-in-Control shall be deemed to have occurred if after the date hereof (i) a public
announcement shall be made or a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the Act)
disclosing that any Person (as defined below), other than Company or Parent or any employee benefit
plan sponsored by Company or Parent, is the beneficial owner (as the term is defined in Rule 13d-3
under the Act) directly or indirectly, of twenty percent (20%) or more of the total voting power
represented by Companys or Parents then outstanding voting common stock (calculated as provided
in paragraph (d) of Rule 13d-3 under the Act in the case of rights to acquire voting common stock);
or (ii) any Person, other than Company or Parent or any employee benefit plan sponsored by Company
or Parent, shall purchase shares pursuant to a tender offer or exchange offer to acquire any voting
common stock of Company or Parent (or securities convertible into such voting common stock) for
cash, securities or any other consideration, provided that after consummation of the offer, the
Person in question is the beneficial owner directly or indirectly, of twenty percent (20%) or more
of the total voting power represented by Companys or Parents then outstanding voting common stock
(all as calculated under clause (i)); or (iii) the stockholders of Company or Parent shall approve
(A) any consolidation or merger of Company or Parent in which Company or Parent is not the
continuing or surviving corporation (other than a merger of Company or Parent in which holders of
the outstanding capital stock of Company or Parent immediately prior to the merger have the same
proportionate ownership of the outstanding capital stock of the surviving corporation immediately
after the merger as immediately before), or pursuant to which the outstanding capital stock of
Company or Parent would be converted into cash, securities or other property, or (B) any sale,
lease, exchange or other transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of Company or Parent; or (iv) there shall have been a change in the
composition of the Board of Directors of Company or Parent at any time during any consecutive
twenty-four (24) month period such that continuing directors cease for any reason to constitute
at least a majority of the Board unless the election, or the nomination for election of each new
Director was approved by a vote of at least two-thirds (2/3) of the Directors then still in office
who were Directors at the beginning of such period; or (v) the Board of Directors of Company or
Parent, by a vote of a majority of all the Directors (excluding Employee) adopts a resolution to
the effect that a Change-in-Control has occurred for purposes of this Agreement.
(c) Disability shall mean the incapacity of Employee by illness or any other cause as
determined under the long-term disability insurance plan of Company in effect at the time in
question, or if no such plan is in effect, then such incapacity of Employee as prevents Employee
from performing the essential functions of Employees position with or without reasonable
accommodation for a period in excess of two hundred forty (240) days (whether or not consecutive),
or one hundred eighty (180) days consecutively, as the case may be, during any twelve (12) month
period.
(d) Effective Date shall be the date on which a Change-in-Control occurs. Anything in this
Agreement to the contrary notwithstanding, if Employees employment is terminated prior to the date
on which a Change-in-Control occurs, and it is reasonably demonstrated that such termination (i)
was at the request of a third party who has taken steps
-2-
reasonably calculated to effect a Change-in-Control or (ii) otherwise arose in connection with
or anticipation of a Change-in-Control, then for all purposes of this Agreement the Effective
Date shall mean the date immediately prior to the date of such termination.
(e) Good Reason shall mean the occurrence of any action which (i) removes or changes
Employees title or reduces Employees job responsibilities or base salary; (ii) results in a
significant worsening of Employees work conditions; or (iii) moves Employees place of employment
to a location that increases Employees commute by more than thirty (30) miles over the length of
Employees commute from Employees place of principal residence at the time the move is requested.
For purposes of this subparagraph (e), any good faith determination by Employee that any such
action has occurred shall be conclusive.
(f) Person shall mean any individual, corporation, partnership, company or other entity,
and shall include a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934.
2.
Employment.
(a) As of the Effective Date, Company hereby agrees to continue to employ Employee and
Employee agrees to remain in the employ of Company for the Term of this Agreement upon the terms
and conditions hereinafter set forth. Subject to the provisions of subparagraph (b) of this
Paragraph 2, and to the provisions of Paragraph 6 below, Term shall mean a continuously
renewing period of three (3) years commencing on the Effective Date.
(b) At any time during the Term, the Board of Directors of Company and Parent may, by written
notice to Employee, advise Employee of their desire to modify or amend any of the terms or
provisions of this Agreement or to delete or add any terms or provisions. Any such notice
(Notice) shall describe the proposed modifications in reasonable detail. In the event a Notice
shall be given to Employee, then Company, Parent and Employee agree to discuss the proposed
modification(s) and to attempt in good faith to reach agreement with respect thereto and to reduce
such agreement to writing in an amendment to be executed by all the parties (Amendment). If a
Notice is given hereunder and an Amendment shall not have been executed on or before the sixtieth
(60th) day following the date on which Notice is given, then the Term shall thereupon be
automatically converted to a fixed period ending three (3) years after the expiration of such sixty
(60) days.
3.
Duties of Employment.
(a) During the Term, Employees position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and assigned at any time
during the ninety (90)-day period immediately preceding the Effective Date and Employees services
shall be performed at such location as Employee shall determine.
(b) During the Term, Employee will serve Company faithfully, diligently and competently and
will devote full-time to Employees employment and will hold, in addition to
-3-
the offices held on the Effective Date, such other Employee offices of Company or Parent, or
their respective subsidiaries and affiliates, to which Employee may be elected, appointed or
assigned by the Boards of Directors of Company or Parent from time to time and will discharge such
Employee duties in connection therewith. Nothing in this Agreement shall preclude Employee, with
the prior approval of the Board of Directors of Company, from devoting reasonable periods of time
required for (i) serving as a director or member of a committee of any organization involving no
conflict of interest with Company or Parent, or (ii) engaging in charitable, religious and
community activities,
provided,
that such directorships, memberships or activities do not
materially interfere with the performance of Employees duties hereunder.
4.
Compensation.
During the Term, Company shall pay to Employee as compensation for
the services to be rendered by Employee hereunder the following:
(a) A base salary at a rate equal to the highest base salary paid or payable to Employee by
Company during the twelve (12)-month period immediately preceding the month in which the Effective
Date occurs, or such larger sum as the Company may from time to time determine in connection with
regular periodic performance reviews pursuant to Companys policies and practices. Such
compensation shall be payable in accordance with the normal payroll practices of Company. Employee
shall receive an annual increase in base salary at each normal pay adjustment date during the Term,
but no later than one (1) year after the date of Employees last increase and annually thereafter
during the Term, of not less than the percentage increase in the cost-of-living since Employees
last pay adjustment, as measured by the Consumer Price Index-All Urban Consumers of the U.S. Bureau
of Labor Statistics.
(b) In addition, Company shall pay to Employee an annual award under the Companys
Performance Stock Program (or other bonus program in effect at the time the Effective Date
occurs) payable in cash or other form of compensation, for which he would have been eligible in
accordance with the Companys practice or plan in effect at that time for annual bonuses for said
employee for the year preceding the fiscal year in which the Effective Date occurs.
5.
Benefits
. During the Term, Employee shall be entitled to the following benefits:
(a)
Incentive, Savings and Retirement Plans
. In addition to base salary and bonus
payable as hereinabove provided, Employee shall be entitled to participate during the Term in all
savings and retirement plans, practices, policies and programs applicable to employees of Company
as may be in effect from time to time. Such plans, practices, policies and programs, in the
aggregate, shall provide Employee with compensation, benefits and reward opportunities at least as
favorable as the most favorable of such compensation, benefits and reward opportunities provided
by Company for Employee under such plans, practices, policies and programs as in effect at any
time during the ninety (90)-day period immediately preceding the Effective Date or, if more
favorable to Employee, as provided at any time thereafter with respect to other key employees of
Company or Parent.
(b)
Welfare Benefit Plans
. During the Term, Employee and/or Employees family, as
the case may be, shall be eligible for participation in and shall receive all benefits
-4-
under welfare benefit plans, practices, policies and programs applicable to employees of
Company (including, without limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life,) at least as favorable as the most favorable of such
plans, practices, policies and programs in effect at any time during the ninety (90)-day period
immediately preceding the Effective Date or, if more favorable to Employee and/or Employees
family, as in effect at any time thereafter with respect to other key employees of Company or
Parent.
(c)
Expenses
. During the Term, Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by Employee in accordance with the most
favorable policies, practices and procedures of Company in effect at any time during the ninety
(90)-day period immediately preceding the Effective Date or, if more favorable to Employee, as in
effect at any time thereafter with respect to other key employees of Company or Parent.
(d)
Fringe Benefits
. During the Term, Employee shall be entitled to fringe benefits,
including use of an automobile and payment of related expenses or payment of an allowance for
automobile related expenses, in accordance with the most favorable plans, practices, programs and
policies of Company in effect at any time during the ninety (90)-day period immediately preceding
the Effective Date or, if more favorable to Employee, as in effect at any time thereafter with
respect to other key employees of Company or Parent.
(e)
Office and Support Staff
. During the Term, Employee shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to secretarial and
other assistance, at least equal to the most favorable of the foregoing provided to Employee by
Company at any time during the ninety (90)-day period immediately preceding the Effective Date or,
if more favorable to Employee, as provided at any time thereafter with respect to other key
employees of Company or Parent.
(f)
Vacation
. During the Term, Employee shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of Company as in effect
at any time during the ninety (90)-day period immediately preceding the Effective Date or, if more
favorable to Employee, as in effect at any time thereafter with respect to other key employees of
Company or Parent.
6.
End of Term and Notice of Termination
.
(a)
End of Term
. The Term shall end upon the occurrence of any of the following
events:
(i) Termination of Employees employment by Company for Cause.
(ii) The voluntary termination of Employees employment by Employee other than
for Good Reason.
(iii) The death of Employee.
-5-
(iv) Employees attainment of age sixty-five (65).
(v) Full compliance by Company with the provisions of Paragraph 7(e) below, if
Employees employment shall have been terminated by Company during the Term for any
reason
other than
Cause, or if Employees employment shall have been
terminated by reason of Employees Disability, or if Employee shall have
voluntarily terminated Employees employment during the Term for Good Reason.
(b)
Notice of Termination
. Any termination by Company for Cause or by Employee for
Good Reason or on account of Employees Disability shall be communicated by notice to the other
party hereto given in accordance with Section 15 of this Agreement. For purposes of this
Agreement, a notice means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employees employment under the
provision so indicated and (iii) if the date of termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice).
(c)
Date of Termination
. The date of termination means the date of receipt of the
notice of termination or any later date specified therein, as the case may be;
provided,
however,
that (i) if Employees employment is terminated by Company other than for Cause
or on account of Employees Disability, the date of termination shall be the date on which Company
notifies Employee of such termination and (ii) if Employees employment is terminated by reason of
death, the date of termination shall be the date of death of Employee.
(d)
Termination of Employment
. In order for the Employee to be considered to have
terminated employment with the Company, the Employee must have incurred a separation from service
from the Company (and all related companies) within the meaning of Section 409A of the Code, and
regulations promulgated thereunder, and the term termination of employment and the like as used in
this Agreement shall be construed to mean separation from service as so defined under Section 409A
of the Code.
7.
Payment Upon Termination
.
(a) If Employees employment is terminated by Company for Cause, as defined in Paragraph
1(a), the obligations of Company under this Agreement shall cease and Employee shall forfeit all
right to receive any compensation or other benefits under this Agreement except only compensation
or benefits accrued or earned and vested (if applicable) by Employee as of the date of
termination, including base salary through the date of termination, benefits payable under the
terms of any qualified or nonqualified retirement plans or deferred compensation plans maintained
by Company, any accrued vacation pay as of the date of termination not yet paid by Company and any
benefits required to be paid by law such as continued health care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (collectively, the Accrued
Obligations).
-6-
(b) If Employee shall voluntarily terminate Employees employment during the Term, other than
for Good Reason, as defined in Paragraph 1(e), the obligations of Company under this Agreement
shall cease and Employee shall forfeit all right to receive any compensation or other benefits
under this Agreement except only the Accrued Obligations.
(c) In the event of the death of Employee during the Term, then, in addition to the Accrued
Obligations and any other benefits which may be payable by Company in respect of the death of
Employee, the base salary then payable hereunder shall continue to be paid at the then current
rate for a period of six (6) months after such death to such beneficiary as shall have been
designated in writing by Employee, or if no effective designation exists, then to the estate of
Employee. Such payment shall be made on the first (1
st
) and fifteenth
(15
th
) of each month, beginning on the first day of the first month following
Employees death.
(d) If Employees employment is terminated by reason of Employees attainment of age
sixty-five (65), the obligations of Company under this Agreement shall cease and Employee shall
forfeit all right to receive any compensation or other benefits under this Agreement except the
Accrued Obligations.
(e) If Employees employment is terminated by Company during the Term for any reason
other
than
for Cause, or Employees death, or Employees attainment of age sixty-five (65), or if
Employees employment is terminated during the Term by reason of Employees Disability, or if
Employee shall voluntarily terminate Employees employment during the Term for Good Reason,
Employee shall be entitled to receive, and Company shall be obligated to pay and provide Employee,
the following amounts:
(i) An amount in consideration of the covenants by Executive set forth in Paragraphs 8 and 9
below to be determined by a nationally recognized independent certified public accounting firm
selected and retained by Company to be the reasonable value of said covenants as of the date of
termination of Employees employment, but in no event shall such amount be greater than the
aggregate value of the benefits provided in subparagraphs (e) (ii), (iii), (iv), (v) and (viii)
herein below. The benefits otherwise payable to Executive pursuant to said subparagraphs shall be
offset by the amount, if any, payable to Executive in respect of the covenants by Employee set
forth in Paragraphs 8 and 9 below. Said amount paid in consideration of the covenants by Executive
set forth in Paragraphs 8 and 9 below shall be paid in accordance with subparagraphs (e)(ii),
(iii), (iv), (v) and (viii) below, and this subparagraph (i) shall not alter the time or form of
payment of such amounts.
(ii) An amount equal to three (3) times the base salary of Employee, at the rate in effect
immediately prior to the date of termination, plus an amount equal to three (3) times the target
percentage of the midpoint of Employees salary grade under the Companys Officers Incentive
Program for the year in which termination occurs if the employee is a participant in such plan at
the time of the Change-in-Control. Such amount so determined shall be divided into thirty-six (36)
equal amounts. If the Employee is not a specified employee as defined under Section 409A of the
Code at the time of termination, payment of such equal amounts shall be made on the first day of
each month, commencing with the first day of the first month following termination. If the
Employee is a specified employee as that term is defined
-7-
under Section 409A of the Code on the date of termination, seven (7) such equal amounts shall
be paid to the Employee on the date which is the first day of the seventh (7
th
) month
following the date of termination of employment, and the twenty-nine (29) remaining equal amounts
shall be payable on the first day of each month subsequent to the date of the first payment (one
payment per month) until the payments are completed. Payments shall be treated as supplemental
wage payments under applicable Treasury Regulations subject to federal tax withholding at the flat
percentage rate applicable thereto.
(iii) An amount equal to the aggregate amounts that Company would have contributed on behalf
of Employee under Companys qualified defined contribution retirement plan(s), if any such plan(s)
shall be in effect (other than amounts attributable to Employees before-tax contributions to such
plan(s)) plus estimated earnings thereon had Employee continued in the employ of Company for the
three (3)-year period commencing on the date of termination and made contributions under said
plan(s) equal to the maximum amount that the Employee could have contributed under the terms of
such plan(s) for the plan year immediately preceding Employees termination, to be payable in a
lump sum to Employee on the second anniversary of the Employees termination of employment,
provided that Employee shall not have breached said non-competition provisions.
(iv) An amount equal to the difference between: (A) benefits which would have been payable to
Employee under any deferred compensation agreement between Company and Employee, if any such
agreement shall be in effect, had Employee continued in the employ of Company for the three
(3)-year period commencing on the date of termination, received compensation at least equal to that
specified in Paragraph 4 of this Agreement during such time, and deferred pursuant to said deferred
compensation agreement the amount of compensation specified therein; and (B) the benefits actually
payable to Employee under such deferred compensation agreement; such amount to be payable in a lump
sum to Employee on the second anniversary of the Employees termination of employment, provided
that Employee shall not have breached said non-competition provisions.
(v) Additional retirement benefits equal to the difference between: (A) the annual pension
benefits that would have been payable to Employee under Companys qualified defined benefit
retirement plan (the Plan) and under any nonqualified supplemental Employee retirement plan
covering Employee (the Supplemental Plan), if any such Plan or Supplemental Plan shall be in
effect, if Employee had been continued in the employ of Company for the three (3)-year period
commencing on the date of termination and had received compensation at least equal to that
specified in Paragraph 4(a) of this Agreement during such time and had been fully vested in the
benefits payable under any such Plan and Supplemental Plan; and (B) the annual benefits actually
payable to Employee under any such Plan and Supplemental Plan. The discounted present value of
such additional benefits, shall be payable to Employee in a lump sum, as calculated by the
independent actuary for the Plan using the assumptions specified in the Plan, on the second
anniversary of the Employees termination of employment, provided that Employee shall not have
breached said non-competition provisions.
(vi) At the date of termination of Employees employment, Employee shall be fully vested in
any form of compensation previously granted to Employee (other than
-8-
benefits payable under a qualified retirement plan), such as, by way of example only,
restricted stock, stock options, and performance share awards.
(vii) If Employees employment is terminated by reason of Employees Disability, Employee
shall be entitled to receive, in addition to the other benefits provided under this Paragraph 7(e),
disability benefits payable in accordance with any bona fide disability plan maintained by Company
or Parent, to the extent Employee qualifies for benefits under the terms of such bona fide
disability plan.
(viii) A lump sum cash payment equal to three (3) times the sum of the average of the annual
contributions, payments, credits or allocations made by the Company on behalf of the Employee for
coverage under all life, health, disability and similar welfare benefit plans and programs and
other perquisites maintained by the Company during the three (3) calendar year period preceding his
termination of employment. Such payment shall be made on the first day of the seventh
(7
th
) month following the Employees termination of employment, if the Employee is a
specified employee as defined under Section 409A of the Code on the date of termination. If the
Employee is not a specified employee on the date of termination, payment shall be made on the first
day of the month following the Employees termination of employment.
(ix) Company shall reimburse Employee for the amount of any reasonable legal or accounting
fees and expenses incurred by Employee to obtain or enforce any right or benefit provided to
Employee by Company hereunder or as confirmed or acknowledged hereunder, provided that no such
reimbursement shall be made earlier than seven (7) months following the Employees termination, if
the Employee is a specified employee as that term is defined under Section 409A of the Code on
the date of termination, and in no event shall any reimbursement be made any later than December 31
of the calendar year following the year in which the expense is incurred by the Employee.
(x) Company shall provide the Employee with reasonable outplacement services from a firm
selected by the Company for a period of one (1) year commencing on the date of termination, or
until Employee accepts other employment, if earlier.
8.
Confidential Information
. Employee understands that in the course of Employees
employment by Company, Employee will receive or have access to confidential information concerning
the business or purposes of Company and Parent, and which Company and Parent desire to protect.
Such confidential information shall be deemed to include, but not be limited to, Companys
customer lists and information, and employee lists, including, if known, personnel information and
data. Employee agrees that Employee will not, at any time during the period ending two (2) years
after the date of termination of Employees employment, reveal to anyone outside Company or Parent
or use for Employees own benefit any such information without specific written authorization by
Company or Parent. Employee further agrees not to use any such confidential information or trade
secrets in competing with Company or Parent at any time during or in the two (2) year period
immediately following the date of termination of Employees employment with Company.
-9-
9.
Covenants by Employee Not to Compete With Company or Parent
.
(a) Upon the date of termination of Employees employment with Company for any reason,
Employee covenants and agrees that Employee will not at any time during the period of two (2)
years from and after such date of termination directly or indirectly in any manner or under any
circumstances or conditions whatsoever be or become interested, as an individual, partner,
principal, agent, clerk, employee, stockholder, officer, director, trustee, or in any other
capacity whatsoever, except as a nominal owner of stock of a public corporation, in any other
business which, at the date of Employees termination, is a Competitor (as defined herein), either
directly or indirectly, with Company or Parent, or engage or participate in, directly or
indirectly (whether as an officer, director, employee, partner, consultant, holder of an equity or
debt investment, lender or in any other manner or capacity), or lend Employees name (or any part
or variant thereof) to, any business which, at the date of Employees termination, is a
Competitor, either directly or indirectly, with Company or Parent, or as a result of Employees
engagement or participation would become, a Competitor, either directly or indirectly, with any
aspect of the business of Company or Parent as it exists at the time of Employees termination, or
solicit any officer, director, employee or agent of Company or Parent or any subsidiary or
affiliate of Company or Parent to become an officer, director, employee or agent of Employee,
Employees respective affiliates or anyone else. Ownership, in the aggregate, of less than one
percent (1 %) of the outstanding shares of capital stock of any corporation with one or more
classes of its capital stock listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a violation of the foregoing provision. For the
purposes of this Agreement, a Competitor is any business which is similar to the business of
Company or Parent or in any way in competition with the business of Company or Parent within any
of the then-existing water utility service areas of Company.
(b) Employee hereby acknowledges that Employees services are unique and extraordinary, and
are not readily replaceable, and hereby expressly agrees that Company and Parent, in enforcing the
covenants contained in Paragraphs 8 and 9 herein, in addition to any other remedies provided for
herein or otherwise available at law, shall be entitled in any court of equity having jurisdiction
to an injunction restraining Employee in the event of a breach, actual or threatened, of the
agreements and covenants contained in these Paragraphs.
(c) The parties hereto believe that the restrictive covenants of these Paragraphs are
reasonable. However, if at any time it shall be determined by any court of competent jurisdiction
that these Paragraphs or any portion of them as written, are unenforceable because the restrictions
are unreasonable, the parties hereto agree that such portions as shall have been determined to be
unreasonably restrictive shall thereupon be deemed so amended as to make such restrictions
reasonable in the determination of such court, and the said covenants, as so modified, shall be
enforceable between the parties to the same extent as if such amendments had been made prior to the
date of any alleged breach of said covenants.
10.
No Obligation to Mitigate
. So long as Employee shall not be in breach of any
provision of Paragraph 8 or 9, Employee shall have no duty to mitigate damages in the event of a
termination and if Employee voluntarily obtains other employment (including self-employment), any
compensation or profits received or accrued, directly or indirectly, from such other
-10-
employment shall not reduce or otherwise affect the obligations of Company and Parent to make
payments hereunder.
11.
Resignation
. In the event that Employees services hereunder are terminated under
any of the provisions of this Agreement (except by death), Employee agrees that Employee will
deliver Employees written resignation as an officer of Company or Parent, or their subsidiaries
and affiliates, to the Board of Directors, such resignation to become effective immediately, or, at
the option of the Board of Directors, on a later date as specified by the Board.
12.
Insurance
. Company shall have the right at its own cost and expense to apply for
and to secure in its own name, or otherwise, life, health or accident insurance or any or all of
them covering Employee, and Employee agrees to submit to the usual and customary medical
examination and otherwise to cooperate with Company in connection with the procurement of any such
insurance, and any claims thereunder.
13.
Release
. As a condition of receiving payments or benefits provided for in this
Agreement, at the request of Company or Parent, Employee shall execute and deliver for the
benefit of Company and Parent, and any subsidiary or affiliate of Company or Parent, a general
release in the form set forth in Attachment A, and such release shall become effective in
accordance with its terms. The failure or refusal of Employee to sign such a release or the
revocation of such a release shall cause the termination of any and all obligations of Company
and Parent to make payments or provide benefits hereunder, and the forfeiture of the right of
Employee to receive any such payments and benefits. Employee acknowledges that Company and
Parent have advised Employee to consult with an attorney prior to signing this Agreement and
that Employee has had an opportunity to do so.
14.
Notices
. All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person to Employee or to the Secretary of Company and Parent,
or if mailed, postage prepaid, registered or certified mail, addressed, in the case of Employee,
to Employees last known address as carried on the personnel records of Company, and, in the case
of Company and Parent, to the corporate headquarters, attention of the Secretary, or to such other
address as the party to be notified may specify by notice to the other party.
15.
Successors and Binding Agreement
.
(a) Company and Parent will require any successor, whether direct or indirect, by purchase,
merger, consolidation or otherwise to all or substantially all of the business and/or assets of
Company and/or Parent, as the case may be, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that Company and Parent are required to perform it.
Failure of Company and Parent to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used in this Agreement, Company and
Parent shall include any successor to Companys and/or Parents, as the case may be, business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
-11-
(b) This Agreement shall inure to the benefit of, and be enforceable by, Employees
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee dies while any amount is still payable hereunder, all such
amounts shall be paid in accordance with the terms of this Agreement to Employees devisee,
legatee or other designee or, if there is no such designee, to Employees estate.
16.
Arbitration
. Any dispute which may arise between the parties hereto may, if both
parties agree, be submitted to binding arbitration in the State of Connecticut in accordance with
the Rules of the American Arbitration Association; provided that any such dispute shall first be
submitted to Companys Board of Directors in an effort to resolve such dispute without resort to
arbitration.
17.
Severability
. If any of the terms or conditions of this Agreement shall be
declared void or unenforceable by any court or administrative body of competent jurisdiction, such
term or condition shall be deemed severable from the remainder of this Agreement, and the other
terms and conditions of this Agreement shall continue to be valid and enforceable.
18.
Amendment
. This Agreement may be modified or amended only by an instrument in
writing executed by the parties hereto.
19.
Construction
. This Agreement shall supersede and replace all prior agreements
and understandings between the parties hereto on the subject
-
matter covered hereby.
This Agreement shall be governed and construed under the laws of the State of Connecticut. Words
of the masculine gender mean and include correlative words of the feminine gender. Paragraph
headings are for convenience only and shall not be considered a part of the terms and provisions
of the Agreement.
20.
Deferred Compensation
. This Agreement has been prepared with reference to
Section 409A of the Internal Revenue Code and shall be interpreted and administered in a manner
consistent with Section 409A.
21.
Assignment Prohibited
. Benefits hereunder shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the Employee, the Employees beneficiary, or estate, and any attempt
to anticipate, alienate, transfer, assign or attach the same shall be void. The Employee, the
Employees beneficiary or estate shall only have a contractual right to benefits hereunder and
shall have the status of general unsecured creditors.
* * * * * * *
IN WITNESS WHEREOF, Company and Parent have caused this Agreement to be executed by an
authorized officer, and Employee has hereunto set Employees hand.
The Connecticut Water Company
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ATTACHMENT A
RELEASE
We advise you to consult an attorney before you sign this Release. You have until the
date which is seven (7) days after the Release is signed and returned to
(Company) to change your mind and revoke your Release. Your Release shall not become
effective or enforceable until after that date.
In consideration for the benefits provided under your Employment Agreement dated
with Company and
(Parent), and more specifically enumerated in Exhibit 1 hereto, by your
signature below you agree to accept such benefits and not to make any claims of any kind against
Company, its past and present and future parent corporations, subsidiaries, divisions,
subdivisions, affiliates and related companies or their successors and assigns, including without
limitation Parent, or any and all past, present and future Directors, officers, fiduciaries or
employees of any of the foregoing (all parties referred to in the foregoing are hereinafter
referred to as the Releasees) before any agency, court or other forum, and you agree to release
the Releasees from all claims, known or unknown, arising in any way from any actions taken by the
Releasees up to the date of this Release, including, without limiting the foregoing, any claim for
wrongful discharge or breach of contract or any claims arising under the Age Discrimination in
Employment Act of 1967, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Employee Retirement Income Security Act of 1974, Connecticuts Fair Employment
Practices Act or any other federal, state or local statute or regulation and any claim for
attorneys fees, expenses or costs of litigation.
THE PRECEDING PARAGRAPH MEANS THAT BY SIGNING THIS RELEASE YOU WILL HAVE WAIVED ANY RIGHT YOU
MAY HAVE TO BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM AGAINST THE RELEASEES BASED ON ANY ACTIONS
TAKEN BY THE RELEASEES UP TO THE DATE OF THIS RELEASE.
By signing this Release, you further agree as follows:
1. You have read this Release carefully and fully understand its terms;
2. You have had at least twenty-one (21) days to consider the terms of the Release;
3. You have seven (7) days from the date you sign this Release to revoke it by written
notification to Company. After this seven (7) day period, this Release is final and binding
and may not be revoked;
4. You have been advised to seek legal counsel and have had an opportunity to do so;
5. You would not otherwise be entitled to the benefits provided under your Employment
Agreement with Company and Parent had you not agreed to waive any right you have to bring a lawsuit
or legal claim against the Releasees; and
6. Your agreement to the terms set forth above is voluntary.
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Name:
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Signature:
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Date:
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Received by:
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Date:
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EXHIBIT 1
1.
2.
3.
4.
5.
etc.
NOTE: THIS EXHIBIT IS TO BE COMPLETED AT THE TIME OF TERMINATION TO REFLECT ALL BENEFITS AND
PAYMENTS MADE UNDER THE EMPLOYMENT AGREEMENT.
Acknowledged and Agreed:
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THE CONNECTICUT WATER COMPANY
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EMPLOYEE
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Its
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CONNECTICUT WATER SERVICE, INC.
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By
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Its
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Exhibit 10.3
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This Agreement, made this 24th day of January, 2008 by and between THE CONNECTICUT WATER
COMPANY (hereinafter referred to as the Employer) and [
] (hereinafter
referred to as the Employee).
WITNESSETH THAT:
WHEREAS, the Employee has and is expected to continue to render valuable services to the
Employer, and
WHEREAS, the Employer desires to ensure that it will have the benefit of the Employees
services until [she] reaches retirement, and
WHEREAS, the Employer wishes to assist the Employee in providing for the financial
requirements of the Employee in the event of [her] retirement, disability or death; and
[WHEREAS, the Employer and the Employee entered into a Supplemental Executive Retirement
Agreement dated [
], as amended by a First Amendment dated
[
]; and]
[WHEREAS, the Employer and the Employee entered into a Supplemental Executive Retirement
Agreement dated [
]; and]
[WHEREAS, the Employer and the Employee entered into a Supplemental Executive Retirement
Agreement dated [
], as amended by a First Amendment dated [
] and
further amended by a Second Amendment dated [
]; and]
WHEREAS, the parties wish to amend and restate the Supplemental Retirement Agreement to comply
with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations issued
thereunder (collectively Section 409A);
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
herein contained, the parties hereto agree to enter into this Amended and Restated Supplemental
Executive Retirement Agreement, effective January 1, 2008, as follows:
1.
SUPPLEMENTAL RETIREMENT BENEFIT
a.
Normal or Deferred Retirement
. If, upon or after the Employees attainment of age
65, the Employee shall separate from service and [she] shall be eligible to receive a benefit
under The Connecticut Water Company Employees Retirement Plan (hereinafter referred to as the
Retirement Plan), the Employee shall be entitled to
receive pursuant to this Agreement a benefit
having a value equal to an annual benefit for [her] life of (a) 60% of the Employees Average
Earnings reduced by (b) the annual benefit payable to the Employee under the Retirement Plan in the form of a single life
annuity for the life of the Employee (whether or not the benefit under the Retirement Plan is
actually paid in such form), commencing at the same time as of which benefits commence hereunder
(whether or not the benefit under the Retirement Plan commences at such time), [and further
reduced by the annual benefit payable to Employee under any qualified defined benefit plan
maintained by
in the form of a single life annuity on the life the
Employee (whether or not the benefit under such plan is actually paid in such form) commencing at
the same time as of which benefits commence hereunder (whether or not the benefit under such plan
commences at such time)]. Such benefit will be payable in accordance with Section 2 below. The
date as of which benefits commence hereunder is the first day of the month following the
Employees separation from service, even though actual payment may be delayed in accordance with
Section 2 hereof.
b.
Early Retirement
. If, upon or after the Employees attainment of age 55 and
prior to attainment of age 65, the Employee shall separate from service and [she] shall be
eligible to receive a benefit under the Retirement Plan, the Employee shall be entitled to
receive pursuant to this Agreement a benefit having a value equal to an annual benefit for [her]
life of (a) 60% of the Employees Average Earnings reduced by (b) the annual benefit payable to
the Employee under the Retirement Plan in the form of a single life annuity for the life of the
Employee (whether or not the benefit under the Retirement Plan is actually paid in such form)
commencing at age 65 (whether or not the benefit under the Retirement Plan commences at such
time) [and further reduced by (c) the annual benefit payable to Employee under any qualified
defined benefit plan maintained by
in the form of a single life annuity for the
life of the Employee (whether or not the benefit payable under such plan is actually payable in
such form) commencing at age 65 (whether or not the benefit under such plan commences at such
time).] If such benefit shall commence to be paid prior to the Employees attainment of age 62,
such benefit shall be reduced by 4% for each complete year by which the date of benefit
commencement precedes [her] attainment of age 62. Such benefit shall be paid in accordance with
Section 2 below.
c. For purposes of a. and b. above, Average Earnings shall have the meaning set forth in
the Retirement Plan, except that in determining Average Earnings, Annual Earnings (as defined in
the Retirement Plan) shall not be limited to the OBRA 93 annual compensation limit, the annual
compensation limit imposed under the Economic Growth and Tax Relief Reconciliation Act of 2001
(EGTRRA), or any similar limit on annual compensation under Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the Code), imposed by any future legislation.
In determining Average Earnings, if the Employee retires under this Agreement on or after
attainment of age 62, Annual Earnings shall also include the value of all of the following: (1)
Cash Units, (2) Restricted Stock, [and] (3) Performance Shares awarded to a Participant under the
Connecticut Water Service, Inc. Performance Stock Program (the Program) for any year in which
such awards are made [and (4) Directors fees paid to Employee not otherwise included in the
definition of Average Earnings]. Notwithstanding the foregoing, in no event shall awards which
are long-term
-2-
awards or PARSAs under the Program be taken into account in determining Average
Earnings. The value of such awards (other than long-term awards or PARSAs) shall be included
within Annual Earnings in the year in which such amounts are finally determined and actually
awarded [and Directors fees shall be taken into account in the
year paid]. Such amounts, if credited to a Performance Share Account, shall not be counted a
second time when payment is made from such Account.
The calculation of the benefit set forth in a. and b. above, and of all other benefits
payable under this Agreement, shall be performed by the Compensation Committee under the
Retirement Plan, and the calculations and interpretations of such Committee shall be final and
binding on the parties hereto.
The Employee will not be deemed to have retired unless [she] has experienced a separation
from service as defined in Section 409A of the Code.
d.
Disability Benefit
. If the Employee shall incur a separation from service due to
a disability such that the Employee is considered eligible for a full disability pension under the
provisions of the Social Security Act, the Employee shall be entitled to receive pursuant to this
Agreement a benefit having a value equal to an annual benefit for [her] life calculated in the
manner set forth in b. above; provided, however, that the reduction factor pursuant to b. above
shall be .72 if the Employees benefit commencement date precedes age 62 by more than 7 complete
years. The Employee will not be deemed to have terminated employment unless [she] has experienced
a separation from service as defined in Section 409A of the Code. Such benefit shall be paid in
accordance with Section 2 below.
e.
Absence of Other Benefits
. No benefits shall be paid to the Employee pursuant to
this Agreement other than as provided in a. through d. above.
2.
TERMS AND CONDITIONS OF BENEFIT
. The annual lifetime benefit calculated in
accordance with Section 1 hereof shall be paid in monthly installments on the first day of each
month. Such installments paid pursuant to 1.a, 1.b or 1.d shall be calculated as if they were to
commence to be paid on the first day of the first month following the Employees separation from
service. However, if the Employee is a specified employee as that term is defined under Section
409A, at the time of separation from service, actual payment will commence on the first day of the
seventh (7
th
) month following the date of the Employees separation from service, and
the first payment shall include all payments that would have been made had payments commenced on
the first day of the month following the Employees separation from service, so that the first
installment made pursuant to 1.a., 1.b. or 1.d, if the Employee is a specified employee, shall be
equal to seven (7) such installments. If the Employee is not a specified employee at the time
of separation from service, payment of monthly installments shall commence on the first day of the
first month following the Employees separation from service.
If the Employee is a specified employee at the time of separation and should die after
separation, but prior to the first day of the seventh (7
th
) month following separation
from service, a lump sum equal to the amount the Employee would have received had [she] commenced
receiving benefits immediately upon the first day of the month
-3-
following separation from service and ending on the date of death shall be paid to the Employees estate; and the Employees
surviving spouse, if any, shall receive any 50% survivor annuity payments for the period from the
Employees date of death to the first day of the seventh (7
th
) month following
separation from service. Any payments made pursuant to the preceding sentence shall be made on
the first day of the seventh (7
th
) month following separation from service.
The form in which the benefit hereunder shall be paid is, if the Employee is unmarried at the
time of separation from service, an annuity for the life of the Employee only and, if the Employee
is married at the time of separation from service, an annuity for the life of the Employee with
the provision that after the Employees death, 50% of the annual benefit that was payable to the
Employee shall be continued to the Employees surviving spouse for life (a Joint and Survivor
Annuity). The benefit payable as a Joint and Survivor Annuity shall be calculated by applying to
the benefit calculated in accordance with Section 1.a., l.b. or 1.d. hereof, as appropriate, the
factors for the 50% contingent annuity option set forth in the Retirement Plan.
Monthly installments of benefits shall be paid on the first day of the month and shall cease
to be paid as of the first day of the month following the date of the Employees death, unless a
Joint and Survivor Annuity is then in effect, in which event the installments shall continue to be
paid on the first day of the month and shall cease as of the first day of the month following the
death of the Employees surviving spouse. A Joint and Survivor Annuity shall be deemed to be in
effect if the Employee is married at the time of separation from service, regardless of whether
the Employee dies prior to actual commencement of benefits.
3.
DEATH BENEFIT
. If the Employee has attained age 55 while in service with the
Employer and dies thereafter, while in the service of the Employer, and if the Employees spouse
or other beneficiary is entitled to a death benefit under the Retirement Plan, said spouse or
other beneficiary shall be entitled to receive a death benefit pursuant to this Plan. However, if
the Employee is survived by [her] spouse, such spouse shall be deemed to be entitled to receive a
spousal pre-retirement death benefit under the Retirement Plan even if a waiver of such spousal
pre-retirement death benefit is in effect under such Plan. The amount of said death benefit shall
be determined as if the Employee had retired on the day prior to [her] death with either a Joint
and Survivor Annuity in effect, if [her] spouse survives [her], or a five years certain and life
annuity (as described in the Retirement Plan) in effect, if [she] has no spouse or [her] spouse
does not survive [her]. However, rather than being paid in the form of a survivor annuity or in
installments for the five-year period, payment of the present value of the death benefit shall be
made in a lump sum on the first day of the first month following the Employees death. The
actuarial assumptions to be utilized in computing the present value thereof shall be the interest
rate and mortality assumptions then being utilized under the Retirement Plan in computing lump sum
payments.
No other death benefits shall be payable in the event of the Employees death while in
the service of the Employer.
4.
LIMITATION OF BENEFIT
. If the Employees employment shall be terminated for cause
involving fraud, dishonesty, moral turpitude, gross misconduct,
-4-
gross failure to perform [her] duties, or disclosure of secret or other confidential information of the Employer to any
competitor or to any person not authorized to receive such information, neither the Employee,
[her] spouse, [her] beneficiary nor [her] estate shall be entitled to receive any benefit under
this Agreement.
5.
ABSENCE OF FUNDING
. Benefits payable pursuant to this Agreement shall not be
funded, and the Employer shall not be required to segregate or earmark any of its assets for the
benefit of the Employee, [her] spouse, [her] beneficiary or [her] estate. Such benefits shall not
be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment by creditors of the Employee, [her] spouse, [her] beneficiary or [her] estate, and any attempt to anticipate,
alienate, transfer, assign or attach these benefits shall be void. The Employee, [her] spouse,
[her] beneficiary or [her] estate shall have only a contractual right against the Employer for the
benefits hereunder and shall have the status of general unsecured creditors. Notwithstanding the
foregoing, in order to pay benefits pursuant to this Agreement, the Employer may establish a
grantor trust (hereinafter the Trust) within the meaning of Section 671 of the Internal Revenue
Code of 1986, as amended. Some or all of the assets of the Trust may be dedicated to providing
benefits to the Employee, [her] spouse, [her] beneficiary or [her] estate pursuant to this
Agreement, but, nevertheless, all assets of the Trust shall at all times remain subject to the
claims of the Employers general creditors in the event of the Employers bankruptcy or
insolvency.
6.
MISCELLANEOUS
.
a. This Agreement may be amended at any time by mutual written agreement of the parties
hereto, but no amendment shall operate to give the Employee, [her] spouse, [her] estate or any
other beneficiary, either directly or indirectly, any interest whatsoever in any funds or assets
of the Employer, except the right to receive the payments herein provided and the right to receive
such payments from assets held in the Trust.
b. This Agreement shall not supersede any other contract of employment, whether oral or in
writing, between the Employer and the Employee, nor shall it affect or impair the rights and
obligations of the Employer and the Employee, respectively, thereunder. Nothing contained herein
shall impose any obligation on the Employer to continue the employment of the Employee.
c. This Agreement shall be construed in all respects under the laws of the State of
Connecticut.
(d) This Agreement has been prepared with reference to Section 409A of the Internal
Revenue Code and should be interpreted and administered in a manner consistent with Section
409A.
(e) This Amendment and Restatement is effective as of January 1, 2008.
IN WITNESS WHEREOF, the Employer and the Employee have executed this Agreement as of the day
and year above written.
-5-
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THE CONNECTICUT WATER COMPANY
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By
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Its
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Date
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[
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-6-
Exhibit 10.4
AMENDED AND RESTATED
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT (the Deferred Compensation Agreement) is made this 24th day of January, 2008
and between The Connecticut Water Company (together with any affiliated companies hereinafter
collectively referred to as the Employer) and [
]
(hereinafter
referred to as the Employee).
WITNESSETH:
WHEREAS, the Employee is among a select group of management or highly compensated employees
of the Employer; and
WHEREAS, the Employer and the Employee entered into a [n Amended and Restated] Deferred
Compensation Agreement dated [
]; and
WHEREAS, the parties wish to amend and restate the Deferred Compensation Agreement to comply
with Section 409A of the Internal Revenue Code as amended, and regulations issued thereunder
(collectively Section 409A); and
WHEREAS, the Employer and the Employee are willing to enter into this Amended and Restated
Deferred Compensation Agreement (the Agreement) on the terms herein set forth, effective as of
January 1, 2008;
NOW, THEREFORE, in consideration of the premises and the mutual and dependent promises herein,
the parties hereto agree as follows:
1.
DEFERRED COMPENSATION
. The Employee may file a written election with the Employer
in the form attached to this Agreement or such other form as may be approved by the Employer to
defer up to 12 percent (12%) of the Employees salary. Such amount shall be credited to a Deferred
Compensation Account as provided in Section 2 hereof. This election to defer the receipt of salary
must be made before the beginning of the calendar year for which the salary is earned and shall
remain in effect, unless terminated or changed, or until the date the Employee ceases to be an
employee of the Employer. Any election termination or change of a deferral election must be made
on a form provided by the Employer for such purpose and may only be made with respect to salary
which will be earned on and after the January 1 following the Employers receipt of such form
provided that such form is received at least seven (7) days prior to the applicable January 1.
2.
DEFERRED COMPENSATION ACCOUNT
. The Employer shall maintain on its books and
records a Deferred Compensation Account to record its liability for future payments of deferred
compensation and interest thereon required to be paid to the Employee or [her] beneficiary
pursuant to this Agreement. However, the Employer shall not be required to segregate or earmark any of its assets for
the benefit of the Employee or [her] beneficiary. The amount reflected in said Deferred
Compensation Account shall be available for the Employers general corporate purposes and shall
be available to the Employers general creditors. The amount reflected in said Deferred
Compensation Account shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the
Employee or [her] beneficiary, and any attempt to anticipate, alienate, transfer, assign or
attach the same shall be void. Neither the Employee nor [her] beneficiary may assert any right
or claim against any specific assets of the Employer. The Employee or [her] beneficiary shall
have only a contractual right against the Employer for the amount reflected in said Deferred
Compensation Account and shall have the status of general unsecured creditors. Notwithstanding
the foregoing, in order to pay amounts which may become due under this Agreement, the Employer
may establish a grantor trust (hereinafter the Trust) within the meaning of Section 671 of
the Internal Revenue Code of 1986, as amended. The assets in such Trust shall at all times be
subject to the claims of the general creditors of the Employer in the event of the Employers
bankruptcy or insolvency, and neither the Employee nor any beneficiary shall have any preferred
claim or right, or any beneficial ownership interest in, any such assets of the Trust prior to
the time such assets are paid to an Employee or beneficiary pursuant to this Agreement.
The Employer shall credit to said Deferred Compensation Account the amount of any salary
to which the Employee becomes entitled and which is deferred pursuant to Section 1 hereof, such
amount to be credited as of the first business day of each month. The Employer shall also
credit to said Deferred Compensation Account an Interest Equivalent in the amount and manner
set forth in Section 3 hereof.
3.
PAYMENT OF DEFERRED COMPENSATION
(a)
Separation from Service On or After Attainment of Age 55
. If the Employee should
separate from service on or after [her] attainment of age fifty-five (55) for any reason other than
death or an account of Cause as defined in subsection (c) below, [she] shall be entitled to
receive payment of the entire amount of [her] Deferred Compensation Account including an Interest
Equivalent, as described below, in the form of an actuarially equivalent life annuity providing for
equal annual payments for the life of the Employee. Such actuarially equivalent life annuity shall
be computed on the basis of a mortality table that assumes a life expectancy of age eighty (80) and
uses the Interest Factor described below (payment shall continue for the life of the Employee, even
if the Employee continues to live past eighty (80)). If the Employee is a specified employee as
that term is defined under Section 409A at the time of separation from service, the first annual
annuity payment under this subsection shall be paid on the first day of the seventh month following
the date of the Employees separation from service, and subsequent payments shall be made on
anniversaries of that date. If the Employee is not a specified employee at the time of
separation from service, the first annual payment under this subsection shall be paid on the first
day of the month following the date of the Employees separation from service, and subsequent payments
shall be made on anniversaries of that date.
There shall be credited to the Employees Deferred Compensation Account as of each January 1
and July 1, commencing with [
] until payment of such account begins, as
additional deferred compensation, an Interest Equivalent equal
-2-
to fifty percent (50%) of the
product of (i) the AAA Corporate Bond Yield Averages published by Moodys Bond Survey for the
Friday ending on or immediately preceding the applicable January 1 and July 1 plus [
]
percentage points (the Interest Factor), multiplied by (ii) the balance of the Employees
Deferred Compensation Account, including the amount of Interest Equivalent previously credited to
such Employees account, as of the preceding day (i.e., December 31 or June 30). The Interest
Factor used to compute the annuity payable upon the Employees separation from service on or after
[her] attainment of age fifty-five (55) shall be calculated based upon the Interest Factor as of
the January 1 or July 1 immediately preceding the date of the Employees separation from service,
whichever shall fall nearer to the date of the Employee
s separation from service.
(b)
Separation from Service Prior to Attainment of Age 55
. If the Employee should
separate from service prior to [her] attainment of age fifty-five (55) for any reason other than
death or on account of Cause as defined in subsection (c) below, the Employee shall be
entitled to receive payment in a lump sum of the entire amount of [her] Deferred Compensation
Account, including the same Interest Equivalent as described in subsection (a) above. If the
Employee is a specified employee as that term is defined under Section 409A at the time of
separation from service, payment under this subsection shall be made on the date which is six
(6) months following the date payment would otherwise be made pursuant to the following
sentence. If the Employee is not a specified employee at the time of separation from service,
payment under this subsection shall be made on the third (3
rd
) day following
separation from service.
(c)
Separation from Service for Cause
.
(i) If the employment of the Employee is terminated by the Employer for Cause, the
Employee shall be entitled only to a return of amounts deferred pursuant to Section 1
hereof.
(ii) If the Employee is so terminated on or after age 55, payment shall be made in
accordance with the terms of Section 3(a) above. However, the Employee shall not be
entitled to the Interest Equivalent for any years prior to such termination, and such
Interest Equivalent shall not be included in determining Employees benefit hereunder.
An Interest Factor shall be utilized in calculating the amount of the annuity payable
in accordance with the last sentence of subsection (a) above.
(iii) If the Employee is so terminated prior to attainment of age 55, payment of
the return of amounts deferred (excluding any Interest Equivalent) shall be made in a lump sum. If the Employee is a specified
employee as that term is defined under Section 409A at the time of separation from
service, payment under this subsection shall be made on the date which is six (6)
months following the date payment would otherwise be made pursuant to the following
sentence. If the Employee is not a specified employee at the time of separation from
service, payment under this subsection shall be made on the third (3
rd
) day
following separation from service.
-3-
(iv) As used in this Agreement, the term Cause shall mean:
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(A)
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the Employees rendering, while employed by the Employer,
of any services, assistance or advice, either directly or indirectly, to
any person, firm or organization competing with, or in opposition to, the
Employer;
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(B)
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the Employees allowing, while employed by the Employer,
any use of [her] name by any person, firm or organization competing with,
or in opposition to, the Employer; or
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(C)
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willful misconduct by the Employee, including, but not
limited to, the commission by the Employee of a felony or the perpetration
by the Employee of a common law fraud upon the Employer.
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(d)
Death While Employed
. Notwithstanding anything to the contrary contained in the
foregoing, if the Employee should die while employed by the Employer, [her] beneficiary,
designated pursuant to Section 4 hereof, shall receive in a lump sum, in lieu of the amount(s)
otherwise payable to the Employee under this Agreement, a death benefit equal to the greater of
(i) the Hypothetical Death Benefit, as defined in subsection (f) hereof, and (ii) the entire
amount of [her] Deferred Compensation Account at the date of [her] death, assuming that an
Interest Equivalent were credited to such account as of each January 1 and July 1, occurring after
the first deferral hereunder until the date of death at the rate set forth in subsection (a)
hereof. Such beneficiary shall receive such death benefit on the thirtieth (30
th
) day
following the death of the Employee.
(e)
Death After Separation from Service
.
(i) If the Employee should die after [her] separation from service, whether prior
to or on or after attainment of age 55, and prior to the date on which payment of [her]
Deferred Compensation Account has commenced in the form of an annuity in accordance
with subsection (a) or has been paid in the form of a lump sum as provided in
subsection (b), [her] beneficiary, designated pursuant to Section 4 hereof, shall
receive in a lump sum, in lieu of the amount(s) otherwise payable to the Employee under
this Agreement, a death benefit equal to the entire amount of the Employees Deferred Compensation Account, including the same Interest Equivalent as described in
subsection (a) above, at the date of [her] death, provided that the Employees
employment shall not have terminated on account of Cause as defined in subsection (c)
hereof. In the event that the Employee should die after the termination of [her]
employment for Cause, whether prior to or on or after attainment of age 55, and in
either case prior to the date upon which payment of [her] Deferred Compensation Account
has been made or has commenced, [her] beneficiary, designated pursuant to Section 4
hereof, shall receive a return of the amounts deferred (excluding any Interest
Equivalent). No Interest Equivalent shall be credited to the Employee
s
Deferred Compensation Account in the event of the Employees death after [her]
termination on
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account of Cause as provided in subsection (c) hereof. In either
case, the Employees beneficiary shall receive such death benefit on the thirtieth
(30
th
) day following the death of the Employee.
(ii) If the Employee should die after [her] separation from service with the
Employer on or after attainment of age 55 (not on account of Cause) and after the
date on which payment of [her] Deferred Compensation Account and the Interest
Equivalent set forth in subsection (a) hereof has commenced in the form of an annuity
as provided in subsection (a), no additional benefits shall be payable under this
Agreement after the Employees death except to the extent that the Employee did not
receive prior to [her] death benefits in an amount equal to or greater than the
Employees Deferred Compensation Account plus any Interest Equivalent credited thereto,
as of the date of the Employees death. If the Employee dies prior to receiving
benefits equal to or greater than the Employees Deferred Compensation Account plus any
Interest Equivalent credited thereto as of the date of the Employees death, [her]
beneficiary shall be entitled to a lump sum payment, thirty (30) days following
Employees death, equal to the difference between benefits paid to the Employee
hereunder and the Employees Deferred Compensation account, plus any Interest
Equivalent credited thereto, as of the date of the Employees death.
(iii) If the Employee should die after [her] separation from service with the
Employer on or after attainment of age 55 on account of Cause and after the date
payments have commenced to [her] in the form of an annuity as provided in subsection
(c), no additional benefits shall be payable under this Agreement after the Employees
death except to the extent the Employee did not receive prior to [her] death benefits
in an amount equal to or greater than the amounts deferred (excluding any Interest
Equivalent earned while employed). In such event, [her] beneficiary shall be entitled
to a lump sum payment, thirty (30) days following Employees death, equal to the
difference between benefits paid to the Employee hereunder and the amounts deferred
(excluding any Interest Equivalent earned while employed).
(iv) If the Employee should die after [her] separation from service with the
Employer and after the date on which payment has been paid to [her] in the form of a lump sum pursuant to subsection (b) or (c), no additional
benefits shall be payable upon the Employees death.
(f)
Hypothetical Death Benefit
. For purposes of this Agreement, the term
Hypothetical Death Benefit shall mean a lump sum benefit equal to the proceeds of any policy of
key-man life insurance on the life of the Employee, of which the Employer is owner and beneficiary,
and which policy is designated by the Employer as subject to the provisions hereof,
reduced
by
(i) the amount of any tax imposed on the Employer with respect to such proceeds and (ii) the
cost to the Employer of any tax deductions postponed as a result of salary deferrals pursuant to
Section 1 hereof and
increased by
(iii) the tax deduction to the Employer which would
result from payment of the Hypothetical Death Benefit to a beneficiary of the Employee. For
purposes of (ii) above, an opportunity cost factor of six (6) percent pre-tax interest will be
applied during the
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period of postponed deductions under (ii). The calculation of the Hypothetical
Death Benefit shall be done by the Employer, whose calculation shall be final and binding on the
Employee and [her] beneficiary. Anything herein to the contrary notwithstanding, the Employer
shall not be required to purchase a policy of key-man life insurance on the life of any Employee,
and any such policy purchased by the Employer, and all proceeds thereof, shall remain at all times
available to the Employers general creditors.
(g)
Termination of Employment
. In order for the Employee to be considered to have
terminated employment with the Employer, the Employee must have incurred a separation from service
from the Employer (and all related companies) within the meaning of Section 409A, and the term
termination of employment shall be construed and interpreted in a manner consistent with the term
separation from service.
4.
BENEFICIARY
. The Employee has notified or will in the future notify the Employer
of the person or persons entitled to receive payments on the death of the Employee. For the
purposes of this Agreement, such person or persons are herein referred to collectively as the
beneficiary. The person whom an Employee designates as [her] beneficiary for this purpose must
be one of the following: the Employee
s spouse; father, mother, sister, brother, son
or daughter. The beneficiary may also be a legal ward living with and dependent on the Employee
at the time of [her] death. If the Employee dies and has not designated a beneficiary, [her]
beneficiary shall be [her] spouse, if living; otherwise, [her] beneficiary shall be deemed to be
[her] estate. An Employees beneficiary designation may be changed at any time by the Employee
giving written notice to the Employer of such change. The rights of any beneficiary presently or
hereafter designated are subject to any changes made in this Agreement by the Employee and the
Employer.
5.
WITHHOLDING
. The Employer shall be permitted to withhold from any payment to the
Employee or [her] beneficiary hereunder all federal, state or other taxes which may be required
with respect to such payment.
6.
ARBITRATION
. In the event that a dispute shall arise with respect to any of the
provisions of this Agreement, either the Employer or the Employee or [her] beneficiary, as the
case may be, may give written notice to the other stating the claims that said party desires to
arbitrate, and naming an arbitrator. Within ten (10) days after the receipt of such notice, the
party receiving same shall appoint a second arbitrator by written notice to be sent to the party
who requested arbitration. Within ten (10) days after receipt of such notice of appointment of
the second arbitrator, the two (2) arbitrators so appointed shall meet to select a third
arbitrator and shall give written notice of such selection to the Employer and the Employee or
[her] beneficiary. The decision of a majority of the arbitrators shall be conclusive and binding
upon the Employer and the Employee or [her] beneficiary. All notices hereunder shall be by
registered mail addressed to the last known address of the party entitled to receive notice. The
Employer and the Employee shall each pay their own costs incurred in the arbitration proceeding.
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7.
MISCELLANEOUS
.
(a) This Agreement shall be binding upon the parties hereto, their heirs, executors,
administrators, successors and assigns. The Employer agrees that it will not be a party to any
merger, consolidation or reorganization unless and until its obligations hereunder shall be
expressly assumed by its successor or successors.
(b) This Agreement may be amended at any time by mutual written agreement of the parties
hereto, but no amendment shall operate to give the Employee, or any beneficiary designated by
[her], either directly or indirectly, any interest whatsoever in any funds or assets of the
Employer, except the right to receive the payments herein provided.
(c) Deferrals under this Agreement may be suspended by the Employer effective as of any
January 1, following the time that tax or other laws are enacted or interpreted which result or
will result in costs to the Employer significantly in excess of those contemplated at the time of
the execution hereof. In the event of such suspension, the Employer
s sole obligation
shall be to pay to the Employee in accordance with Section 3 above. In no event may deferrals be
ceased during a calendar year by action of either the Employer or the Employee, or both.
(d) This Agreement shall not supersede any contract of employment, whether oral or written,
between the Employer and the Employee, nor shall it affect or impair the rights and obligations of
the Employer and the Employee, respectively, thereunder. Nothing contained herein shall impose any
obligation on the Employer to continue the employment of the Employee.
(e) If Moodys Bond Survey shall cease to publish the Corporate Bond Yield Averages referred
to in Section 3 hereof, a similar average selected by the Board of Directors of the Employer, in
its sole discretion, shall be used.
(f) This Agreement shall be executed in duplicate, and each executed copy of this
Agreement shall be deemed an original.
(g) This Agreement shall be construed in all respects under the laws of the State of
Connecticut, subject to applicable federal law.
(h) This Agreement has been prepared with reference to Section 409A and should be
interpreted and administered in a manner consistent with Section 409A.
(i) This Amendment and Restatement is effective as of January 1, 2008.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of
the day and year first above written.
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THE CONNECTICUT WATER
COMPANY
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Exhibit 10.6
SECOND AMENDMENT TO THE
CONNECTICUT WATER SERVICE, INC.
2004 PERFORMANCE STOCK PROGRAM
WHEREAS, the Board of Directors of Connecticut Water Service, Inc. (the Company) adopted the
Connecticut Water Service, Inc. 2004 Performance Stock Program (the Plan) on January 7, 2004 and
the Companys shareholders approved the Plan, effective April 23, 2004; and
WHEREAS, the Company reserved the right to the Compensation Committee of the Board of
Directors to amend the Plan in Section 14 thereof; and
WHEREAS, the Plan was previously amended by a First Amendment thereto, dated December 1, 2005;
and
WHEREAS, the American Jobs Creation Act of 2004 added a new section 409A to the Internal
Revenue Code of 1986, as amended; and
WHEREAS, awards made under the Plan are subject to Section 409A; and
WHEREAS, the Company wishes to further amend the Plan to make it compliant with Section 409A
and regulations issued thereunder (collectively, Section 409A).
NOW, THEREFORE, the Plan is amended as set forth below. The effective date of this amendment
is January 1, 2008.
1. Section 2(j) is amended in its entirety to read as follows:
(j)
Date of Grant
means the date on which the granting of an Award is authorized.
2. Section 7(e) is stricken in its entirety and the following is substituted in lieu thereof:
[Intentionally omitted].
3. Section 7(i) is deleted in its entirety and the following is substituted in lieu thereof:
[Intentionally omitted].
4. Section 8 is amended to read as follows:
8.
Performance Share or Cash Units
(a)
Award Grants
. The Committee is authorized to establish performance programs to be
effective over designated Award Periods determined by the Committee. The Committee may grant
Awards of Performance Share Units or Performance Cash Units to Eligible Persons in accordance with
such performance programs. The Committee shall determine the number of Performance Share Units of
Performance Cash Units to be awarded, if any, to each Eligible person who is selected to receive
such an Award. Before or within 90 days after the beginning of each Award Period to which the
Performance Goals relate and on or before twenty-five percent (25%) of the period of service (as
scheduled in good faith at the time the Performance Goals are established) has elapsed, the
Committee shall establish written Performance Goals based upon financial objectives for the Company
or a Subsidiary for such Award Period and a schedule relating to the accomplishment of the
Performance Goals to the Awards to be earned by Participants, provided that the outcome is
substantially uncertain at the time the Committee actually establishes the Performance Goals.
Performance Goals may include absolute or relative growth in earnings per share, rate of return on
stockholders equity, earnings per share, total stockholder return relative to peers, water
quality, customer satisfaction, customer growth or other measurement of corporate performance and
may be determined on an individual basis or by categories of Participants.
(b)
Determination of Award
. At the completion of an Award Period, or at other times as
specified by the Committee, the Committee shall calculate the number of shares of Stock or amount
of cash earned with respect to each Participants Performance
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Share Unit or Performance Cash Unit, as applicable, by multiplying the number of Performance Share
Units and Performance Cash Units, as applicable, granted to the Participant by a performance factor
representing the degree of attainment of the Performance Goals.
(c)
Payment of Performance Share or Cash Unit Awards
. Performance Share Unit or Performance
Cash Unit Awards shall be payable in the number of shares of Stock or that amount of cash
determined in accordance with Section 8(b). The amount of any payment made in cash shall be based
upon the Fair Market Value of the Stock on the business day prior to payment. Payments of
Performance Cash Unit Awards shall be made between the March 1 and April 1 following completion of
an Award Period. Performance Share Units shall be credited to the Participants Performance Share
Account between the March 1 and April 1 following the completion of the Award Period and the
requirements of any vesting schedule established by the Committee with respect to the Award have
been satisfied.
(i)
Elections.
Any election to have an Award or a portion of an Award credited to a
Performance Share Account shall be made on a written form provided by the Company and shall
be effective with respect to Awards that may be earned on and after the January 1 following
the Companys receipt of such form, provided that such form is received by the December 24
prior to the applicable January 1. Any such election shall be made only in increments of
ten percent (10%) of the Award (rounded to the nearest whole share) and shall be effective
only for Awards made during the year in which the election becomes effective.
(ii)
Performance Share Account
. The Company shall maintain on its books and records a
Performance Share Account to record its liability for future
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payments to the Participant or his beneficiary pursuant to the Plan. However, a
Performance Share Account under the Plan shall constitute an unfunded arrangement; the
Company shall not be required to segregate or earmark any of its assets for the benefit of
the Participant or his beneficiary, and the amount reflected in a Performance Share Account
shall be available for the Companys general corporate purposes and shall be available to
the Companys general creditors. The amount reflected in a Performance Share Account shall
not be subject in any manner to anticipation, alienation, transfer or assignment by the
Participant or his or her beneficiary, and any attempt to anticipate, alienate, transfer or
assign the same shall be void. Neither the Participant nor his or her beneficiary may
assert any right or claim against any specific assets of the Company in respect of a
Performance Share Account, and the Participant and his or her beneficiary shall have only a
contractual right against the Company for the amount reflected in a Performance Share
Account.
Notwithstanding the foregoing, in order to pay amounts which may become due under the
Plan in respect of a Participants Performance Share Account, the Company may establish a
grantor trust (hereinafter the Trust) within the meaning of Section 671 of the Code.
Some or all of the assets of the Trust may be dedicated to providing benefits to the
Participants pursuant to the Plan, but, nevertheless, all assets of the Trust shall at all
times remain subject to the claims of the Companys general creditors in the event of the
Companys bankruptcy or insolvency.
(iii)
Dividend Equivalents
. On every date on which a dividend or other distribution
is paid with respect to Common Stock, commencing with the first such payment date after the
date on which a Performance Share Unit is credited to
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a Participants Performance Share Account and continuing until such a Performance Share
Unit is either forfeited or paid out, there shall be credited to the Participants
Performance Share Account a Dividend Equivalent in respect of such Performance Share Unit.
A Dividend Equivalent shall mean, with respect to a whole Performance Share Unit credited
to a Participants Performance Share Account, a measure of value equal to the fractional
share of Common Stock that could be purchased with the amount that would have been paid to
the Participant as a dividend or other distribution if the Participant had owned a whole
share of Common Stock in lieu of said whole Performance Share Unit, the date of such deemed
purchase being the dividend payment date. Dividend Equivalents are expressed in the form
of Performance Share Units.
(iv)
Participant Not a Stockholder
. The Participant shall have no stockholders
rights with respect to any shares of Common Stock in respect of which Performance Share
Units are credited to his or her Performance Share Account.
(v)
Payments in Respect of Performance Shares
.
1.
Separation from Service for Reasons Other than Death
. In the event of a
Participants Normal Termination or termination by reason of Disability, such
Participant shall be entitled to receive payment in respect of the entire amount
then credited to his or her Performance Share Account. For purposes of this
Section 8, a Normal Termination or termination by reason of Disability shall be
deemed to occur at the time the Participant experiences a separation from service,
as that term is defined under Section 409A of the Code. Such payment shall be made
in the form of the number of shares of Common Stock equal to the number of
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whole Performance Share Units then credited to the Participants Performance Share
Account, including related Dividend Equivalents, with any fractional Performance
Share Unit being paid in cash determined on the basis of the value of a
corresponding fractional share of Common Stock on the business day preceding the
date of payment. Said shares of Common Stock and any cash amount shall be
transferred to the Participant sixty (60) days after the Participants separation
from service. Notwithstanding the foregoing the foregoing sentence, if a
Participant is a specified employee, as defined under Section 409A of the Code,
at the time of termination, payment hereunder shall be made six (6) months
following the date on which the Participant would have been paid, had he not been a
specified employee on the date of termination.
2.
Death While Employed by the Company
. In the event of a Participants death
prior to separation from service, the Participants beneficiary shall be entitled
to receive payment in respect of the entire amount then credited to his or her
Performance Share Account. Such payment shall be made in the form of the number of
shares of Common Stock equal to the number of whole Performance Share Units then
credited to the Participants Performance Share Account, with any fractional
Performance Share Unit being paid in cash determined on the basis of the value of a
corresponding fractional share of Common Stock on the business day preceding the
date of payment. Said shares of Common Stock and any cash amount shall be
transferred to the Participants beneficiary sixty (60) days after the death of the
Participant.
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3.
Hardship Payment
. Notwithstanding anything to the contrary herein, if the
Committee, upon written petition of the Participant, determines, in the Committees
sole discretion, that the Participant has suffered an unforeseeable emergency (as
hereinafter defined), the Participant shall be entitled to receive, at the time of
such determination, an amount not to exceed the lesser of (1) the amount reasonably
necessary to satisfy the emergency need (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to result
from the distribution), as determined by the Committee; and (ii) the number of
Whole Performance Share Units then credited to the Participants Performance Share
Account. Such payment shall be made in cash. In the event of a hardship payment
in respect of the Participants entire Performance Share Account, any fractional
Performance Share Unit shall be paid in cash determined on the basis of the value
of a corresponding fractional share of Common Stock on the business day preceding
the date of payment. For purposes of the foregoing, an Unforeseeable Emergency
shall mean a severe financial hardship to the Participant resulting from an illness
or accident of the Participant, the Participants spouse, the Participants
beneficiary, or the Participants dependent (as defined in Section 152 of the Code
without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B); loss of the
Participants property due to casualty (including the need to rebuild a home
following damage to a home not otherwise covered by insurance) or other similar
extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant or the need to pay for the funeral expenses of a
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spouse, a beneficiary or a department (as defined in Section 152 of the Code
without regard to Section 152(a)(1), (b)(2), and (d)(1)(B)).
(d)
Adjustment of Performance Goals
. The Committee may, during the Award Period, make such
adjustments to Performance Goals as it may deem appropriate, to compensate for, or reflect (i)
extraordinary or non-recurring events experienced during an Award Period by the Company or by any
other corporation whose performance is relevant to the determination of whether Performance Goals
have been attained; (ii) any significant changes that may have occurred during such Award Period in
applicable accounting rules or principles or changes in the Companys method of accounting or in
that of any other corporation whose performance is relevant to the determination of whether an
Award has been earned; (iii) any significant changes that may have occurred during such Award
period in tax laws or other laws or rules or regulations that alter or affect the computation of
the measures of Performance Goals used for the calculation of Awards; or (iv) any other factors
which the Committee deems appropriate; provided, however, that no such change may increase the
amount of an Award that would otherwise be payable to any Covered Employee.
5. Section 9(g) is deleted in its entirety and the following is substituted in lieu thereof:
[Intentionally omitted].
6. Section 11(q) (iii) is deleted in its entirety and the following is substituted in lieu
thereof: [Intentionally omitted].
7. Section 11(t) is deleted in its entirety and the following is substituted in lieu thereof:
[Intentionally omitted].
8. Except as hereby amended, the Plan remains in full force and effect.
9. This Amendment is effective as of January 1, 2008.
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