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EXHIBIT 10.12.1
SAVINGS PLAN OF THE CONNECTICUT WATER COMPANY
SUMMARY PLAN DESCRIPTION
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CONNECTICUT WATER SERVICE, INC.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.
October 1, 2000
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INTRODUCTION
Effective 10/01/2000, Connecticut Water Company has amended the Savings Plan of
the Connecticut Water Company designed to help you meet your financial needs
during your retirement years. The Plan was originally effective on 01/01/1985
and its plan sequence number is 003. The plan sequence number identifies the
number of qualified plans that Connecticut Water Company currently maintains or
has previously maintained.
On October 1, 2000, the Connecticut Water Company amended the Plan to, among
other things, allow you to invest your Employee 401(k) contributions in the
common stock, no par value, of Connecticut Water Service, Inc., the parent
corporation of the Connecticut Water Company (the Company Stock) beginning on
December 18, 2000. The addition of Company Stock as an investment option under
the Plan with respect to your Employee 401(k) Contributions requires that a
Registration Statement be filed with the Securities and Exchange Commission
covering the Company Stock to be purchased under the terms of the Plan.
Connecticut Water Service, Inc. has filed with the Securities and Exchange
Commission a registration statement on Form S-8 to register [200,000] shares of
Company Stock and related participation interests in the Plan. The registration
statement covering [200,000] shares of Company Stock and related participation
interests was filed on December 8, 2000 (Form S-8 File No. 333-______).
As used in this document, the term "Company" refers to the Connecticut Water
Company; the term "Parent Company" refers to Connecticut Water Service, Inc.;
and the term "Company Stock" means common stock of Connecticut Water Service,
Inc.
To become a Participant in the Plan, you must meet the Plan's eligibility
requirements. Once you become a Participant, Connecticut Water Company will
maintain an Individual Account for you. Each Plan Year your account will be
adjusted to reflect contributions, gains, losses, etc. The percentage of your
account to which you will be entitled when you terminate employment depends on
the Plan's vesting schedule. These features are explained further in the
following pages.
The actual Plan is a complex legal document that has been written in the manner
required by the Internal Revenue Service (IRS) and is referred to as the Basic
Plan Document. This document is called a Summary Plan Description (SPD) and
explains and summarizes the important features of the Basic Plan Document.
Connecticut Water Company may make contributions to this Plan. In addition, you
may be able to elect to reduce your annual taxable income by deferring a portion
of your Compensation into the Plan as Employee 401(k) Contributions. You should
consult the Basic Plan Document for technical and detailed Plan provisions. The
legal operation of the Plan is controlled by the Basic Plan Document and not
this SPD.
If at any time you have specific questions about the Plan as it applies to you,
please bring them to the attention of the Plan Administrator whose address and
telephone number appear in Section One of this SPD. You may also examine the
Basic Plan Document itself at a reasonable time by making arrangements with the
Plan Administrator.
INCORPORATION BY REFERENCE
This Summary Plan Description (SPD), the current Appendix to the SPD and any
subsequent Appendix to the SPD, and the documents incorporated by reference in
the registration statement on Form S-8 for the Plan constitute a prospectus that
meets the requirements of Section 10(a) of the Securities Act of 1933. The
following documents filed by the Parent Company with the SEC are incorporated by
reference in the registration statement:
- - The Parent Company's annual report on Form 10-K for the fiscal year ended
December 31, 1999, which contains audited financial statements for the fiscal
year ended December 31, 1999;
- - The Parent Company's quarterly reports on Form 10-Q for the quarters ended
March 31, 2000; June 30, 2000, and September 30, 2000;
- - The Parent Company's definitive proxy statement pursuant to Schedule 14A
filed with the SEC on March 14, 2000; and
- - The description of the Parent Company's common stock which is contained in
its Form S-4 registration statement on Form S-4 filed on June 17, 1999,
including any amendment or report filed for the purpose of updating such
description.
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Any statement contained in a document incorporated or deemed to be incorporated
by reference into this SPD will be deemed to be modified or superseded for
purposes of this SPD to the extent that a statement contained in this SPD or any
other subsequently filed document that is deemed to be incorporated by reference
into this SPD modifies or supersedes the statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this SPD.
AVAILABLE INFORMATION
A copy of the Parent Company's annual report to stockholders for each fiscal
year, and copies of all reports, proxy statements, and other communications
distributed to stockholders of the Parent Company generally, will be delivered
to each employee who receives this SPD unless such employee otherwise receives a
copy of such annual report as a stockholder of the Parent Company, in which case
the Parent Company will furnish a copy to the employee on written request.
The Company will provide without charge to each person to whom a copy of this
SPD is delivered, upon the written or oral request of any such person, a copy of
any or all of the above documents incorporated by reference in the registration
statement (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information or documents which
the SPD incorporates). Requests should be directed to:
Plan Administrator of the Savings Plan
for the Connecticut Water Company
c/o Connecticut Water Company
93 West Main Street
Clinton, CT 06413
Telephone Number: (860) 669-8630
The Parent Company files reports, proxy statements and other information with
the SEC. Copies of such Parent Company reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the SEC at:
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 500 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
Reports, proxy statements and other information concerning the Parent Company
may also be inspected at:
The National Association of Securities Dealers
1735 K Street, N.W.
Washington, D.C. 20006
Copies of these materials can also be obtained by mail at prescribed rates from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains a Website
that contains reports, proxy statements and other information regarding the
Parent Company. The Internet address of the SEC Website is http://www.sec.gov.
THE SHARES OF COMPANY STOCK TO BE ISSUED TO PARTICIPANTS IN THE PLAN HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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CONTENTS OF THE SUMMARY PLAN DESCRIPTION
SECTION ONE DEFINITIONS
SECTION TWO ELIGIBILITY AND PARTICIPATION
Information in this section includes:
Service Requirements
How Hours of Service Are Counted
When You Can Participate in the Plan
SECTION THREE FUNDING & ADMINISTRATION OF THE PLAN
Information in this section includes:
Plan Contribution Sources, Allocations and Limitations
Compensation
Plan Administration and Management
Self Direction of Investments
SECTION FOUR DISTRIBUTION OF BENEFITS AND VESTING
Information in this section includes:
Benefit Eligibility
Distribution of Benefits
Determining Your Vested Amount
Restrictions or Penalties on Distributions
Payouts to Your Beneficiaries
SECTION FIVE CLAIMS PROCEDURE
Information in this section includes:
What to do to Receive Benefits
How to File a Claim
SECTION SIX MISCELLANEOUS
Information in this section includes:
Borrowing From the Plan
Plan Termination
Break in Service Situations
SECTION SEVEN RIGHTS UNDER ERISA
Information in this section includes:
The Rights and Protections a Plan Participant is Entitled to
Under the Employee Retirement Income Security Act
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SECTION ONE: DEFINITIONS
The following definitions are used in the text of this SPD. These words and
phrases are capitalized throughout the SPD for ease of reference.
COMPENSATION - means the earnings paid to you by Connecticut Water Company.
EMPLOYEE - means any person employed by Connecticut Water Company.
EMPLOYEE 401(k) CONTRIBUTIONS - means the dollars you put into the Plan through
before-tax payroll deductions.
EMPLOYER - means Connecticut Water Company, the corporation maintaining this
Plan.
EMPLOYER CONTRIBUTION - means the amount contributed to the Plan on your behalf
by Connecticut Water Company.
INDIVIDUAL ACCOUNT - means the contribution account established and maintained
for you which is made up of all contributions made by you or on your behalf.
MATCHING CONTRIBUTION - means a contribution made by Connecticut Water Company
to the 401(k) Plan on your behalf based upon your Employee 401(k) Contributions.
PARTICIPANT - means an Employee who has met the eligibility requirements, has
entered the Plan, and has become eligible to make or receive a contribution to
his or her Individual Account.
PAYROLL DEDUCTION FORM - means the agreement you sign to authorize Connecticut
Water Company to deduct your Employee 401(k) Contributions from your
Compensation and put them into the 401(k) Plan.
PLAN - means the Savings Plan of The Connecticut Water Company. The Plan is
governed by a legal document containing various technical and detailed
provisions. The Plan Administrator has a copy of the Plan document.
PLAN ADMINISTRATOR - The Plan Administrator is responsible for directly
administering the Plan. Connecticut Water Company is the Plan Administrator of
this Plan and is therefore responsible for the day-to-day administration and
management of the Plan. To ensure efficient and sound operation and management
of the Plan, Connecticut Water Company has the discretionary authority to
appoint other persons as may be necessary to act on its behalf or assist in
performing these responsibilities. The address and phone number of Connecticut
Water Company are listed below.
Connecticut Water Company
93 West Main Street
Clinton, CT 06413
860-669-8630
PLAN YEAR - means the twelve month period ending on 12-31.
SECTION TWO: ELIGIBILITY AND PARTICIPATION
SERVICE REQUIREMENTS
Employee 401(k) Contributions
You will become eligible to enter the Plan and begin making Employee 401(k)
Contributions after your have completed 6 months of service for Connecticut
Water Company.
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Matching Contributions
You will become eligible to enter the Plan and receive Matching Contributions
after you have performed 6 months of service for Connecticut Water Company.
Profit Sharing Contributions
You will become eligible to enter the Plan and receive Profit Sharing
Contributions after you have performed 6 months of service for Connecticut Water
Company.
HOW HOURS OF SERVICE ARE COUNTED
Your hours of service are generally counted on the basis of the actual number of
hours you work or for which you are entitled to Compensation. For each type of
contribution for which you are required to perform a fractional Year of
Eligibility Service, instead of counting hours of service for purposes of
determining your number of Years of Eligibility Service, you will receive credit
for the period of time during which you are paid or entitled to pay from
Connecticut Water Company.
However, since this is an amendment and restatement of an existing Plan, you
will not be required to satisfy the eligibility requirements stated above if you
were a Participant in the prior Plan.
You will continue to participate in the Plan as long as you do not incur a break
in service. A break in service is a 12 consecutive month period during which you
fail to work in excess of 1 hours. However, no break in service will occur if
the reason you did not work more than the required number of hours was because
of certain absences due to birth, pregnancy or adoption of children, military
service or other service during a national emergency during which your
re-employment under a federal or state law is protected and you do, in fact,
return to work within the time required by law.
SECTION THREE: PLAN FUNDING AND ADMINISTRATION
PLAN CONTRIBUTION SOURCES, ALLOCATIONS AND LIMITATIONS
Employee 401(k) Contributions
Effective 10/01/2000 (or the date you begin participating in the Plan, if
later), you may make before-tax contributions to the Plan through payroll
deduction. Such contributions are called Employee 401(k) Contributions.
To begin making Employee 401(k) Contributions, you must complete and sign a
Payroll Deduction Form. Once you become eligible to participate in the Plan,
Connecticut Water Company will provide you with such form.
For example, assume your compensation is $15,000. You wish to make an Employee
401(k) Contribution to the Plan and sign a Payroll Deduction Form authorizing an
Employee 401(k) Contribution of 5% of your Compensation. As a result,
Connecticut Water Company will pay you $14,250 as gross taxable income and will
deposit your 5% Employee 401(k) Contribution (i.e., $750) into the Plan for you.
Limits on Employee 401(k) Contributions
Federal tax laws and plan documents govern the amount of Employee 401(k)
Contributions which you may make. Specifically, federal law places two annual
limits on the amount you may defer into a 401(k) plan - an individual limit and
an average limit.
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Individual Limit
Federal tax law limits the amount you can put into the Plan during each of your
tax years (generally, a calendar year). This amount is indexed periodically for
changes in the cost-of-living index (e.g., 2000 limit of $10,500). This limit
applies to all Employee 401(k) Contributions you make during your tax year to
any 401(k) plans maintained by your present or former employers.
If you defer more than you are allowed, you must submit in writing for the
return of the excess to Connecticut Water Company no later than March 1.
The excess amount and any earnings you may have received on the excess must be
taken out of the Plan by April 15 of the year following the year the money went
into the Plan. The excess amounts will appear on your Form W-2 and will be
taxable income for the year in which you put the excess into the Plan. If the
excess is not removed from the Plan by April 15, you will have to pay additional
income tax.
EXAMPLE: You deferred $100 more than the law allows in your tax year and you had
earnings of $10 on the excess. You removed your $100 excess and the $10 earnings
by April 15 of the following year. The excess will be reported on your Form W-2
for the year deferred and you will pay income tax on that amount.
Average Limits
Tax law defines a group of an employer's employees known as highly compensated
employees. Highly compensated employees making Employee 401(k) Contributions are
limited in the percent of their compensation which they defer based on the
average percent of compensation deferred by the non-highly compensated group of
employees during the Plan Year. If these limits apply to you, Connecticut Water
Company can give you additional information about them.
Plan Specific Limitations
Upon completion of a Payroll Deduction Form, your compensation will be reduced
each pay period by the percent you specify. Connecticut Water Company permits
you to defer a percentage of your Compensation from 1% to 15% in increments of
1% each Plan Year.
To change the amount of your Employee 401(k) Contributions, you must complete
and sign a revised Payroll Deduction Form and return it to Connecticut Water
Company at least 30 days before the change will take effect or a lesser number
of days if Connecticut Water Company permits. You may change your Payroll
Deduction Form as of the first day of any quarter.
To discontinue making Employee 401(k) Contributions, you must complete and sign
a revised Payroll Deduction Form. You may discontinue making Employee 401(k)
Contributions as of the first day of any quarter.
If you stop making deferrals, you must wait until the beginning of the next
quarter before you may begin making deferrals again.
Matching Contributions
Individual Limits
Matching Contributions are Employer Contributions which are contributed to the
Plan based on your Employee 401(k) Contributions. Effective 10/01/2000 (or the
date you begin participating in the Plan, if later), Connecticut Water Company
will make Matching Contributions to the Plan equal to 50% of your Employee
401(k) Contributions.
However, Matching Contributions will not be made with respect to your
contributions in excess of 4% of your compensation.
To share in the Matching Contribution, you must be a Participant in the Plan on
at least one day of the Plan Year and make Employee 401(k) Contributions.
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Average Limits
Tax law defines a group of an employer's employees known as highly compensated
employees. Highly compensated employees receiving Matching Contributions are
limited in the amount of Matching Contributions which they may receive based on
the average Matching Contribution (as a percent of compensation) received by the
non-highly compensated group of employees during the Plan Year. If these limits
apply to you, Connecticut Water Company can give you additional information
about them.
Profit Sharing Contributions
Each year, the managing body of Connecticut Water Company will determine the
amount, if any, which it will contribute to the Plan. CONNECTICUT WATER
COMPANY'S Employer Contributions to a the Plan will range from 0% to 1% of
participants' compensation each year.
In addition, you must work at least 1000 hours of service during the Plan Year
to receive a contribution. The hour of service requirement will be waived,
however, if you die, or if you separate from service after attaining normal
retirement age or after becoming disabled.
Finally, in order to be eligible to receive a profit sharing contribution, you
must be employed on the last day of the Plan Year. The last day requirement will
be waived, however, if you die, or if you separate from service after attaining
normal retirement age or becoming disabled.
Please note, employees who are participants in the Connecticut Water Service,
Inc. Performance Stock Program will not be eligible to receive an allocation of
any Employer Profit Sharing Contribution made pursuant to Section 11 of the
Adoption Agreement.
If you satisfy the requirements and are entitled to a profit sharing
contribution, you will receive a pro rata allocation based on your Compensation
in relation to the Compensation of all Participants entitled to profit sharing
contributions.
For example, assume you are one of 10 Participants in the Plan and your
Compensation is $10,000. Assume further the Compensation of all Participants
when added together equals $100,000. The ratio of your Compensation ($10,000) to
that of all Participants ($100,000) is 1/10. Therefore, 1/10 of the contribution
made by your Employer to the Plan will be allocated to your account.
Qualified Nonelective Contributions (QNECs)
QNECs may be made by Connecticut Water Company to satisfy special
nondiscrimination rules which apply to the Plan. These contributions are fully
vested when made and are subject to the same restrictions on withdrawals
applicable to Employee 401(k) Contributions.
Rollover and Transfer Contributions
Connecticut Water Company allows you to make rollover contributions, regardless
of whether you have become a Participant in the Plan. You are 100% vested in
your rollover contributions at all times and may withdraw them from the Plan at
any time.
Connecticut Water Company allows you to make transfer contributions, regardless
of whether you have become a Participant in the plan. You are 100% vested in
your transfer contributions and may withdraw them from the Plan at any time.
However, assets transferred from a money purchase pension plan to this Plan may
not be distributed before your retirement, death, disability or severance from
employment or prior to plan termination.
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Annual Additions Limitation
In spite of the contribution/allocation formulas described earlier, federal law
limits the annual amount which may be allocated to your account to the lesser of
$30,000 or 25% of your Compensation.
COMPENSATION
The definition of compensation for plan purposes can vary for many reasons. For
example, federal tax law may require use of one definition of compensation for
nondiscrimination testing and another definition for contribution allocation
purposes. In addition, federal tax law permits employers such as Connecticut
Water Company to choose the definition of compensation which will be used for
other purposes. Regardless of the various definitions of compensation which may
be required or allowed, however, in the event your Compensation exceeds $170,000
per year, only the first $170,000 will be counted as Compensation under the
Plan. This $170,000 cap will be adjusted periodically by the Internal Revenue
Service for increases in the cost-of-living.
In spite of the definitions of compensation listed above, compensation with
respect to any source of money will include only that compensation from the time
you become a Participant in the Plan for ADP/ACP testing and other general Plan
purposes.
PLAN ADMINISTRATION AND MANAGEMENT
All contributions made to the Plan on your behalf will be placed in a trust fund
established to hold dollars for the benefit of all Participants. Connecticut
Water Company will establish and maintain an Individual Account for you and all
Participants. Your Individual Account will be used to track your share in the
total trust fund.
INVESTMENT OF CONTRIBUTIONS
As a Participant in this Plan, you direct the investment of your account (s).
Your Plan provides a menu of investment options from which you may select your
investments. You may modify your investment elections, transfer existing account
balances, and obtain information regarding your investments on a daily basis.
The Plan Administrator has selected investment funds in which you and the other
participants may choose to invest. A Company Stock Fund has been added as an
investment option beginning ____________ ___, 2000. A brief description of each
current investment fund available under the Plan is contained in the Appendix to
this SPD. There is no minimum or maximum percentage of your Plan account which
may be invested in the Company Stock Fund or any other investment fund offered
under the Plan; however, investment advisors often recommend that participants
consider diversifying investments and not investing more than 20% of their
overall investment assets in the stock of a single company.
The Plan Administrator or the 401(k) Plan Committee may from time to time add
new investment funds or eliminate existing investment funds AND MAY CHANGE OR
ADD AN ADDITIONAL INVESTMENT MANAGER. You will be notified in the event any such
action is taken by the Plan Administrator.
The investment options range from a relatively low risk fund generally with
lower returns, to a higher risk equity fund, with the potential for higher
returns.
Before you make your investment decision, you should carefully consider your
investment goals. The Plan Administrator will provide you with information in a
current Appendix to the SPD that summarizes the general investment goals and the
past investment performance of the investment funds as they exist from time to
time. In addition, you may request from the Plan Trustee(s) copies of
prospectuses, financial statements or any other materials relating to the funds,
to the extent such information is provided to this Plan, and a description of
the annual operating expenses of each fund, such as investment management fees,
administration fees and transaction costs. The Company intends to pay the
administrative costs of the Plan, such as Trustee and accounting fees, but
reserves the right to have the Plan pay part or all of such costs at any future
time.
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This Plan is intended to constitute a plan described in section 404(c) of the
Employee Retirement Income Security Act of 1974, as amended (ERISA) and Title 29
of the Code of Federal Regulations section 2550.404c-1. As a result, the
fiduciaries of this Plan may be relieved of liability for any losses which are
the direct and necessary result of investment instructions given by you or your
beneficiary.
You will receive written reports on the status of your Plan account on a
quarterly basis, and you may obtain daily information on a daily basis by using
the Voice Response System or the Internet site.
You should be aware that your investment decisions will ultimately affect the
retirement benefits to which you will become entitled. Your Employer and the
Plan Trustee(s) cannot provide you with investment advice, nor are they
obligated to reimburse any participant for any investment loss that may occur as
a result of his or her investment decisions. There is no guarantee that any of
the investment options available in this Plan will retain their value or
appreciate. You should also remember that all investments have some element of
risk. Therefore, you should select your investments based on your own financial
and retirement needs. In addition, it is important to remember that, like the
stock market, stock investments can go down as well as up. If that should
happen, as it probably will from time to time, the dollar value of all amounts
invested in stock will decrease.
SECTION FOUR: DISTRIBUTION OF BENEFITS AND VESTING
BENEFIT ELIGIBILITY
Certain events must occur before you can withdraw money from the Plan. In
general, benefits may be withdrawn upon termination of employment after
attaining normal retirement age or upon Plan termination.
Normal retirement age under this Plan is age 65.
In addition, you may withdraw your Employee 401(k) Contributions if you:
- attain age 59 1/2 but continue to work
- incur a financial hardship
- terminate employment before attaining normal retirement age
- become disabled
- qualify for in-service distributions on account of financial
hardship
You will satisfy the Plan's early retirement age requirements upon attainment of
age 55.
Under your Plan, the only financial needs which are considered to meet the
financial hardship requirements are the following items: deductible medical
expenses for you or your immediate family, purchase of your principal residence,
payment of tuition and related educational fees for the next 12 months for you
or your immediate family, or to prevent eviction from your home or foreclosure
upon your principal residence. A hardship distribution cannot exceed the amount
of your immediate and heavy financial need and you must have obtained all
distributions and all nontaxable loans from all Plans maintained by Connecticut
Water Company prior to qualifying for a hardship distribution. Hardship
distributions are subject to a 10% penalty tax if received before you reach age
59 1/2. Your Elective Deferrals will be suspended for 12 months after receipt of
the hardship distribution.
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DISTRIBUTION OF BENEFITS
Form of Payment
Payments from the Plan that are eligible rollover distributions can be taken in
two ways. You may have all or any portion of your eligible rollover distribution
either (1) paid in a direct rollover to an IRA or another employer plan or (2)
paid to you. If you choose to have your Plan benefits paid to you, you will
receive only 80% of the payment, because Connecticut Water Company is required
to withhold 20% of the payment and send it to the IRS as income tax withholding
to be credited against your taxes.
Connecticut Water Company will give you more information about your options
around the time you request your payout from the Plan. That information will,
among other things, define an eligible rollover distribution.
If your vested Individual Account (i.e., the amount of money in the Plan you are
entitled to) is no more than $5,000, your benefits will be paid, either directly
to you or as a direct rollover to an IRA or another plan, in a single lump sum
payment. If your vested Individual Account is more than $5,000, your benefits
under the Plan will be made in a form other than an annuity.
Timing of Benefit Payments
If the value of your Individual Account is no more than $5,000, Connecticut
Water Company may direct that your benefits be paid within 90 days after the end
of the Plan Year in which you become eligible to receive them.
If your account is more than $5,000, your funds may be left in the Plan until
you submit a written request to Connecticut Water Company for payment. However,
you must begin taking required minimum distributions at age 70 1/2 if you are a
five- percent or more owner of your Employer. If you are not a five percent or
more owner, you must begin taking required minimum distributions from the Plan
by April 1 of the year after the year in which you turn age 70 1/2 or, if later,
April 1 of the year after the year in which you separate from service.
Connecticut Water Company can provide you with the proper request forms. Once
you have returned the completed request to Connecticut Water Company, payment
will be made no later than 90 days after the close of the Plan Year in which
Connecticut Water Company received your request.
Required Minimum Distributions
The tax laws and regulations require you to start taking minimum distributions
from the Plan by April 1 of the year after the year in which you turn 70 1/2
years of age if you are a five percent or more owner of your Employer. If you
are not a five percent or more owner, you must begin taking minimum
distributions from the Plan by April 1 of the year after the year in which you
turn age 70 1/2 or, if later, April 1 of the year after the year in which you
separate from service. Minimum distributions must continue every year thereafter
and must be taken by December 31. In general, the amount of the annual minimum
distribution is determined by dividing the balance in your Individual Account by
your life expectancy or the joint life expectancy of you and your Plan
beneficiary.
DETERMINING YOUR VESTED AMOUNT
CONNECTICUT WATER COMPANY HAS SELECTED THE 100% VESTING SCHEDULE UNDER WHICH ALL
PARTICIPANTS ARE 100% VESTED AT ALL TIMES.
RESTRICTIONS OR PENALTIES ON DISTRIBUTIONS
If you receive a distribution before reaching age 59 1/2, you must pay an
additional 10% penalty tax on dollars included in income. There are, however,
exceptions to the 10% early distribution penalty. Your tax advisor can assist
you in determining if one of the exceptions applies to your distribution.
If the value of your Individual Account is greater than $5,000, your beneficiary
will receive a payout(s) in a form other than an annuity.
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SECTION FIVE: CLAIMS PROCEDURE
WHAT TO DO TO RECEIVE BENEFITS
You or your beneficiary must file a written request with the Plan Administrator
in order to start receiving benefits when you become eligible for them or when
you die.
HOW TO FILE A CLAIM
A claim should be filed with Connecticut Water Company. You may claim a benefit
to which you think you are entitled by filing a written request with Connecticut
Water Company. The claim must set forth the reasons you believe you are eligible
to receive benefits and authorize Connecticut Water Company to conduct such
examinations and take such steps as may be necessary to evaluate the claim.
If your claim is turned down, Connecticut Water Company will provide you or your
beneficiary with a written notice of the denial within 60 days of the date your
claim was filed. This notice will give you the specific reasons for the denial,
the specific provisions of the Plan upon which the denial is based, and an
explanation of the procedures for appeal. You or your beneficiary will have 60
days from receipt of the notice of denial in which to make written application
for review by Connecticut Water Company. You may request that the review be in
the nature of a hearing. You may be represented by an attorney if you so desire.
Connecticut Water Company will issue a written decision on this review within 60
days after receipt of the application for review.
SECTION SIX: MISCELLANEOUS
TAX INFORMATION
The Company believes that the Plan is qualified under Section 401(a) of the
Internal Revenue Code and that the trust is exempt under Section 501(a) of the
Internal Revenue Code. Some of the major tax consequences of a qualified plan
are described briefly below. However, this is not intended to be an
all-inclusive description of the tax impact of plan participation. Since the tax
laws are complex and subject to change, you should consult with your own
personal tax adviser as to the specific tax consequences.
1. Contributions made by the Company (including your Employee 401(k)
Contributions) on your behalf are generally not taxable to you when
they are made. You do not report them as income at that time. However,
Employee 401(k) Contributions are subject when earned to social
security and unemployment taxes.
2. Any investment earnings or profits received by the Trustee and
allocated to your Individual Account are generally not taxable when
they are realized by the trust fund or allocated to your Individual
Account.
3. Distributions from your Individual Account to you will generally be
taxed to you when received by you. If the distribution is eligible to
be rolled over to a traditional individual retirement account or other
qualified plan, in what is known as an "eligible rollover
distribution," you may make such a rollover and avoid current taxation.
At the time of a distribution to you, you will receive a special notice
describing in general terms the tax consequences associated with your
distribution.
4. With certain exceptions, distributions or withdrawals from your
Individual Account prior to your attainment of age 59 1/2 will be
subject to an additional excise tax equal to 10% of the taxable amount
of the distribution or withdrawal. Under one of the exceptions, you
will not be subject to the 10% penalty if the distribution is made
following separation from service if separation from service occurs
after attaining age 55.
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5. If you receive a lump sum distribution from the Plan following
attainment of age 59 1/2 or following separation from service that
includes Company Stock, special rules may apply to the increase in the
value of that Company Stock while it was held by the Plan. Generally,
you would not be required to pay tax on the increase in value until the
shares are sold.
6. Your participation in the Plan may affect your ability to make
tax-deductible contributions to a traditional individual retirement
account. You should consult your personal tax adviser for further
details.
7. Under federal law, distributions generally must be made or commence by
April 1 of the year following the year the Participant attains 70 1/2
or retires, whichever is later.
8. Generally, contributions made by the Company to the Plan, including
your Employee 401(k) Contributions, matching contributions, and profit
sharing contributions, are deductible for corporate income tax purposes
by the Company when contributed.
COMPANY STOCK
The Plan offers you a Company Stock Fund along with the other investment fund
options. Participants' assets invested in the Company Stock Fund are carried by
the Trustee on a unit value accounting system. This means that each
participant's interest in the Company Stock Fund is represented by "units"
credited by the Trustee to his account in the Company Stock Fund. That is, the
participant does not own any of the actual Company stock in the Company Stock
Fund, but rather has a participating interest in the cash equivalents (money
market investments) and Company stock held in the Company Stock Fund represented
by the number of units in the Company Stock Fund credited to his account. The
number of units a participant's contributions buy depends on the price of one
unit, called the "unit value". To develop the unit value, the Trustee determines
the market value of the total number of shares of Company stock in the Company
Stock Fund, adds the amount of any cash equivalents and divides this by the
total number of units held by all participants who have invested in the Company
Stock Fund. Hence, the units in a participant's account represent a pro-rata
share of all the assets held in the Company Stock Fund.
Company stock is acquired by the Trustee on a nondiscretionary basis. The
Trustee maintains a specific percentage of the Company Stock Fund in cash
equivalent assets so as to satisfy requests for participant distributions,
transfers to other investment funds, etc. If the cash equivalent assets exceed
the specified percentage (for example, because of contributions or transfers
from other funds), the Trustee buys Company stock until the specified percentage
is reached. Conversely, should the cash equivalent assets fall below the
specified level (for example, to make distributions to participants), the
Trustee sells Company stock until the specified percentage is reached. Thus, the
Trustee does not try to time any purchases or sales of Company stock, which are
driven solely by the amount of, or the need for, liquidity of the Company Stock
Fund.
The value of the Company Stock Fund, and hence the value of the units in a
participant's account, will move with the fluctuations in the market value of
the Company stock. In certain cases, the value of the participant's account
could, at various times, be less than the dollar amount of the contributions
invested by a participant.
BORROWING FROM THE PLAN
Effective Date
As a Participant in this Plan, you may be able to borrow a portion of your
vested account balance. The loan program adopted by Connecticut Water Company is
effective 10/1/2000 and is available on a uniform basis to all parties in
interest to the Plan who meet loan qualification requirements.
Loan Program Administrator
If you have questions regarding the loan program you should contact The Plan
Administrator, the person responsible for administering your loan program.
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Loan Application Procedure
To apply for a loan under this Plan, you must complete and return to The Plan
Administrator a Loan Application Form, furnishing all information requested and
pay any required loan application processing fees.
Collateral Pledge
A percentage of your vested account balance equal to the amount borrowed divided
by your vested account balance is pledged as security for repayment of loans
under this program.
Limitations on Loan Types
Loans from this Plan may be used for any purpose.
Loan Approval Standards
Decisions approving or denying loans from this Plan will be based on the value
of your vested individual account balance.
Loan Principal Limitations
The minimum amount you may borrow from this Plan is $1,000.00. The maximum
amount you may borrow from this Plan is one-half of your vested account balance
or $50,000.
Loan Principal Limitations
The minimum amount you may borrow from this Plan is $1,000.00. You may have two
outstanding loans at a time.
Interest Calculations
Interest on Loans from this Plan will be equal to Prime rate as of the end of
the calendar quarter, plus 1.00%.
Default Provisions
You will be deemed to have defaulted on your loan if you fail to remit payment
in a timely manner as required under the Loan Agreement, breach any of your
obligations or duties under the Loan Agreement, or terminate employment.
Upon default, The Plan Administrator is entitled to foreclose its security
interest in your vested account balance pledged for repayment upon the
occurrence of an event which triggers a distribution of your benefits. In
addition, The Plan Administrator will report as taxable any amounts which are
deemed distributed as a result of failing to make loan payments.
PLAN TERMINATION
Connecticut Water Company expects to continue the Plan indefinitely. However, in
the unlikely event Connecticut Water Company must terminate the Plan, you will
become 100% vested in the aggregate value of your Individual Account regardless
of whether your vesting years of service are sufficient to make you 100% vested
under the vesting schedule(s).
If the Plan terminates, benefits are not insured by the Pension Benefit Guaranty
Corporation (PBGC). Under the law, PBGC insurance does not cover the type of
plans called defined contribution plans. This Plan is a defined contribution
plan and, therefore is not covered.
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BREAK IN SERVICE SITUATIONS
If you quit your job, incur a break in service and then return to work, your
date of participation depends on whether you had a vested interest in
contributions (other than your Employee 401(k) Contributions) at the time you
quit and incurred a break in service.
If you had a vested interest, you will participate again upon your return to
employment. In addition, your vesting years of service accumulated prior to the
time you quit and incurred a break in service will be counted in figuring your
vested interest.
If you did not have a vested interest, any eligibility years of service
occurring before the break in service will be taken into account and you will
begin to participate again upon your return to service unless the number of
consecutive one year breaks in service equals or exceeds the greater of five
years, or the aggregate number of eligibility years of service preceding the
breaks in service. If your period of consecutive breaks in service exceeds your
period of prior service, you will be treated as a new employee and will
participate again when you satisfy the Plan's eligibility requirements. In
addition, any vesting years of service occurring before the break in service
will be taken into account in computing your vested interest under the Plan
unless the number of consecutive one year breaks of service equals or exceeds
the greater of five years or the aggregate number of vesting years of service
preceding the breaks in service. For example, if you work for two years, quit
without being vested, and then return to employment after a break of two years
of more, the Plan will give you vesting credit for the initial two-year period.
SECTION SEVEN: RIGHTS UNDER ERISA
THE RIGHTS AND PROTECTIONS A PLAN PARTICIPANT IS ENTITLED TO UNDER THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT
As a Participant in this Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA provides that all Plan Participants shall be entitled to do the following:
1. Examine, without charge, at the Plan Administrator's office and at
other specified locations, all Plan documents, and copies of all
documents filed by Connecticut Water Company with the U.S. Department
of Labor, such as detailed annual reports and Plan descriptions.
2. Obtain copies of all Plan documents and other Plan information upon
written request to Connecticut Water Company. Connecticut Water Company
may make a reasonable charge for the copies.
3. Receive a summary of the Plan's annual financial report. Connecticut
Water Company is required by law to furnish each participant with a
copy of this Summary Annual Report.
4. Obtain, once a year, a statement of the total pension benefits accrued
and the nonforfeitable (vested) pension benefits (if any) or the
earliest date on which benefits will become nonforfeitable (vested).
The Plan may require a written request for this statement, but it must
provide the statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your Plan, called fiduciaries of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
beneficiaries. No one, including Connecticut Water Company, or any other person,
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining a pension benefit or exercising your rights under ERISA.
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If your claim for a benefit is denied in whole or in part, you must receive a
written explanation of the reason for the denial. You have the right to have
Connecticut Water Company review and reconsider your claim. Under ERISA, there
are steps you can take to enforce the above rights. For instance, if you request
materials from Connecticut Water Company and do not receive them within 30 days,
you may file suit in a federal court. In such a case, the court may require
Connecticut Water Company to provide the materials and pay you up to $110 day
until you receive the materials, unless the materials were not sent because of
reasons beyond the control of Connecticut Water Company. If you have a claim for
benefits which is denied, or ignored, in whole or in part, you may file suit in
a state or federal court. If it should happen that Plan fiduciaries misuse the
Plan's money, or if you are discriminated against for asserting your rights, you
may seek assistance from the U.S. Department of Labor, or you may file suit in a
federal court. The court will decide who should pay court costs and legal fees.
If you are successful, the court may order the person you have sued to pay the
costs and fees. If you lose, the court may order you to pay these costs and
fees. For example, if the court finds your claim is frivolous, expenses may be
assessed against you.
If you have any questions about your Plan, you should contact Connecticut Water
Company. If you have any questions about this statement or about your rights
under ERISA, you should contact the nearest area office of the Pension and
Welfare Benefit Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and Inquires,
Pension and Welfare Benefits Administration, U.S. Department of Labor, 200
Constitution Avenue, N. W., Washington, D. C. 30210.
Further, if this Plan is maintained by more than one employer, you can obtain,
in writing, information as to whether a particular employer is participating in
this Plan and, if so, the participating Employer's address. In addition, you may
request, in writing, a complete list of Employers participating in this Plan.
You may obtain such information by making a written request to Connecticut Water
Company. Connecticut Water Company is the most significant (parent) employer of
the group of employers maintaining this Plan.
Employer Information
Name: Connecticut Water Company
Address: 93 West Main Street
Clinton, CT 06413
Business Telephone: 860-669-8630
Employer Identification Number: 06-0713930
Employer's Income Tax Year End: 12/31
Agent for Service of Legal Process
The Agent for Service of Legal Process is the person upon whom any legal papers
can be served. Service of legal process may be made upon a Plan Trustee, the
Employer or the Plan Administrator.
Name: Connecticut Water Company
Address: 93 West Main Street
Clinton, CT. 06413
Trustee Information
Name: PW Trust Company
Address: 1200 Harbor Blvd, Sixth Floor
Weehawken, New Jersey 07087
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APPENDIX TO SUMMARY PLAN DESCRIPTION
This Appendix supplements the Summary Plan Description (SPD) dated December
18, 2000 that has been provided to all employees of Connecticut Water Company
(the "Company") eligible to participate in the Savings Plan of the Connecticut
Water Company (the "Plan"). The information contained in this Appendix is to be
read in conjunction with the SPD. To the extent that the information contained
in this Appendix is inconsistent with information contained in the SPD, the
information contained in this Appendix supersedes and replaces the
corresponding information in the SPD. If you have misplaced or discarded your
SPD, please request an additional booklet from the Company's Human Resources
Department and one will be provided to you.
INVESTMENT INFORMATION
Your salary deferral contributions, matching contributions made by the Company,
any profit sharing contributions made to the Plan by the Company and rollover
contributions will be invested in accordance with your directions in one or
more of the funds listed on the attached fund information sheets.
You are provided periodically with summaries of each fund containing more
detailed information than the attached summaries, except for the Company Stock
Fund, for which bid and asked prices are quoted each weekday in the Wall Street
Journal; [Company Stock prices are also available from NASDAQ.com or by
contacting the Company's Corporate Secretary at 1-800-428-3985, ext. 3015.
Shares of Company Stock will be purchased at market prices in transactions over
securities exchanges as soon as practicable after receiving contributions to
the Company Stock Fund. The purchase price of the Company Stock will include
brokerage fees and commissions, transfer taxes, and related expenses. Brokers
who make such transactions are selected by the Trustee. However, the Trustee
may also purchase newly issued or treasury stock from the Company at such
prices and on such terms as it deems proper.
There is no guarantee as to the rate of return or preservation of principal for
contributions made to the Company Stock Fund. Dividends (if any) and other
distributions received on Company Stock, net of Plan expenses attributable to
Company Stock held in the Fund, will be reinvested in Company Stock by the
Trustee, and each participant's accounts invested in the Company Stock Fund
will be credited with the proportionate number of shares.
VOTING RIGHTS
To the extent participant's Plan accounts are invested in Company Stock, each
participant may instruct the Trustee how to vote shares of Company Stock. In
addition, each participant may decide whether or not to tender shares of
Company Stock held in his Plan accounts in case of a tender offer. Before each
stockholder's meeting, each participant will receive the voting materials
necessary to vote shares of Company Stock held in his Plan accounts. The
Company has established procedures that are intended to ensure that each
participant's voting and, if applicable, his tender instructions relating to
shares of Company Stock are confidential by providing that voting and tender
forms are sent directly to each participant by the Company's transfer agent
and by providing that his instructions are sent directly back to the transfer
agent. The transfer agent then tabulates the instructions and forwards the
results to the Trustee for its action. Subject to its fiduciary
responsibilities under ERISA, the Trustee will vote shares that are not voted by
participants in the same portion as shares voted by participants and will not
tender shares for which no instructions are received.
NO GUARANTEE OF FUND RESULTS
No assurance can be given that results of the various investment funds in
future periods will be the same or similar to those reflected in the foregoing
paragraphs with respect to fund results in prior periods. Changes in the market
value of underlying securities and interest and dividend income, among other
things,
18
may cause the rates of return and therefore the value of participants' accounts
constantly to vary, sometimes significantly. Accordingly, no past period is
necessarily indicative of future performance.
RESTRICTIONS ON RESALE
There are generally no restrictions on resale of Company Stock acquired pursuant
to the Plan except for employees who are deemed to be "affiliates" of the
Company, and directors or officers of the Company who are subject to Section 16
of the Securities Exchange Act of 1934 ("Exchange Act"). An affiliate may resell
Company Stock acquired under the Plan either pursuant to a registration
statement or pursuant to Rule 144 or another applicable exemption under the
Securities Act of 1933. For purposes of reselling, an affiliate is basically
defined as a control person or one who, directly or indirectly, has the power to
direct or cause the direction of the management and policies of the Company.
Under Section 16 of the Exchange Act, any profit realized by a director or
officer of the Company through the purchase and sale, or any sale and purchase,
of any equity security of the Company within a period of six months might be
recoverable by the Company. If an employee thinks that he or she might be an
affiliate of the Company, or subject to the provisions of Section 16 of the
Exchange Act, an attorney should be consulted to determine what steps should be
taken to accomplish any such resale under securities laws.
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FUND INFORMATION FOR CONNECTICUT WATER COMPANY SAVINGS PLAN
NAME OF FUND TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ------------ ----------------------------------------
EUROPACIFIC GROWTH 2000* 1999 1998 1997
----------------------------------------
-10.76 56.97 15.54 9.19
----------------------------------------
DESCRIPTION OF FUND
- -------------------
Seeks long-term growth of capital by
investing in companies based outside
the United States. * Through 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ------------ ----------------------------------------
AIM AGGRESSIVE GROWTH 2000* 1999 1998 1997
----------------------------------------
23.96 45.06 4.99 12.16
----------------------------------------
DESCRIPTION OF FUND
- -------------------
This fund seeks aggressive capital
growth by investing in small and
mid-sized companies that management
believes will have earnings growth
well in excess of the general economy. * Through 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ------------ ----------------------------------------
DREYFUS FOUNDERS DISCOVERY 2000* 1999 1998 1997
----------------------------------------
12.28 94.59 14.19 11.95
----------------------------------------
DESCRIPTION OF FUND
- -------------------
The fund seeks capital appreciation
through the pursuit of targeting small
and relatively unknown companies w/high
growth potential. * Through 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ------------ ----------------------------------------
FRANKLIN BALANCE SHEET INVESTMENT 2000* 1999 1998 1997
----------------------------------------
12.79 -1.53 -0.61 25.98
----------------------------------------
DESCRIPTION OF FUND
- -------------------
The fund will seek capital appreciation
and/or high income primarily through
investment in securities that the
portfolio managers believe are undervalued
in the marketplace and trading at a low
price-to-book value. * Through 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ------------ ----------------------------------------
AIM BLUE CHIP 2000* 1999 1998 1997
----------------------------------------
2.07 25.6 30.45 31.96
----------------------------------------
DESCRIPTION OF FUND
- -------------------
The fund seeks long term capital growth
by investing in large established
companies which are considered to be
market leaders. The companies must exhibit
strong earnings growth potential or be
attractively valued relative to their
fundamentals. * Through 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ------------ ----------------------------------------
MASSACHUSETTES INVESTORS GROWTH 2000* 1999 1998 1997
STOCK FUND ----------------------------------------
7.43 38.76 40 48.15
----------------------------------------
DESCRIPTION OF FUND
- -------------------
The fund seeks long term growth of
capital and future income, rather than
current income. The fund invests
primarily in common stocks exhibiting
above-average prospects for long term
growth. * Through 09/30/00
- -----------------------------------------------------------------------------
20
NAME OF FUND
WASHINGTON MUTUAL INVESTORS
- ----------------------------------------
TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ----------------------------------------
2000* 1999 1998 1997
- ----------------------------------------
2.4 1.16 19.37 33.29
- ----------------------------------------
DESCRIPTION OF FUND
Seeks current income and an opportunity for
growth of principal consistent with sound
common-stock investing. *Through __ 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND
AMERICAN BALANCED
- ----------------------------------------
TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ----------------------------------------
2000* 1999 1998 1997
- ----------------------------------------
7.48 3.47 11.13 21.04
- ----------------------------------------
DESCRIPTION OF FUND
The fund seeks conservation of capital,
current income and long term growth of
capital and income by investing in stocks,
bonds, and fixed-income securities. *Through __ 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND
OPPENHEIMER QUEST OPPORTUNITY VALUE
- ----------------------------------------
TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ----------------------------------------
2000* 1999 1998 1997
- ----------------------------------------
1.02 9.27 7.66 20.14
- ----------------------------------------
DESCRIPTION OF FUND
The fund seeks long term growth of capital
utilizing a flexible approach within the portfolio
which can contain stocks, bonds, and cash
equivalents. *Through __ 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND
PIMCO TOTAL RETURN
- ----------------------------------------
TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ----------------------------------------
2000* 1999 1998 1997
- ----------------------------------------
6.69 -0.82 9.25 10.17
- ----------------------------------------
DESCRIPTION OF FUND
The fund is a core bond strategy which
seeks maximum total return by focusing on
an intermediate-term, high quality bond
*Through __ 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND
PW TRUST COMPANY STABLE VALUE
- ----------------------------------------
TOTAL RETURNS (%) BASED ON CALENDAR YEAR
- ----------------------------------------
2000* 1999 1998 1997
- ----------------------------------------
5.76 5.19 5.54 5.86
- ----------------------------------------
DESCRIPTION OF FUND
The fund's objective is to generate a total
return in excess of the average monthly yield
to maturity of one-year Treasury bills and to
provide stability of principal while maximizing
current income. *Through __ 09/30/00
- --------------------------------------------------------------------------------
NAME OF FUND
COMPANY STOCK FUND
- -------------------------------------------------
CLOSING PRICE BASED ON CALENDAR YEAR
- -------------------------------------------------
9/30/2000* 1999 1998 1997
- -------------------------------------------------
$32.25 $32.00 $27.00 $21.66
- -------------------------------------------------
DESCRIPTION OF FUND
Invests solely in common stock of Connecticut
Water Service, Inc., the parent company of
Connecticut Water Company. The Company
Stock is traded on the NASDAQ under the
symbol "CTWS." *Closing bid price on 9/30/00
- --------------------------------------------------------------------------------