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EXHIBIT 10.10
SAVINGS PLAN OF
THE CONNECTICUT WATER COMPANY
Amended and Restated as of
January 1, 1999
(except as otherwise indicated herein)
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TABLE OF CONTENTS
ARTICLE I NAME OF PLAN
ARTICLE II DEFINITIONS
ARTICLE III ADMINISTRATION
ARTICLE IV PARTICIPATION
ARTICLE V CONTRIBUTIONS BY EMPLOYEES
ARTICLE VI CONTRIBUTIONS BY THE EMPLOYER
ARTICLE VII INVESTMENT OF CONTRIBUTIONS
ARTICLE VIII ALLOCATION OF CONTRIBUTIONS
ARTICLE IX VESTING
ARTICLE X PAYMENT OF BENEFITS
ARTICLE XI WITHDRAWALS FROM ACCOUNTS
ARTICLE XII LOANS TO PARTICIPANTS
ARTICLE XIII TERMINATION OF PLAN
ARTICLE XIV AMENDMENT OF PLAN
ARTICLE XV CLAIMS PROCEDURE
ARTICLE XVI THE TRUSTEE
ARTICLE XVII MISCELLANEOUS PROVISIONS
ARTICLE XVIII TOP-HEAVY PLAN PROVISIONS
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SAVINGS PLAN OF THE CONNECTICUT WATER COMPANY
WHEREAS, The Connecticut Water Company heretofore established a savings
plan for its employees effective January 1, 1985;
WHEREAS; under the terms of the Plan, the Employer has the ability to
amend the Plan;
WHEREAS, the Plan, which has been amended from time to time, was
restated in its entirety effective as of January 1, 1989, October 1, 1995 and
January 1, 1996;
NOW, THEREFORE, the following plan is hereby adopted by The Connecticut
Water Company to be effective January 1, 1999, except as otherwise indicated
herein:
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ARTICLE I
NAME OF PLAN
1.1 The name of this Savings Plan, as amended from time to time, shall
be the "Savings Plan of The Connecticut Water Company" (hereinafter the "Plan").
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ARTICLE II
DEFINITIONS
When used herein, each of the following terms shall have the
corresponding meaning set forth below unless a different meaning is plainly
required by the context in which a term is used:
2.1 "Account" shall mean collectively the Participant's Employee Salary
Deferral Contribution Account, Rollover Account, Additional Employee
Contribution Account, and Employer Contribution Account, whether or not such
accounts have actually been combined into one account.
2.2 "Accrued Balance" shall mean the balance of a Participant's
Account.
2.3 "Act" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and all regulations issued pursuant thereto.
2.4 "Additional Employee Contribution" shall mean any contribution by
an Employee to the Trust Fund as provided for in Section 5.2 hereof.
2.5 "Additional Employee Contribution Account" shall mean the account
of a Participant as provided for in Section 8.2 hereof.
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2.6 "Administrator" shall mean the person or persons designated by the
Committee, pursuant to Section 3.5 hereof, as the Administrator of the Plan,
within the meaning of Section 3(16)(A) of the Act.
2.7 "Affiliated Company" shall mean any company which is included
within a "controlled group of corporations" within which the Company is also
included, as determined under Section 1563 of the Code without regard to
subsections (a)(4) and (e)(3)(c) of said Section 1563. Notwithstanding the
foregoing, with respect to the benefit limitations set forth in Paragraphs 8.5
and 8.6 of this Plan, such determination under Section 1563 shall be made
assuming the phrase "more than 50 percent" were substituted for the phrase "at
least 80 percent" each place it appears in Section 1563(a)(1).
2.8 "Beneficiary" shall mean a Participant's surviving spouse, if any,
or any other person designated by a Participant who is entitled to receive any
benefits payable hereunder upon the Participant's death pursuant to Section 10.5
hereof, or the executor or administrator of the Participant's estate if there is
no surviving spouse and if no other Beneficiary shall have been effectively
designated by the Participant.
2.9 "Board" shall mean the Board of Directors of the Company.
2.10 "Calendar Quarter" shall mean each calendar quarter beginning on
the first day of January, April, July or October in each calendar year.
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2.11 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and all regulations issued pursuant thereto.
2.12 "Code Section 415 Compensation" shall mean with respect to any
Participant such Participant's wages as defined in Code Section 3401(a) and all
other payments of compensation by the Employer (in the course of the Employer's
trade or business) for a Plan Year for which the Employer is required to furnish
the Participant a written statement under Code Sections 6041(d), 6051(a)(3) and
6052, without regard to any rules under Code Section 3401(a) that limit the
remuneration included in wages based on the nature or location of the employment
or the services performed.
For Plan Years beginning after December 31, 1997, for purposes of this
Section, the determination of "Code Section 415 Compensation" shall be made by
including amounts which are contributed by the Employer pursuant to a salary
reduction agreement and which are not includible in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457(b).
2.13 "Committee" shall mean the Committee appointed to manage and
administer the Plan in accordance with Section 3.1 hereof.
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2.14 "Company" shall mean The Connecticut Water Company, any
corporation or business that is merged with the Company, or any successor
corporation or business organization that assumes the obligations of the Plan
with respect to its Employees.
2.15 "Company Stock" shall mean common stock of Connecticut Water
Service, Inc.
2.16 "Company Stock Fund" shall mean that portion of the Trust Fund
invested exclusively in Company Stock, as provided for in Article VII hereof;
provided, however, that (i) short term cash investments shall be permitted to
the extent that whole shares of Company Stock cannot be purchased, (ii) cash
dividends received shall be reinvested in Company Stock and (iii) any other
rights or non-cash distributions (other than dividends in the form of Company
Stock) shall be sold and the proceeds invested in Company Stock.
2.17 "Compensation" shall mean all compensation paid by the Employer to
or for the benefit of an Employee during a Plan Year, excluding, under rules
uniformly applicable to all Employees similarly situated, bonuses, pay for
overtime, special pay, reimbursements or other expense allowances, fringe
benefits (cash and noncash), moving expenses and the Employer's cost for any
public or private employee benefit plan, including the Plan; provided, however,
that, unless otherwise specifically stated herein, Compensation shall include
amounts deferred under any salary deferral agreement pursuant to Section 5.1
hereof, or any cafeteria plan pursuant to Section 125 of the Code, or any
nonqualified retirement plan or arrangement maintained by the Employer.
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In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, the annual
Compensation of each Employee taken into account under the Plan shall not exceed
the OBRA '93 annual Compensation limit. The OBRA '93 annual Compensation limit
is $150,000, as adjusted by the Commissioner for increases in the cost of living
in accordance with Section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12. Any reference in this Plan to the limitation
under Section 401(a)(17) of the Code shall mean the OBRA '93 annual Compensation
limit set forth in this provision.
2.18 "Early Retirement Date" shall mean the date on which a Participant
retires prior to his Normal Retirement Date and after his attainment of age
fifty-five (55).
2.19 "Employee" shall mean any person who is regularly engaged in
rendering personal services to the Employer other than as an independent
contractor.
2.20 "Employee Loan Fund" shall mean that portion of the Trust Fund
invested exclusively in personal notes executed by Participants as provided for
in Section 7.4 hereof.
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2.21 "Employee Salary Deferral Contributions" shall mean the
contributions made by the Employer to the Trust Fund as provided for in Sections
5.1, 6.1, and 6.2(c) hereof.
2.22 "Employee Salary Deferral Contribution Account" shall mean the
account of a Participant as provided for in Section 8.2 hereof.
2.23 "Employer" shall mean the Company and any Participating Company.
2.24 "Employer Contributions" shall mean the contributions, if any,
made by the Employer to the Trust Fund as provided for in Sections 6.2(a) and
(b) hereof.
2.25 "Employer Contribution Account" shall mean the account of a
Participant as provided for in Section 8.2 hereof.
2.26 "Entry Date" shall mean the January 1, April 1, July 1 and October
1 of each Plan Year.
2.27 "Fiduciary" shall mean any person (1) who exercises any
discretionary authority or control respecting management of the Plan or any
authority or discretionary control respecting management or disposition of
assets held under the Plan; (2) who renders investment advice for a fee or other
compensation, direct or indirect, as to assets held under the Plan or has any
authority or responsibility to do so; or (3) who has any discretionary authority
or discretionary
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responsibility in the administration of the Plan, within the meaning of Section
4975(e) (3) of the Code.
2.28 "414(s) Compensation" shall mean with respect to any Employee his
wages as defined in Code Section 3401(a) and all other payments of compensation
by the Employer (in the course of the Employer's trade or business) for a Plan
Year for which the Employer is required to furnish the Employee a written
statement under Code Sections 6041(d), 6051(a)(3) and 6052, without regard to
any rules under Code Section 3401(a) that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed plus amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Employee under Code Sections 125, 402(e)(3), 401(h)(1)(B), 403(b) or 457(b).
Effective January 1, 1998, 414(s) Compensation in excess of $160,000
shall be disregarded. Such amount shall be adjusted as permitted under Code
Section 401(a)(17).
2.29 "Highly Compensated Employee" means, effective as of January 1,
1997, an Employee who performed services for the Employer during the
determination year and is in one or more of the following groups:
(a) Employees who at any time during the determination year or
look-back year were five percent owners of the Employer. Five
percent owner means any person who
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owns (or is considered as owning within the meaning of Code
Section 318) more than five percent of the outstanding stock
of the Employer or stock possessing more than five percent of
the total combined voting power of all stock of the Employer.
In determining percentage ownership hereunder, employers that
would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers.
(b) Employees who received Code Section 414(s) Compensation during
the look-back year from the Employer in excess of $80,000.
This amount shall be adjusted at such time and in such manner
as is provided in Treasury Regulations.
The "determination year" shall be the Plan Year for which testing is
being performed, and the "look-back year" shall be the immediately preceding
twelve-month period.
In determining who is a Highly Compensated Employee, all Affiliated
Companies shall be taken into account as a single employer and leased employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered
Employees unless such leased employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the
Employer. The exclusion of leased employees for this purpose shall be applied on
a uniform and consistent basis for all of the Employer's retirement plans. In
addition, highly compensated former employees shall be treated as Highly
Compensated Employees without regard to whether they performed services during
the determination year.
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2.30 "Highly Compensated Participant" shall mean any Highly Compensated
Employee who is eligible to participate in the Plan.
2.31 "Hour of Service" shall mean (1) each hour for which an Employee
is directly or indirectly paid, or entitled to payment, by the Employer for the
performance of duties (to be credited to the Employee as of the time that the
duties were performed); (2) each hour for which an Employee is directly or
indirectly paid, or entitled to payment, by the Employer for reasons other than
the performance of duties, such as vacation or holidays (to be credited in
accordance with Labor Department Regulation Section 2530.200b-2(c) or any
successor regulation); (3) each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed to by the Employer (to
be credited to the Employee as of the time to which the award or agreement
pertains rather than the time that the award, agreement or payment is made). The
same hour shall not be credited under more than one of the above clauses. In
determining Hours of Service for the purpose of clause (2) above, the provisions
of Labor Department Regulation Section 2530.200b-2(b) or any successor
regulation shall be applicable. Hours of Service shall also include each hour,
based on the Employee's standard work week and work day as in effect from time
to time, during which an Employee is absent from work:
(a) temporarily, on account of illness or with the consent of the
Employer for a period not to exceed six months. In the event
of any absence approved by the Employer and exceeding six
months, the Committee shall establish uniform rules
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for the inclusion or exclusion of any hour as an Hour of
Service on account of such absence in excess of six months; or
(b) effective as of December 12, 1994, on account of qualified
military service, as determined in accordance with USERRA and
Code Section 414(u).
2.32 "Investment Fund" shall mean a fund selected by the Committee in
which all or a portion of the Trust Fund may be invested, as provided in Article
VII hereof.
2.33 "Non-Highly Compensated Participant" shall mean any Participant
who is not a Highly Compensated Employee.
2.34 "Normal Retirement Date" shall mean the first day of the month
coinciding with or next following the date on which the Participant attains age
sixty-five (65).
2.35 "1-Year Break in Service" shall mean a Period of Severance of at
least 12 consecutive months.
2.36 "Participant" shall mean an Employee who is eligible to
participate in the Plan under the terms of Article IV hereof and who has taken
all the steps required by said Article IV to participate in the Plan.
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2.37 "Participating Company" shall mean any Affiliated Company which is
designated by the Board as a Participating Company under the Plan and whose
designation as such has become effective and has continued in effect. The
designation shall become effective only when it shall have been accepted by the
Board of Directors of the Participating Company. A Participating Company may
revoke its acceptance of such designation at any time, but until such acceptance
has been revoked all of the provisions of the Plan and amendments thereto shall
apply to the Employees (and their Beneficiaries) of the Participating Company.
In the event the designation of a Participating Company as such is revoked by
the Board of Directors of the Participating Company, the Plan will be deemed
terminated only as to such Participating Company in accordance with Article
XIII.
2.38 "Period of Service" shall mean the aggregate of all periods
commencing with the Employee's first day of employment or reemployment with the
Employer and ending on the date a Period of Severance begins. The first day of
employment or reemployment is the first day the Employee performs an Hour of
Service. An Employee will also receive partial credit for any Period of
Severance of less than 12 consecutive months. Fractional periods of a year will
be expressed in terms of days.
2.39 "Period of Severance" shall mean a continuous period of time
during which the Employee is not employed by the Employer. Such period begins on
the date the Employee retires, quits or is discharged, or if earlier, the
12-month anniversary of the date on which the Employee was otherwise first
absent from service.
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In the case of an individual who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the first
anniversary of the first day of such absence shall not constitute a 1-Year Break
in Service. For purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence (a) by reason of the pregnancy of the
individual, (b) by reason of the birth of a child of the individual, (c) by
reason of the placement of a child with the individual in connection with the
adoption of such child by such individual, or (d) for purposes of caring for
such child for a period beginning immediately following such birth or placement.
2.40 "Plan" shall mean this plan: the Savings Plan of The Connecticut
Water Company.
2.41 "Plan Year" shall mean each calendar year ending on December 31.
2.42 "Retirement Plan" shall mean The Connecticut Water Company
Employees' Retirement Plan, as amended from time to time.
2.43 "Rollover Account" shall mean the account of a Participant as
provided for in Section 8.2 hereof.
2.44 "Termination Date" shall mean the date on which the Participant
ceases to be an Employee.
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2.45 "Total Disability" shall mean that disability which qualifies an
Employee to be considered a totally and permanently disabled Employee for
purposes of the Employer's long-term disability insurance benefits, as amended
from time to time.
2.46 "Trust" shall mean the trust created by the trust agreement, as
amended from time to time, entered into by the Employer and the Trustee for the
purpose of holding the Trust Fund.
2.47 "Trustee" shall mean the person or persons who may at any time be
acting as trustee or trustees of the Trust.
2.48 "Trust Fund" shall mean all funds received by the Trustee from the
Employer or any Participant, pursuant to the terms hereof, together with all
income, profits and increments thereon, and less any expenses, losses and
payments therefrom.
2.49 "USERRA" shall mean the Uniformed Services Employment and
Reemployment Rights Act of 1994. Notwithstanding any provision of this Plan to
the contrary, effective as of December 12, 1994, contributions and service
credit with respect to qualified military service will be provided in accordance
with Code Section 414(u).
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2.50 "Valuation Date" shall mean the last day of each Calendar Quarter
and/or such other date(s) as may be prescribed by the Committee with respect to
the Investment Funds, the Company Stock Fund, and the Employee Loan Fund.
Neither the gender nor the number (singular or plural) of any word
shall be construed to exclude another gender or number when a different gender
or number would be appropriate.
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ARTICLE III
ADMINISTRATION
3.1 Committee. The Committee established pursuant to Article XI of the
Retirement Plan shall also act as the Committee hereunder. The Board shall
certify to the Trustee the names and specimen signatures of the members of the
Committee.
3.2 Named Fiduciary. The Committee is hereby designated the Named
Fiduciary of the Plan, within the meaning of Section 402(a) of ERISA, and
subject to the provisions hereof, shall have the authority to control and manage
the operation and administration of the Plan.
3.3 Powers of Committee. The Committee shall have all powers necessary
to determine in its sole discretion all questions concerning the administration
of the Plan, including without limitation questions of eligibility of Employees,
funding policy, and the amount of any benefits payable hereunder. In addition,
the Committee shall have full authority to interpret and apply the provisions
hereof, including without limitation authority to correct any defects or
omissions or reconcile any inconsistencies herein, in such a manner and to such
an extent as it shall deem necessary or desirable to effectuate the Plan. The
Committee may make such rules and regulations for the administration of the Plan
and the interpretation and application of the provisions hereof, as it deems
necessary or desirable. Subject to the provisions of Article XV hereof, any
determination by the Committee within the scope of its authority and any action
taken thereon in good faith shall be conclusive and binding on all persons.
Although the
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investment and management of assets of the Plan shall be the responsibility of
the Trustee, subject to investment elections of Participants pursuant to Article
VII hereof, the Committee shall be responsible for the selection of Investment
Funds.
3.4 Delegation of Duties. The Committee shall have authority in its
sole discretion to designate or appoint, from time to time (1) persons to render
advice to it with regard to any responsibility it has under the Plan, (2)
persons to carry out specified fiduciary responsibilities for the operation and
administration of the Plan, other than any responsibility to manage or control
the assets of the Plan provided for in the trust agreement creating the Trust
Fund, and (3) persons to act as investment managers to manage (including the
power to acquire and dispose of) any assets of the Plan. Any such person shall
serve at the pleasure of the Committee and may resign by delivering written
notice to the Committee. The Committee may delegate any of its powers and duties
to any person referred to in clause (2) above, subject to the limitation
contained therein. Any appointment under clause (3) above shall be made and
acknowledged in writing.
3.5 Administrator. The Committee shall designate an Administrator of
the Plan. In addition to carrying out any duties required of the Administrator
by applicable provisions of ERISA, the Administrator shall prepare and file, or
cause to be prepared and filed, such reports, descriptions, summaries, and
financial and other statements with respect to the Plan as may be necessary or
desirable, within the time prescribed therefor, and furnish such reports,
descriptions, summaries, and statements to Participants and Beneficiaries as may
be necessary or
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desirable, within the time specified therefor. Any delegation of duties to the
Administrator by the Committee shall be made and acknowledged in writing. The
Administrator shall serve at the pleasure of the Committee and may resign by
delivering written notice to the Committee. If at any time there shall be a
vacancy in the position of Administrator, the Committee shall serve as
Administrator until said position has been filled as herein provided.
3.6 Agent for Service. The Administrator shall be the agent for service
of legal process in connection with any claim or proceeding relating to the
Plan.
3.7 Action by Majority. Any action which the Committee is authorized or
required to take may be taken by a majority of the members of the Committee then
holding office. The action of such majority of the members of the Committee,
expressed by a vote at a meeting, or in writing without a meeting, shall
constitute the action of the Committee, and shall have the same effect for all
purposes as if assented to by all the members of the Committee then holding
office.
3.8 Action by Single Member. The Committee may from time to time
authorize any one or more of its members to execute any document on behalf of
the Committee. The Committee shall certify to the Trustee the name of any such
member authorized to act for it in its relationship with the Trustee and the
extent and duration of such authorization.
3.9 Member's Own Participation. A member of the Committee who is also a
Participant shall not vote on the exercise of any rights or options or on any
other matter with
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respect to his rights as a Participant; provided, however, that this prohibition
shall not be construed as preventing such member from voting on matters which
affect all Participants.
3.10 Records. The Committee shall keep such records of its proceedings
and acts as may in its discretion be necessary or desirable for the proper
administration of the Plan. The Committee shall make available to each
Participant or Beneficiary, for examination at its principal office or in such
other place as the Committee may in its sole discretion decide is necessary or
desirable to make available all pertinent records to such Participant or
Beneficiary, such of its records as may pertain to such Participant or
Beneficiary, and such Participant or Beneficiary shall have the right to examine
the same during normal business hours. The Employer may at any time inspect the
records of the Committee or have the same inspected by any agent or Employee and
may at any time demand an accounting from the Committee.
3.11 Compensation; Agents. The members of the Committee shall serve
without compensation for services as such, but any member of the Committee who
does not receive a salary from the Employer shall be paid such reasonable
compensation for attending meetings of the Committee as may be voted by the
Board, in its sole discretion. All expenses properly attributable to the
operation and administration of the Plan, including fees paid to agents,
advisors, counsel, investment managers, and other persons designated or
appointed by the Committee to assist it, shall be paid as provided in Section
3.14 hereof.
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3.12 Bonding; Liability of Committee. The Committee, or the
Administrator, if so directed by the Committee, shall ensure that each Fiduciary
of the Plan, including each member of the Committee, is bonded in accordance
with applicable laws, rules, and regulations, including without limitation
Section 412 of ERISA. The Employer shall indemnify and hold harmless each member
of the Committee, the Administrator and any other Fiduciary with respect to the
Plan, if he is, or was at the time of the acts or failure to act in question, a
director, officer or Employee of the Employer, from any liability, claim,
demand, suit or action of any type, including without limitation reasonable
attorneys' fees arising from any action or failure to act, provided that such
person acted in good faith, in a manner he reasonably believed to be in the best
interests of the Employer or of the Participants and Beneficiaries of the Plan
and consistent with the provisions of the Plan and, with respect to any criminal
action or proceeding, that he had no reasonable cause to believe his conduct was
unlawful.
3.13 Fiduciary Responsibility. Any Fiduciary with respect to the Plan
shall discharge his duties solely in the interest of the Participants and
Beneficiaries for the exclusive purpose of providing benefits to Participants
and Beneficiaries and defraying reasonable expenses of administering the Plan.
In addition, any Fiduciary with respect to the Plan shall discharge his duties
with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with
like aims.
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3.14 Expenses. The Employer shall pay all the administrative expenses
of the Plan and all fees and retainers of the Plan's Trustee, auditors, and
counsel so long as the Plan remains in effect, except that any expenses directly
relating to the investments of the Trust Fund, such as taxes, brokerage
commissions and registration charges, shall be paid by the Employer unless the
Administrator shall direct the Trustee to pay such expenses from the Trust Fund.
In the event of the failure of the Employer to pay such fees and retainers, the
Trustee shall have the right to charge such amounts against the Trust Fund.
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ARTICLE IV
PARTICIPATION
4.1 Eligibility Requirement. Every Employee of the Employer shall be
eligible to participate in the Plan as of the Entry Date coinciding with or next
following his completion of a six (6) month Period of Service.
4.2 Entry. The Committee shall notify each Employee of his eligibility
to participate in the Plan upon meeting the requirements of Section 4.1 or 4.3
hereof, and shall provide him an opportunity to become a Participant. An
Employee who desires to become a Participant shall file with the Committee an
election to participate, shall execute a salary deferral agreement, as provided
for in Section 5.1 hereof, which shall authorize payroll deductions of his
Employee Salary Deferral Contributions, and shall make an election of Investment
Funds as provided for in Section 7.2 hereof. An election to participate
hereunder filed with the Committee shall be effective as of the Entry Date on
which the Employee first becomes eligible to participate hereunder; provided,
however, that any such election filed less than 15 days prior to such Entry Date
shall be effective on the next following Entry Date. Notwithstanding the
foregoing, for purposes of an Employee's eligibility to share in Employer
Contributions pursuant to Section 6.2(b) hereof, the Employee shall become a
Participant in the Plan as of the applicable Entry Date under Section 4.1
hereof, and no election to participate shall be required.
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4.3 Termination of Participation; Reentry. If an Employee who is a
Participant or is eligible to participate in the Plan shall terminate his
employment or incur one or more 1-Year Breaks in Service, he shall cease to be a
Participant or be eligible to participate in the Plan. Any such person shall
again become a Participant or be eligible to participate in the Plan as of his
date of re-employment in the case of an Employee who terminated his employment
or as of the first day of the next Plan Year in which he does not incur a 1-Year
Break in Service in the case of an Employee who did not terminate his
employment. In addition, if an Employee who is a Participant in the Plan
withdraws the entire Accrued Balance in his Account pursuant to Section 11.1
hereof, he shall thereupon cease to be a Participant in the Plan. Such an
Employee may again become a Participant in the Plan on the next Entry Date by
filing a new election to participate with the Committee at least 15 days prior
to such Entry Date; provided, however, that the restrictions on deferrals of
salary provided in Section 11.1 shall, where appropriate, apply.
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ARTICLE V
CONTRIBUTIONS BY EMPLOYEES
5.1 Salary Deferral Agreements. Each Participant may elect, in any Plan
Year, to enter into a written salary deferral agreement with the Employer which
shall be applicable to all payroll periods within such Plan Year. The terms of
any such salary deferral agreement shall provide that the Participant agrees to
defer a portion of his salary from the Employer in an amount equal to any
percentage or specified dollar amount not less than one-half percent (.5%) of
his Compensation nor more than (i) fifteen percent (15%) of his Compensation,
for Non-Highly Compensated Participants, or (ii) ten percent (10%) of his
Compensation, for Highly Compensated Participants. Effective January 1, 1998,
the total Employee Salary Deferral Contributions made under this Plan, and any
other plans the Employer may have, shall not exceed $10,000 for the calendar
year. This dollar limitation shall be adjusted annually pursuant to the method
provided in Code Section 415(d) in accordance with Treasury Regulations. In
consideration of such agreement, the Employer shall make an Employee Salary
Deferral Contribution to the Participant's Employee Salary Deferral Contribution
Account on behalf of the Participant for such Plan Year in an amount equal to
the total amount of the Participant's Compensation from the Employer which was
deferred during the Plan Year pursuant to the salary deferral agreement.
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All Employee Salary Deferral Contributions shall be 100% vested and
non-forfeitable at all times. If a Participant enters into a salary deferral
agreement with the Employer for a given Plan Year, his Compensation for such
Plan Year for all purposes under this Plan, except as otherwise expressly
provided herein, shall be equal to his Compensation before application of the
salary deferral agreement. For purposes of any other plan or benefits
arrangement of the Employer, including the Retirement Plan, his Compensation
shall be equal to his Compensation before application of the salary deferral
agreement.
Salary deferral agreements shall be governed by the following rules:
(a) A salary deferral agreement shall apply to each payroll period
during which an effective salary deferral agreement is on file
with the Employer.
(b) A salary deferral agreement may be amended by a Participant
only once during any Calendar Quarter unless the Committee,
pursuant to uniform and nondiscriminatory rules applicable to
all Participants, determines that good cause exists to permit
a Participant to amend such agreement more frequently.
(c) Salary deferral agreements and amendments to salary deferral
agreements shall be effective as of, and shall not apply to
any payroll period preceding, the payroll period next
following the 15th day after the salary deferral agreement or
V-2
29
amendment to the salary deferral agreement is executed by the
Participant and the Employer.
(d) Notwithstanding the foregoing, the Employer may reduce the
amount subject to its salary deferral agreement with any
Participant at any time if the Employer determines that
reduction is necessary to ensure that annual additions for any
Plan Year will not exceed the limitations of Section 8.5 and
8.6 hereof or to ensure that the anti-discrimination
requirements of Section 401(k) of the Code, and all applicable
regulations thereunder, are met for such Plan Year. At any
time that the Employer makes such reduction, the Participant
shall have the option of electing to have the excess
percentage contributed to the Plan as his Additional Employee
Contributions.
(e) Except as provided above, a salary deferral agreement
applicable to any given Plan Year, once made, may not be
revoked or amended by the Participant or the Employer.
(f) If a Participant's Employee Salary Deferral Contributions
under this Plan, together with any salary deferrals under
another qualified cash or deferred arrangement (as defined in
Code Section 401(k)), a simplified employee pension (as
defined in Code Section 408(k)), a salary reduction agreement
(within the meaning of Code Section 3121(a)(5)(D)), or a trust
described in Code Section
V-3
30
501(c)(18), cumulatively exceed the limitation imposed by Code
Section 402(g) (as adjusted annually in accordance with the
method provided in Code Section 415(d)) for such Participant's
taxable year, the Participant may, not later than March 1
following the close of his taxable year, notify the Committee
in writing of such excess and request that his Employee Salary
Deferral Contribution under this Plan be reduced by an amount
specified by the Participant. In such event, the Committee may
direct the Trustee to distribute such excess amount (and any
income allocable to such excess amount) to the Participant not
later than the first April 15th following the close of the
Participant's taxable year. Any distribution of less than the
entire amount of the excess Employee Salary Deferral
Contribution and income shall be treated as a pro rata
distribution of excess Employee Salary Deferral Contribution
and income. The amount distributed shall not exceed the
Employee Salary Deferral Contribution under the Plan for the
taxable year. Any distribution on or before the last day of
the Participant's taxable year must satisfy each of the
following conditions:
(1) the Participant must designate the distribution as an
excess Employee Salary Deferral Contribution;
(2) the distribution must be made after the date on which
the Plan received the excess Employee Salary Deferral
Contribution; and
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31
(3) the Plan must designate the distribution as a
distribution of an excess Employee Salary Deferral
Contribution.
(g) Notwithstanding Section 5.1(f) above, a Participant's Employee
Salary Deferral Contributions shall be reduced, but not below
zero, by any distribution and/or recharacterization of excess
contributions pursuant to Section 8.8(a) for the Plan Year
beginning with or within the taxable year of the Participant.
5.2 Additional Employee Contributions. Subject to the provisions of
Sections 8.9 and 8.10, a Participant may from time to time, in addition to the
amount contributed pursuant to Section 5.1 hereof, contribute to the Plan as his
Additional Employee Contributions such amount as he may determine to be
desirable. Such Additional Employee Contributions shall be made by deductions
from the payroll of the Participant in semi-monthly installments which may be
rounded to the nearest whole dollar and which shall be paid by the Employer to
the Trustee as soon as practicable. If permitted by the Committee, Additional
Employee Contributions may also be made in a single sum payment by the
Participant directly to the Plan or by a combination of payroll deductions and
single sum payments. Additional Employee Contributions shall not be eligible for
matching Employer Contributions by the Employer, if any, as provided for in
Section 6.2(a) hereof. An amount equal to a Participant's Additional Employee
Contributions shall be allocated to his Account.
V-5
32
5.3 Rollovers. A Participant may, with the consent of the Committee,
which shall be granted or withheld in a uniform and nondiscriminatory manner,
rollover to the Trust Fund in cash or in kind, within sixty (60) days of his
receipt thereof, all or any portion of the amount distributed to him within one
taxable year of the Participant as a rollover amount, as defined in Section
402(a)(5), 403(a)(4), or 408(d)(3) of the Code, to the extent permitted by the
Code; provided, however, that no such rollover amount may include any amounts
representing the Participant's contributions. The Committee may require such
information or documentation with respect to any such rollover contribution
hereunder as it deems necessary or desirable.
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33
ARTICLE VI
CONTRIBUTIONS BY THE EMPLOYER
6.1 Employee Salary Deferral Contributions. For each Plan Year, the
Employer, in addition to any amount it may contribute pursuant to Section 6.2
hereof, shall contribute an amount equal to the total amount of contributions
agreed to be made by it pursuant to salary deferral agreements under Section 5.1
hereof entered into between the Employer and Participants for such Plan Year.
Contributions made by the Employer for a given Plan Year pursuant to salary
deferral agreements under Section 5.1 hereof shall be placed in the Trust Fund
as of the earliest date on which such contributions can reasonably be segregated
from the Employer's general assets, but in any event not later than fifteen (15)
business days following the end of the month in which the Participant's
contribution was received or withheld from the Participant's pay. The provisions
of Department of Labor regulations 2510.3-102 are incorporated herein by
reference.
6.2 Other Types of Contributions by the Employer.
(a) The Employer shall contribute to the Trust Fund with respect
to a Plan Year, as an Employer Contribution, an amount equal
to fifty percent (50%) of each Participant's Employee Salary
Deferral Contribution made pursuant to Section 5.1 hereof not
exceeding four percent (4%) of Compensation. A Participant may
elect that such Employer Contributions shall be paid to the
Trustee in the form of
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34
cash or shares of Company Stock and cash in lieu of fractional
shares. Such election shall be made, or may be changed, at
such time, in such manner and in such form as the Committee
may prescribe through uniform and nondiscriminatory rules. In
the absence of such an election, Employer Contributions shall
be paid in the form of shares of Company Stock and cash in
lieu of fractional shares. Employer Contributions shall be
paid to the Trustee at the same time as the payment of the
Employee Salary Deferral Contributions with respect to which
such Employer Contributions are made and such Employer
Contributions shall be allocated to each Participant's
Employer Contribution Account. Employer Contributions made in
the form of Company Stock shall be based on the average of bid
and asked prices per share as of the close of business on the
date on which such Employer Contributions are paid to the
Trustee.
(b) In addition to the contribution provided under subsection (a)
hereof, the Employer may, but shall not be obligated to,
contribute to the Trust Fund, within the time prescribed by
law for filing of the income tax return for the Company's
fiscal year, including any extensions thereof, such amount as
the Board shall determine by resolution adopted before the end
of such time, provided, however, that the Employer
Contribution hereunder on behalf of each eligible Employee, as
described herein below, shall not be less than one percent
(1%) of each such eligible Employee's Compensation earned
while an eligible Employee in the Plan Year with respect to
which such Employer contribution is made. Such Employer
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35
Contribution shall be allocated to the Employer Contribution
Account of each Employee who was an eligible Employee for all
or a part of the Plan Year with respect to which such
contribution is made on the basis of the percentage that each
such eligible Employee's Compensation earned while an eligible
Employee in such Plan Year is to the total aggregate
Compensation of all such eligible Employees earned while
eligible Employees in such Plan Year. For purposes of this
subsection (b), an Employee shall be eligible to share in the
allocation of the Employer contribution made with respect to a
Plan Year pursuant to this subsection (b) only if such
Employee has satisfied the eligibility requirement of Section
4.1 of this Plan, has completed one thousand (1,000) or more
Hours of Service in such Plan Year, and is not a participant
in the Connecticut Water Service, Inc. Performance Stock
Program with respect to the Plan Year for which such Employer
Contribution is made.
6.3 Earnings Limitation. The Employer's contributions pursuant to
Sections 6.1 and 6.2 hereof shall be made out of the Employer's current or
accumulated earnings (as shown by its books and accounts for general corporate
purposes in accordance with accepted accounting practices), and may only be made
if and to the extent such current or accumulated earnings are adequate for such
purposes.
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36
ARTICLE VII
INVESTMENT OF CONTRIBUTIONS
7.1 Investment Funds. The trust agreement creating the Trust shall
provide for the establishment of one or more separate Investment Funds in which
the assets of the Trust, excluding amounts described in Section 7.4 (Company
Stock Fund) and 7.5 (Employee Loan Fund), shall be invested.
7.2 Allocation of Contributions to Investment Funds. A Participant may
elect how contributions to his Account, excluding Employer Contributions made in
shares of Company Stock and cash in lieu of fractional shares in accordance with
Section 6.2(a) hereof, shall be allocated among the available Investment Funds.
Allocations to Investment Funds shall be in 5% increments. Such elections shall
be made at such time, in such manner and in such form as the Committee may
prescribe through uniform and nondiscriminatory rules. In the absence of an
investment election by a Participant, contributions shall be invested in that
Investment Fund which invests in short-term, fixed income investments such as
bank certificates of deposit, commercial paper, and treasury bills.
7.3 Transfers of Investments. A Participant may elect to transfer
amounts among the available Investment Funds. Such elections shall be made at
such time, in such manner and in such form as the Committee may prescribe
through uniform and nondiscriminatory rules. The minimum amount transferable out
of any one Investment Fund shall be five percent (5%) of the
VII-1
37
total value of the Participant's Account, or, if less, the entire amount
invested in such Investment Fund.
In no event shall amounts invested in the Company Stock Fund be
available for transfer to any Investment Fund pursuant to this Section, except
in the case of the cash proceeds of a tender offer for Company Stock, nor shall
amounts invested in any Investment Fund be available for transfer to the Company
Stock Fund.
7.4 Company Stock Fund. All Employer Contributions made in shares of
Company Stock and cash in lieu of fractional shares in accordance with Section
6.2(a) hereof, together with earnings thereon, shall at all times be invested in
the Company Stock Fund.
7.5 Employee Loan Fund. The trust agreement creating the Trust shall
provide for the establishment of an Employee Loan Fund which shall be invested
exclusively in personal notes executed by Participants pursuant to Section 12.1
hereof.
7.6 Valuations. As of each Valuation Date, the Trust Fund, each of the
Investment Funds and the Company Stock Fund shall be valued on the basis of
current market value in accordance with the provisions of the Trust Agreement.
VII-2
38
ARTICLE VIII
ALLOCATION OF CONTRIBUTIONS
8.1 Notice to Committee. As of each Entry Date, the Employer shall
deliver to the Committee a list of all Employees who entered the Plan after the
last preceding Entry Date together with the Entry Date for each such Employee, a
statement of the amount of Compensation paid to each such Employee, and the
amount of contributions by or on behalf of each such Employee. As of such Entry
Date, the Employer shall also notify the Committee in writing of all changes in
the list of Participants, and shall notify said Committee of the amount of
Compensation paid to, and the amount of contributions by or on behalf of, each
Participant.
8.2 Accounts. The Committee shall open the following accounts on behalf
of each Participant:
(a) Employee Salary Deferral Contribution Account. The Committee
shall credit to each Participant's Employee Salary Deferral
Contribution Account all Employee Salary Deferral
Contributions pursuant to Sections 5.1, 6.1, and 8.8 hereof,
including accruals thereon pursuant to Section 8.3 hereof,
made on behalf of the Participant.
(b) Employer Contribution Account. The Committee shall credit to
each Participant's Employer Contribution Account all Employer
Contributions, if any, pursuant to
VIII-1
39
Sections 6.2(a) and (b) and 8.10 hereof, including accruals
thereon pursuant to Section 8.3 hereof, made on behalf of the
Participant.
(c) Additional Employee Contribution Account. The Committee shall
credit to each Participant's Additional Employee Contribution
Account his contributions to the Trust Fund pursuant to
Section 5.2 hereof, including accruals thereon pursuant to
Section 8.3 hereof.
(d) Rollover Account. The Committee shall credit to each
Participant's Rollover Account his contributions to the Trust
Fund pursuant to Section 5.3 hereof, including accruals
thereon pursuant to Section 8.3 hereof.
For the purposes of allocating earnings and losses, all contributions
shall be treated as being paid in the manner and at the time described in
Section 7.6 hereof.
8.3 Allocation of Accruals. As of each Valuation Date, as provided in
Section 7.6 hereof, the Trustee shall determine the values of each of the
Investment Funds and of the Company Stock Fund and the amount of the accruals to
each such fund since the preceding Valuation Date, which accruals shall consist
of any earnings therefrom, any increase in market value thereof, and other
accretions thereon, less losses, decreases in market value, expenses, and other
proper deductions. The Trustee shall also determine the value of each
Participant's interest in the Employee Loan Fund and the amount of accruals to
such interest since the preceding
VIII-2
40
Valuation Date, which accruals shall consist of any earnings therefrom, any
increase in market value thereof, and other accretions thereon, less losses,
decreases in market value, expenses, and other proper deductions. The Trustee
shall notify the Committee of the foregoing amounts within a reasonable time
after their determination. The Committee shall allocate net accruals in each of
the Investment Funds and in the Company Stock Fund to each Participant's
Account, as of the Valuation Date, on the basis of the percentage that the
amount of each Participant's Account invested in each Investment Fund and in the
Company Stock Fund on the Valuation Date, prior to the allocation of any
contributions made since the last preceding Valuation Date, is of the total
amount of all Participants' Accounts invested in each Investment Fund and in the
Company Stock Fund on the Valuation Date, prior to the allocation of any
contributions made since the last preceding Valuation Date. For purposes of
determining the value of a Participant's interest in the Employee Loan Fund,
only notes executed by the Participant shall be taken into account.
8.4 Notice to Participants. Within a reasonable time after the end of
each Plan Year, the Committee shall notify each Participant of (1) the amount
credited to his Account under Section 8.2 hereof since the last Plan Year; (2)
the amount credited to his Account under Section 8.3 hereof since the last Plan
Year; and (3) the total amount credited to his Account since the last Plan Year.
8.5 Limitation. Anything herein to the contrary notwithstanding, in no
event shall the sum of annual additions to a Participant's Account in any Plan
Year, when combined with the
VIII-3
41
annual additions to such Participant's Account under any other defined
contribution plan maintained by the Employer, attributable to (1) contributions
of the Employer (including Employer Contributions and Employee Salary Deferral
Contributions), (2) forfeitures, and (3) Additional Employee Contributions, be
greater than the lesser of (1) $30,000 (as adjusted under Section 415(d) of the
Code), or (2) twenty-five percent (25%) of all the Participant's Code Section
415 Compensation from the Employer. Any excess amount hereunder (i) to the
extent of Additional Employee Contributions in such Plan Year shall be returned
to the Participant; (ii) to the extent of Employee Salary Deferral Contributions
pursuant to Sections 5.1 and 6.1 hereof shall be treated as provided in the
preceding clause (i); and (iii) to the extent of matching Employer Contributions
pursuant to Section 6.2(a) hereof, Employer Contributions pursuant to Section
6.2(b) hereof and Employee Salary Deferral Contributions pursuant to Section
6.2(c) hereof shall be treated as Employer Contributions and shall reduce the
amount that the Employer would otherwise contribute to the Trust Fund as
matching Employer Contributions pursuant to Section 6.2(a) hereof, Employer
Contributions pursuant to Section 6.2(b) hereof and Employee Salary Deferral
Contributions pursuant to Section 6.2(c) hereof, respectively.
8.6 Additional Limitation - Members of Retirement Plan. In the case of
any Participant who is entitled to benefits due to Employer contributions under
the Retirement Plan, in addition to the limitations imposed by Section 8.5
hereof, the sum of the defined benefit plan fraction and the defined
contribution plan fraction for any year may not exceed 1.0. The defined benefit
plan fraction for any year is a fraction (a) the numerator of which is the
projected annual benefit of the Participant under the Retirement Plan
(determined as of the close of the Plan
VIII-4
42
Year), and (b) the denominator of which is the lesser of: (1) the product of
1.25 multiplied by the maximum dollar limitation in effect under Section
415(b)(1)(A) of the Code for such year, or (2) the product of 1.4 multiplied by
the amount which may be taken into account under Section 415(b)(l)(B) of the
Code for such Participant for such year. The defined contribution plan fraction
for any year is a fraction (a) the numerator of which is the sum of the annual
additions to the Participant's Account as of the close of the Plan Year and (b)
the denominator of which is the sum of the lesser of the following amounts
determined for such year and each prior year of service with the Employer: (1)
the product of 1.25 multiplied by the dollar limitation in effect under Section
415(c)(1)(A) of the Code for such year (determined without regard to Section
415(c)(6) of the Code), or (2) the product of 1.4 multiplied by the amount which
may be taken into account under Section 415(c)(l)(B) of the Code for such
Participant for such year.
In the event that said annual additions to a Participant's Account
should exceed the aforesaid limitation, the Committee shall have the right to
accomplish the aforementioned compliance by reducing or limiting benefits under
this Plan or under the Retirement Plan, and may vary the extent to which the
reduction or limitation will be applied to either, provided that any such
reduction or limitation shall be made in a nondiscriminatory manner.
Effective for Plan Years beginning after December 31, 1999, this
Section 8.6 shall not apply.
VIII-5
43
8.7 Actual Deferral Percentage Tests. The following Section 8.7 shall
be effective for periods beginning on or after January 1, 1997.
(a) The annual allocation derived from Employee Salary Deferral
Contributions to Employee Salary Deferral Contribution
Accounts shall satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not be more than
the "Actual Deferral Percentage" of the Non-Highly
Compensated Participant group for the preceding Plan
Year, multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for
the Highly Compensated Participant group over the
"Actual Deferral Percentage" for the Non-Highly
Compensated Participant group for the preceding Plan
Year shall not be more than two percentage points.
Additionally, the "Actual Deferral Percentage" for
the Highly Compensated Participant group shall not
exceed the "Actual Deferral Percentage" for the
Non-Highly Compensated Participant group for the
preceding Plan Year multiplied by 2. The provisions
of Code Section 401(k)(3) and Treasury Regulations
Section 1.401(k)-1(b) are incorporated herein by
reference. However, in order to prevent the multiple
use of the alternative method described in this
paragraph in Code Section 401(m)(9)(A), any Highly
VIII-6
44
Compensated Participant eligible to make elective
deferrals pursuant to Section 5.1 and to make
Employee contributions or to receive matching
contributions under this Plan or under any other plan
maintained by the Employer or an Affiliated Company
shall have his actual contribution ratio reduced
pursuant to Treasury Regulations Section 1.401(m)-2,
the provisions of which are incorporated herein by
reference.
(b) For the purposes of this Section "Actual Deferral Percentage"
means, with respect to the Highly Compensated Participant
group for a Plan Year and the Non-Highly Compensated
Participant group for the preceding Plan Year, the average of
the ratios, calculated separately for each Participant in such
group, of the amount of Employee Salary Deferral Contributions
allocated to each Employee Salary Deferral Contribution
Account for such Plan Year (and contributed to the Plan within
12 months following the end of the Plan Year) to such
Participant's 414(s) Compensation for such Plan Year. The
actual deferral ratio for each Participant and the "Actual
Deferral Percentage" for each group shall be calculated to the
nearest one-hundredth of one percent. Employee Salary Deferral
Contributions allocated to each Non-Highly Compensated
Employee Salary Deferral Contribution Account shall be reduced
by excess Employee Salary Deferral Contributions to the extent
such excess amounts are made under this Plan or any other plan
maintained by the Employer.
VIII-7
45
(c) The "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group is determined without regard to
changes in the group of Non-Highly Compensated Participants
who are eligible under the Plan in the testing year. However,
if the Plan results from, or is otherwise affected by, a "Plan
Coverage Change" that becomes effective during the testing
year, then the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group for the prior year is the
"Weighted Average of the Actual Deferral Percentages For The
Prior Year Subgroups." Notwithstanding the above, if ninety
(90) percent or more of the total number of Non-Highly
Compensated Participants from all "Prior Year Subgroups" are
from a single "Prior Year Subgroup," then in determining the
"Actual Deferral Percentage" for the Non-Highly Compensated
Participants for the prior year, the Employer may elect to use
the "Actual Deferral Percentage" for Non-Highly Compensated
Participants for the prior year under which that single "Prior
Year Subgroup" was eligible, in lieu of using the weighted
averages. For purposes of this Section the following
definitions shall apply:
(1) "Plan Coverage Change" means a change in the group or
groups of eligible Participants on account of (i) the
establishment or amendment of a plan, (ii) a plan
merger, consolidation, or spinoff under Code Section
414(l), (iii) a change in the way plans within the
meaning of Code Section
VIII-8
46
414(l) are combined or separated for purposes of
Regulation 1.401(k)- 1(g)(11), or (iv) a combination
of any of the foregoing.
(2) "Prior Year Subgroup" means all Non-Highly
Compensated Participants for the prior year who, in
the prior year, were eligible Participants under a
specific Code Section 401(k) plan maintained by the
Employer and who would have been eligible
Participants in the prior year under the plan tested
if the plan coverage change had first been effective
as of the first day of the prior year instead of
first being effective during the testing year.
(3) "Weighted Average of the Actual Deferral Percentages
For The Prior Year Subgroups" means the sum, for all
prior year subgroups, of the "Adjusted Actual
Deferral Percentages."
(4) "Adjusted Actual Deferral Percentage" with respect to
a prior year subgroup means the Actual Deferral
Percentage for Non-Highly Compensated Participants
for the prior year of the specific plan under which
the members of the prior year subgroup were eligible
Participants, multiplied by a fraction, the numerator
of which is the number of Non-Highly Compensated
Participants in the prior year subgroup and the
VIII-9
47
denominator of which is the total number of
Non-Highly Compensated Participants in all prior year
subgroups.
(d) For the purposes of Sections 8.7(a) and 8.8, a Highly
Compensated Participant and a Non-Highly Compensated
Participant shall include any Employee eligible to make a
deferral election pursuant to Section 5.1, whether or not such
deferral election was made or amended pursuant to Section 5.1.
(e) For the purposes of this Section, if two or more plans (other
than an employee stock ownership plan as defined in Code
Section 4975(e)(7)) which include cash or deferred
arrangements are considered one plan for the purposes of Code
Section 401(a)(4) or 410(b) (other than the average benefits
test under Code Section 410(b)(2)(A)(ii)), the cash or
deferred arrangements included in such plans shall be treated
as one arrangement.
(f) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two (2) or more cash or
deferred arrangements of the Employer or an Affiliated
Company, all such cash or deferred arrangements shall be
treated as one (1) cash or deferred arrangement for the
purpose of determining the deferral percentage with respect to
such Highly Compensated Participant. However, if the cash or
deferred arrangements have different Plan Years, this
VIII-10
48
paragraph shall be applied by treating all cash or deferred
arrangements ending with or within the same calendar year as a
single arrangement.
8.8 Adjustment to Actual Deferral Percentage Tests. The following
Section 8.8 shall be effective for periods beginning on or after January 1,
1997.
In the event that the initial allocations of the Employee Salary
Deferral Contributions do not satisfy one of the tests set forth in Section
8.7(a), the Committee shall adjust excess contributions pursuant to the options
set forth below:
(a) On or before the fifteenth day of the third month following
the end of each Plan Year, the Highly Compensated Participant
having the largest amount of Employee Salary Deferral
Contributions shall have his portion of excess contributions
distributed to him and/or at his election recharacterized as
an Additional Employee Contribution pursuant to Section 5.2,
until the total amount of excess contributions has been
distributed, or until the amount of his Employee Salary
Deferral Contributions equals the Employee Salary Deferral
Contributions of the Highly Compensated Participant having the
second largest amount of Employee Salary Deferral
Contributions. This process shall continue until the total
amount of excess contributions has been distributed. For each
Highly Compensated Participant, the amount of excess
contributions is equal to the Employee Salary Deferral
Contributions on behalf of such Highly Compensated
VIII-11
49
Participant (determined prior to the application of this
paragraph) minus the amount determined by multiplying the
Highly Compensated Participant's actual deferral ratio
(determined after application of this paragraph) by his 414(s)
Compensation. For purposes of this Section, Employee Salary
Deferral Contributions shall exclude any such amounts
distributed as excess "annual additions" pursuant to Section
8.5. In determining the amount of excess contributions to be
distributed and/or recharacterized with respect to an affected
Highly Compensated Participant as determined herein, such
amount shall be reduced by any excess Employee Salary Deferral
Contribution previously distributed to such affected Highly
Compensated Participant for his taxable year ending with or
within such Plan Year.
(1) With respect to the distribution of excess
contributions pursuant to (a) above, such
distribution:
(i) may be postponed but not later than the
close of the succeeding Plan Year;
(ii) shall be made first from unmatched Employee
Salary Deferral Contributions and,
thereafter, simultaneously from Employee
Salary Deferral Contributions which are
matched and matching
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50
Employer Contributions which relate to such
Employee Salary Deferral Contributions;
(iii) shall be adjusted for income; and
(iv) shall be designated by the Employer as a
distribution of excess contributions (and
income).
(2) With respect to the recharacterization of excess
contributions pursuant to (a) above, such
recharacterized amounts:
(i) shall be deemed to have occurred on the date
on which the last of those Highly
Compensated Participants with excess
contributions to be recharacterized is
notified of the recharacterization and the
tax consequences of such recharacterization;
(ii) shall not exceed the amount of Employee
Salary Deferral Contributions on behalf of
any Highly Compensated Participant for any
Plan Year;
(iii) shall be treated as Additional Employee
Contributions for purposes of Code Section
401(a)(4) and Treasury Regulations Section
VIII-13
51
1.401(k)-1(b). However, for purposes of
Sections 18.3 and 18.11(a) recharacterized
excess contributions continue to be treated
as Employer contributions that are Employee
Salary Deferral Contributions. Excess
contributions recharacterized as Additional
Employee Contributions shall continue to be
nonforfeitable and subject to the rules of
Section 11.1(d);
(iv) are not permitted if the amount
recharacterized plus Additional Employee
Contributions actually made by such Highly
Compensated Participant exceed the maximum
amount of Additional Employee Contributions
(determined prior to application of Section
8.9) that such Highly Compensated
Participant is permitted to make under the
Plan in the absence of recharacterization;
(v) shall be treated as Employer contributions
for purposes of Section 8.5; and
(vi) shall be adjusted for income.
VIII-14
52
(3) Any distribution and/or recharacterization of less
than the entire amount of excess contributions shall
be treated as a pro rata distribution and/or
recharacterization of excess contributions and
income.
(4) Matching Employer Contributions made pursuant to
Section 6.2(c) which relate to excess contributions
shall be forfeited unless the related matching
Employer Contribution is distributed as an excess
aggregate contribution pursuant to Section 8.10.
(b) Within twelve (12) months after the end of the Plan Year, the
Employer may make a special qualified non-elective
contribution on behalf of Non-Highly Compensated Participants
electing salary reductions pursuant to Section 5.1 in an
amount sufficient to satisfy (or to prevent an anticipated
failure of) one of the tests set forth in Section 8.7(a). Such
contribution shall be allocated in the prior Plan Year to the
Participant's Employee Salary Deferral Account on behalf of
each Non-Highly Compensated Participant who was employed by
the Employer on the last day of the prior Plan Year in the
same proportion that each such Non- Highly Compensated
Participant's Employee Salary Deferral Contributions for the
prior Plan Year bears to the total Employee Salary Deferral
Contributions of all such Non-Highly Compensated Participants
for the prior Plan Year. Such contribution shall be made by
the Employer prior to the end of the current Plan Year.
VIII-15
53
(c) If during a Plan Year the projected aggregate amount of
Employee Salary Deferral Contributions to be allocated to all
Highly Compensated Participants under this Plan would, by
virtue of the tests set forth in Section 8.7(a), cause the
Plan to fail such tests, then the Committee may automatically
reduce proportionately or in the order provided in Section
8.8(a) each affected Highly Compensated Participant's deferral
election made pursuant to Section 5.1 by an amount necessary
to satisfy one of the tests set forth in Section 8.7(a).
8.9 Actual Contribution Percentage Tests. The following Section 8.9
shall be effective for periods beginning on or after January 1, 1997.
(a) The "Actual Contribution Percentage" for the Highly
Compensated Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly
Compensated Participant group for the preceding Plan
Year; or
(2) the lesser of 200 percent of such percentage for the
Non-Highly Compensated Participant group for the
preceding Plan Year, or such percentage for the
Non-Highly Compensated Participant group for the
preceding Plan Year plus 2 percentage points.
However, to prevent the multiple use of the
alternative method described in this paragraph and in
VIII-16
54
Code Section 401(m)(9)(A), any Highly Compensated
Participant eligible to make salary deferrals
pursuant to Section 5.1 or any other cash or deferred
arrangement maintained by the Employer or an
Affiliated Company and to make Additional Employee
Contributions or to receive matching contributions
under this Plan or under any other plan maintained by
the Employer or an Affiliated Company shall have his
actual contribution ratio reduced pursuant to
Treasury Regulations Section 1.401(m)-2. The
provisions of Code Section 401(m) and Treasury
Regulations Section 1.401(m)-1(b) and 1.401(m)-2 are
incorporated herein by reference.
(b) For the purposes of this Section and Section 8.10, "Actual
Contribution Percentage" means, with respect to the Highly
Compensated Participant group for a Plan Year and the
Non-Highly Compensated Participant group for the preceding
Plan Year, the average of the ratios (calculated separately
for each Participant in each group) of:
(1) the sum of Additional Employee Contributions made
pursuant to Section 5.2; matching Employer
Contributions made pursuant to Section 6.2(a) and
excess contributions recharacterized as Additional
Employee Contributions pursuant to Section 8.8(a) on
behalf of each such Participant for such Plan Year;
to
VIII-17
55
(2) the Participant's 414(s) Compensation for such Plan
Year.
The actual contribution ratio must be rounded to the nearest
one-hundredth of one percent.
(c) For purposes of determining the "Actual Contribution
Percentage" and the amount of Excess Aggregate Contributions
pursuant to Section 8.10(d), only matching Employer
Contributions contributed to the Plan prior to the end of the
succeeding Plan Year shall be considered. In addition, the
Administrator may elect to take into account with respect to
Employees eligible to have matching Employer Contributions
pursuant to Section 6.2 and Additional Employee Contributions
pursuant to Section 5.2 allocated to their accounts, elective
deferrals (as defined in Regulation 1.402(g)-1(b)) and
qualified non-elective contributions (as defined in Code
Section 401(m)(4)(C)) contributed to any plan maintained by
the Employer. Such elective deferrals and qualified
non-elective contributions shall be treated as matching
Employer Contributions subject to Regulation 1.401(m)-1(b)(2)
which is incorporated herein by reference. However, the Plan
Year must be the same as the plan year of the plan to which
the elective deferrals and the qualified non-elective
contributions are made.
(d) For purpose of this Section, if two or more plans of the
Employer to which Additional Employee Contributions, matching
Employer Contributions, or
VIII-18
56
elective deferrals are made are treated as one plan for
purpose of Code Sections 401(a)(4) or 410(b) (other than the
average benefits test under Code Section 410(b)(2)(A)(ii)),
such plans shall be treated as one plan for purposes of this
Section 8.9. In addition, two or more plans of the Employer to
which Additional Employee Contributions, matching Employer
Contributions, or Employee Salary Deferral Contributions are
made may be considered as a single plan for purposes of this
Section. In such a case, the aggregated plans must satisfy
Code Sections 401(a)(4) and 410(b) as though such aggregated
plans were a single plan. Plans may be aggregated under this
paragraph only if they have the same plan year.
Notwithstanding the above, if two or more plans are
permissively aggregated under Regulation Section
1.410(b)-7(d), all plans permissively aggregated must use
either the current year testing method or the prior year
testing method for the testing year. Contributions to an
employee stock ownership plan as defined in Code Section
4975(e)(7) shall not be aggregated with this Plan.
(e) If a Highly Compensated Participant participates in two or
more plans which are maintained by the Employer or an
Affiliated Company to which Additional Employee Contributions,
matching Employer Contributions, or Employee Salary Deferral
Contributions are made, all such contributions on behalf of
such Highly Compensated Participant shall be aggregated for
purposes of this Section 8.9. However, if the plans have
different plan years, this paragraph shall be applied by
treating all plans ending with or within the same calendar
year as a single plan.
VIII-19
57
(f) For purposes of Section 8.9(a) and 8.10, a Highly Compensated
Participant and Non-Highly Compensated Participant shall
include any Employee eligible to have matching Employer
Contributions pursuant to Section 6.2 (whether or not a
deferral election was made or suspended pursuant to Section
5.1) and Additional Employee Contributions pursuant to Section
5.2 (whether or not Additional Employee Contributions are
made) allocated to his account for the Plan Year.
(g) The "Actual Contribution Percentage" for the Non-Highly
Compensated Participant group is determined without regard to
changes in the group of Non- Highly Compensated Participants
who are eligible under the Plan in the testing year. However,
if the Plan results from, or is otherwise affected by, a "Plan
Coverage Change" that becomes effective during the testing
year, then the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group for the prior year is
the "Weighted Average of the Actual Contribution Percentages
For The Prior Year Subgroups." Notwithstanding the above, if
ninety (90) percent or more of the total number of Non-Highly
Compensated Participants from all "Prior Year Subgroups" are
from a single "Prior Year Subgroup," then in determining the
"Actual Contribution Percentage" for the Non-Highly
Compensated Participants for the prior year, the Employer may
elect to use the "Actual Contribution Percentage" for
Non-Highly Compensated Participants for the prior year under
which that single "Prior Year Subgroup" was
VIII-20
58
eligible, in lieu of using the weighted averages. For purposes
of this Section the following definitions shall apply:
(1) "Plan Coverage Change" means a change in the group or
groups of eligible Participants on account of (i) the
establishment or amendment of a plan, (ii) a plan
merger, consolidation, or spinoff under Code Section
414(l), (iii) a change in the way plans within the
meaning of Code Section 414(l) are combined or
separated for purposes of Regulation 1.401(k)-
1(g)(11), or (iv) a combination of any of the
foregoing.
(2) "Prior Year Subgroup" means all Non-Highly
Compensated Participants for the prior year who, in
the prior year, were eligible Participants under a
specific Code Section 401(m) plan maintained by the
Employer and who would have been eligible
Participants in the prior year under the plan tested
if the plan coverage change had first been effective
as of the first day of the prior year instead of
first being effective during the testing year.
(3) "Weighted Average of the Actual Contribution
Percentages For The Prior Year Subgroups" means the
sum, for all prior year subgroups, of the "Adjusted
Actual Contribution Percentages."
VIII-21
59
(4) "Adjusted Actual Contribution Percentage" with
respect to a prior year subgroup means the Actual
Contribution Percentage for Non-Highly Compensated
Participants for the prior year of the specific plan
under which the members of the prior year subgroup
were eligible Participants, multiplied by a fraction,
the numerator of which is the number of Non-Highly
Compensated Participants in the prior year subgroup
and the denominator of which is the total number of
Non-Highly Compensated Participants in all prior year
subgroups.
8.10 Adjustment to Actual Contribution Percentage Tests. The following
Section 8.10 shall be effective for periods beginning on or after January 1,
1997.
(a) In the event that the "Actual Contribution Percentage" for the
Highly Compensated Participant group exceeds the "Actual
Contribution Percentage" for the Non-Highly Compensated
Participant group pursuant to Section 8.9(a), the Committee
(on or before the fifteenth day of the third month following
the end of the Plan Year, but in no event later than the close
of the following Plan Year) shall direct the Trustee to
distribute to the Highly Compensated Participant having the
largest amount of contributions determined pursuant to Section
8.9(b)(1), such excess aggregate contributions (and income
allocable to such contributions) until the total amount of
excess aggregate contributions has been distributed, or until
his remaining amount equals the amount of contributions
VIII-22
60
determined pursuant to Section 8.9(b)(1) of the Highly
Compensated Participant having the second largest amount of
contributions. This process shall continue until the total
amount of excess aggregate contributions has been distributed.
The distribution of excess aggregate contributions shall be
made in the following order:
(1) Matching Employer Contributions distributed pursuant
to Section 8.8(a)(1);
(2) Additional Employee Contributions including excess
contributions recharacterized as Additional Employee
Contributions pursuant to Section 8.8(a)(2);
(3) Remaining matching Employer Contributions.
(b) Any distribution of less than the entire amount of excess
aggregate contributions (and income) shall be treated as a pro
rata distribution of excess aggregate contributions and
income. Distribution of excess aggregate contributions shall
be designated by the Employer as a distribution of excess
aggregate contributions (and income).
VIII-23
61
(c) Excess aggregate contributions attributable to amounts other
than Additional Employee Contributions shall be treated as
Employer contributions for purposes of Code Sections 404 and
415 even if distributed from the Plan.
(d) For each Highly Compensated Participant, the amount of excess
aggregate contributions is equal to the total Additional
Employee Contributions made pursuant to Section 5.2, matching
Employer Contributions made pursuant to Section 6.2, excess
contributions recharacterized as Additional Employee
Contributions pursuant to Section 8.8(a) and any qualified
non- elective contributions or elective deferrals taken into
account pursuant to Section 8.9(c) on behalf of the Highly
Compensated Participant (determined prior to the application
of this paragraph) minus the amount determined by multiplying
the Highly Compensated Participant's actual contribution ratio
(determined after application of this paragraph) by his 414(s)
Compensation. In no case shall the amount of excess aggregate
contribution with respect to any Highly Compensated
Participant exceed the amount of Additional Employee
Contributions made pursuant to Section 5.2, matching Employer
Contributions made pursuant to Section 6.2, Excess Aggregate
Contributions recharacterized as Additional Employee
Contributions pursuant to Section 8.8(a) and any qualified
non-elective contributions or elective deferrals taken into
account pursuant to Section 8.9(c) on behalf of such Highly
Compensated Participant for such Plan Year.
VIII-24
62
(e) The determination of the amount of excess aggregate
contributions with respect to any Plan Year shall be made
after first determining the excess contributions, if any, to
be treated as Additional Employee Contributions due to
recharacterization for the plan year of any other qualified
cash or deferred arrangement (as defined in Code Section
401(k)) maintained by the Employer that ends with or within
the Plan Year or which are treated as Additional Employee
Contributions due to recharacterization pursuant to Section
8.8(a).
(f) Notwithstanding the above, within twelve (12) months after the
end of the Plan Year, the Employer may make a special
qualified non-elective contribution on behalf of Non-Highly
Compensated Participants in an amount sufficient to satisfy
one of the tests set forth in Section 8.9(a). Such
contribution shall be allocated in the prior Plan Year to the
Account of each Non-Highly Compensated Participant who was
employed by the Employer on the last day of the prior Plan
Year in the same proportion that each such Non-Highly
Compensated Participant's Compensation for the prior Plan Year
bears to the total Compensation of all Non- Highly Compensated
Participants for the prior Plan Year. Such contribution shall
be made by the Employer prior to the end of the current Plan
Year. A separate accounting of any special qualified
non-election contributions shall be maintained in the
Participant's Account.
VIII-25
63
ARTICLE IX
VESTING
9.1 Vesting Schedule. A Participant shall at all times be fully vested
in the Accrued Balance in his Account.
IX-1
64
ARTICLE X
PAYMENT OF BENEFITS
10.1 Distribution on Account of Termination of Employment. If a
Participant terminates his employment other than by reason of death, retirement
or Total Disability, the Accrued Balance in such Participant's Account
(calculated as of the Valuation Date next preceding the date of the
distribution) hereof shall be paid to the Participant in a lump sum. Such lump
sum shall consist of cash, except that the Participant's interest in the Company
Stock Fund may be paid, at the Participant's election, in the form of whole
shares of Company Stock, the number of such whole shares to be determined as of
the Valuation Date next preceding the date of distribution, with any amounts
representing fractional shares of Company Stock to be paid in cash. The lump sum
distribution shall be made no later than the close of the second Plan Year
following the Plan Year in which termination of employment occurs, except as
provided in the following sentence. Effective January 1, 1998, if the amount of
the distribution derived from the Participant's Employer Contribution Account
exceeds, or has ever exceeded, $5,000 (or such larger amount that may be
established by Treasury Regulations under Section 411(a)(7)(B) of the Code), the
payment of the distribution shall be delayed until the Participant's Normal
Retirement Date, unless the Participant requests an earlier payment of benefits.
10.2 Distribution at Retirement. Any Participant shall be eligible to
terminate his employment by retiring at any time on or after the first day of
the month coinciding with or next following his Early Retirement Date, if
applicable, or his Normal Retirement Date. In the event
X-1
65
of such retirement of any Participant, the Accrued Balance credited to such
Participant's Account (calculated as of the Valuation Date next preceding the
date of the distribution) shall be paid to such former Participant in a lump
sum.
10.3 Deferred Retirement. A Participant may remain in the service of
the Employer after reaching his Early Retirement Date or Normal Retirement Date
and shall continue to be eligible to defer salary pursuant to Section 5.1
hereof, to make Additional Employee Contributions pursuant to Section 5.2
hereof, to share in Employer Contributions, if any, pursuant to Section 6.2
hereof, and to share in allocations pursuant to Section 8.3 hereof.
10.4 Distribution Upon Death. In the event of the termination of
employment of a Participant through the death of the Participant prior to his
retirement, the Accrued Balance credited to his Account (calculated as of the
Valuation Date next preceding the date of the distribution) shall be paid to his
Beneficiary in a lump sum.
10.5 Designation of Beneficiary. In the event of the death of a
Participant or former Participant, any benefits payable hereunder shall be paid
to the Participant's surviving spouse, if any, or to any other Beneficiary or
alternate Beneficiary who may be designated by the Participant as hereinafter
provided if such surviving spouse consents thereto or if there is no surviving
spouse. For purposes of entitlement to receive benefits pursuant to the
foregoing sentence, surviving spouse shall mean the spouse to whom a Participant
shall be married on the date payment of his benefits commences or to whom a
Participant shall be married at the time of
X-2
66
his death if he shall die while employed by the Employer, unless otherwise
specifically provided by a qualified domestic relations order pursuant to
Section 414(p) (5) of the Code.
The consent of a surviving spouse to the designation of any other
Beneficiary shall be made in writing on a form provided by the Committee, which
form shall contain the surviving spouse's acknowledgment of the effect of such
consent and shall be witnessed by the Administrator or his representative, or a
notary public. Notwithstanding the foregoing, such written consent shall not be
required if it is established to the satisfaction of the Administrator or his
representative that such consent may not be obtained because there is no spouse,
because the spouse cannot be located, or because of such other circumstances as
the Secretary of the Treasury may by regulations prescribe.
Subject to the foregoing paragraphs of this Section 10.5, each
Participant and former Participant shall have the unrestricted right at any time
to designate a primary and an alternate Beneficiary to receive any benefits
payable hereunder on the death of the Participant, and from time to time to
change any such designation. Each such designation shall be evidenced by a
written instrument filed with the Committee, signed by the Participant. Such
designation or change shall take effect as of the date of execution of such
written instrument, whether or not the Participant is living at the time of such
filing, but without prejudice to the Trust Fund on account of any payments made
before receipt of such written instrument by the Committee.
X-3
67
10.6 Distribution Upon Total Disability. In the event of a
Participant's Total Disability, the Accrued Balance in his Account (calculated
as of the Valuation Date next preceding the date of the distribution) shall be
paid to such former Participant in a lump sum.
10.7 Commencement of Benefit Payments. A Participant who terminates
service by reason of retirement shall have the right to elect to delay the
benefit commencement date until the expiration of one year after his date of
termination of service if payment would otherwise be made within that year.
Notwithstanding the foregoing, unless a Participant elects a later date
by submitting a signed election form to the Administrator setting forth the date
on which the payment of benefits shall be made, the payment of benefits under
the Plan shall be made not later than the sixtieth (60th) day after the close of
the Plan Year in which the later of the following events occurs: (1) the
Participant attains age 65; or (2) the Participant terminates his service with
the Employer. Effective for Participants who attain age 70-1/2 in 1996 or later,
in no case shall distributions of benefits under the Plan be made later than
April 1 of the calendar year following the later of (i) the calendar year in
which the Participant attains age 70-1/2; or (ii) the calendar year in which the
Participant retires, provided, however, that this clause (ii) shall not apply in
the case of a Participant who is a "five (5) percent owner" at any time during
the five (5) Plan Year period ending in the calendar year in which he attains
age 70-1/2 or, in the case of a Participant who becomes a "five (5) percent
owner" during any subsequent Plan Year, clause (ii) shall no longer apply and
the required beginning date shall be the April 1st of the calendar year
following the
X-4
68
calendar year in which such subsequent Plan Year ends. Such distributions shall
be equal to or greater than any required distribution. .
10.8 Direct Rollover.
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this
Section, a distributee may elect, at the time and in the
manner prescribed by the Plan Administrator, to have any
portion of an eligible rollover distribution paid directly to
an eligible retirement plan specified by the distributee in a
direct rollover.
(b) Definitions.
(1) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any
portion of the balance to the credit of the
distributee, except that an eligible rollover
distribution does not include: any distribution that
is one of a series of substantially equal periodic
payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or
the joint lives (or joint life expectancies) of the
distributee and the distributee's designated
beneficiary, or for a specified period of ten years
or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of
the Code; and the portion of any distribution that is
not includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to Employer securities).
X-5
69
(2) Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in
Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code,
or a qualified trust described in Section 401(a) of
the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an
eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(3) Distributee: A distributee includes an Employee or
former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's
or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of
the spouse or former spouse.
(4) Direct rollover: A direct rollover is a payment by
the Plan to the eligible retirement plan specified by
the distributee.
10.9 USERRA Compliance. Notwithstanding any provisions of the Plan to
the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in compliance with Code Section
414(u).
X-6
70
ARTICLE XI
WITHDRAWALS FROM ACCOUNTS
11.1 Withdrawals. A Participant may at any time, but not more than
twice in any Plan Year nor more than once in any Calendar Quarter, on the
appropriate form filed with the Committee at least fifteen (15) days before the
last day of a Calendar Quarter, elect to withdraw from one or more Investment
Funds, subject to the limitations herein, all or any part of his Account,
excluding his Rollover Account and the amount of any loan to the Participant
under Section 12.1 which is outstanding, as adjusted for investment income, gain
or loss. If the Participant's Account is invested in one or more Investment
Funds pursuant to Section 7.1, the Participant shall be entitled to elect on the
form provided by the Committee, in dollar amounts, the extent to which the
withdrawal shall be made from any such Fund. The effective date of the
withdrawal shall be the last day of the Calendar Quarter in which the
Participant's election is received by the Committee.
All amounts distributed pursuant to this Section shall be paid from the
following sources, in the following order:
(a) from that part of his Account equal to the aggregate amount of
his Additional Employee Contributions;
XI-1
71
(b) from that part of his Account equal to the earnings on the
amounts described in (a); and
(c) from that part of his Account equal to the aggregate amount of
his Employee Salary Deferral Contributions, including pre-1989
earnings thereon; provided, however, that no withdrawal of
such amount shall be permitted unless the Participant has
attained age 59-1/2, has suffered a Total Disability, or is
able to demonstrate hardship pursuant to Section 11.2 hereof.
11.2 Hardship.
(a) The Committee shall authorize a distribution for hardship only
if the distribution is on account of:
(1) Medical expenses described in Code Section 213(d)
incurred by the Participant, his spouse, or any of
his dependents (as defined in Code Section 152);
(2) The purchase (excluding mortgage payments) of a
principal residence for the Participant;
XI-2
72
(3) Payment of tuition, related educational fees and room
and board expenses for the next twelve (12) months of
post-secondary education for the Participant, his
spouse, children, or dependents; or
(4) The need to prevent the eviction of the Participant
from his principal residence or foreclosure on the
mortgage of the Participant's principal residence.
(b) No distribution shall be made on account of hardship unless
the Committee, based upon the Participant's representation and
such other facts as are known to the Committee, determines
that all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount of
the immediate and heavy financial need of the
Participant; and
(2) The Participant has obtained all distributions, other
than hardship distributions, and all nontaxable loans
currently available under all plans maintained by the
Employer.
11.3 Suspension of Contributions. If a Participant receives a hardship
distribution pursuant to Section 11.2, such Participant's Employee Salary
Deferral Contributions and Additional Employee Contributions will be suspended
for twelve (12) months after receipt of the
XI-3
73
hardship distribution. In addition, the Participant may not make Employee Salary
Deferral Contributions for his taxable year immediately following the taxable
year of the hardship distribution in excess of the applicable limit under Code
Section 402(g) for such next taxable year less the amount of such Participant's
Employee Salary Deferral Contributions for the taxable year of the hardship
distribution.
XI-4
74
ARTICLE XII
LOANS TO PARTICIPANTS
12.1 Procedures. The Committee may, upon the application of any
Participant but in the Committee's sole discretion, direct the Trustee to make a
loan to a Participant under the following circumstances: (a) loans shall not be
made available to Highly Compensated Employees, officers, or shareholders in an
amount greater than the amount made available to other Participants; (b) loans
shall bear a reasonable rate of interest; (c) loans shall be adequately secured;
and (d) loans shall provide for periodic repayment over a period of up to five
(5) years, provided, however, that a loan shall not be granted to any
Participant that provides for a repayment period extending beyond such
Participant's Normal Retirement Date. Notwithstanding the foregoing clause (d),
a loan for a term of up to ten (10) years shall be permitted if the proceeds of
such loan are used for the purpose of a Participant's purchase of his principal
residence; provided, however, that in no event shall the term of such loan
extend beyond a Participant's Normal Retirement Date. In addition to any other
security that may be required, every loan to a Participant shall be secured by a
pledge of fifty percent (50%) of the Participant's interest in the Trust Fund
(excluding the Participant's interest in the Company Stock Fund).
A Participant may specify from which Investment Fund the loan funds are
to be taken, and in the absence of any such designation the Committee shall so
specify.
XII-1
75
A loan to a Participant shall be considered an earmarked investment of
such Participant's Account. Loan funds shall be taken first from the Additional
Employee Contribution Account and then, to the extent necessary, from the
Rollover Account and the Employee Salary Deferral Contribution Account, in that
order. Loan funds shall not be taken from the Employer Contribution Account.
Repayments of loans shall reduce the amount of the loan investment in the
Employee Loan Fund and shall be invested in one or more of the Investment Funds
in accordance with the Participant's then current investment election.
Loans made pursuant to this Section from a Participant's Account shall
be limited in amount to the lesser of:
(i) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan, or any
other qualified plan maintained by the Employer, to
the Participant during the one year period ending on
the day before the date on which such loan is made,
over the outstanding balance of loans from the Plan
to the Participant on the date on which such loan was
made, or
(ii) one-half (1/2) of the present value of the
Participant's vested Accrued Balance.
XII-2
76
Any loans granted or renewed shall be made pursuant to a Participant
loan program. Such loan program shall be established in writing and must
include, but need not be limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans
offered;
(5) the procedure under the program for determining a reasonable
rate of interest;
(6) the types of collateral which may secure a Participant loan;
and
(7) the events constituting default and the steps that will be
taken to preserve Plan assets.
Such Participant loan program shall be contained in a separate written
document which, when properly executed, is hereby incorporated by reference and
made a part of the Plan.
XII-3
77
Furthermore, such Participant loan program may be modified or amended in writing
from time to time without the necessity of amending this Section.
12.2 USERRA Compliance. Effective December 12, 1994, loan repayments
will be suspended under this Plan, as permitted under Code Section 414(u).
XII-4
78
ARTICLE XIII
TERMINATION OF PLAN
13.1 Termination. The Employer hopes to continue the Plan and its
contributions to the Trust Fund indefinitely. Nevertheless, each Employer
maintains the right to suspend, terminate, or completely discontinue
contributions under the Plan with respect to its Employees. Upon any full or
partial termination of the Plan or complete discontinuance of contributions by
an Employer hereunder, all affected Participants who are Employees of such
Employer shall become vested in the Accrued Balances in their Accounts.
13.2 Distribution. Upon (1) the termination of the Plan, (2) the
complete discontinuance of contributions by an Employer to the Trust Fund, or
(3) the termination of the liability of an Employer, as provided for in Section
13.1 hereof, the Committee shall make a final allocation of Employer
Contributions, if any, and net earnings or losses in the manner prescribed
herein to the Accounts of Participants who are Employees of such Employer.
Thereafter, the funds in the Account of each such Participant shall be paid and
distributed to such person in a lump sum upon the earliest of (1) a date that is
not more than 60 days following the later of termination of the Plan or the
receipt of a favorable determination letter (if requested) from the Internal
Revenue Service following such termination, but only if another defined
contribution plan (other than an employee stock ownership plan) has not been
established or is not maintained by the Employer, (2) the Participant's
attainment of age 59 1/2,
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(3) the Participant's termination of employment with the Employer, (4) the
Participant's Total Disability, or (5) the Participant's death.
13.3 Final Expenses. Notwithstanding anything to the contrary herein,
all expenses of administration of the Trust Fund, and other expenses incident to
the termination and distribution of the Trust Fund, incurred after the
termination of the Plan shall be paid from the Trust Fund as directed by the
Committee.
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ARTICLE XIV
AMENDMENT OF PLAN
14.1 Amendment. The Company shall have the right, by action of the
Pension Trust Committee of the Board, to modify or amend this Plan, in whole or
in part, at any time and from time to time; provided, however, that no such
action shall adversely affect Participants to the extent of their vested
benefits, nor shall such action decrease a Participant's accrued benefit or
eliminate an optional form of distribution. Any such modification or amendment
may be made retroactively.
If the Plan should at any time become a transferee of a plan which is
subject to the requirements of Section 401(a)(11)(A) of the Code, the Plan shall
be amended to meet said requirements.
14.2 Change in Vesting. If an amendment or a change in the top-heavy
status of the Plan changes the vesting schedule of the Plan, as set forth in
Section 9.1 hereof, any Participant having three (3) or more Years of
Eligibility Service on the date which is sixty (60) days after such amendment or
change is adopted or becomes effective (or, if later, sixty (60) days after
written notice of the amendment or change is given) may, within a reasonable
time after the effective date of the amendment or change, elect to remain
subject to the vesting schedule in effect prior to such amendment or change.
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14.3 Trustee. The Committee shall deliver a copy of each amendment to
the Plan, and the Board resolution adopting the same, to the Trustee promptly
after its adoption. No amendment shall be made that would adversely affect the
Trustee or impose additional duties on it without the Trustee's written consent
thereto.
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ARTICLE XV
CLAIMS PROCEDURE
15.1 Claims. Each Participant and Beneficiary of the Plan shall submit
all claims for benefits, claims relating to the amount or manner of any
distribution, and any other request relating to any Account, in writing, to the
Administrator of the Plan. The Administrator shall within a reasonable period of
time, but not later than 60 days after receipt thereof, either approve or deny
such claim or request either wholly or in part, and notify the claimant in
writing of the action taken.
15.2 Notice of Denial. If such claim or request is wholly or partially
denied, the written notice of the Administrator shall set forth in a manner
calculated to be understood by the claimant:
(a) specific reasons for the denial;
(b) specific references to the pertinent Plan provisions on which
the denial is based;
(c) specific references to any additional material or information
necessary for the claimant to perfect review of the claim and
an explanation of why such material or information is
necessary; and
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(d) an explanation of the Plan's claims review procedure.
If the notice of the denial is not furnished to the Participant in
accordance with this section within a reasonable period of time, such
participant's claim shall be deemed denied.
15.3 Review. Upon denial of such a claim or request, the claimant shall
be entitled within 60 days after the receipt of written notice of denial by the
Administrator:
(a) to request, in writing, a review by the Committee of the
denial;
(b) to review pertinent documents; and
(c) to submit issues and comments in writing.
The Committee shall render a decision on its review of the denial
promptly, but not later than 60 days after the receipt of the request for
review, unless special circumstances require an extension of time, in which case
a decision shall be rendered not later than 120 days after the receipt of a
request for review. If the Committee's decision on review is not furnished to
the Participant within the time limitations described herein, the claim shall be
deemed denied upon review.
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The decision of the Committee shall be in writing and shall set forth
reasons therefor stated in a manner calculated to be understood by the claimant,
including specific references to the pertinent Plan provisions. Determinations,
decisions and other actions of the Committee, taken in accordance with the
provisions hereof shall be made in a uniform, non-discriminatory manner and
shall be final, conclusive and binding on all parties.
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ARTICLE XVI
THE TRUSTEE
16.1 All contributions hereunder to the Trust Fund shall be held, in
trust, by such Trustee as may be selected by the Committee, from time to time,
under a trust agreement approved by the Board, with such powers in the Trustee
as to investment, reinvestment, control and disbursement of all or part of the
Trust Fund as shall be in accordance with the provisions hereof.
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ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 The Plan and the Trust provided for hereunder are created for the
exclusive benefit of the Participants and their Beneficiaries. Under no
circumstances whatsoever shall any assets of the Trust Fund ever revert to, or
be used or enjoyed by, the Employer, or any successor thereto, nor shall any
such assets ever be used other than for the exclusive benefit of the
Participants or their Beneficiaries.
17.2 No Participant or Beneficiary shall have any legal or equitable
right or interest in the Trust Fund established hereunder, or in any annuity
contract purchased hereunder, except as expressly provided for herein, and no
Employee shall be deemed to possess a right to share in any moneys allocated by
the Committee as hereinabove set forth, except as herein provided.
17.3 Participation in the Plan shall not give any Participant the right
to be retained in the service of the Employer or any right or claim to a
retirement pension unless the right to such retirement pension is provided for
herein.
17.4 Whenever an Employer is permitted or required under the terms of
this Plan to take any action, it shall be done by its Board of Directors and
shall be evidenced by proper resolutions certified by the Secretary thereof.
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17.5 The Plan shall not be automatically terminated by the Company's
acquisition by, or merger into, any other company. The Plan shall be continued
after such merger if the successor company agrees to continue the Plan. All
rights to amend or terminate the Plan shall be transferred to the successor
company, effective as of the date of the merger.
The merger or consolidation with, or transfer of assets and liabilities
to, any other qualified retirement plan shall be permitted only if the benefit
each Participant would receive if the Plan were terminated immediately after
such merger or consolidation, or transfer of assets and liabilities, would be at
least as great as the benefit he would have received had the Plan been
terminated immediately before any such transaction.
17.6 To the extent permitted by law and with the exception of payments
pursuant to a qualified domestic relations order within the meaning of Section
414(p) of the Code, no benefit payable hereunder shall be subject in any manner
to anticipation, assignment, garnishment, or pledge. Any attempt to anticipate,
assign, garnish or pledge the same will be of no effect. No such benefits will
be in any manner liable for or subject to the debts, liabilities, or torts of
any Participant, and if any Participant is adjudicated bankrupt or attempts to
anticipate, assign, or pledge any such benefits, then such benefits will, in the
discretion of the Committee, cease. In such event, the Committee will have the
authority to cause the same or any part thereof to be held or applied to or for
the benefit of such Participant, his spouse, his children or other dependents,
or any of them, in such manner and in such proportion as the Committee may in
its discretion deem proper.
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Notwithstanding any provision of this Section to the contrary, an
offset to a Participant's Account against an amount that the Participant is
ordered or required to pay the Plan with respect to a judgment, order, or decree
issued, or a settlement entered into, on or after August 5, 1997, shall be
permitted in accordance with Code Sections 401(a)(13)(C) and (D).
17.7 A Participant shall not, with or without cause, be divested of any
portion of his Accrued Balance that is vested under the terms of the Plan.
17.8 Notwithstanding any other provisions of the Plan, a former
Participant shall not be entitled to payment of duplicate benefits upon again
becoming a Participant.
17.9 The headings of the Sections herein are for reference only. In the
event of a conflict between such a heading and the content of a Section, the
content of the Section shall control.
17.10 If any person to whom a benefit is payable hereunder is an
infant, or if the Committee determines that any person to whom a benefit is
payable is incapable by reason of physical or mental disability of taking care
of his own affairs, the Committee shall have power to cause the payments
becoming due to such person to be made to another for his benefit without
responsibility of the Committee or the Trustee to see to the application of such
payments. Payments made pursuant to such power shall operate as a complete
discharge of the obligation of the Employer, the Trust Fund, the Trustee and the
Committee to make such payments.
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17.11 The interpretation of the provisions hereof and the
administration of the Plan shall be governed, to the extent applicable, by the
Act and, to the extent the Act is not applicable, by the laws of Connecticut.
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ARTICLE XVIII
TOP-HEAVY PLAN PROVISIONS
(Sections 18.1-18.10 provide definitions for Article XVIII.)
18.1 Compensation. Compensation of an Employee which is reportable on
Form W-2 for the calendar year ending with or within the Plan Year.
18.2 Key Employee. Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the Determination Period
was an officer of the Employer with Compensation greater than 150 percent of the
dollar limitation under Section 415(c)(1)(A) of the Code, an owner (or
considered an owner under Section 318 of the Code) of one of the ten largest
interests in the Employer if such individual's Compensation exceeds the dollar
limitation under Section 415(c)(1)(A) of the Code and such individual's
ownership interest exceeds 1/2 percent, a 5-percent owner of the Employer, or a
1-percent owner of the Employer who has Compensation of more than $150,000. The
determination of who is a Key Employee will be made in accordance with Section
416(i)(1) of the Code.
18.3 Top-Heavy Plan. For any Plan Year, this Plan is top-heavy if any
of the following conditions exist:
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(a) If the Top-Heavy Ratio for this Plan exceeds 60 percent and
this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans.
(b) If this Plan is a part of a Required Aggregation Group of
plans (but not part of a Permissive Aggregation Group) and the
Top-Heavy Ratio for the Required Aggregation Group of plans
exceeds 60 percent.
(c) If this Plan is a part of a Required Aggregation Group of
plans and part of a Permissive Aggregation Group of plans and
the Top-Heavy Ratio for the Permissive Aggregation Group
exceeds 60 percent.
18.4 Top-Heavy Ratio.
(a) The Top-Heavy Ratio for any Required or Permissive Aggregation
Group, as appropriate, is a fraction, the numerator of which
is the sum of the account balances under the aggregated
defined contribution plan or plans for all Key Employees as of
the Determination Date(s) (including any part of any account
balance distributed in the Determination Period(s)), and the
Present Value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees as of the
Determination Date(s), and the denominator of which is the sum
of all account balances (including any part of any account
balance distributed in the Determination Period(s)) under the
aggregated defined contribution plan or
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plans for all Participants and the Present Value of accrued
benefits under the defined benefit plan or plans for all
Participants as of the Determination Date(s), all determined
in accordance with Section 416 of the Code. The accrued
benefits under a defined benefit plan in both the numerator
and denominator of the Top-Heavy Ratio are adjusted for any
distribution of an accrued benefit made in the Determination
Period.
(b) For purposes of (a) above, the value of account balances and
the Present Value of accrued benefits shall be determined as
of the most recent Valuation Date that falls within or ends
with the 12-month period ending on the Determination Date,
except as provided in Section 416 of the Code and the
Regulations thereunder for the first and second plan years of
a defined benefit plan. The account balances and accrued
benefits of a Participant (1) who is not a Key Employee but
who was a Key Employee in a prior year, or (2) who has not
performed any services for any Employer maintaining the Plan
at any time during the Determination Period shall be
disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, and transfers are
taken into account shall be made in accordance with Section
416 of the Code and the Regulations thereunder. Deductible
employee contributions shall not be taken into account for
purposes of computing the Top-Heavy Ratio. When aggregating
plans, the value of account balances and accrued benefits
shall be calculated with reference to the Determination
Date(s) that falls within the same calendar year.
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18.5 Permissive Aggregation Group - The Required Aggregation Group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
18.6 Required Aggregation Group - (1) Each qualified plan of the
Employer in which at least one Key Employee participated during the
Determination Period, and (2) any other qualified plan of the Employer which
enabled a plan described in (1) to meet the requirements of Sections 401(a)(4)
and 410 of the Code during the Determination Period.
18.7 Determination Date - For any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year of
the Plan, the last day of that year.
18.8 Determination Period - The Plan Year containing the Determination
Date and the four (4) preceding Plan Years.
18.9 Valuation Date - For purposes of computing the Top-Heavy Ratio,
the Valuation Date shall be the normal annual valuation date for the Plan.
18.10 Present Value - For purposes of computing the Top-Heavy Ratio,
any benefit shall be discounted only for mortality and interest as follows:
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Interest Rate: 5%
Mortality Table: 1971 TPF&C Forecast Mortality Table
18.11 If the Plan is or becomes a Top-Heavy Plan in any Plan Year, the
following provisions shall supersede any conflicting provision in the Plan:
(a) Minimum Allocations.
(i) Except as otherwise provided in (ii) and (iii) below,
for any Plan Year in which this Plan is a Top-Heavy
Plan, the Employer Contributions allocated on behalf
of any Participant who is not a Key Employee shall
not be less than the lesser of three percent (3%) of
such Participant's Compensation or in the case where
the Employer has no defined benefit plan which
designates this Plan to satisfy Section 401 of the
Code, the largest percentage of Employer
Contributions allocated on behalf of any Key Employee
for that year. The minimum allocation is determined
without regard to any Social Security contribution.
This minimum allocation shall be made even though,
under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation,
or would have received a lesser allocation for the
year because of (i) the Participant's failure to
complete 1,000 Hours of Service (or any equivalent
provided in the Plan).
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(ii) The provision in (i) above shall not apply to any Participant
who was not employed by the Employer on the last day of the
Plan Year.
(iii) The provision in (i) above shall not apply to any Participant
to the extent the Participant is a Participant in The
Connecticut Water Company Employees' Retirement Plan which
shall provide the minimum allocation or benefit applicable to
Top-Heavy Plans.
(b) Additional Limitation. With respect to any Plan Year for which
the Plan is determined to be a Top-Heavy Plan, paragraph
(2)(B) and (3)(B) of Section 415(e) of the Code, as
incorporated in Section 8.6 hereof, shall be applied by
substituting "1.0" for "1.25 percent" in the calculation of
the defined benefit and defined contribution fractions unless
the requirements of Section 416(h)(2) of the Code are met.
XVIII-6