As filed with the Securities and Exchange Commission on January 15, 1997
Registration No. 33-
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
CONSUMERS WATER COMPANY
(Exact name of registrant as specified in charter)
MAINE 01-0049450
--------------------- -------------------
(State or other jurisdiction (IRS Employer
or incorporation or organization) Identification No.)
Three Canal Plaza
Portland, Maine 04101
---------------------------------------------------
(Address of principal executive offices and Zip Code)
(207) 773-6438
----------------------------------------------------
(Registrant's telephone number, including area code)
Consumers Water Company Employees 401(k) Savings Plan and Trust
---------------------------------------------------------------
(Full Title of Plan)
BRIAN R. MULLANY, Secretary and Clerk
Consumers Water Company
Three Canal Plaza
Portland, Maine 04101
(Name and Address of agent for service)
Copies to:
Keith C. Jones, Esq.
Drummond Woodsum & MacMahon
245 Commercial Street
Portland, Maine 04101
CALCULATION OF REGISTRATION FEE
============================================================================
Proposed Proposed
maximum maximum Amount
Title of each class Amount offering aggregate of
of securities to be price offering registration
to be registered Registered per unit* price* fee*
- ----------------------------------------------------------------------------
Common Shares (par
value $1.00) . . . 250,000 shares $17.75 $4,437,500 $ 1,344.70
------- ---------- ----------
============================================================================
*Estimated for the purpose of calculating the registration fee only and
not as a representation of the actual offering price. Pursuant to Rule
457(c) the registration fee has been calculated on the basis of $17.75
per share, which equals the average of the high and low prices of the
common shares of the Company on January 13, 1997 as reported on the NASDAQ
Stock Market.
PURSUANT TO RULE 416(C) UNDER THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT ALSO COVERS AN INDETERMINATE AMOUNT OF
INTERESTS TO BE OFFERED OR SOLD PURSUANT TO THE EMPLOYEE BENEFIT
PLAN DESCRIBED HEREIN.
PURSUANT TO RULE 429, THE PROSPECTUS INCLUDED IN THIS REGISTRATION
STATEMENT WILL SERVE AS AN UPDATED PROSPECTUS FOR REGISTRATION
STATEMENTS NO. 33-20994 AND NO. 33-57618.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
- ------------------------------------------------
The following documents and information heretofore filed
with the Commission (File No. 0-493) are incorporated by
reference in this registration statement.
1. Consumers Water Company's Annual Report on Form
10-K for the year ended December 31, 1995, filed pursuant to
the Securities Exchange Act of 1934.
2. Consumers Water Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1996, June 30, 1996 and
September 30, 1996, filed pursuant to the 1934 Act.
3. The Annual Report of the Consumers Water Company
Employees 401(k) Savings Plan and Trust (the "Plan") on Form
11-K for the year ended December 31, 1995, filed pursuant to
the 1934 Act.
4. The description of the common shares which is
contained in the Registration Statement on Form 10 filed
under the 1934 Act, including any amendment or report filed
for the purpose of updating such description under the 1934 Act.
All reports and other documents filed by Consumers Water
Company (the "Company") and the Plan pursuant to Sections 13(a),
13(c), 14 and 15(d) of the 1934 Act after the date of this
registration statement and prior to the filing of a post-effective
amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such
reports and documents.
Item 6. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 719 of the Maine Business Corporation Act provides
in its entirety as follows:
Section 719. Indemnification of officers, directors, employees
and agents; insurance
1. A corporation shall have power to indemnify or,
if so provided in the bylaws, shall in all cases indemnify, any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason
of the fact that that person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, trustee, partner, fiduciary,
employee or agent of another corporation, partnership, joint venture,
trust, pension or other employee benefit plan or other enterprise,
against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by that
person in connection with such action, suit or proceeding; provided
that no indemnification may be provided for any person with respect
to any matter as to which that person shall have been finally
adjudicated:
A. Not to have acted honestly or in the reasonable
belief that that person's action was in or not opposed to the best
interests of the corporation or its shareholders or, in the case of
a person serving as a fiduciary of an employee benefit plan or trust,
in or not opposed to the best interests of that plan or trust, or its
participants or beneficiaries; or
B. With respect to any criminal action or proceeding,
to have had reasonable cause to believe that that person's conduct was
unlawful.
The termination of any action, suit or proceeding by judgment,
order or conviction adverse to that person, or by settlement or plea
of nolo contendere or its equivalent, shall not of itself create a
presumption that that person did not act honestly or in the reasonable
belief that that person's action was in or not opposed to the best
interests of the corporation or its shareholders or, in the case of a
person serving as a fiduciary of an employee benefit plan or trust, in
or not opposed to the best interests of that plan or trust or its
participants or beneficiaries and, with respect to any criminal action
or proceeding, had reasonable cause to believe that that person's
conduct was unlawful.
1-A. Notwithstanding any provision of subsection 1, a
corporation shall not have the power to indemnify any person with
respect to any claim, issue or matter asserted by or in the right of
the corporation as to which that person is finally adjudicated to be
liable to the corporation unless the court in which the action, suit
or proceeding was brought shall determine that, in view of all the
circumstances of the case, that person is fairly and reasonably
entitled to indemnity for such amounts as the court shall deem
reasonable.
2. Any provision of subsection 1, 1-A, or 3 to the
contrary notwithstanding, to the extent that a director, officer,
employee or agent of a corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred
to in subsection 1 or 1-A, or in defense of any claim, issue or matter
therein, that director, officer, employee or agent shall be indemnified
against expenses, including attorneys' fees, actually and reasonably
incurred by that director, officer, employee or agent in connection
therewith. The right to indemnification granted by this subsection
may be enforced by a separate action against the corporation, if an
order for indemnification is not entered by a court in the action,
suit or proceeding wherein that director, officer, employee or agent
was successful on the merits or otherwise.
3. Any indemnification under subsection 1, unless
ordered by a court or required by the bylaws, shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee
or agent is proper in the circumstances and in the best interests of
the corporation. That determination shall be made by the board of
directors by a majority vote of a quorum consisting of directors who
were not parties to that action, suit or proceeding, or if such a
quorum is not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion, or by the shareholders. Such a determination
once made may not be revoked and, upon the making of that
determination, the director, officer, employee or agent may enforce
the indemnification against the corporation by a separate action
notwithstanding any attempted or actual subsequent action by the
board of directors.
4. Expenses incurred in defending a civil, criminal,
administrative or investigative action, suit or proceeding may be
authorized and paid by the corporation in advance of the final
disposition of that action, suit or proceeding upon a determination
made in accordance with the procedure established in subsection 3
that, based solely on the facts then known to those making the
determination and without further investigation, the person seeking
indemnification satisfied the standard of conduct prescribed by
subsection 1, or if so provided in the bylaws, these expenses shall
in all cases be authorized and paid by the corporation in advance
of the final disposition of that action, suit or proceeding upon
receipt by the corporation of:
A. A written undertaking by or on behalf of the
officer, director, employee or agent to repay that amount if that
person is finally adjudicated:
(1) Not to have acted honestly or in the
reasonable belief that that person's action was in or not opposed
to the best interests of the corporation or its shareholders or, in
the case of a person serving as a fiduciary of an employee benefit
plan or trust, in or not opposed to the best interests of such plan
or trust or its participants or beneficiaries;
(2) With respect to any criminal action or
proceeding, to have had reasonable cause to believe that the
person's conduct was unlawful; or
(3) With respect to any claim, issue or matter
asserted in any action, suit or proceeding brought by or in the
right of the corporation, to be liable to the corporation, unless
the court in which that action, suit or proceeding was brought
permits indemnification in accordance with subsection 2; and
B. A written affirmation by the officer, director,
employee or agent that the person has met the standard of conduct
necessary for indemnification by the corporation as authorized in
this section.
The undertaking required by paragraph A shall be an unlimited
general obligation of the person seeking the advance, but need not
be secured and may be accepted without reference to financial ability
to make the repayment.
5. The indemnification and entitlement to advances
of expenses provided by this section shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in that person's official capacity
and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director,
officer, employee, agent, trustee, partner or fiduciary and shall
inure to the benefit of the heirs, executors and administrators of
such a person. A right to indemnification required by the bylaws
may be enforced by a separate action against the corporation, if
an order for indemnification has not been entered by a court in any
action, suit or proceeding in respect to which indemnification is
sought.
6. A corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, trustee,
partner, fiduciary, employee or agent of another corporation,
partnership, joint venture, trust, pension or other employee benefit
plan or other enterprise against any liability asserted against that
person and incurred by that person in any such capacity, or arising
out of that person's status as such, whether or not the corporation
would have the power to indemnify that person against such liability
under this section.
7. For purposes of this section, references to the
"corporation" shall include, in addition to the surviving corporation
or new corporation, any participating corporation in a consolidation
or merger.
---------------------------
Article XIV of the Company's Bylaws, which provides for the
indemnification of directors, officers and employees, is incorporated
herein by reference to pages 4 through 6 of Exhibit 3.2 to Consumers
Water Company's Annual Report on Form 10-K for the year ended December
31, 1993.
---------------------------
The Company has entered into an Indemnification Agreement with
each person who is a current member of the board of directors or a
current executive officer of the Company, pursuant to which the
Company agrees to hold harmless and indemnify such person to the
full extent authorized or permitted by Maine law. The form of
Indemnification Agreement entered into with each such person is
incorporated by reference to Exhibit 10.8 to Consumers Water
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994.
------------------------
The Company has purchased and maintains insurance on behalf
of any person who is or was a director or officer against any loss
arising from any claim asserted against him and incurred by him
in any such capacity, subject to certain exclusions.
Item 18. Exhibits
- -------------------
The following Exhibits are submitted in response to this item:
4.1 Conformed Copy of Restated Articles of Incorporation
of Consumers Water Company, as amended, incorporated by
reference to Exhibit 4.1.6 to Consumers Water Company's
Registration Statement on Form S-2, Registration No.
33-41113, filed with the Securities and Exchange
Commission on June 11, 1991.
4.2 Bylaws of Consumers Water Company, as amended March
2, 1994, incorporated by reference to Exhibit 3.2 to
Consumers Water Company's Annual Report on Form 10-K
for the year ended December 31, 1993.
4.3 Conformed Copy of the Consumers Water Company Employees
401(k) Savings Plan and Trust, as amended, is submitted
herewith as Exhibit 4.3
5.1 Opinion of Drummond Woodsum & MacMahon as to legality
of the shares registered is submitted herewith as
Exhibit 5.1.
5.2 Conformed Copy of determination letter from Internal
Revenue Service as to qualification of the Consumers
Water Company 401(k) Plan and Trust, dated May 3, 1995,
is submitted herewith as Exhibit 5.2.
23.1 The Consent of Arthur Andersen LLP, Consumers Water
Company's auditors, is submitted herewith as Exhibit
23.1.
23.2 The Consent of Drummond Woodsum & MacMahon, counsel
to the Company, is included in their opinion submitted
herewith as Exhibit 5.1.
24 Powers of attorney are included as part of the
signature page.
Item 19. Undertakings
- ----------------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of the securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of the prospectus filed with the
Commission pursuant to Rule 424(b) (Section 230.424(b) of this chapter) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the registration statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) If the registrant is a foreign private issuer,
to file a post-effective amendment to the registration statement
to include any financial statements required by Rule 3-19 of
Regulation S-X at the start of any delayed offering or throughout
a continuous offering. Financial statements and information
otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided that the registrant includes in the prospectus,
by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information
necessary to ensure that all other information in the prospectus is
at least as current as the date of those financial statements.
Notwithstanding the foregoing, with respect to registration
statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required
by Section 10(3)(a) of the Act or Rule 3-19 or Regulation S-X
if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in the Form F-3.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
SIGNATURES
----------
THE COMPANY. Pursuant to the requirements of the Securities Act of
1933, Consumers Water Company certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-8
and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Portland and State of Maine on the 15th day of January, 1997.
Consumers Water Company
(as issuer and employer)
By:/s/ Peter L. Haynes
----------------------
Peter L. Haynes
President
POWER OF ATTORNEY
----------------
We, the undersigned, officers and directors of Consumers
Water Company, hereby authorize and direct Peter L. Haynes, Keith
C. Jones, or either of them acting singly, as Attorney-in-Fact, to
execute in the name and on behalf of each of the undersigned persons,
and in the respective capacities indicated below, any amendment or
amendments to this Registration Statement of Consumers Water Company
under the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Peter L. Haynes President and Director 1/15/97
- ------------------- --------
Peter L. Haynes (Principal Executive
Officer)
/s/ John F. Isacke Senior Vice President 1/15/97
- ------------------ --------
John F. Isacke (Principal Financial
Officer)
/s/ Gary E. Wardwell Controller 1/15/97
- ------------------- --------
Gary E. Wardwell (Principal Accounting
Officer)
/s/ David R. Hastings, II Director 1/15/97
- ------------------------- --------
David R. Hastings, II
/s/ Jack S. Ketchum Director 1/15/97
- ------------------------- --------
Jack S. Ketchum
/s/ John E. Menario Director 1/15/97
- ------------------------- --------
John E. Menario
/s/ John E. Palmer, Jr. Director 1/15/97
- ------------------------- --------
John E. Palmer, Jr.
/s/ Jane E. Newman Director 1/15/97
- ------------------------- --------
Jane E. Newman
/s/ Elaine D. Rosen Director 1/15/97
- ------------------------- --------
Elaine D. Rosen
/s/ William B. Russell Director 1/15/97
- ------------------------- --------
William B. Russell
/s/ John H. Schiavi Director 1/15/97
- ------------------------- --------
John H. Schiavi
THE PLAN. Pursuant to the requirements of the Securities Act
of 1933, the trustees (or other persons who administer the Plan)
have duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Portland, State of Maine on the 15th day of January, 1997.
Consumers Water Company
Employees 401(k)
Savings Plan and Trust
By /s/ William B. Russell
--------------------------
William B. Russell, Chairman
Consumers Water Company
Retirement Committee
EXHIBIT INDEX
- --------------
Exhibit
- -------
4.1 Conformed Copy of Restated Articles of
Incorporation of Consumers Water Company, as
amended, incorporated by reference to Exhibit
4.1.6 to Consumers Water Company's Registration
Statement on Form S-2, Registration No. 33-
41113, filed with the Securities and Exchange
Commission on June 11, 1991.
4.2 Bylaws of Consumers Water Company, as amended
March 2, 1994, incorporated by reference to
Exhibit 3.2 to Consumers Water Company's Annual
Report on Form 10-K for the year ended December
31, 1993.
4.3 Conformed Copy of the Consumers Water Company
Employees 401(k) Savings Plan and Trust, as
amended, is submitted herewith as Exhibit 4.3
5.1 Opinion of Drummond Woodsum & MacMahon as to
legality of the shares registered is submitted
herewith as Exhibit 5.1.
5.2 Conformed Copy of determination letter from
Internal Revenue Service as to qualification of
the Consumers Water Company 401(k) Plan and
Trust, dated May 3, 1995, is submitted herewith
as Exhibit 5.2.
23.1 The Consent of Arthur Andersen LLP, Consumers
Water Company's auditors, is submitted herewith
as Exhibit 23.1.
23.2 The Consent of Drummond Woodsum & MacMahon,
counsel to the Company, is included in their
opinion submitted herewith as Exhibit 5.1.
24 Powers of attorney are included as part of the
signature page.
EXHIBIT 4.3
CONSUMERS WATER COMPANY
EMPLOYEES 401(K) SAVINGS PLAN AND TRUST
CONSOLIDATED VERSION
TRUST AGREEMENT, dated as of January 1, 1987 between
CONSUMERS WATER COMPANY, a Maine corporation with its principal
place of business in Portland, Maine, as sponsoring Employer,
and BRIAN R. MULLANY, JOHN VAN C. PARKER and ROBERT W. PHELPS,
as Trustees.
W I T N E S S E T H
WHEREAS, Consumers Water Company desires to establish a
401(k) savings plan for its employees and the employees of those
of its affiliates who have elected to be included in the Plan; and
WHEREAS, Brian R. Mullany, John van C. Parker and Robert W.
Phelps have agreed to act as Trustees of the Trust created
hereunder pursuant to the terms and conditions hereof;
NOW THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I. DEFINITIONS
The following terms shall have the meanings set forth below
unless the context clearly indicates that a different meaning is
required.
1.01 "Accounts" shall include the Elective Account, the
Matching Account, the Voluntary Account and the Transfer Account.
1.02 "Affiliate" shall mean any corporation which is a member
of a controlled group of corporations which includes the Company
(within the meaning of section 1563(a) of the Code, determined
without regard to section 1563(a)(4) and (e)(3)(C) of the Code).
1.03 "Anniversary Date" shall mean January 1.
1.04 "Code" shall mean the Internal Revenue Code of 1986,
as amended. Reference to a section of the Code shall include that
section and any comparable section or sections of any future
legislation that amends, supplements or supersedes such section.
1.05 "Committee" shall mean the Committee appointed by the
Company as provided in Article VIII. The Committee shall be the
"administrator" (as defined in Section 3(16)(A) of ERISA) of the
Plan and shall be responsible for all reporting and disclosure
obligations under ERISA, and all other obligations required or
permitted to be performed by the Plan administrator under ERISA.
The Committee, as Plan administrator, shall be the designated
agent for service of legal process. The Committee shall be the
"named fiduciary" referred to in Section 402(a) of ERISA.
1.06 "Company" shall mean Consumers Water Company, and its
successors and assigns.
1.07 "Company Stock" shall mean shares of voting common stock
of the Company.
1.08 "Compensation" shall mean all amounts to be paid to
an Employee during the Plan Year for Service with the employer
which are reportable on such Employee's Form W-2, or which
would have been reportable if such amounts had not been
contributed to his Elective Account by the Employer.
In addition to other applicable limitations set forth
in the plan, and notwithstanding any other provision of the plan
to the contrary, for plan years beginning on or after January 1,
1994, 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 Commission for increases in the cost of living
in accordance with section 401(a)(17)(B) of the Internal Revenue
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.
For plan years beginning on or after January 1, 1994, 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.
If compensation for any prior determination period is taken
into account in determining an employee's benefits accruing in the
current plan year, the compensation for that prior determination
period is subject to the OBRA '93 annual compensation limit in
effect for that prior determination period. For this purpose,
for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA
'94 annual compensation limit if $150,000.
1.09 "Compensation Deferral Agreement" shall mean an
arrangement pursuant to which a Member agrees to reduce, or to
forego an increase in, his Compensation and the Employer agrees
to contribute to the Plan the amount so reduced or foregone as
an Elective Contribution.
1.10 "Effective Date" shall mean January 1, 1987.
1.11 "Elective Account" shall mean the Elective Contributions
made on behalf of a Member, and the income, losses, appreciation and
depreciation attributable to such contributions.
1.12 "Elective Contribution" shall mean an amount contributed
to the Plan on behalf of a Member by the Employer pursuant to a
Compensation Deferral Agreement, as provided in Section 3.01(a)
hereof.
1.13 "Employee" shall mean a person employed by the Employer.
1.14 "Employer" shall mean Consumers Water Company and any
Affiliate which elects by proper corporate action to be included in
this Plan) and any successor by merger, and any business organization
that acquires the Employer's business and adopts the Plan.
1.15 "Employer Matching Contribution" shall mean the amount
contributed to the Plan on behalf of a Member by the Employer pursuant
to Section 3.02(a) hereof.
1.16 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended. Reference to a section of ERISA shall include
that section and any comparable section or sections of any future
legislation that amends, supplements or supersedes such section.
1.17 "Fund" shall mean all property received by the Trustees
for purposes of the Plan, investments thereof and earnings and any
increase or decrease in the market value thereon, less payments made
by the Trustees to carry out the Plan.
1.18 "Hour of Service" shall be determined on the basis of
actual hours for which the Employee is paid or entitled to payment
and shall mean:
(a) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer.
These hours shall be credited to the Employee for the computation
period in which the duties are performed; and
(b) Each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence. No more than 501 Hours of Service
shall be credited under this paragraph for any single continuous
period (whether or not such period occurs in a single computation
period). Hours under this paragraph shall be calculated and credited
pursuant to sections 2530.200b-2(b) and (c) of the Department of Labor
Regulations which are incorporated herein by reference; and
(c) Each hour for which back pay, irrespective
of mitigation of damages, is either awarded or agreed to by the
Employer. The same hours of service shall not be credited both
under paragraph (a) or paragraph (b) as the case may be, and under
this paragraph (c). These hours shall be credited to the Employee
for the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award,
agreement or payment is made.
Hours of Service will be credited for employment with other
members of an affiliated service group (under section 414(m) of the
Code), a controlled group of corporations (under section 414(b) of
the Code), or a group of trades or businesses under common control
(under section 414(c) of the Code), of which the adopting Employer
is a member. Hours of Service will also be credited for any
individual considered an Employee for purposes of this Plan under
section 414(n) of the Code.
Solely for purposes of determining whether a Break in Service,
as defined in Section 16.01, for participation and vesting purposes
has occurred in a computation period, an individual who is absent
from work for maternity or paternity reasons shall receive credit
for the Hours of Service which would otherwise have been credited
to such individual but for such absence, or in any case in which
such hours cannot be determined, 8 Hours of Service per day of
such absence. For purposes of this paragraph, an absence from work
for maternity or paternity reasons means an absence (1) by reason
of the pregnancy of the individual, (2) by reason of a birth of a
child of the individual, (3) by reason of the placement of a child
with the individual in connection with the adoption of such child
by such individual, or (4) for purposes of caring for such child for
a period beginning immediately following such birth or placement.
The Hours of Service credited under this paragraph shall be credited
(1) in the computation period in which the absence begins if the
crediting is necessary to prevent a Break in Service in that period,
or (2) in all other cases, in the following computation period.
1.19 Masculine pronouns shall include the feminine.
1.20 "Matching Account" shall mean the Employer Matching
Contributions, if any, made on behalf of a Member, and the income,
losses, appreciation and depreciation attributable to such
contributions.
1.21 "Member" shall mean any Employee who meets the requirements
for membership fixed by Article II hereof.
1.22 "Plan", shall mean the profit-sharing plan of the Company
as set forth in this 401(k) Savings Plan and Trust.
1.23 "Plan Year" shall mean the twelve consecutive month period
beginning on January 1.
1.24 "Service" shall mean the period of an Employee's current
or prior employment by the Employer.
1.25 "Total and Permanent Disability" shall mean a disability
which prevents the Employee from engaging in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less
than twelve months. The permanence and degree of such impairment
shall be supported by medical evidence.
1.26 "Transfer Account" shall mean any amount transferred on
behalf of a Member from another qualified plan pursuant to Article
XIV hereof, and the income, losses, appreciation and depreciation
attributable to such transferred amounts.
1.27 "Trustee" or "trustees" shall mean Chase Manhattan Bank,
or any successor or successors thereto.
1.28 "Voluntary Account" shall mean the Member's voluntary
contributions, if any, pursuant to Section 3.05 hereof, and the
income, losses, appreciation and depreciation attributable to such
contributions.
1.29. "Rollover Contribution" shall mean any rollover amount
or rollover contribution defined in section 402(a)(5) or section
403(a)(4) of the Code (relating to certain lump sum distributions
for an employee's trust of employee annuity described in section
402(a) or section 403(a) of the Code), or section 408(d)(3) of
the Code (relating to certain distributions from an individual
retirement account or an individual retirement annuity) or section
409(b)(3)(C) of the Code (relating to certain distributions from a
retirement bond). Any Rollover Contributions from an individual
retirement account shall be limited to amounts rolled over into such
individual retirement account from another qualified plan plus the
income and gains thereon.
ARTICLE II. ELIGIBILITY
2.01 Each Employee who is employed on the Effective Date shall
immediately participate in the Plan. Each Employee first employed
after the effective Date shall become a Member on the Anniversary
Date next following his initial employment date.
An Employee shall not become a Member in the Plan if he is a
member of a union with which the Employer has a collective bargaining
agreement directly or through an employers' association, unless
the collective bargaining agreement between the Employer and the
union involved specifically makes the Plan applicable to Employees
covered under such collective bargaining agreement, provided that
retirement benefits have been a subject of good faith bargaining
between the Employer and its Employees.
2.02 If a Member becomes ineligible for participation because
he is no longer a member of an eligible class of Employees, such as
becoming employed by an Affiliate which is not an Employer, such
Member shall participate immediately upon his return to an eligible
class of Employees. If an Employee who is not a member of the
eligible class of Employees becomes a member of the eligible class,
such Employee shall participate on the Anniversary Date next
following his becoming a member of the eligible class.
2.03 A former Member who has terminated Service shall become
a Member immediately upon his return to the employ of the Employer.
ARTICLE III. CONTRIBUTIONS AND CREDITS OF MEMBERS
3.01 (a) A Member may, pursuant to a Compensation Deferral
Agreement, have the Employer contribute to the Plan on his behalf
Elective Contributions of up to 15% of his Compensation, up to a
maximum of $7,000 per Plan Year (or, for Plan Years after 1987,
such larger amount as may be permitted pursuant to the Code for
such Plan Year) through payments no less frequently than monthly,
to the Trustees. Each Compensation Deferral Agreement, including
the percentage of deferral designated by a Member, shall be executed
and delivered by the Member to the Company no later than 15 days
prior to its commencement date, unless otherwise consented to by
the Company. Such Compensation Deferral Agreement shall be revocable
at any time by the Member upon delivery of a written revocation notice
to the Company, and may be modified by the Member, as of the end of
any fiscal quarter of any Plan Year. If a Compensation Deferral
Agreement is revoked by the Member, he may not enter into a new
Compensation Deferral Agreement until the next following Anniversary
Date. All Elective Contributions made on behalf of a Member shall be:
(1) credited to his Elective Account as of the day they are delivered
to the Trustees, (2) fully vested and nonforfeitable at all times,
and (3) be made no later than 30 days after the end of the Plan Year
to which they relate. Any Elective Contributions which are made
pursuant to the preceding sentence after the end of a Plan Year
shall be credited to Members' Elective Accounts as of the end of
the Plan Year.
(b) In order to ensure that the provisions of the Plan with
respect to Elective Contributions constitute a qualified cash or
deferred arrangement under section 401(k) of the Code and
applicable regulations thereunder ("CODA"), the Committee shall
monitor the amounts of Elective Contributions made hereunder for
each Member. In the event the Committee, in its sole good-faith
discretion, shall determine that it is necessary or desirable for
the amount of Elective Contributions being made hereto for one or
more Members to be altered in order for the applicable Plan
provisions to remain a CODA, it shall take whatever actions are
necessary to accomplish the alteration, including a unilateral
modification to any Compensation Deferral Agreement, provided that
in so doing it shall treat all Members who are similarly situated
in a nondiscriminatory manner and shall not discriminate in favor
of Members who are "Highly Compensated Employees," as defined in
Section 3.04(d). Such action by the Committee may relate to future
Elective Contributions and, to the extent permitted by applicable
law, may include (but is not limited to) temporarily suspending
certain Members' ability to have all or a portion of the Elective
Contributions made to the Plan for them.
3.02 (a) Subject to the provisions of this Plan, the Employer
shall, as and to the extent it lawfully may, contribute to each
Member's Matching Account an amount (called an "Employer
Matching Contribution") equal to: (i) 40% of the aggregate
Elective Contributions for such Plan Year for such Member (less the
aggregate distributions to such Member of the contributions to his
Elective Account made for such Plan Year), up to a maximum for such Member
of $1,040 for such Plan Year, plus (ii) 20% of the aggregate contributions
by such Member to his Voluntary Account during such Plan Year (less
the aggregate withdrawals by such Member of contributions made to
his Voluntary Account for such Plan Year), up to a maximum for such Member
of $520 for such Plan Year, provided, however, that in no event shall
the aggregate Employer Matching Contributions for any Member exceed $1,040
for a Plan Year, and provided further that Employer Matching
Contributions shall not be made with respect to that portion of the
aggregate contributions made for or by such Member to his Elective Account
and his Voluntary Account in excess of $2,600 for a Plan Year, as of the
end of such Plan Year. The Employer Matching Contribution on behalf of
any Member who is a "Highly Compensated Employee," as defined in
Section 3.04(d), shall be limited, to the extent necessary, in order to
comply with the provisions of Section 3.04(a), with respect to
the "Matching/Voluntary Actual Deferral Percentage," provided that all
Members who are "Highly Compensated Employees" shall be treated in
a nondiscriminatory manner.
(b) Except as otherwise provided to the contrary elsewhere in
this Plan, all amounts in a Member's Matching Account shall be subject to
the same distribution restrictions as amounts in that Member's
Elective Account.
(c) Notwithstanding the foregoing, in the event that a Member
withdraws from his Voluntary Account during a Plan Year any amount that
had been utilized in determining the amount of an Employer
Matching Contribution for the Member in a prior Plan Year under (a)(ii)
of this Section 3.02, the amount of any Employer Matching Contribution for
the current Plan Year for the Member shall be one-half of what it
would otherwise be under (a)(ii) of this Section 3.02.
3.03 Notwithstanding anything else contained in this Plan to
the contrary, the aggregate of Elective Contributions and
Voluntary Contributions for any Member for a Plan Year shall not exceed 15%
of that Member's Compensation for that Plan
Year.
3.04 (a) Neither the Elective Actual Deferral Percentage nor
the Matching/Voluntary Actual Deferral Percentage (both as defined below)
for any Plan Year for Members who are "Highly Compensated Employees"
shall exceed the greater of (i) or (ii) as follows: (i) the applicable
Actual Deferral Percentage for the preceding Plan Year for the Members who
are not "Highly Compensated Employees" multiplied by 1.25, or (ii)
the applicable Actual Deferral Percentage for the preceding Plan Year for
the Members who are not "Highly Compensated Employees," multiplied by
2.0, provided, however, that the Actual Deferral Percentage for the Plan
Year for the Members who are "Highly Compensated Employees" may not
exceed the applicable Actual Deferral Percentage for the preceding Plan
Year for the Members who are not "Highly Compensated Employees" by more
than two percentage points, provided, however, that the
Matching/Voluntary Actual Deferral Percentage shall comply solely with (I),
if required by regulations pursuant to the Code.
(b) The "Elective Actual Deferral Percentage" for a specific group
of Members for a Plan Year shall be the average of the ratios
(calculated separately) for each Member in such group of the amount
of Elective Contributions actually paid into the Plan on behalf of such
Member for such Plan Year to the Member's Compensation for such Plan Year.
(c) The "Matching/Voluntary Actual Deferral Percentage" for a
specific group of Members for a Plan Year shall be the average of the
ratios (calculated separately) for each Member in such group of the amount
of Employer Matching Contributions and Voluntary Contributions actually
paid into the Plan on behalf of such Member for such Plan Year to the
Member's Compensation for such Plan Year.
(d) "Highly Compensated Employee" shall mean any Member who: (i) was
a five percent (5%) owner at any time during the Plan Year or the
preceding Plan Year, or (ii) had compensation from the Employer for
the preceding Plan Year in excess of $80,000 (or such figure as
adjusted pursuant to Section 414(q)(1) of the Internal Revenue Code), and,
if the Employer so elects, was a Member of the "Top Paid Group." The
"Top Paid Group" is the highest twenty percent (20%), in terms
of compensation, of all Employees of the Employer, excluding those
Employees: (I) employed for less than six (6) months, (II) working less
than seventeen and one-half (17 1/2) hours per week, (III) working six
(6) months or less per year, (IV) under age twenty-one (21), or (V) who
are non-resident aliens with no United States source of earned
income. Employees represented by a union and covered by a collective
bargaining agreement will not be excluded unless the Internal Revenue Code
and Regulations so require. For purposes of this paragraph (d),
"Compensation" shall have the same meaning as set forth in Section
9.01(1)(B), but ignoring the exclusions therefrom set forth in (i) and
(iv) of Section 9.01(1)(B).
(e) If, notwithstanding the limits contained in paragraph (d)
hereof, the aggregate Elective Contributions for the Highly
Compensated Employees exceed such limits for a Plan year, the amounts of
such Elective Contributions for Highly Compensated Employees that
are determined to be "excess contributions" (and any earnings thereon)
shall be distributed to such Highly Compensated Employees prior to the end
of the Plan Year next following the Plan Year for which such
excess contributions are made. Any such distribution shall be made
as prescribed in section 401(k)(8) of the Code, and regulations thereunder.
(f) If, notwithstanding the limits contained in paragraph (d)
hereof, the aggregate Employer Matching Contributions and
Voluntary Contributions for the Highly Compensated Employees exceed
such limits for a Plan Year, the amounts of such contributions for
Highly Compensated Employees that are determined to be "excess
contributions" (and any earnings thereon) shall be distributed to such
Highly Compensated Employees prior to the end of the Plan Year next
following the Plan Year for which such excess contributions are made.
Any such distribution shall be made as prescribed in section 401(m)(7)
of the Code, and regulations thereunder.
(g) In the event that a Member notifies the Committee by March
1 following the close of a Plan Year that he has made an "Excess
Deferral" under the Plan and the amount of the Excess Deferral, the
Committee shall direct the Trustees to distribute such Excess
Deferral, together with any income allocable to it, to the Member not
later than April 15 following such notification. For purposes hereof,
'Excess Deferral' shall mean that portion of the Elective Contributions
made for a Member under this Plan which causes the Member to have more
than the amount referred to in Section 3.01(a) of this Plan in
election contributions for the Plan Year made on his behalf to this Plan
and any other qualified plan of which he is a member.
3.05 (a) A Member may make voluntary contributions, which are
not deductible by the Member for federal income tax purposes, and which
shall be paid to the Trustees and invested by them for his Voluntary
Account. Such contributions shall be paid in cash by the Member in
such manner and at such times as the Committee may determine
(including payments by means of payroll deduction), which contributions
shall be transmitted to the Trustees at regular intervals, but in any event
no less frequently than quarterly, and no later than 30 days after the end
of the Plan Year. The contributions by a Member to his Voluntary Account
in this Plan and all other qualified plans shall not exceed 9% of
his aggregate Compensation paid to him by the Employer for all Plan Years
in which he has been a Member in this Plan and all other qualified plans
of the Employer.
(b) A Member may make withdrawals from his Voluntary Account at
the end of any fiscal quarter of the Plan Year, provided that no single
withdrawal shall be greater than the balance in his Voluntary Account or
less than the smaller of such balance or $100. The withdrawals by a
Member from his Voluntary Account shall be deemed to be from amounts
first contributed to his Voluntary Account.
(c) Any balance of a Member's Voluntary Account not previously
withdrawn shall be paid to the Member as provided in Section 5.05 and
Article VI.
(d) In order to comply with applicable provisions of the Code
with respect to Employer Matching Contributions and Voluntary
Contributions, the Committee shall monitor the amounts of
Voluntary Contributions made by each Member. In the event the Committee
in its sole good-faith direction, shall determine that it is appropriate,
it may suspend or limit certain Members' ability to make further
Voluntary Contributions to the Plan for a Plan Year.
3.06 As of the last business day of each fiscal quarter of the
Plan Year, any increase or decrease in the fair market value of the Fund
since the last adjustment under this Article and all income of the Fund
for such period shall be credited to or deducted from the Accounts of
Members and former Members in direct proportion to the respective amount
of each after the credits under this Article III for the preceding
fiscal quarter, but before the credits under this Article III for the
current fiscal quarter; provided, however, that any increase or decrease
or income on loans pursuant to Section 10.04 or directed investments
pursuant to Section 10.06 shall only be credited to or deducted from
the accounts to which such loans or directed investments relate.
3.07 Credits or deductions under this Article III shall be deemed
to have been made on the date to which they are related although
actually determined on some later date. Distributions to a Member or
his beneficiary shall be based on an adjustment of a Member's Accounts made
as soon as administratively feasible following the date of death or
other separation from service, but in no event later than the last
business day of the fiscal quarter of the Plan Year next following the date
of death or other separation from service.
3.08 The Employer shall, within 30 days after the death or
other separation from Service of a Member, notify the Committee and
the Trustees in writing of such death or other separation from service.
Such Member's Accounts shall be paid or segregated by the Trustees as soon
as practical after receipt of such notice in accordance with the provisions
of Article V.
3.09 Any portion of a former Member's Accounts which is retained in
the Fund after his death or other separation from service shall,
upon instructions of the Committee, be segregated in an
interest-bearing account and shall be debited or credited only with income
and charges attributable directly to it. Amounts placed in such a
segregated account shall not be considered an account for purposes of
Article III.
ARTICLE IV. VESTING
4.01 Each Member shall always be 100% vested in all his Accounts.
4.02 If the aggregate vested amount in the Member's Accounts
exceeds $3,500, the Member must consent to any distributions from
such Accounts, provided, however, that if a Member does not consent to
a distribution from his Accounts prior to his normal retirement age, he
may not thereafter obtain a distribution from his Accounts until the
earlier of his normal retirement age or death without the consent of
the Committee.
ARTICLE V. BENEFITS
5.01 Normal Retirement
A Member shall have a non-forfeitable right to his normal
retirement benefits upon attainment of his normal retirement age, age 65,
and shall, upon retirement thereafter, be entitled to receive benefits
based upon the entire amount credited to his Accounts, which benefits will
be paid in accordance with the provisions of Section 5.05.
5.02 Disability
Any Member who separates from service because of Total and
Permanent Disability shall be entitled to receive benefits based on the
entire amount credited to his Accounts, which benefits will be paid
in accordance with the provisions of Section 5.05.
5.03 Other Separation
Any Member who separates from service for any reason except
normal retirement, Total and Permanent Disability, or death shall be
entitled to receive benefits based on his vested interest in his
Accounts, which benefits will be paid in accordance with the provisions
of Section 5.05.
5.04. A Member may apply in writing to the Committee for a
distribution of all or part of his Accounts to relieve financial
hardship. 'Financial hardship' shall mean immediate and heavy financial
needs of the Member, because of: (a) medical expenses described in
section 213(d) of the Code incurred by the Member, the Member's spouse, or
any dependents of the Member (as defined in section 152 of the Code),
(b) purchase (excluding mortgage payments) of a principal residence of
the Member, (c) payment of tuition for the next semester or quarter of
post-secondary education for the Member, the member's spouse, the
Member's children or the Member's dependents, or (d) the need to prevent
the eviction of the Member from his principal residence or foreclosure on
the mortgage of the Member's principal residence. The Committee shall
approve a distribution hereunder only if it determines: (1) that a
financial hardship exists for the Member (and only in an amount that
is necessary to relieve such financial hardship), (2) that such amount is
not reasonably available from other resources available to the
Member (including, without limitation, withdrawals pursuant to Section
3.05(b) and loans pursuant to Section 10.04 that are not treated as
taxable distributions under section 72(b) of the Code, and (3) that
the distribution is otherwise proper under the terms of the Plan, the
Code and regulations thereunder.
In order to determine the amount of the Member's financial need,
the Committee shall require the member to submit actual written evidence
(such as bills or invoices) of the financial obligations or expenses for
which such distribution on a standardized form designed by the Committee
and shall require the Member to obtain all distributions (other than
hardship distributions) and all nontaxable loans under the Plan and all
other plans maintained by the Employer. In order to determine that
other financial resources are not reasonably available to the Member,
the Committee may require the Member to submit a sworn statement to
such effect on such standardized form referred to above. No
distribution hereunder shall be made from a Member's Elective Account
until all other Accounts of the Member had been depleted.
If such determinations are made, the Committee shall instruct
the Trustee to make such distribution. If a distribution is made
hereunder from the Member's Elective Account: (I) the member may not
have contributions made to his Elective Account, and may not
make contributions to his Voluntary Account, for at least twelve months
after the date of receipt of such distribution, and (II) the maximum
amount that may be contributed to his Elective Account for the Plan
Year following the Plan Year in which such distribution is made shall be
the maximum amount set forth in Section 3.01(a) less the aggregate amount
of Elective Contributions made on behalf of the Member during the Plan Year
in which such distribution is made.
5.05 (a) The requirements of this Section 5.05 shall apply
to any distribution of a Member's benefits.
(b) Except as provided differently elsewhere in the
Plan, distribution of benefits from the Member's entire interest in the
Plan will be made to or for the benefit of the Member, or, in the event of
his death to or for the benefit of his designated beneficiary by payment in
a single lump sum.
For purposes hereof, a Member's surviving spouse shall be
deemed to be the designated beneficiary for purposes of this Plan, but
if there is no surviving spouse, or if the surviving spouse has
already consented in a manner conforming to a qualified election (as
defined in paragraph (e)), then to an otherwise designated beneficiary.
For purposes hereof, a former spouse shall be treated as a surviving spouse
to the extent provided under a qualified domestic relations order as
described in section 414(p) of the Code.
(c) Except as provided differently elsewhere in the Plan,
unless the Member otherwise elects, such payment shall be made as soon
as administratively feasible following the final adjustment made to
his Accounts pursuant to Section 3.07, but in any event not later
than April 1st of the calendar year after the close of the later of -
(i) the Plan Year in which the Member attains age 65
(Normal Retirement Age), or
(ii) the Plan Year in which the Member terminates his
Service with the Employer,
except that distributions to any Member who is a five percent
(5%) owner of the Employer during the Plan Year in which that
Member attains age 70 1/2 must be made no later than the first
day of April following the calendar year in which such individual
attains age 70 1/2.
(e) A "qualified election" means a written consent of the
surviving spouse that acknowledges the effect of the consent and which
is witnessed by a plan representative or notary public.
5.06 Notwithstanding anything else to the contrary in this Plan,
no distribution may be made from a Member's Transfer Account, Matching
Account or Elective Account earlier than the Member's retirement, death,
Total and Permanent Disability, other separation from Service or attainment
of age 59-1/2, unless such distribution is made on account of hardship,
as provided in Section 5.04, or termination of the Plan with respect to
that Member, as provided in Section 13.02.
ARTICLE VI. DEATH BENEFITS
6.01 Upon the death of a Member or former Member, or if Section
15.04 applies, all amounts credited to his Accounts as of the last
adjustment date under Section 3.07 shall be paid to the Member's
designated beneficiary (as defined in Section 5.05).
6.02 If there is no such designated beneficiary under Section
5.05 surviving at a Member's death, the designated beneficiary shall be
deemed to be, in equal shares per stirpes, his surviving children
and surviving issue of deceased children. If the Member leaves no
such surviving children or surviving issue of deceased children,
the designated beneficiary shall be deemed to be his personal
representative.
6.03 Death benefits shall be paid in accordance with the
provisions of Section 5.05.
ARTICLE VII. TOP-HEAVY PROVISIONS
7.01 If the Plan is or becomes top-heavy in any Plan Year, the
provisions of this Article VII will supersede any conflicting provision
in the Plan.
7.02 (a) 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 if such
individual's annual Compensation exceeds 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 100 percent of
such dollar limitation, a 5-percent owner of the Employer, or a
1-percent owner of the Employer who has an annual Compensation of more
than $150,000. The determination period is the Plan Year containing
the Determination Date and the four preceding Plan Years. The
determination of who is a Key Employee will be made in accordance with
section 416(i)(1) of the Code and the regulations thereunder.
(b) Top-Heavy Plan: For any Plan Year, this Plan is
top-heavy if any of the following conditions exists:
(i) 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.
(ii) 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 group of plans exceeds 60 percent.
(iii) If this Plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group of plans and the
Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60 percent.
(c) Top-Heavy Ratio: A fraction, the numerator of which is
the sum of the account balances under the aggregated defined contribution
plan or plans of all Key Employees as of the Determination Date (including
any part of any account balance distributed in the five year period ending
on the Determination Date) and the present value of accrued benefits under
the aggregated defined benefit plan or plans for all Key Employees as of
the Determination Date, and the denominator of which is the sum of all
account balances under the aggregated defined contribution plan or plans
for all Members as of the Determination Date (including any part of
any account balance distributed in the five year period ending on
the Determination Date) and the present value of accrued benefits under
the aggregated defined benefit plan or plans for all Members as of
the Determination Date, all determined in accordance with section 416 of
the Code and the regulations thereunder. 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 five year period ending on the Determination Date. Both
the numerator and denominator of the Top-Heavy Ratio are adjusted to
reflect any contribution not actually made as of the Determination Date,
but which is required to be taken into account on that date under section
416 of the Code and the regulations thereunder. For purposes hereof,
the value of account balances and the present value of accrued benefits
will be determined as of the most recent Valuation Date that falls within
or ends with the twelve month period ending on the Determination Date,
except as provided in section 416 of the Code and regulations thereunder
for the first and second plan years of a defined benefit plan. The
account balances and accrued benefits of a Member (i) who is not a
Key Employee but who was a Key Employee in a prior year or (ii) has
not received any Compensation from any employer maintaining the Plan at
any time during the five year period ending on the Determination Date will
be disregarded. The calculation of the Top-Heavy Ratio, and the extent
to which distributions, rollovers, and transfers are taken into account
will be made in accordance with section 416 of the Code and the
regulations thereunder. Deductible employee contributions will not be
taken into account for purposes of computing the Top-Heavy Ratio.
When aggregating plans, the value of account balances and accrued
benefits will be calculated with reference to the Determination Dates
that fall within the same calendar year.
(d) 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 section 401(a)(4) and 410 of the
Code.
(e) Required Aggregation Group: (1) Each qualified plan of
the Employer in which at least one Key Employee participates, and (2)
any other qualified plan of the Employer which enables a plan described in
(1) to meet the requirements of section 401(a)(4) or 410 of the Code.
(f) Determination Date and Valuation 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
Plan Year.
(g) Present Value: Present Value shall be based on the
following interest and mortality rates: Interest Rate - 7%; Mortality
Table - 1971 Group Annuity Mortality Table.
(h) Super Top-Heavy Plan: In any Plan Year, this Plan is
super top-heavy if any of the following conditions exist:
(i) If the Top-Heavy Ratio for this Plan exceeds 90 percent
and this Plan is not part of any Required Aggregation Group
or Permissive Group of Plans.
(ii) 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 group of plans exceeds 90 percent.
(iii) If this Plan is a part of a Required Aggregation group
and part of a Permissive Aggregation Group of Plans and the
Top-Heavy Ratio for the Permissive Aggregation Group exceeds
90 percent.
7.03 (a) Except as otherwise provided in (c) and (d) below,
the Employer contributions and forfeitures allocated on behalf of any
Member who is not a Key Employee shall not be less than the lesser of
three percent of such Member's Compensation or the largest percentage
of Employer contributions and forfeitures, as a percentage of the
first $200,000 of the Key Employee's Compensation, 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
Member would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the year because of (i) the Member's
failure to complete 1,000 Hours of Service (or any equivalent provided in
the Plan), or (ii) the Member's failure to make mandatory employee
contributions to the Plan or (iii) Compensation less than a stated amount.
(b) For purposes of computing the minimum
allocation, Compensation will mean all of such Member's compensation for
the Limitation Year (as that term is defined in Section 9.01(l)(E)
for purposes of section 415 of the Code) ending with or within the Plan
Year, which is actually paid within such year.
(c) The provision in (a) above shall not apply to any
Member who was not employed by the Employer on the last day of the
Plan Year.
(d) The provision in (a) above shall not apply to any
Member to the extent the Member is covered under any other plan or
plans of the Employer and the Employer has provided the minimum
allocation or benefit accrual requirement applicable to top-heavy
plans in the other plan or plans.
7.04 The minimum allocation required (to the extent required
to be nonforfeitable under section 416(b) of the Code) may not be
forfeited under section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
7.05 For any Plan Year in which the Plan is top-heavy, only the
first $200,000 (or such larger amount as may be prescribed by the Secretary
of the Treasury or his delegate) of a Member's annual Compensation shall
be taken into account for purposes of determining Employer contributions
under the Plan.
7.06 For any Plan Year in which this Plan is top-heavy, the
following minimum vesting schedule will automatically apply to the
Plan: 100% vested at all times.
The minimum vesting schedule applies to all benefits within the
meaning of section 411(a)(7) of the Code, including benefits accrued
before the effective date of section 416 of the Code and benefits
accrued before the Plan became top-heavy. Further, no reduction in
vested benefits may occur in the event the Plan's status as top-heavy
changes for any Plan Year. However, this section does not apply to
the account balances of any Employee who does not have an Hour of
Service after the Plan has initially become top-heavy and such
Employee's account balance attributable to Employer contributions
and forfeitures will be determined without regard to this section.
ARTICLE VIII. THE COMMITTEE
8.01 The Company shall appoint a Committee to administer the
Plan consisting of three or more persons who shall serve without
compensation at the Company's pleasure. Vacancies shall be filled
by the Company.
8.02 The Committee shall adopt such rules for the conduct of
its business and administration of the Plan as it considers desirable,
provided they do not conflict with the Plan.
8.03 The Committee may authorize one or more of its members or
any agent to act on its behalf and may contract for legal,
medical, accounting, clerical and other services to carry out the purposes
of the Plan. The cost of such services and expenses of the Committee may
be paid from the Fund or by the Employer, and the Employer may reimburse
the Fund for any such payment from the Fund.
8.04 The Committee may construe the Plan, determine the percentage
of vesting for each Member, correct defects, supply omissions or
reconcile inconsistencies to the extent necessary to effectuate the Plan
and, subject to Section 8.07, such action shall be conclusive.
8.05 The Committee shall keep records reflecting its
administration of the Plan which shall be subject to audit by
the Employer. Employees may examine records pertaining directly
to them.
8.06 No member of the Committee shall participate in any decision
of the Committee which involves the payment of benefits to him or in which
he has a financial interest other than as a Member of the Plan. If the
entire Committee is disqualified to act by reason of this Section 8.06
the Company's Board of Directors shall perform as the Committee for
such purpose.
8.07 A Member or other person entitled to benefits under the
Plan may make a claim for benefits by filing a written request with
his Employer.
If a claim is wholly or partially denied, the Employer shall
furnish the claimant with written notice setting forth in a manner
calculated to be understood by the claimant:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on
which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect his claim and an
explanation why such material or information is necessary; and
(d) appropriate information as to the steps to be taken if the
claimant wishes to submit his claim for review.
Such notice shall be furnished to the claimant within ninety (90)
days after receipt of his claim, unless special circumstances require
an extension of time for processing his claim. If an extension of time
for processing is required, the Employer shall, prior to the termination
of the initial ninety (90) day period, furnish the claimant with
written notice indicating the special circumstances requiring an extension
and the date by which the Employer expects to render its decision. In no
event shall an extension exceed a period of ninety (90) days from the end
of the initial ninety (90) day period.
A claimant may request a review of a denied claim. Such review shall
be made by the Committee. Such request shall be in writing and must
be delivered to the Committee within sixty (60) days after receipt by
the claimant of written notification of denial of claim. A claimant or
his duly authorized representative may:
(a) review pertinent documents, and
(b) submit issues and comments in writing.
The Committee shall notify the claimant of its decision on review
not later than sixty (60) days after receipt of a request for review,
unless special circumstances require an extension of time for processing,
in which case a decision shall be rendered as soon as possible, but not
later than one hundred twenty (120) days after receipt of a request
for review. If an extension of time for review is required because of
special circumstances, written notice of the extension must be furnished
to the claimant prior to the commencement of the extension. The
Committee's decision on review shall be in writing and shall include
specific reasons for the decision, as well as specific references to
the pertinent Plan provisions on which the decision is based.
8.08 The Committee and its assistants and representatives shall
not be liable for any loss to the Fund or any act done or omitted by it,
unless due to its own gross negligence, willful misconduct, lack of
good faith or violation of Part 4 of Title I of ERISA.
8.09 In the event and to the extent not insured against by
any insurance company pursuant to the provisions of any applicable
insurance policy, the Company shall indemnify and hold harmless the members
of the Committee and their assistants and representatives from any and
all claims, demands, suits or proceedings in connection with the Plan or
Trust that may be brought by the Employees, Members or beneficiaries or
legal representatives, or by any other person, corporation, entity,
government or agency thereof; provided, however, that such
indemnification shall not apply to any such person for such person's acts
of gross negligence or willful misconduct in connection with the Plan
or Trust.
ARTICLE IX. LIMITATION ON ALLOCATIONS
9.01 Limitation on Allocations.
(1) Definitions. For the purpose of this Article IX, the following
definitions are added to those set forth in Article I or in Article XVI:
(A) Annual Additions -- The sum of the following
amounts allocated on behalf of a Member for the Limitation Year:
(i) Employer contributions,
(ii) forfeitures, and
(iii) any contributions by the Member to this
Plan (and any other defined contribution plan adopted by the
Employer).
(B) Compensation -- A Member's earned income, wages,
salaries, fees for professional service and other amounts received
for personal services actually rendered in the course of employment
with the Employer (including, but not limited to, commissions paid
salesman, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, and bonuses) and
excluding the following:
(i) Employer contributions to a plan of deferred
compensation to the extent contributions are not
included in gross income of the Member for the taxable year
in which contributed, or Employer contributions to a simplified
employee pension plan to the extent such contributions are
deductible by the Member, or any distributions from a plan of
deferred compensation;
(ii) Amount realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held
by the Member becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(iv) Other amounts which receive special tax benefits,
or contributions made by an Employer (whether or not
under a salary reduction agreement) towards the purchase
of a 403(b) annuity contract (whether or not the
contributions are excludable from the gross income of the
Member).
For purposes of applying the limitations in this Article IX,
Compensation for a Limitation Year is the Compensation actually paid or
includible in gross income during such year.
(C) Employer -- The Employer, and all members of: (i) a controlled
group of corporations (as defined in section 414(b) of the Code, as
modified by section 415(h) of the Code), (ii) all commonly controlled
trades or businesses (as defined in section 414(c) of the Code, as
modified by section 415(h) of the Code) and (iii) "affiliated service
groups" (as defined in section 414(m) of the Code), of which the
Employer is a part.
(D) Excess Amount -- The excess of the Member's Annual Additions
for the Limitation Year over the Maximum Permissible Amount or otherwise
applicable limit.
(E) Limitation Year -- A calendar year. All qualified plans
maintained by the Employer must use the same Limitation Year. If the
Limitation Year is amended to a different twelve consecutive month
period, the new Limitation Year must begin on a date within the new
Limitation Year in which the amendment was made.
(F) Maximum Permissible Amount -- The lower of $30,000 or 25
percent of the Member's Compensation for the Limitation Year. Beginning
January 1, 1988, the dollar amounts shall be any such larger amount as
may be permitted pursuant to the Code for the Limitation Year.
(G) Defined Benefit Fraction -- A fraction, the numerator of which
is the sum of the Member's Projected Annual Benefits under all the defined
benefit plans (whether or not terminated) maintained by the Employer, and
the denominator of which is the lesser of 125 percent of the dollar
limitation in effect for the Limitation Year under section 415(b)(1)(A)
of the Code or 140 percent of the Highest Average Compensation (provided,
however, that, if the Plan is a Super Top-Heavy Plan, as defined in Section
7.02(h), the denominator shall be the lesser of 100 percent of the dollar
limitation in effect for the Limitation Year under section 415(b)(1)(A)
of the Code or 140 percent of the Highest Average Compensation).
Notwithstanding the above, if the Member was a participant in one
or more defined benefit plans maintained by the Employer which were
in existence on July 1, 1982, the denominator of this fraction will not
be less than 125 percent of the sum of the annual benefits under such
plans which the Member had accrued as of the later of September 30, 1983,
or the end of the last Limitation Year beginning before January 1, 1983.
The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of section 415
of the Code as in effect at the end of the 1982 Limitation Year.
(H) Defined Contribution Fraction -- A fraction, the numerator of
which is the sum of the Annual Additions to the Member's accounts under
all the defined contribution plans (whether or not terminated) maintained
by the Employer for the current and all prior Limitation Years (including
the Annual Additions attributable to the Member's nondeductible
employee contributions to all defined benefit plans, whether or
not terminated, maintained by the Employer, and the Annual
Additions attributable to all welfare benefits funds, as defined in
section 419(e) of the Code, maintained by the Employer), and the
denominator of which is the sum of the maximum aggregate amounts for
the current and all prior Limitation Years of Service with the
Employer (regardless of whether a defined contribution plan was maintained
by the Employer). The maximum aggregate amount in any Limitation Year is
the lesser of 125 percent of the dollar limitation in effect under
section 415(c)(1)(A) of the Code or 35 percent of the Member's
Compensation for such year (provided, however, that, if the Plan is a
Super Top-Heavy Plan, as defined in Section 7.02(h), the maximum aggregate
amount shall be the lesser of 100 percent of the dollar limitation in
effect under section 415(c)(1)(A) of the Code or 35 percent of the
Member's Compensation for such year).
If the Member was a participant in one or more defined
contribution plans maintained by an Employer which were in existence on
July 1, 1982, the numerator of this fraction will be adjusted if the sum
of this fraction and the Defined Benefit Fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an amount equal to
the product of (1) the excess of the sum of the fractions over 1.0 times
(2) the denominator of this fraction, will be permanently subtracted from
the numerator of this fraction. The adjustment is calculated using
the fractions as they would be computed as of the later of the end of the
last Limitation Year beginning before January 1, 1983. This adjustment
also will be made if at the end of the last Limitation Year beginning
before January 1, 1984, the sum of the fractions exceeds 1.0 because
of accruals or additions that were made before the limitations of this
Article IX became effective to any plans of the Employer in existence
on July 1, 1982.
(I) Highest Average Compensation -- The average Compensation for
the three consecutive Years of Service with the Employer that produces
the highest average. A Year of Service is the 12-consecutive month
period defined in Section 16.03.
(J) Projected Annual Benefit -- The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
qualified joint and survivor annuity) to which the Member would be
entitled under the terms of the plan assuming:
(i) the Member will continue employment until normal
retirement age under the plan (or current age, if later), and
(ii) the Member's Compensation for the current
Limitation Year and all other relevent factors used
to determine benefits under the plan will remain
constant for all future Limitation Years.
(K) Restricted Members -- a group of Members consisting of (1)
officers of an Employer; (2) shareholders owning more than ten
percent (disregarding stock in the Trust) of the total combined voting
power of all classes of stock issued by an Employer entitled to vote or
more than ten percent of the total value of shares of all classes of
stock issued by an Employer; and (3) Employees receiving Compensation for
a Limitation Year which exceeds an amount equal to twice the dollar
limitation in effect under section 415(c)(1)(A) of the Code.
(2) General Limitation. With respect to any Member who does
not participate in, and has never participated in, another qualified plan or
a welfare benefit fund, as defined in section 419(e) of the Code,
maintained by the Employer, the amount of Annual Additions which may
be credited to the Member's account for any Limitation Year will not
exceed the Maximum Permissible Amount. If the Employer Contributions
that would otherwise be contributed or allocated to the Member's account
would cause the Annual Additions for the Limitation Year to exceed the
above limits, the amount contributed or allocated will be reduced so that
the Annual Additions for the Limitation Year will exceed the applicable
limit.
(3) Corrective Action. If there is an Excess Amount, the
excess will be disposed of as follows:
(A) Any nondeductible voluntary employee contributions, to
the extent they would reduce the Excess Amount, will be
returned to the Member;
(B) If after the application of paragraph (A) an Excess
Amount still exists, and the Member is covered by the Plan
at the end of the Limitation Year, the Excess Amount in the
Member's account will be used to reduce Employer contributions
(including any allocation of forfeitures) for such Member in
the next Limitation Year, and each succeeding Limitation Year
if necessary;
If after the application of paragraph (A) an
Excess Amount still exists, and the Member is not covered by the Plan
at the end of the Limitation Year, the Excess Amount will be
held unallocated in a suspense account. The suspense account will
be applied to reduce future Employer contributions (including
allocation of any forfeitures) for all remaining Members in the
next Limitation Year, and each succeeding Limitation Year if
necessary;
(D) If a suspense account is in existence at any time
during the Limitation Year pursuant to this section, it
shall not participate in the allocation of the trust's
investment gains and losses.
(4) Combined Limitation.
(A) If the Member is covered under another
defined contribution plan, or a welfare benefit fund, as defined
in section 419(e) of the Code, maintained by the Employer during
the Limitation Year, the Annual Additions which may be credited to
a Member's account under this Plan for any such Limitation Year will
not exceed the lesser of the Maximum Permissible Amount or any
other limitation contained in this Plan, reduced by the Annual
Additions credited to the Member's accounts under such other plans
and welfare benefit funds for the same Limitation Year. If a
Member's Annual Additions under this Plan and such other plans
would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual Additions
last allocated, except that Annual Additions attributable to a
welfare benefit fund will be deemed to have been allocated
first regardless of the actual allocation date. If an Excess Amount
was allocated to a Member or an allocation date of this Plan
which coincides with an allocation date of another plan, the
Excess Amount attributed to this Plan will be the product of the
total Excess Amount allocated as of such date, times the ratio of
(I) the Annual Additions allocated to the Member for the Limitation
Year as of such date under this Plan to (II) the total Annual
Additions allocated to the Member for the Limitation Year as of
such date under this and all other such plans. Any Excess
Amount attributed to this Plan will be disposed of in the
manner described in paragraph (3).
(B) In the case of a Member who is also a participant
under any defined benefit plan maintained by an Employer, no amount
of Annual Additions shall be allocated to the account of such a
Member under this Plan in any Limitation Year in excess of the
amount which will cause the sum of the applicable Defined
Contribution Fraction and the applicable Defined Benefit Fraction
of such Member to equal 1.0.
ARTICLE X. INVESTMENT
10.01 The Trustees shall invest the Fund as directed by the
Committee.
10.02 Except as otherwise provided herein, and subject to
Section 10.01 the Trustees may:
(a) Except as hereinafter limited, invest in any form of
property without restriction to investments authorized for
fiduciaries, including, without limitation on the amount that may be
invested therein, any common trust fund; provided that as long as the Fund
has any investments in a common trust fund available only to retirement
plans which meet the requirements of section 401(a) of the Code, such
common trust funds shall constitute an integral part of the Plan and
Trust;
(b) Hold cash uninvested and deposit the same with any
banking or savings institution;
(c) Join in or oppose the reorganization, recapitalization,
consolidation, sale or merger of corporations or properties, including
those in which they are interested as Trustees, upon such terms as they
deem wise;
(d) Dispose of property for such prices and on such terms
as seems best without liability on the purchasers to see to application
of the purchase money;
(e) Borrow money with the Committee's approval, upon such
terms as the Trustees deem advisable, and pledge all or part of the
Fund as security therefor. No person lending to the Trustees need
see to application of the money lent or the propriety of the borrowing;
(f) Hold investments in nominee or bearer form;
(g) Give proxies; and
(h) Sell, write and otherwise deal in calls and other
options for the sale and purchase of securities.
10.03 Except as provided herein, the Trustees shall not invest
in any obligations of, or lease any property to, the Company or any
affiliate of the Company. Since this Plan is intended to be an
"eligible individual account plan," as defined in Section 407(d)(3)
of ERISA, up to 100 percent of the Fund may be invested in Company
Stock. Until such time as all registration requirements of all
applicable securities laws are met, no portion of the Accounts of
Members may be invested in securities of the Company or any affiliate
of the Company.
10.04 Upon the written application of any Member, the Committee
may, in its discretion, direct the Trustees to make a loan or loans to
such Member, provided, however, that nothing contained herein shall
obligate the Committee to direct the Trustees to make loans to Members,
and provided, further, that the total amount of any such loan or loans
shall not exceed the value of the amount vested in all Accounts of such
Member. If the Committee determines that loans should be made to
Members, such loans shall be available to all Members on a reasonably
equivalent basis, and shall not be made available to highly-compensated
Employees, officers or shareholders as a percentage of their vested
Accounts greater than the percentage of the vested Accounts made
available to other Employees. All such loans shall be considered as
investments of the Accounts referred to above of the Member to whom
such loans are made. All such loans shall bear a reasonable interest
rate and shall be adequately secured, and in any event shall be secured
by such Member's Accounts as the Committee deems appropriate. Any such
loan or loans shall be repaid by the Member in such manner and at such time
as the Committee may determine; provided, however, that in no event shall
the term of any such loan be for a term longer than the lesser of (I)
five years or (ii) a period commencing on the date of the making of such
loan and ending at the Member's normal retirement age.
10.05 The Committee may appoint in writing an Investment Manager,
as defined in ERISA, to direct the investments of the Fund. If the
Committee appoints an Investment Manager, such Investment Manager
shall acknowledge in writing that he is a fiduciary with regard to the
Plan and the Trust. If the Committee appoints an Investment Manager,
the Company agrees to indemnify and hold harmless the Trustees from
and against all liability, cost or expense (including reasonable
attorney's fees) arising out of or connected with the investment of
Trust assets by the Investment Manager.
10.06 Any Member may direct the investment of his or her own
Accounts (other than such Member's Transfer Account and Matching Account).
In such event, neither the Trustee nor the Company nor the Employer nor
the Committee shall be responsible for any losses or diminution in value
of the Member's Accounts arising out of such investment direction by
the Member. Each Member who elects to direct the investment of such
Accounts shall by such action release and agree, on his or her behalf and
on the behalf of such Member's heirs and beneficiaries, to indemnify and
hold harmless the Trustee, the Company, the Employer and the Committee
from and against any and all liability, cost or expense (including
reasonable attorney's fees) arising out of or connected with the
investment directions of the Member, including, without limitation,
any diminution in value or losses incurred from such investment directions.
A Member may direct the investment of such Accounts only in the
following investment vehicles: (i) a fund investing in the Company Stock
(but not until such time as applicable securities regulation requirements
are met), (ii) an equity fund, (iii) a balanced fund, (iv) a stable
value fund, (v) a value fund, (vi) an aggressive equity fund, or (vii)
such other investment options as may be designated in writing by the
Company. Unless otherwise authorized by the Committee, investment
directions may be changed by a Member, such changes to be effective as
soon as administratively feasible, but no later than the first day of
any fiscal quarter of the Plan Year. Changes in investment dierction must
be made in such form as designated by the Committee. If the
Committee requires that a Member's change in investment direction be made
in writing, the Committee will deliver a change of investment form to
the Personal Representative of such Member's Employer not later than
fifteen (15) days prior to the first day of such fiscal quarter. Under
no circumstances may a Member engage in a prohibited transaction as defined
in ERISA or the Code.
10.07. Notwithstanding anything herein the contrary, in no event
shall the Fund be so invested that the ratio, (stated) as a percentage) of
the market value of equity securities with respect to which, in the absence
of an exemption under the Securities and Exchange Act of 1934, reports
under section 16(a) of that Act would be required, to the market value of
all securities held by the Fund having a readily ascertainable market
value, determined as of the end of the preceding Plan Year, equal or
exceed twenty percent (20%).
ARTICLE XI. ACCOUNTINGS
11.01 A separate account shall be maintained by the Trustees for
each Member.
11.02 The Trustees shall keep accounts of transactions hereunder
which shall be open to inspection and audit by persons designated by the
Committee or by the Employer.
11.03 Within 90 days after each Plan Year and within 90 days after
its removal or resignation, the Trustees shall file with the Committee an
account of their administration of the Fund during such year or form
the end of the preceding Plan Year to the date of removal or resignation.
Neither the Employer, the Committee nor any other person shall be
entitled to any further accounting by the Trustees.
11.04 The Committee shall, within 90 days after filing of the
account, file with Trustees a written statement stating any objections to
the account, including claims relating to negligence, willful misconduct
or lack of good faith on the part of the Trustees. If such a statement
is filed, the Trustees shall, unless the matter be compromised with
the Committee, file their account in any court or competent jurisdiction
for audit and adjudication.
ARTICLE XII. GENERAL PROVISIONS CONCERNING TRUSTEES
12.01 The Trustees shall make investments and pay benefits only
as directed by the Committee and shall be fully protected in so doing.
12.02 Whenever the Trustees must or may act upon the direction
or approval of the Committee, the Trustees may act upon written
communication signed by any Committee member or any agent appointed in
writing by the whole Committee to act on its behalf whose authority shall
be deemed to continue until revoked in writing. The Trustees shall incur
no liability for failure to act without such a communication.
12.03 Whenever the Committee is appointed or its membership
changes, the Company shall advise the Trustees in writing of the names
of the Committee members and the Trustees may assume that those persons
continue in office until advised differently in the same manner.
12.04 All unreimbursed expenses of the Fund including legal fees
and expenses incurred by the Trustees in administering the Trust, taxes
and other items may be paid from the Fund or by the Employer, and the
Employer may reimburse the Fund for any such payment from the Fund.
12.05 The Trustees shall not be liable for any loss to the Fund
or any act done or omitted by them, unless due to their own negligence,
willful misconduct, lack of good faith or violation of Part 4 of Title
I of ERISA, and, except as herein provided, all claims against the
Trustees shall be limited to the Fund.
12.06 The Trustees need not engage in litigation unless first
indemnified against expense by the Company or unless the litigation is
occasioned by the fault of the Trustees or involves a question of
their fault.
12.07 Any Trustee may resign by written notice to the Company
which shall be effective 30 days after delivery. Any Trustee may be
removed by the Company by written notice to the Trustee which shall
be effective upon delivery. The Company and the Trustees may agree
to waive all or part of any such waiting period. In the event of
such resignation or removal, the Company shall promptly appoint a new
Trustee. The remaining Trustees shall continue to serve as Trustees,
with all power and authority to act, until a new Trustee is appointed.
ARTICLE XIII. AMENDMENT: TERMINATION: EXCLUSIVE BENEFIT
13.01 The Company hopes and expects to continue the Plan
indefinitely, but necessarily reserves the right to amend, modify
or terminate the Plan, provided, however, that no amendment,
modification or termination shall:
(a) decrease a Member's account balance, or
(b) provide that the Fund shall be used for purposes other
than for the exclusive benefit of Members or their beneficiaries, or
that the Fund shall ever revert to or be used or enjoyed by the Employer
except as specifically authorized herein, provided, however, this
agreement may be amended retroactively to qualify the Plan as a tax
exempt profit-sharing plan, or to qualify a portion of the Plan as
a CODA.
13.02 The Plan may also be partially or completely terminated
by the Company at any time, and any Employer shall have the right to
terminate its participation in the Plan at the end of any Plan Year.
If the Plan is partially terminated, all amounts credited to the
Accounts of Members who are terminated from the Plan (including
amounts held for a terminated Member pursuant to Section 16.06 not
previously forfeited by him) shall fully vest and become non-forfeitable.
If the Plan is completely terminated, or if there is a complete
discontinuance of contributions under the Plan, or if any Employer
terminates its participation in the Plan, all amounts credited to the
Accounts of affected Members (including amounts held for a terminated
Member pursuant to Section 16.06 not previously forfeited by him) shall
fully vest and become non-forfeitable. Upon partial or complete
termination of the Plan, or upon complete discontinuance of
contributions under the Plan, the Trustees, as directed by the Committee,
with respect to part or all of the Fund, as the case may be, or in the
absence of such direction, in their own discretion, shall distribute the
Fund at once, any such distribution to be in the manner provided in
Section 5.05, or shall continue to hold the Fund for distribution,
provided that if the Commissioner of Internal Revenue determines that
the Plan as adopted fails to meet the requirements of section 401(a) of
the Code for the first Plan Year, the Plan shall terminate and all
property held in the Fund shall be returned to the Employer or to the
contributors (with respect to voluntary contributions) free of trust,
within one year after the date of denial of qualification of the Plan.
In the event that a contribution is made to the Plan conditioned upon
qualification of the Plan as amended, such contribution must be returned
to the Employer upon the determination that the amended Plan fails to
qualify under the Code provided that:
(a) The Plan amendment is submitted to the Internal Revenue
Service for qualification within one year from the date the amendment
is adopted;
(b) Such contribution that was made conditioned upon
Plan requalification is returned to the Employer within one year after
the date the Plan's requalification is denied. Following the completion
of such distributions, the Trust will terminate, the Trustees will be
relieved from all liability under the Trust and no Member or other person
will have any claims thereunder, except as required by applicable law.
13.03 No termination or amendment of the Plan or of the Trust
and no other action shall divert any part of the Fund to any purpose
other than the exclusive benefit of Employees or their beneficiaries.
ARTICLE XIV. CONCERNING OTHER QUALIFIED PLANS
14.01 The Committee may, in its sole discretion, allow to
be transferred to the Trustees all or any of the assets held by any other
plan or trust which satisfies the applicable requirements of the Code
relating to qualified plans and trusts on behalf of a Member in this
Plan. Any such assets so transferred shall be accompanied by
written information from the trustee holding such assets, setting forth
the Member or Members in this Plan for whose benefit such assets have
been transferred and showing separately the respective current value of
the assets attributable to each such Member. Upon receipt of such assets
and instructions the Trustees shall thereafter proceed in accordance with
the provisions of the Plan. Such transferred amounts shall be maintained
in each such Member's Transfer Account. This Plan will not accept a
transfer of "accumulated deductible employee contributions," within the
meaning of section 72(o)(5) of the Code.
14.02 The Company by written direction to the Trustees may
transfer some or all of the assets held under the Plan to another
plan or trust meeting the requirements of the Code relating to
qualified plans and trusts. Upon receipt of such written direction,
the Trustees shall cause to be transferred the assets so directed.
14.03 An Employee eligible to participate in the Plan, regardless
of whether he has satisfied the age and service requirements, may file
a written petition with the Committee requesting that the Trustee accept
a Rollover Contribution from such Employee. The Committee, in its
sole discretion, shall determine whether or not such Employee shall
be permitted to make a Rollover Contribution to the Trust. Any
written petition filed pursuant to this Section 14.03 shall set forth
the amount of such Rollover Contribution, the nature of the property
contained in the Rollover Contribution, and a statement, satisfactory to
the Committee, that such contribution constitutes a Rollover Contribution.
In the event the Committee permits an Employee to make a Rollover\
Contribution, such Rollover Contribution shall become part of the Fund
and shall be maintained in the Transfer Account.
ARTICLE XV. MISCELLANEOUS PROVISIONS
15.01 The Plan shall not confer upon an Employee any right to be
continued as such.
15.02 The corpus or income of the Trust may not be diverted to or
used for other than the exclusive benefits of Members or their
beneficiaries. No benefit or interest available hereunder shall be subject
to assignment or alienation, either voluntary or involuntary. The
preceding sentence shall also apply to the creation, assignment,
or recognition of a right to any benefit payable with respect to a
Member pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in
section 414(p) of the Code. A domestic relations order entered before
January 1, 1985 will be treated as a qualified domestic relations order
if payment of benefits pursuant to the order has commenced as of such date.
15.03 If the Committee deems any person incapable of receiving
benefits to which he is entitled by reason of minority, illness, infirmity
or other incapacity, it may direct the Trustees to make payment directly
for the benefit of such person or to any person selected by the Committee
to disburse it. Such payments shall, to the extent thereof, discharge
all liability of the Company, the Employer, the Committee, the Trustees
and the Fund.
15.04 If any benefit hereunder has been payable and unclaimed for
four years since the whereabouts or continued existence of the person
entitled thereto was last known to the Committee, such benefit shall
be distributed following a determination by a court of competent
jurisdiction that such Member is legally dead as if such Member had died
on the date specified in such determination, as provided in Article VI.
The four year period may be extended by the Committee whenever, in its
discretion, special circumstances justify such action.
15.05 The Employer shall have no liability for payments under the
Plan or administration of the Fund except to make the contributions
required by Article III. Persons entitled shall look solely to the Fund
for any payments under the Plan.
15.06 In the case of any merger or consolidation with, or transfer
of assets or liabilities of the Plan to, any other plan, each Employee
and beneficiary shall (if the Plan then terminates) receive a
benefit immediately after the merger, consolidation or transfer which is
equal to or greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation or transfer (if the
Plan had then terminated).
15.07 Construction, validity and administration of the Plan and
Trust shall be governed by the laws of the United States and, to the
extent not preempted by such laws, by the laws of the State of Maine.
15.08 This Plan shall not become a direct or indirect transferee
of the assets of a defined benefit plan, money purchase plan, stock
bonus plan, or profit sharing plan which provides for a life annuity
form of payment of benefits.
ARTICLE XVI. ADDITIONAL PROVISIONS
16.01 "Break in Service" shall mean a 12-consecutive month
period during which the Employee has not completed more than 500
Hours of Service with the Employer; provided that any period during
which an Employee is employed by an Affiliate which is not an Employer
shall not be counted in determining a Break in Service.
16.02 "12 consecutive month period." The measurement of a 12
consecutive month period for purposes of determining a Year of Service
and a Break in Service shall begin on the date on which the Employee
first performs an Hour of Service and each anniversary thereof.
16.03 Except as provided below, "Year of Service" for purposes
of eligibility and vesting shall mean a 12-consecutive month period
during which the Employee completes at least 1,000 Hours of Service. Any
12-consecutive month period during which an Employee has less than 1,000
Hours of Service shall not be considered in computing Years of Service.
In the case of any Employee who has a Break in Service, Service
before such break shall be considered in computing Years of Service
for purposes of eligibility under Article II and for purposes of
determining such Employee's vested portion of his Accounts after such
break, but Service after such break shall be considered in computing
Service for purposes of determining the Employee's vested portion of
his Accounts before such break except, that, in the case of an Employee
who has five or more consecutive Breaks in Service, all Service after
such breaks shall not be considered in computing Service for purposes
of determining the Employee's vested portion of his Accounts that
accrued before such breaks. Separate accounts will be maintained for
the Employee's pre-Break and post-Break Employer-derived accrued benefit.
Both accounts will share in the earnings and losses of the Fund.
16.04 No amendment to the vesting schedule as set forth above or in
any prior vesting schedule under the Plan shall deprive a Member of his
non-forfeitable rights to benefits accrued to the date of the
amendment. Further, if a vesting schedule of the Plan is amended, or if
the Plan is amended in any way that directly or indirectly affects
the computation of a Member's non-forfeitable rights to benefits, or if
the Plan is deemed amended by an automatic change to or from a
top-heavy vesting schedule, each Member with at least five Years of
Service with the Employer may elect, within a reasonable period after
the adoption of the amendment, to have his non-forfeitable percentage
computed under the Plan without regard to such amendment. The period
during which the election may be made shall commence with the date of
the amendment is adopted and shall end on the later of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective;
or
(iii) 60 days after the Member is issued written notice of the
amendment by the Employer or plan administrator.
16.05 If a distribution is made at a time when a Member has
a nonforfeitable right to less than 100 percent of the account balance
derived from Employer contributions and the Member may increase
the nonforfeitable percentage in the account: (1) a separate account shall
be established for the Member's interest in the Plan as of the time of
the distribution, and (2) at any relevant time, the Member's
nonforfeitable portion of the separate account will be equal to an
amount ("x") determined by the formula: x = P(AB + (R x D)) - (R x D).
For purposes of applying the formula: P is the nonforfeitable percentage
at the relevant time; AB is the account balance at the relevant time; R is
the ratio of the account balance at the relevant time to the account
balance after distribution; and D is the amount of the distribution.
16.06 Forfeitures
Any balance in the Accounts of a Member who has separated from
service to which he is not entitled under Article IV shall be subject
to forfeiture and held in a separate account, administered by the
Trustees, and treated as though it were a Member's Regular Account. If
a Member who has separated from service as provided in Section 5.03
is subsequently rehired without incurring five consecutive Breaks in
Service, then such amount shall be restored in such Member's Regular
Account and shall vest in accordance with Article IV, but if such
Member incurs five consecutive Breaks in Service, then the amounts held in
the separate account shall be forfeited in the Plan Year in which such
fifth consecutive Break in Service occurs. No forfeitures will occur
solely as a result of a Member's withdrawal of contributions to his
Voluntary Account. The amounts forfeited shall be allocated to the
Accounts of other Members in direct proportion to their respective
Compensation for the Plan Year.
ARTICLE XVII. DISTRIBUTIONS
17.01 Applicability. This Article applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the plan to
the contrary that would otherwise limit a distributee's election under
this Article, 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.
17.02 Definitions.
(a) 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 includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
(b) 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.
(c) 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.
(d) Direct rollover: A direct rollover is a payment
by the plan to the eligible retirement plan specified by the
distributee.
IN WITNESS WHEREOF, the parties hereto have signed this Trust
Agreement, to be effective as of January 1, 1987.
WITNESS:
CONSUMERS WATER COMPANY
/s/ Lorraine M. Libby By /s/ John van C. Parker
____________________________ __________________________
Its President
/s/ Lorraine M. Libby By /s/ Brian R. Mullany
____________________________ ___________________________
Brian R. Mullany, Trustee
/s/ Lorraine M. Libby By /s/ John van C. Parker
____________________________ ___________________________
John van C. Parker, Trustee
/s/ Lorraine M. Libby By /s/ Robert W. Phelps
____________________________ ____________________________
Robert W. Phelps, Trustee
Incorporates Amendments One through Six, effective January 1, 1987;
January 1, 1988; January 1, 1988; January 1, 1990; January 1, 1993;
and January 1, 1997.
EXHIBIT 5.1
DRUMMOND WOODSUM & MACMAHON
ATTORNEYS AT LAW
245 COMMERCIAL STREET
P.O. BOX 9781
PORTLAND, MAINE 04104-5081
(207) 772-1941
FAX (207) 772-3627
January 15, 1997
Consumers Water Company
Three Canal Plaza
Portland, ME 04101
RE: Registration Statement on Form S-8
Ladies and Gentlemen:
We are familiar with the proceedings taken and proposed to be taken
by Consumers Water Company, a Maine corporation (hereinafter called
the "Company"), to authorize and issue previously unissued shares pursuant
to its Employees 401(k) Savings Plan and Trust (the "Plan"), all as set
forth in its Registration Statement on Form S-8 filed by the Company
pursuant to the Securities Act of 1933, as amended, to which this opinion
is an exhibit and in the prospectus constituting a part of such
Registration Statement.
We have examined the restated Articles of Incorporation and Bylaws of
the Company and all amendments thereto and are familiar with the laws of
the State of Maine under which the Company is incorporated and exists.
We have also examined the corporate proceedings relating to the
authentication and issuance of previously unissued common shares of
the Company and have made such further examination and inquiries as we
deemed necessary for the purposes of this opinion.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the State of Maine.
2. Previously unissued common shares issuable pursuant to the Plan,
when issued, will have been duly issued and will be fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-mentioned Registration Statement.
Very truly yours,
/s/ Drummond Woodsum
& MacMahon
EXHIBIT 5.2
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
DISTRICT DIRECTOR
G.P.O. BOX 1680
BROOKLYN, NY 11202
Date: 03 MAY 1995
CONSUMERS WATER COMPANY
C/O MR. BRIAN MULLANY
VICE PRESIDENT & SECRETARY
THREE CANAL PLAZA
PORTLAND, ME 04112
Employer Identification Number:
01-0049450
File Folder Number:
010000134
Person to Contact:
SHARON PETSHAFT
Contact Telephone Number:
(203) 773-2759
Plan Name:
CONSUMERS WATER COMPANY EMPLOYEES
401K SAVINGS PLAN AND TRUST
Plan Number: 003
Dear Applicant:
We have made a favorable determination on your plan, identified
above, based on the information supplied. Please keep this letter in
your permanent records.
Continued qualification of the plan under its present form will
depend on its effect in operation. (See section 1.401-1(b)(3) of the
Income Tax Regulations.) We will review the status of the plan in
operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the
qualified status of your employee retirement plan, and provides
information on the reporting requirements for your plan. It also
describes some events that automatically nullify it. It is very
important that you read the publication.
This letter relates only to the status of your plan under the
Internal Revenue Code. It is not a determination regarding the
effect of other federal or local statutes.
This determination is subject to your adoption of the proposed
amendments submitted in your letter dated December 15, 1994. The
proposed amendments should be adopted on or before the date prescribed
by the regulations under Code section 401(b).
CONSUMERS WATER COMPANY
This determination letter is applicable for the amendment(s)
adopted on December 22, 1989.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise
specified in this letter.
This plan satisfies the nondiscriminatory current availability
requirements of section 1.401(a)(4)-4(b) of the regulations with respect
to those benefits, rights, and features that are currently available to
all employees in the plan's coverage group. For this purpose, the
plan's coverage group consists of those employees treated as currently
benefiting for purposes of demonstrating that the plan satisfies the
minimum coverage requirements of section 410(b) of the Code.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act, Pub. L. 103-465.
The information on the enclosed addendum is an integral part of
this determination. Please be sure to read and keep it with this letter.
We have sent a copy of this letter to your representative as
indicated in the power of attorney.
If you have questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
/s/ Herbert J. Huff
Herbert J. Huff
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
for Employee Benefit Plans
Addendum
CONSUMERS WATER COMPANY
This determination is applicable to the controlled group of
corporations as indicated in your letter dated December 15, 1994.
"This letter may not be relied upon with respect to whether the
plan satisfies the qualification requirements as amended by the
Uruguay Round Agreements Act, Pub. L. 103-465."
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-8 Registration Statement of our
reports dated February 7, 1996, included in Consumers Water Company's
Annual Report Form 10-K for the year ended December 31, 1995 and
August 15, 1996 included in Consumers Water Company Employees 401(k)
Savings Plan and Trust's Form 11-K for the year ended Deember 31, 1995,
and to all references to our Firm included in or made part of this
Registration Statement.
/s/ Arthur Andersen LLP
Boston Massachusetts,
January 15, 1997
