March 18, 1998
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of
Connecticut Water Service, Inc., scheduled to be held on April 24, 1998, at
the Company's General Offices, 93 West Main Street, Clinton, Connecticut
commencing at 2:00 P.M. If you plan to attend the meeting, please call 1-
800-428-3985, Ext. 305 and leave your name, address and phone number.
Directions to the meeting will be mailed to you. Your Board of Directors
and management look forward to personally greeting those stockholders able
to attend.
At the Meeting, you will be asked to elect four directors, to appoint
independent auditors for the calendar year ending December 31, 1998, to
adopt proposals to amend certain provisions of the Amended and Restated
Certificate of Incorporation and Bylaws of the Company, and to transact
such other business as may properly be brought before the Meeting.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the stockholders. Important information is contained
in the accompanying proxy statement which you are urged to read carefully.
It is important that your shares are represented and voted at the
Meeting, regardless of the number you own and whether or not you plan to
attend. Accordingly, you are requested to sign, date, and return the
enclosed proxy at your earliest convenience.
In our continuing effort to provide stockholders with information on the
Company's operations, we will provide a tour of the Customer Service and
Engineering departments and conduct a water-main tapping and leak detection
demonstration after the meeting. If you are planning to attend the tour
and demonstration, please indicate your attendance when you call the above
toll-free number.
Your interest and participation in the affairs of the Company are
sincerely appreciated.
Sincerely,
Marshall T. Chiaraluce
President and
Chief Executive Officer
CNSCM/PS/97
<PAGE>
CONNECTICUT WATER SERVICE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
THE COMPANY'S CORPORATE OFFICES
93 WEST MAIN STREET
CLINTON, CONNECTICUT
Notice is hereby given that the Annual Meeting of Stockholders of
Connecticut Water Service, Inc. (the "Company") will be held on April 24, 1998
at 2:00 P.M. at the Company's Corporate Offices, 93 West Main Street,
Clinton, Connecticut, for the following purposes:
1. To elect four directors for three-year terms;
2. To appoint Arthur Andersen LLP, independent public accountants, as
independent auditors for the Company for the calendar year ending
December 31, 1998;
3. To adopt a proposal to make various conforming changes and a
corrective change to the Certificate of Incorporation and Bylaws
of the Company.
4. To adopt a proposal to amend the Certificate of Incorporation of the
Company to enhance the Company's ability to indemnify its directors,
officers, employees and agents.
5. To adopt a proposal to amend the Certificate of Incorporation of the
Company to require that directors' resignations be submitted in
writing.
6. To transact such other business as may properly come before said
meeting or any adjournment thereof.
Only holders of the Company's Common Stock and its Cumulative Preferred
Stock - Series A of record at the close of business on February 27, 1998 are
entitled to notice of and to vote at this meeting or any adjournment thereof.
All stockholders who find it convenient to do so are urged to attend the
meeting in person.
By Order of the Board of Directors,
Vincent F. Susco, Jr., Secretary
March 18, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE, AND SIGN
THE ENCLOSED PROXY AND RETURN IT TO THE COMPANY IN THE ENVELOPE ACCOMPANYING
THIS NOTICE. IF YOU ARE PRESENT AT THE MEETING, YOU MAY VOTE IN PERSON EVEN
THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE>
CONNECTICUT WATER SERVICE, INC. PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 24, 1998
The accompanying proxy is solicited by the Board of Directors of the Company
for use at the Annual Meeting of Stockholders to be held at the Company's
Corporate Offices, 93 West Main Street, Clinton, Connecticut, on April 24, 1998
at 2:00 P.M. and at any adjournment of the meeting.
Only holders of the Company's Common Stock and its Cumulative Preferred
Stock - Series A of record at the close of business on February 27, 1998, are
entitled to notice of and to vote at the meeting. On that date, the Company
had outstanding 3,018,188 shares of Common Stock, 15,000 shares of Cumulative
Preferred Stock-Series A, $20 par value, and 29,499 shares of $.90 Cumulative
Preferred Stock, $16 par value. Each share of Common Stock is entitled to
three votes and each share of Cumulative Preferred Stock-Series A is entitled
to one vote on all matters coming before the meeting. The holders of shares of
$.90 Cumulative Preferred Stock, $16 par value, have no general voting rights.
The cost of solicitation of proxies will be borne by the Company. In
addition to this solicitation by mail being made initially on or about March
18, 1998, officers and regular employees of the Company may make solicitations
by telephone, telegraph, mail, or personal interviews, and arrangements may be
made with banks, brokerage firms, and others to forward proxy material to their
principals. The Company has retained Morrow & Company, Inc., to assist in the
solicitation of proxies at an estimated cost of $12,000 including expenses,
which will be paid by the Company.
All stockholders unable to attend the meeting in person are urged to send in
proxies to assure a good representation at the meeting. A proxy may be revoked
at any time before it is voted by a writing filed with the Secretary of the
Company, by a duly executed proxy bearing a later date or by voting in person
at the meeting.
PROPOSAL (1) - ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a Board of not less
than nine nor more than fifteen directors, the exact number of directorships to
be determined from time to time by resolution adopted by the affirmative vote
of a majority of the Board. The directors are divided into three classes as
nearly equal in number as possible with members of each class to hold office
until successors are elected and qualified. Each class is to be elected for a
three-year term at successive annual meetings. As a result, only one class of
directors is to be elected at each Annual Meeting.
The Board of Directors has fixed the number of directors at 12, and has
selected the four nominees listed below for election to three-year terms
expiring in 2001. Of the Company's eight directors remaining in office, the
terms of four directors expire in 1999 and the terms of four directors expire
in 2000. Each nominee is presently a director of the Company except Mr.
Gooley. Messrs. Guillaume and Lichtenfels have reached the Board's age limits
and are not standing for re-election.
Unless otherwise directed, it is intended that the enclosed proxy will be
voted for the election of Marshall T. Chiaraluce, Charles E. Gooley, Marcia L.
Hincks, and Robert F. Neal. In case any nominee is unable or declines to
serve, the persons named in the proxy may vote for some other person or
persons. Under Connecticut law, directors are elected by a plurality of the
votes cast. Votes withheld and broker non-votes are counted for purposes of
determining whether a quorum is present at the meeting but are not considered
as voted in the election of directors. Broker non votes and abstentions are,
therefore , not counted as votes cast and have no effect.
<TABLE>
<CAPTION>
Common Stock
Committees Beneficially PERCENT
Presently Principal Occupation Director Owned as of OF
NAME SERVING (1) AGE AND DIRECTORSHIPS SINCE FEB. 27, 1998 CLASS (2)
CLASS I:
NOMINEES FOR ELECTION AT THIS MEETING FOR TERMS EXPIRING
IN 2001
<S> <C> <C> <C> <C> <C> <C>
Marshall T. 55 President and Chief Executive 1992 3,519(3) .12
Chiaraluce Officer of the Company.
Charles E. Gooley 44 President, Yankee Gas - 100 <.01
Services Company.
Marcia L. Hincks 1,4,5 62 Retired; formerly Vice 1983 318 .01
President and Senior Counsel,
Aetna Life & Casualty.
Robert F. Neal 3,4,5 63 Retired; formerly Senior Vice 1990 350 .01
President - Network Services;
Southern New England
Telecommunications
Corporation.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS II:
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1999
<S> <C> <C> <C> <C> <C> <C>
Harold E. Bigler, 2,3,7 66 Chairman, Bigler Investment 1983 2,000 .07
Jr. Management Company, Inc.
Astrid T. Hanzalek 1,2,5,6,7 70 Consultant - water resources 1985 776 .03
and various public policy
issues (self-employed);
formerly Connecticut State
Representative.
Frederick E. 5,6,7 71 Chairman, State of 1983 225 <.01
Hennick Connecticut Freedom of
Information Commission;
retired, formerly President
and Publisher, Naugatuck
Daily News; Director,
Naugatuck Valley Savings and
Loan, Inc.
Donald B. Wilbur 4,7 55 Plant Manager, Unilever Home 1993 349 .01
and Personal Care (personal
products manufacturing);
Director, Middlesex Hospital;
Director, Liberty Bank.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Committees Beneficially Percent
Presently Principal Occupation Director Owned as of of
NAME SERVING (1) AGE AND DIRECTORSHIPS SINCE FEB. 27, 1998 CLASS (2)
CLASS III
DIRECTORS WHOSE TERMS CONTINUE UNTIL 2000
<S> <C> <C> <C> <C> <C> <C>
Francis E. Baker 2,4,6 68 Chairman and Director, 1973(4) 125 <.01
Andersen Group, Inc.
(electronic and medical
manufacturing and services);
Chairman and Director,
Digital Graphix, Inc.
Rudolph E. 1,5 69 Real Estate Agent, D. W. 1994 300 <.01
Luginbuhl Fish, Better Homes;
Corporator, The Savings Bank
of Rockville.
Harvey G. Moger 1,2,3,7 70 President, GBAJ Associates 1981 2,345 .08
(commercial real estate
financial consultant);
Director, Ensign Bickford
Realty Corporation.
Warren C. Packard 1,3 63 Former First Selectman, Town 1991 250 <.01
of Suffield; formerly
President and Chief Executive
Officer, The Wiremold Company
(manufacturing); Director,
The Wiremold Company.
</TABLE>
__________________________
(1)1. AUDIT COMMITTEE
2. FINANCE COMMITTEE
3. PENSION TRUST COMMITTEE
4. COMPENSATION COMMITTEE
5. PUBLIC INFORMATION COMMITTEE
6. COMMITTEE ON DIRECTORS
7. STRATEGIC PLANNING COMMITTEE
(2)The percentages have been rounded to the nearest one hundredth of one
percent. As of February 27 1998, executive officers and directors of the
Company as a group owned 22,699 shares (.75%) of the Common Stock of the
Company. No directors or officers own any shares of the Company's
Cumulative Preferred Stock.
(3)Includes both shares actually EARNED by the officer under the Company's pre-
1998 Performance Stock Programs and AWARDED under the 1998 Performance Stock
Program. Does not include shares deferred nor their earned dividend
equivalents under the Program. See Note 1 on page 7.
(4)The Connecticut Water Company is a subsidiary of the Company. The
affiliation of the Company (then Suburban Water Service, Inc.) and The
Connecticut Water Company was effected on April 10, 1975. Prior to the
affiliation, Mr. Baker was a director of The Connecticut Water Company. The
Company's Board of Directors and the Board of Directors of The Connecticut
Water Company are now identical.
With the exception of Mr. Packard whose term as First Selectman of the Town
of Suffield expired on November 21, 1995, and Mr. Neal who retired from
Southern New England Telecommunications Company in 1994, each of the nominees
listed above has had the same employment for more than the past five years
either in the position or positions indicated or in other similar or executive
capacities with the same company or a predecessor thereof.
The Company's Board of Directors met five times during 1997. In addition,
the Company has a number of committees, including an Audit Committee, a Finance
Committee, a Pension Trust Committee, a Compensation Committee, a Public
Information Committee, a Committee on Directors and a Strategic Planning
Committee which meet periodically during the year. The Audit Committee,
composed of Mmes. Hanzalek and Hincks and Messrs. Luginbuhl, Moger and Packard,
reviews the activities, procedures and recommendations of the independent
auditors of the Company and The Connecticut Water Company and recommends
annually the appointment of independent auditors for the coming year. The
Committee met twice during 1997. The Finance Committee, composed of Ms.
Hanzalek and Messrs. Baker, Bigler and Moger, recommends and advises the Board
of Directors on financial policy and issuance of securities. The Committee met
twice in 1997. The Pension Trust Committee, composed of Messrs. Bigler, Moger,
Neal and Packard, reviews the Pension Trust Fund of The Connecticut Water
Company Employee Retirement Fund and the VEBA Trust Fund for retiree medical
benefits, reviews and determines actuarial policies and investment guidelines,
and selects the investment managers. The Committee met four times in 1997.
The Compensation Committee, composed of Ms. Hincks and Messrs. Baker, Neal,
Lichtenfels and Wilbur, establishes compensation levels for officers of The
Connecticut Water Company and makes recommendations to the full Board regarding
officer succession. The Committee met twice during 1997. The Public
Information Committee, consisting of Mmes. Hanzalek and Hincks and Messrs.
Hennick, Neal and Luginbuhl, advises management on policies for communicating
Company information to the general public, government officials, investors and
other interested parties. The Committee met twice in 1997. The Committee on
Directors, consisting of Ms. Hanzalek, Messrs. Baker, Hennick and Lichtenfels
recommends candidates for nomination as directors to the Board. The Committee
met twice in 1997. The Strategic Planning Committee, consisting of Ms.
Hanzalek and Messrs. Bigler, Hennick, Lichtenfels, Moger, and Wilbur, oversees
the preparation and implementation of the Company's Strategic Plan. The
Committee met once in 1997. All of the Company's directors, except Warren C.
Packard, attended at least 75% of the aggregate number of meetings in 1997 of
the Board and committees on which they serve.
Pursuant to the Company's Bylaws, nominations for directors may be made by
any stockholder entitled to vote for the election of directors at the meeting
who complies with the following procedures. A nomination by a stockholder
shall be made only if such stockholder has given proper and timely notice in
writing of such stockholder's intent to make such nomination to the Secretary
of the Company. To be timely a stockholder's notice must be delivered to or
mailed and received by the Secretary of the Company at the General Offices of
the Company not later than (i) with respect to an election to be held at an
annual meeting of stockholders, the close of business on a day which is not
less than 120 days prior to the anniversary date of the immediately preceding
annual meeting, and (ii) with respect to an election to be held at a special
meeting of stockholders called for the election of directors, the close of
business on the tenth day following the date on which notice of such meeting is
first mailed to stockholders. Each such notice must set forth: (a) the name
and address of the person or persons to be nominated; (b) the name and address,
as they appear on the Company's books, of the stockholder making such
nomination; (c) the class and number of shares of the Company which are
beneficially owned by the stockholder; (d) a representation that the
stockholder is a holder of record of stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (e) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (f) such other
information regarding each nominee proposed by the stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (g) the consent of each nominee
to serve as a director of the Company if so elected. Any such notice of
nominations for consideration at the 1999 Annual Meeting must be received
by the
Company's Secretary by the close of business on December 24, 1998.
REPORTS UNDER SECTION 16
Under Section 16 of the Securities Exchange Act of 1934, directors, officers
and certain beneficial owners of the Company's equity securities are required
to file reports of their transactions in the Company's equity securities with
the Securities and Exchange Commission on specified due dates. In 1997, all
directors and beneficial owners of the Company's equity securities so required,
filed such reports on or before the specified due dates, except that reports of
sales by Messrs. Bancroft, Guillaume, O'Neill, Benoit, Kells and Susco in
March, 1997 of certain shares received pursuant to the Company's Performance
Stock Program were not timely filed. In making this statement, the Company
has relied on the written representations of its directors and officers and its
five percent holders and copies of the reports that they have filed with the
Securities and Exchange Commission.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following tabulation sets forth the total compensation paid by the
Company and The Connecticut Water Company during 1997 , 1996 and 1995 to each
of the executive officers, including the Chief Executive Officer of the
Company, receiving more than $100,000 aggregate compensation in 1997. The
Company has no employees. All officers are employees of The Connecticut Water
Company and all compensation is paid by The Connecticut Water Company.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
Name and Principal Position Annual Compensation Awards
RESTRICTED STOCK AWARDS
YEAR SALARY($) ($)(1)
<S> <C> <C> <C>
Marshall T. Chiaraluce, President and Chief Exec- 1997 222,722 52,320
utive Officer 1996 212,122 28,705
1995 200,000 47,091
David C. Benoit, Vice President Finance and 1997 118,000 17,888
Accounting and Treasurer 1996 105,000 12,346
1995 - -
James R. McQueen, Vice President Engineering and 1997 114,000 14,272
Planning 1996 101,612 8,109
1995 94,500 12,644
Terrance P. O'Neill, Vice President of Operations 1997 110,000 14,784
1996 94,562 8,109
1995 87,000 15,151
</TABLE>
1) The value of the full number of shares of restricted stock initially
allocated to Messrs. Chiaraluce, Benoit, McQueen and O'Neill under the
Company's Stock Program was $50,370, $0, $14,212 and $14,212 respectively in
1995; and $52,111, $14,709, $18,907 and $18,907 respectively in 1996. In
1997, the value of the full number of shares of restricted stock initially
allocated to Messrs. Chiaraluce, Benoit, McQueen and O'Neill under the
Company's Performance Stock Program were $54,196, $19,664, $15,299, and $15,
299 respectively. The aggregate number of shares of restricted stock
actually EARNED by Messrs. Chiaraluce, Benoit, McQueen and O'Neill, based
upon the actual attainment of 1995 and 1996 criteria were 1,697, 0, 464 and
556 respectively in 1995; and 1,023, 440, 289 and 289 respectively in 1996.
In 1997, the aggregate number of shares of restricted stock actually EARNED
by Messrs. Chiaraluce, Benoit, McQueen, and O'Neill based upon the actual
attainment of 1997 performance criteria were 1,635, 559, 446 and 462
respectively. The values shown in the table above are the shares actually
EARNED in said year, valued on the date earned which was February 14, 1996
for the 1995 plan, February 14, 1997 for the 1996 plan, and February 13,
1998 for the 1997 plan. Pursuant to the Company's Performance Stock
Program, Messrs. Chiaraluce, Benoit, McQueen and O'Neill elected to defer
100%, 50%, 70% and 0% of their 1997 awards respectively.
RETIREMENT BENEFITS
Officers and employees of the Company and The Connecticut Water Company are
entitled to receive retirement benefits under a pension plan, and executive
officers are entitled to receive benefits under supplemental executive
retirement agreements, which provide for defined benefits in the event of
retirement at a specified age and after a specified number of years of service
based on highest average annual compensation. Examples of annual full straight
life annuity allowances payable under the pension plan and supplemental
agreements to employees and executive officers are set forth in the following
table. As of December 31, 1997, the estimated credited years of service for
Messrs. Chiaraluce, Benoit, McQueen and O'Neill are 6, 2, 32, and 17
respectively. The table assumes retirement occurs at age 65 which for Messrs.
Chiaraluce, Benoit, McQueen and O'Neill would occur with 16, 26, 42, and 39
years, respectively, of credited service. Highest average annual compensation
is the highest average regular basic compensation received by an individual
from the Company and The Connecticut Water Company during any 60 consecutive
months.
HIGHEST AVERAGE ANNUAL
COMPENSATION DURING 5 OR MORE YEARS
60 CONSECUTIVE MONTHS OF SERVICE *
$100,000 $60,000
$125,000 $75,000
$150,000 $90,000
*In the case of each of Mr. Chiaraluce and Mr. Benoit, the amounts are
reduced by benefits payable under the retirement plan of a prior employer.
DIRECTOR COMPENSATION
Since the Boards of Directors of the Company and The Connecticut Water
Company are identical, regular meetings of each are generally held on the same
day. Directors of the Company receive $250 for each regular meeting of the
Board of Directors of the Company and $350 for each special Board meeting and
each committee meeting of the Company which they attend. In addition,
Directors of The Connecticut Water Company receive an annual retainer of
$4,000, $450 for each regular or special meeting of the Board of Directors, and
$400 for each committee meeting which they attend. Directors who are salaried
officers receive the same retainer and meeting fees as other directors. These
amounts have been included in the Summary Compensation Table on Page 5.
Directors who are not officers are not entitled to retirement benefits from the
Company or The Connecticut Water Company.
Pursuant to a Directors Deferred Compensation Plan, the Directors of the
Company and The Connecticut Water Company may elect to defer receipt of all or
a specified portion of the compensation payable to them for services as
Directors until after retiring as Directors. Any amounts so deferred are
credited to accounts maintained for each participating Director, and interest
at an annual rate of 10.74% is currently credited monthly to all deferred
amounts. Distribution of amounts deferred and accumulated interest may be
made, at the election of each participating Director, in a lump sum or in
annual installments over a period of years specified by the Director, such
distribution to commence in the year following the year in which the individual
ceases to be a Director. In 1997, five Directors elected to participate in the
Plan.
COMPENSATION COMMITTEE REPORT
The Committee is responsible for making recommendations to the Board on
executive compensation and administering the Company's Performance Stock
Program (the "Program").
EXECUTIVE COMPENSATION PRINCIPLES
The Company's executive compensation plan is designed to align executive
compensation with the Company's and/or The Connecticut Water Company's
strategic business planning which includes management initiatives and business
financial performance. Through this process the Committee has established a
program to:
o Attract and retain key executives critical to the long-term success
of the Company.
o Reward executives for the accomplishment of strategic goals which
reflect customer service and satisfaction as well as the enhancement of
stockholder value.
o Integrate compensation programs with both The Connecticut Water
Company's annual performance review and the Company's and/or The
Connecticut Water Company's strategic planning and measuring processes.
o Support a performance-oriented environment that rewards performance
with respect to overall performance goals and performance on individual
goals for each participant in the plan.
EXECUTIVE COMPENSATION PROGRAM
The total compensation program consists of both cash and equity based
compensation. The annual compensation consists of a base salary and any Common
Stock awarded through the Program. The Committee determines a salary range and
a level of salary for executive officers. The Committee determines the salary
or salary range based upon competitive norms from periodic studies of a peer
group of other water companies. Actual salary changes are based upon such norms
and upon performance. Additional incentives are provided through the
Program{1}. The Committee reviews and approves the participation of executive
officers of The Connecticut Water Company under the Program. The Committee
also approves the award value each year as a percentage of base salary and the
basis for judging performance over the following year. Awards are currently
based on whether the Company and/or The Connecticut Water Company has met
certain goals based on objective performance criteria and attainment by
participants of individual goals. The Committee determines what these criteria
and goals are each year. The Criteria for the 1997 awards were based on The
Connecticut Water Company's customer value rating and water quality measures,
the Company's return on equity, other service and financial measures, and
specific individual performance goals. The Committee has approved and
implemented an award program for 1998 based upon similar criteria and goals.
Executive officers may also participate in the Company's Savings and
Investment 401(k) Plan and other benefit plans generally available to all
levels of salaried employees. Also, executive officers may elect to defer
compensation under a non-qualified salary deferral plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee determined the compensation for 1997 of Mr. Chiaraluce, the
Chief Executive Officer ("CEO"), based upon a number of factors and criteria,
including a review of the salaries of Chief Executive Officers for similar
companies of comparable size and capitalization and a review by the Committee
of the CEO's performance. The Committee approved the CEO's participation in
the Program for 1997. The Committee noted the continued efforts of Mr.
Chiaraluce to avoid requesting a general rate increase for 7 years while
achieving consistently higher earnings and increasing shareholder value during
his 6 years as CEO. The awarding of 86% (1,635 of 1,902 shares originally
allocated) of the Common Stock allocated to Mr. Chiaraluce in 1997 was based
upon all targeted individual goals being met and the majority of corporate
performance and financial targets being met.
COMPENSATION COMMITTEE
William C. Lichtenfels, Chairman
Francis E. Baker, Jr.
Marcia L. Hincks
Robert F. Neal
Donald B. Wilbur
**FOOTNOTES**
{1} The Program provides for an aggregate maximum of up to 50,000 shares
of Common Stock of the Company to be issued as awards of restricted stock to
eligible employees. An award of a share of restricted stock is an award to a
participant of a share of the Common Stock of the Company generally conditioned
upon the attainment of performance goals established by the Committee for the
performance period to which the award relates and the continued employment of
the participant with the Company or any majority-owned subsidiary of the
Company through the end of the performance period. During the performance
period, the participant has all of the rights of a stockholder of the Company,
including the right to receive dividends, except that the participant does not
have custody of the shares of Common Stock nor the right to transfer ownership
of the shares during the performance period. Commencing with 1997 awards, the
Program has been amended to permit participants to defer income taxation of all
or a portion of such restricted stock awards by electing instead to receive
"performance shares" at the end of a chosen deferral period. Until the end of
the deferral period, a participant holding performance shares has no rights as
a stockholder of the Company. However, dividend equivalents are credited to
such participant as additional performance shares.
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
stockholder return for each of the years 1992 - 1997 on the Company's Common
Stock, based on the market price of the Common Stock and assuming
reinvestment of dividends, with the cumulative total stockholder return of
companies on the Standard & Poor's 500 Stock Index and the Standard & Poor's
Utilities Index.
*********
********
*** GRAPHIC CHART appears here in hardcopy document as described above
*** using the values summarized in the table below.
*******
********
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
CT Water Service, Inc. $100.00 $114.11 $ 98.94 $127.66 $144.38 $170.26
S&P 500 $100.00 $110.06 $111.51 $153.39 $188.59 $251.48
S&P Utilities $100.00 $114.44 $105.33 $149.58 $154.25 $192.28
</TABLE>
<PAGE>
BENEFICIAL SHAREHOLDINGS OF CERTAIN PERSONS
The Company does not know of any beneficial owner of more than 5% of its
$.90 Cumulative Preferred Stock, $16 par value. The Company does not know of
any beneficial owner of more than 5% of its Common Stock and does not know of
any beneficial owner of more than 5% of its Cumulative Preferred Stock - Series
A, $20 par value, except as follows:
<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER Amount Beneficially Percent
Owned as of of
DECEMBER 31, 1997 CLASS
<S> <C> <C> <C>
Common Stock Dimensional Fund Advisors, Inc. 156,400 5.18%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Cumulative Preferred Stock -Series William Neal MacKenzie 1,850 12.3%
A, $20 par value 222 North Main Street
Wallingford, CT 06492
Herbert I. Johnson and 900 6.0%
Annabelle C. Johnson
35 Carter Street, Bolton, CT 06040
Shearson Lehman American Express 900 6.0%
One Western Union Int'l Plaza
New York, NY 1004-1008
Dorothy L. Bach 825 5.5%
55 Mountain Spring Road
Tolland, CT 06084
</TABLE>
(1)Information relating to such beneficial ownership is based on a statement on
Schedule 13G filed with the Securities and Exchange Commission.
CERTAIN TRANSACTIONS
During the year 1997, the law firm of Day, Berry & Howard, of which Michael
F. Halloran, Assistant Secretary of the Company and The Connecticut Water
Company, is a partner, performed certain legal services for the Company and The
Connecticut Water Company. The Company believes that the charges made by said
firm for legal services were not more than others would have charged for
similar services.
<PAGE>
PROPOSAL (2) - APPOINTMENT OF AUDITORS
Arthur Andersen LLP served as independent auditors for the Company and its
subsidiary, The Connecticut Water Company, for the calendar year ending
December 31, 1997. One or more representatives of Arthur Andersen LLP will
attend the annual meeting, with the opportunity to make a statement if they
desire to do so and to respond to appropriate questions.
It is intended that unless otherwise specified, proxies will be voted in
favor of the appointment of Arthur Andersen LLP, independent public
accountants, of Hartford, Connecticut, as independent auditors for the Company
for the calendar year ending December 31, 1998. The Company's Audit Committee
has recommended that Arthur Andersen LLP be so appointed. Arthur Andersen LLP
has no direct or indirect financial interest in the Company. Proposal (2) will
be approved if the votes cast at the meeting favoring the appointment of Arthur
Andersen LLP exceed the votes cast opposing such appointment. Broker non votes
and abstentions are not counted as votes cast and, therefore, have no
effect.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL (2).
PROPOSED AMENDMENTS TO THE COMPANY'S CERTIFICATE AND BYLAWS
PROPOSALS (3A), (3B), (4), AND (5)
General
The Board of Directors recommends that the stockholders approve certain
amendments to the Company's Amended and Restated Certificate of Incorporation
(the "Certificate") and Bylaws. The proposed amendments are contained in three
separate Proposals. Shareholders are urged to consider carefully and approve
each Proposal. Proposal (3) is divided into two sections, Proposal (3a) and
Proposal (3b). Proposal (3a) provides for various conforming changes intended
to update citations to the Connecticut General Statutes , to ensure
consistency of language throughout the Certificate, and to conform
the purposes of the Company to those approved by the Connecticut Department of
Public Utility Control (the "CDPUC") if such approval is received before April
24,1998; Proposal (3b) provides a correction to references in the
Certificate to certain voting rights of the holders of the Company's Preferred
Stock. Proposal (4) provides that the Company will indemnify directors and
officers to the fullest extent permitted by the Connecticut Business Corporation
Act (the "CBCA") and authorizes the Company to determine, on a case by case
basis, the extent of indemnification that it will provide to employees and
agents. Proposal (5) provides that directors desiring to resign from the Board
be required to submit a resignation in writing to the Board of Directors.
These proposed amendments are designed to ensure compliance with the CBCA,
provide flexibility regarding the make various nonsubstantive
modifications to the Certificate, and permit the Company to provide additional
indemnification rights to directors, officers, agents and employees of the
Company in an effort to promote management stability and security. The text of
the Company's Certificate, as proposed to be amended, is set forth in Exhibit A
to this Proxy Statement. Proposed deletions are indicated as stricken-through
and proposed additions are indicated as double-underlined. The following
description and discussion of the proposed amendments is qualified in its
entirety by reference to such exhibit.
Effective January 1, 1997, the CBCA updated the statutory framework for
stock corporations in Connecticut based on the Model Business Corporation Act
(the "MBCA"). In adopting the CBCA, Connecticut has followed the lead of a
number of states which have adopted corporation codes based on the MBCA.
Despite this new framework, the CBCA provides that certificates of
incorporation of corporations organized prior to January 1, 1997, such as the
Company, will be "grandfathered." In other words, a provision in the Company's
Certificate that was valid under the law in effect prior to January 1, 1997
will continue to be valid regardless of any differences in the CBCA. The
Company is not, therefore, required to amend the Certificate to comply with the
CBCA. However, the Proposals are recommended in order to modernize the
Company's Certificate in light of the enactment of the CBCA and to enable the
Company to attract and maintain a capable and stable management by entitling
individuals serving as directors, officers, agents and employees to certain
indemnification rights. The three Proposals are being presented separately,
and if any one of the Proposals is adopted by the stockholders, it will become
effective, regardless of whether the stockholders adopt the other Proposals.
THE BOARD OF DIRECTORS BELIEVES THAT ADOPTION OF PROPOSALS (3A),
(3B), (4), AND (5) IS IN THE BEST INTERESTS OF ALL OF THE COMPANY'S
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" ADOPTION OF THE PROPOSALS.
PROPOSAL (3A) - CONFORMING AMENDMENTS AND
PROPOSAL (3B) - CORRECTIVE AMENDMENT
GENERAL
Proposals (3a) and (3b) would amend the Company's Certificate to generally
(i) ensure consistent use of language throughout the Certificate; (ii) delete
and revise references to sections of the Connecticut General Statutes that were
repealed in connection with the enactment of the CBCA; (iii) add a provision
defining the statutory references used in the Certificate ; (iv) conform
the purposes of the Company to those approved by the CDPUC if such approval is
received before the Annual Meeting (all of the amendments referred to in
clauses (i), (ii) and (iii) hereinafter referred to as "Proposal (3a)" or the
"Conforming Amendments"); and (iv) delete each reference to "Article Fourth,
Section 5" and replace it with a reference to "Section 5 of Paragraph B of
Article Fourth" ("Proposal (3b)" or the "Corrective Amendment").
REASONS FOR THE CONFORMING AMENDMENTS AND THE CORRECTIVE AMENDMENT
The Conforming Amendments and the Corrective Amendment are designed to
ensure that the terms contained in the Certificate are consistent and to
modernize the Certificate in light of the enactment of the CBCA and the
anticipated approval of the CDBPUC . In addition, the Conforming Amendments
define the statutory references used in the Certificate to include amendments to
such statutes, thus permitting the Certificate to evolve with any changes in
such statutes.
DESCRIPTION OF THE CONFORMING AMENDMENTS AND THE CORRECTIVE AMENDMENT
CONSISTENCY OF LANGUAGE. Various changes are proposed to ensure that
references to the Company, the Certificate, and the Articles of the Certificate
are consistent throughout the Certificate.
Updated Statutory References. In connection with the enactment of the CBCA,
the provisions of the Connecticut General Statutes governing Connecticut stock
corporations prior to such enactment were repealed. Accordingly, Proposal (3a)
would delete any references to statutes that were repealed in connection with
the enactment of the CBCA and replace such references with statutory references
to the CBCA. For example, corrections are proposed to be made to Article Sixth
of the Certificate which limits the liability of the Company's directors to the
Company and the stockholders if such directors have complied with a specified
standard of care.
REFERENCES PROVISION. A new Article Eighth is proposed to be added to the
Certificate to reference the provisions of the CBCA and any subsequent
amendments thereto. This provision will eliminate the need to amend the
Certificate if any provision of the CBCA referenced therein is subsequently
amended or repealed.
PURPOSES. Article Third, Paragraph F of the Company's Certificate currently
contains a provision prohibiting the Company and its subsidiaries from engaging
in any business or activity that is not subject to regulation by the CDPUC
without the consent of the CDPUC. This provision was added to the Company's
Certificate in 1975 in connection with the Company's acquisition of The
Connecticut Water Company in response to concerns expressed by the CDPUC's
predecessor. In recent years, the CDPUC has permitted utility holding companies
(such as the Company) and their subsidiaries to engage in a broad range of
activities which are not regulated by the CDPUC. Thus, in order to provide
greater flexibility to the Company, Article Third, Paragraph F is proposed to be
deleted in the event that the CDPUC approves such deletion. An application to
the CDPUC for approval of the deletion of the provision contained in Article
Third, Paragraph F was filed on December 10, 1997 and a decision is expected in
April, 1998.
CORRECTION OF REFERENCES TO "SECTION 5 OF PARAGRAPH B OF ARTICLE FOURTH."
Proposal (3b) would replace any reference to "Article Fourth, Section 5" with a
reference to "Section 5 of Paragraph B of Article Fourth" in order to more
accurately and precisely reference the voting rights of the Company's Preferred
Stock. Similar corrective changes would also be made to the Company's Bylaws.
Proposal (3b) would not change the existing voting rights set forth in Article
Fourth.
The Conforming Amendments and the Corrective Amendment will modernize the
Company's Certificate and make it a more workable document for the
administration of the Company. By updating statutory references, the
Conforming Amendments will guide management and others to the proper statutes
governing the Company and the Certificate. In addition, the references
provision will ensure that the Company will avoid the expense of amending the
Certificate if statutory citations are later revised or repealed. Finally,
the deletion of Article Third, Paragraph F, if approved by the CDPUC, will
permit the Company and any future subsidiaries to engage in a broader range of
businesses and activities.
VOTE REQUIRED AND EFFECTIVE TIME
The affirmative vote of a majority of the voting power of the outstanding
shares of the Company's Common Stock and Cumulative Preferred Stock - Series A,
$20 par value, voting together as a single class, is required to adopt the
Conforming Amendments. Abstentions and broker non-votes will not be counted as
votes cast and will have the same effect as a vote against Proposal (3a). The
Conforming Amendments, if adopted, will become effective as of the date and
time they are filed with the Office of the Secretary of the State of the State
of Connecticut. The proposed deletion of Article Third, Paragraph F will
not, however, become effective unless and until approved by the CDPUC.
The affirmative vote of the holders of at least eighty percent (80%) of the
Company's Common Stock and Cumulative Preferred Stock - Series A, $20 par
value, voting together as a single class, is required to adopt the Corrective
Amendment. Abstentions and broker non-votes will not be counted as votes cast
and will have the same effect as a vote against Proposal (3b). The Corrective
Amendment, if adopted, will become effective as of the date and time it is
filed with the Office of the Secretary of the State of the State of
Connecticut. The proposed deletion of Article Third, Paragraph F will not,
however, become effective unless and until approved by the CDPUC.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ADOPTION OF PROPOSALS (3A) AND (3B).
PROPOSAL (4) - INDEMNIFICATION AMENDMENT
GENERAL
In recent years, lawsuits and other proceedings (including claims by
stockholders on behalf of a corporation or "derivative proceedings")
("Proceedings") directed against or involving directors or officers of publicly
held corporations have become increasingly common. Such Proceedings are
typically extremely expensive whatever their outcome. Due to the uncertainties
inherent in any litigation and particularly since questions of subjective
business judgment are usually involved, it is often prudent for corporations to
settle Proceedings in which claims against a director or officer are made.
Settlement amounts, even if not material to the corporation involved and minor
compared to the amount claimed, often exceed the financial resources of most
individual defendants. Even in Proceedings in which a director or officer is
not named as a defendant, such an individual may incur substantial expenses and
attorneys' fees if he or she becomes involved in a Proceeding as a witness or
otherwise.
At the same time that the exposure to personal liability has increased for
directors and officers, corporations have faced increasing difficulty
protecting directors and officers from the expenses and liabilities associated
with Proceedings through the purchase of directors' and officers' liability
insurance as coverage provided under such policies has diminished. Without the
assurance that directors' and officers' liability insurance will continue to
protect them financially from the expenses and liabilities associated with such
Proceedings, directors, potential candidates for director and officers must
increasingly rely upon protections offered by the corporations they serve. If
these protections are not adequate, such individuals may question whether the
risks associated with the Proceedings in which they may become involved exceed
the benefit they may realize from service to a corporation. Other
corporations, not yet including the Company, have had individuals resign or
threaten to resign from such positions because they were unwilling to risk
personal financial loss in the event the corporation failed to provide adequate
indemnification protection. The adequacy of a corporation's protection of its
directors and officers is measured, in part, by the relative certainty that
indemnification will be made promptly and without the need to resort to
additional time-consuming, and often costly, Proceedings.
Proposal (4) would amend the Company's Certificate (the "Indemnification
Amendment") generally to require the Company to indemnify its directors and
officers who are made parties to a Proceeding because he or she is or was a
director or officer of the Company against liability so long as the director or
officer satisfied a statutorily required standard of care. In addition, the
Indemnification Amendment would allow the Company to provide officers with
additional indemnification consistent with the CBCA. Finally, with respect to
indemnification of employees and agents, the Indemnification Amendment would
provide the Company with flexibility to determine such indemnification rights
on a case by case basis.
REASONS FOR THE INDEMNIFICATION AMENDMENT
Prior to the enactment of the CBCA, indemnification of directors, officers,
employees and agents was both mandatory and exclusive. The Connecticut Stock
Corporation Act (the "CSCA"), which was in effect prior to January 1, 1997,
required corporations to provide the indemnification it authorized, but not
more or less. In addition, the CSCA stated that no action to indemnify was
valid unless consistent therewith. The CBCA, by contrast, takes a permissive
approach to indemnification, allowing corporations to expand or limit
indemnification in their certificates of incorporation.
Pursuant to the CBCA, in the absence of a provision in its certificate of
incorporation, a corporation organized prior to January 1, 1997, such as the
Company, is required to indemnify its directors, officers, agents and employees
in a Proceeding if he or she (a) conducted himself or herself in good faith and
(b) reasonably believed (i) when acting in his or her official capacity that
the conduct was in the corporation's best interests and (ii) in all other cases
that the conduct was not opposed to its best interests. For criminal cases,
the director, officer, employee or agent must also have had no reasonable cause
to believe his or her conduct was unlawful.
The CBCA, however, permits a corporation to provide enhanced indemnification
rights by adding a provision to its certificate of incorporation that would
permit or require it to indemnify a director so long as his or her conduct met
the standards described below. Such indemnification may also be extended to
officers to the same extent as it is extended to directors. In addition, the
CBCA permits a corporation to provide even greater indemnification to officers,
employees and agents, so long as such indemnification is consistent with public
policy.
The Company's Certificate is proposed to be amended to provide such enhanced
indemnification rights and to expand the situations in which the Company will
indemnify its directors and officers in order to provide its directors and
officers with the greatest protection allowed by law. Such enhanced protection
is expected to assist the Company in attracting and maintaining a capable and
stable management. In addition, the Indemnification Amendment would provide
the Company with greater flexibility with respect to the indemnification of
employees and agents who are not officers and directors. The Indemnification
Amendment would allow the Company to determine the indemnification rights of
such individuals on a case by case basis, on such terms and conditions as may
be established by the Board of Directors.
DESCRIPTION OF THE INDEMNIFICATION AMENDMENT
The Indemnification Amendment, included as proposed Article Seventh of the
Company's Certificate as set forth in Exhibit A, implements the enhanced
indemnification protections authorized by the CBCA. If Proposal (4) is
adopted, the Indemnification Amendment will replace, for directors, officers,
employees and agents, the indemnification provisions currently contained in
Article VIII of the Company's Bylaws (the "Current Indemnification Bylaw").
Prior to the adoption of the CBCA, the CSCA set out the permissible scope of
indemnification by Connecticut corporations for directors, officers, employees
and agents (each an "eligible indemnitee"). The Current Indemnification Bylaw
provided that the Company would, to the fullest extent permitted by and in
accordance with the CSCA, indemnify each such individual entitled to
indemnification under the CSCA. Under the CSCA, an eligible indemnitee could
be indemnified only if (a) he or she was successful on the merits of a
Proceeding in respect of which indemnification was sought or (b) a
determination was made by a quorum of disinterested directors, by independent
legal counsel or by the shareholders that the eligible indemnitee had acted in
good faith and in a manner he or she reasonably believed to be in the best
interests of the corporation and, with respect to any criminal Proceeding, had
no reasonable cause to believe his or her conduct was unlawful. Corporations
were also permitted to advance expenses to eligible indemnitees provided the
indemnitee agreed to repay such amount unless it were ultimately determined
that the individual was entitled to indemnification.
In the case of suits brought by the corporation or derivative actions, the
CSCA contained significant restrictions on the scope of indemnification.
First, the CSCA did not permit indemnification for amounts paid to the
corporation, to a plaintiff or to counsel for a plaintiff in settling or
otherwise disposing of a Proceeding, with or without court approval. Second,
the CSCA did not permit indemnification for expenses incurred in defending a
Proceeding which is settled or otherwise disposed of without court approval.
The Indemnification Amendment requires the Company, to the fullest extent
permitted by the CBCA, to indemnify any person who is or was a director or
officer of the Company and permits it to provide additional indemnification to
officers, consistent with the CBCA. With respect to employees and agents of
the Company, the Indemnification Amendment permits the Board of Directors to
determine the terms and conditions of such indemnification. The Certificate
does not presently contain an express statement of the Company's authority to
indemnify such individuals.
The Indemnification Amendment is intended to implement for directors and
officers specific changes in the Connecticut law regarding indemnification that
were effected by the CBCA. In doing so, the Indemnification Amendment would
significantly broaden the rights of the Company's directors and officers to
indemnification from those contained in the Current Indemnification Bylaw as
provided by the CSCA. Under the Indemnification Amendment, the right to be
indemnified "to the fullest extent permitted by law" would mean that a director
would be indemnified against expenses and liabilities incurred in connection
with any Proceeding so long as his or her conduct did not (i) involve a knowing
and culpable violation of law by the director, (ii) enable the director or an
associate, as defined in Section 33-840 of the Connecticut General Statutes, to
receive an improper personal economic gain, (iii) show a lack of good faith and
a conscious disregard for the duty of the director to the Company under
circumstances in which the director was aware that his or her conduct or
omission created an unjustifiable risk of serious injury to the Company, (iv)
constitute a sustained and unexcused pattern of inattention that amounted to an
abdication of the director's duty to the Company, or (v) create liability under
Section 33-757 of the Connecticut General Statutes. Copies of Connecticut
General Statutes Sections 33-757 and 33-840 are attached as Exhibit B to this
Proxy Statement. The Indemnification Amendment would also afford such
indemnification rights to officers of the Company. The Indemnification
Amendment will not provide for indemnification for liabilities arising out of
the federal securities laws. If future changes to Connecticut law expand or
contract the scope of permissible indemnification, such changes would
automatically expand or contract the scope of indemnification provided under
the proposed Indemnification Amendment.
In addition, the Indemnification Amendment would permit, but not require,
the Company to provide additional indemnification rights to officers of the
Company who are not also directors, or who are directors but are made a party
to a Proceeding solely in their capacity as officers, so long as such
indemnification is consistent with public policy. The Indemnification
Amendment also provides the Company with the flexibility to determine the level
of indemnification of employees and agents on terms and conditions established
by the Board of Directors from time to time, also consistent with public
policy. These indemnification rights may be evidenced by contract, bylaws or
by resolutions of the Board.
In addition to the authority granted to corporations to increase or decrease
the levels of indemnification, the CBCA has eliminated the distinction drawn by
the CSCA between the indemnification protections granted in connection with
derivative actions and those granted in connection with any other type of
Proceeding. By eliminating this distinction, the CBCA makes indemnification of
directors mandatory for all types of Proceedings (both derivative and non-
derivative) unless indemnification is prohibited by law. Indemnification in
connection with derivative actions is limited, however, to reasonable expenses
incurred in connection with such Proceedings.
Further, the Indemnification Amendment proposes to obligate the Company to
advance the expenses of a director or officer so long as the director or
officer promises to repay the advance if it is later determined that he or she
is not entitled to indemnification by the Company. The Board of Directors may
establish different policies regarding the advancement of expenses to employees
and agents. Pursuant to the CBCA, a director, officer, employee or agent may
have his or her right to indemnification or to advancement of expenses
determined by a court. The CBCA does not limit the Company's power to pay for
or reimburse expenses incurred by any such individual in connection with his or
her appearance as a witness in a Proceeding at a time when he or she is not a
party thereto.
The CBCA, like the CSCA, continues to permit the Company to purchase
insurance to protect itself and any person eligible to be indemnified
thereunder against any liability or expense asserted against such person
whether or not the Company would be permitted to indemnify against such
liability or expense.
The Indemnification Amendment further provides that its provisions shall not
be deemed exclusive of any other rights of indemnification which a person
seeking indemnity may have under any Bylaw, agreement, vote of the stockholders
or disinterested directors or otherwise. If the Indemnification Amendment is
adopted by the stockholders, the rights of indemnification granted under the
Indemnification Amendment may not be limited in any way by a subsequent
amendment or repeal of proposed Article Seventh with respect to acts or
omissions that occur prior to the adoption of the amendment or repeal. The
rights to indemnification created under the Indemnification Amendment are
treated as contractual rights of the persons entitled to indemnification.
Amendment or repeal of Article Seventh would require the affirmative vote of a
majority of the voting power of the outstanding shares of the Company's Common
Stock and Cumulative Preferred Stock - Series A, $20 par value, voting together
as a single class.
If Proposal (4) is adopted, the Indemnification Amendment shall govern the
indemnification protections granted to directors, officers, employees and
agents of the Company as to all Proceedings after the date that the
Indemnification Amendment is filed with the Secretary of the State.
The CBCA has not yet been subject to judicial review due to its recent
enactment. As a consequence, its validity is untested by Connecticut courts.
The outcome of any litigation challenging the applicability of the CBCA's
provisions regarding indemnification or the effects of the Indemnification
Amendment cannot be predicted with any certainty at this time. If Proposal (4)
is adopted, the Indemnification Amendment may cause the Company to indemnify
directors and officers in situations where the Company currently is under no
obligation to do so. Accordingly, if any such indemnification is made, the
economic cost to the Company is likely to be greater than the economic cost of
its indemnity obligations if the Indemnification Amendment were not adopted.
The Company is not aware of any known or anticipated Proceeding for which a
claim for indemnification may be made by a director, officer, employee or agent
under the Indemnification Amendment.
The effect, if any, of the adoption of Proposal (4) upon the cost or
coverage of the Company's directors' and officers' liability insurance cannot
be determined at this time. The Company intends to continue to carry such
insurance whether or not Proposal (4) is approved by stockholders.
VOTE REQUIRED AND EFFECTIVE TIME
The affirmative vote of a majority of the voting power of the outstanding
shares of the Company's Common Stock and Cumulative Preferred Stock - Series A,
$20 par value, voting together as a single class, is required to adopt Proposal
(4). Abstentions and broker non-votes will not be counted as votes cast and
will have the same effect as a vote against Proposal (4). The Indemnification
Amendment, if adopted, will become effective as of the date and time it is
filed with the Office of the Secretary of the State of the State of
Connecticut.
The Board of Directors acknowledges that individual directors have a
significant personal interest in the outcome of the vote on Proposal (4) since
they would be the beneficiaries of the increased protections that Proposal (4)
authorizes. Moreover, any such personal benefit that the directors would
derive could potentially be at the stockholders' expense. Nevertheless, the
Board believes that the Indemnification Amendment is fair and in the best
interests of the Company and its stockholders and that it should enhance the
Company's ability to attract and retain qualified directors, officers,
employees and agents.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ADOPTION OF PROPOSAL (4).
PROPOSAL (5) - CORPORATE GOVERNANCE AMENDMENT
GENERAL
Proposal (5) would amend the Company's Certificate (the "Corporate
Governance Amendment") to require that directors provide written notice of
resignation to the Board of Directors as specified in the CBCA.
REASONS FOR THE CORPORATE GOVERNANCE AMENDMENT
The Certificate currently allows directors to resign from the Board either
by oral tender of resignation at any meeting of the Board of Directors or by
giving written notice thereof to the Company. Although the CSCA did not
specify the means by which a director's resignation was required to be
communicated to a corporation, the CBCA provides that such resignation must be
in writing. The Corporate Governance Amendment would, therefore, conform the
Certificate to the CBCA and ensure that the Company is able to maintain a
comprehensive record of resignations by directors.
DESCRIPTION OF THE CORPORATE GOVERNANCE AMENDMENT
The Corporate Governance Amendment deletes from the Certificate the
reference to oral notice of resignation and requires that directors submit
resignations in writing to the Company. The Board of Directors recommends that
the stockholders approve the Corporate Governance Amendment because such
amendment will provide the Company with comprehensive records of resignations
from the Board of Directors and will make the Certificate consistent with the
requirements of the CBCA.
VOTE REQUIRED AND EFFECTIVE TIME
The affirmative vote of the holders of at least eighty percent (80%) of the
Company's Common Stock and Cumulative Preferred Stock - Series A, $20 par
value, voting together as a single class, is required to adopt Proposal (5).
Abstentions and broker non-votes will not be counted as votes cast and will
have the same effect as a vote against Proposal (5). The Corporate Governance
Amendment, if adopted, will become effective as of the date and time it is
filed with the Office of the Secretary of the State of the State of
Connecticut.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ADOPTION OF PROPOSAL (5).
*********
********
*** NOTE: Due to the restrictions of the electronic EDGAR filing,
*** the following Exhibit A varies from the original hardcopy thusly:
*** DELETIONS are surrounded by the set of characters: "< >"
*** ADDITIONS are surrounded by the set of characters: "{ }"
*** In the original hardcopy, these changes were reflected by overstruck
*** and double-underscored enhancements, respectively.
*******
********
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
of
CONNECTICUT WATER SERVICE, INC.
FIRST: <That the> {The} name of the corporation is CONNECTICUT
WATER SERVICE, INC. {(the "Company").}
SECOND: <Said corporation> {The Company} is to be located in the
Town of Clinton, County of Middlesex and State of Connecticut.
THIRD: Except as specifically limited by the provisions of
Paragraph F of this Article <THIRD> {Third}, the nature of the business to
be transacted and the purposes to be promoted or carried out by <said
corporation> {the Company} are as follows:
A. To purchase, subscribe for, or otherwise acquire and own, hold,
use, sell, assign, transfer, mortgage, pledge, exchange, or otherwise
dispose of shares of stock, bonds, debentures, notes, evidences of
indebtedness, and other securities, contracts, or obligations of any public
service company or public utility company or of any corporation or
corporations, person or persons, trust or trusts, or partnership or
partnerships, and to pay therefor in whole or in part in cash or by
exchanging therefor stocks, bonds, or other evidences of indebtedness or
securities of this or any other corporation, and while the owner or holder
of any such stocks, bonds, debentures, notes, evidences of indebtedness or
other securities, contracts, or obligations, to receive, collect, and
dispose of the interest, dividends and income arising therefrom, and to
possess and exercise in respect thereof, all the rights, powers and
privileges of ownership, including all voting powers on any stocks so
owned.
B. To aid{,} either by loans or by guaranty of securities or in any
other manner, any corporation, person, trust or partnership, any shares of
stock, or any bonds, debentures, evidences of indebtedness or other
securities whereof are held by <this corporation> {the Company} or in which
<this corporation> {the Company} shall have any interest, and to do any
acts designed to protect, preserve, improve, or enhance the value of any
property at any time held or controlled by <this corporation> {the Company}
or in which it at that time may be interested.
C. To purchase, lease, option, hold, improve, deal in, mortgage and
sell real estate and interests in real estate and personal property; to
develop and operate watersheds, reservoirs, wells, water pipelines and
water properties in any manner not inconsistent with law.
D. To enter into, make and perform any contracts suitable or
convenient to the business of <this corporation> {the Company} with any
person, firm, association, corporation, municipality or body politic; to
borrow or raise moneys without limit as to amount; to draw, make, accept,
endorse, execute, pledge, issue, sell or otherwise dispose of promissory
notes, drafts, warrants, bonds, debentures and other instruments, whether
negotiable or nonnegotiable, transferable or nontransferable, and evidences
of indebtedness whether secured by mortgage or otherwise{,} as well as to
secure the same, and all obligations arising therefrom, by mortgage or
otherwise, either alone or jointly with any other person or corporation, of
the whole or any part of the property of the corporations presently owned
or to be acquired; to confer upon the holders of any of these obligations
such powers, rights, and privileges as from time to time may be deemed
advisable by the Board of Directors, except as may be specifically
prohibited by law; to loan money with or without collateral or other
security.
E. To do any or all of the things herein set forth to the same
extent as natural persons might or could do, as principals, agents,
contractors or otherwise, and either alone or in company with others.
<F. Notwithstanding any contrary provisions of law or of this Article
<THIRD, said corporation> {Third, the Company} and any and all subsidiaries
are hereby expressly prohibited from engaging in any business or activity
which is not then subject to regulation by the Connecticut Public Utilities
Commission (or any regulatory body which may succeed to the jurisdiction of
said Commission) unless said Commission shall approve such business or
activity or unless said Commission shall have waived the requirements of,
or shall have approved an amendment to<,> or deletion of the provisions of
this Paragraph F.>
FOURTH: <That the> {The} amount of the capital stock of <said
corporation> {the Company} hereby authorized is (a) $300,000, divided into
15,000 shares of Cumulative Preferred Stock of the par value of $20 each,
(b) $800,000, divided into 50,000 shares of Cumulative Preferred Stock of
the par value of $16 each, (c) $10,000,000, divided into 400,000 shares of
Cumulative Preferred Stock of the par value of $25 each, (d) 7,500,000
shares of Common Stock without par value, and (e) 1,000,000 shares of
Preference Stock, $1 par value.
A. The voting powers, restrictions and qualifications of the Common
Stock shall be as follows:
1. The holders of the Common Stock shall each be entitled to
three {(3)} votes per share.
2. No holder of Common Stock shall be entitled as such as a
matter of right to subscribe for or purchase any part of any stock of any
class of the Company or securities convertible into such stock now or
hereafter authorized or issued.
<B.> B. The general preferences, voting powers, restrictions and
qualifications of the Cumulative Preferred Stock of the par value of $20
per share <and>{,} of the Cumulative Preferred Stock of the par value of
$16 per share{,} and of the Cumulative Preferred Stock of the par value of
$25 per share and applicable to all such classes of Cumulative Preferred
Stock (hereinafter called the "Preferred Stock") shall be as follows:
1. GENERAL. The Board of Directors is authorized from time to
time to establish the series and to fix and determine the variations among
series of any class of Preferred Stock; to fix and determine the dividend
rate, the redemption prices, the amounts to be paid upon liquidation and
any other terms, limitations, rights and preferences of any series of any
class of Preferred Stock to the extent not fixed and determined by <the>
{this Amended and Restated} Certificate of Incorporation; and from time to
time to issue any shares of Preferred Stock in one or more series, in such
amounts, on such terms and conditions and for such consideration as may be
determined by the Board of Directors and without first offering said shares
to the stockholders and without giving the stockholders the right to
subscribe thereto.
2. DIVIDENDS. The holders of any series of Preferred Stock of
any class shall receive, when declared by the Board of Directors,
preferential quarterly dividends at such rate and payable on such dividend
payment dates in each year as said Board may determine at the time of its
vote to issue said series, such dividends to be payable to Preferred
Stockholders of record on such dates as may be fixed by said Board, but not
more than <45> {forty-five (45)} days before each dividend date.
Dividends on each share of the Preferred Stock shall be cumulative
from the date of issue thereof or from such date as the Board of Directors
may determine at the time of its vote to issue such share.
Unless full cumulative dividends to the last preceding dividend date
shall have been paid or set apart for payment on all outstanding shares of
Preferred Stock{,} no dividend shall be paid on any junior stock. The term
"junior stock" as used herein means stock of the Company subordinate to the
Preferred Stock in respect of dividends or payment in case of liquidation.
3. REDEMPTION OR PURCHASE OF PREFERRED STOCK. All or any part
of any series of the Preferred Stock at any time outstanding may be called
by vote of the Board of Directors for redemption at any time and in the
manner hereinbelow provided. If less than all of any series of any class
of Preferred Stock is so called, the Company shall determine by lot the
shares of such series of Preferred Stock to be called. The redemption
prices with respect to any series of any class of Preferred Stock shall be
determined by the Board of Directors at the time of its vote to issue said
series.
No call of less than all of the Preferred Stock of any class
outstanding shall be made without setting aside an amount equal to the
dividends accumulated to the redemption date fixed in such call on all of
the Preferred Stock of such class then outstanding and not called.
All or any part of any series of any class of Preferred Stock may be
called for redemption without calling any part or all of any other series
or class of Preferred Stock.
The sums payable in respect of any Preferred Stock so called shall be
payable at the office of the Company or an incorporated bank or trust
company in good standing designated by the Company. Notice of such call,
stating the redemption date and the place where the stock so called is
payable, shall be mailed not less than <30> {thirty (30)} days before the
redemption date to each holder of stock so called at his address as it
appears upon the books of the Company.
If the Company shall, before the redemption date, deposit with such
bank or trust company all sums payable with respect to the Preferred Stock
so called, then, after such mailing and deposit, the holders of the
Preferred Stock so called for redemption shall cease to have any right to
future dividends or other rights or privileges as stockholders in respect
of such stock and shall be entitled only to the payment on the redemption
date of the sums so deposited with such bank or trust company for their
respective accounts. Stock so redeemed may be reissued but only subject to
the limitations imposed by this Article {Fourth} upon the issue of
Preferred Stock.
At any time when there is no default in the payment of any dividend on
the Preferred Stock and there is no event of default with respect thereto,
the Company may purchase all or any of the then outstanding shares of the
Preferred Stock of any series of any class upon the best terms reasonably
obtainable, but not exceeding the then current redemption price of such
shares.
4. AMOUNTS PAYABLE ON LIQUIDATION. The provisions relating to
the amount payable to the holder of shares of any series of any class of
Preferred Stock upon liquidation, dissolution or winding{-}up of the
Company shall be determined by the Board of Directors at the time of its
vote to issue said series. If the net assets of the Company shall be
insufficient to pay said amounts in full, then the entire net assets of the
Company shall be distributed among the holders of the shares of all classes
of Preferred Stock, who shall receive amounts proportionate to the
respective involuntary liquidation values of such shares.
5. VOTING RIGHTS. Except as otherwise provided by this Article
{Fourth} or as provided by law, the holders of the Preferred Stock shall
have no voting power or right to notice of any meeting.
Whenever dividends on any share of the Preferred Stock of any class
shall be in arrears in an amount equal to or exceeding six (6) quarterly
dividends thereon, or whenever the Company shall fail to set aside moneys
for any sinking fund provided for any series of Preferred Stock, or
whenever there shall have occurred some default in the observance of any of
the Preferred Stock provisions or some default on which action has been
taken to declare due prior to their stated maturity any debentures or bonds
on the Company by their holders or the trustee of any mortgage or trust
indenture of the Company, or whenever the Company shall have been declared
bankrupt or a receiver of its property shall have been appointed (any of
said conditions being herein called an "event of default"), then the
holders of the Preferred Stock shall be given notice of all stockholders'
meetings and shall have the right, voting as one class, to elect the
smallest number of <Directors> {directors} necessary to constitute a
majority of the Board of Directors of the Company. When all such arrears
of dividends shall have been paid and the current quarterly dividend
thereon for the current quarterly dividend period shall have been declared
and set apart for payment, or when the Company shall have made up the
deficiency in any such sinking fund or any other event of default shall
have terminated, such right and power of the holders of the Preferred Stock
shall cease, subject to being again revived on any subsequent default in
the payment of dividends or application of moneys to any such sinking fund
or occurrence of any event of default.
When the holders of the Preferred Stock shall have acquired such right
to elect a majority of the Board of Directors, or such right shall cease,
the Company shall, <with> {within} seven (7) days from the delivery to the
Company of a written request therefor by (a) the holders of ten percent
(10%) or more of the then outstanding Preferred Stock in the event the
holders of Preferred Stock shall have acquired the right to elect a
majority of the Board of Directors, or (b) any stockholder in the event
such right shall have ceased, cause a special meeting of the stockholders
to be held within thirty (30) days from the delivery of such request for
the purpose of electing a new Board of Directors. Forthwith, upon the
election and qualification of the new Board of Directors, the terms of
office of the existing <Directors> {directors} shall terminate.
6. ACTION REQUIRING CONSENT OF PREFERRED STOCKHOLDERS. So long
as any shares of any class of Preferred stock are outstanding, and unless a
greater vote or consent shall then be required by law, the <company>
{Company} shall not, without the affirmative vote of at least two-thirds of
the then outstanding shares of each class of Preferred Stock, each class
voting separately, given at a meeting the notice of which shall be mailed
to all holders of Preferred Stock and shall state the general character of
the matters to be submitted thereat:
(a) increase the authorized amounts of any class of
Preferred Stock or authorize or create, or increase the authorized amount
of, any additional class of stock ranking prior to any class of Preferred
Stock as to payment of dividends or payment in case of liquidation,
dissolution or winding-up of the Company, or authorize or create, or
increase the authorized amount of, any class of stock or obligations
convertible to or evidencing the right to purchase any class of stock
ranking prior to any class of Preferred Stock as to payment of dividends or
payment in case of liquidation, dissolution or winding-up of the Company;
or
(b) make any changes in the preferences, voting powers,
restrictions and qualifications relating to any class of Preferred Stock,
or change the par value thereof, except that no reduction of the dividend
rate, redemption prices or amount to be paid in case of liquidation,
dissolution or winding-up of the Company in respect to any share of
Preferred stock may be made without the consent of the holder thereof.
7. NO PREEMPTIVE RIGHT. No holder of Preferred Stock shall
have any right, whether preferential, preemptive or otherwise, to subscribe
for any issue of stock of any class of the Company, whether or not now
authorized, or for any issue of bonds, notes, obligations or other
securities which the Company may at any time issue and whether or not the
same be convertible into stock of the Company of any class.
8. NONCONVERTIBILITY OF PREFERRED STOCK. The Preferred Stock
is not convertible into shares of any other class of stock of the Company.
C. VOTING RIGHTS OF $20 PAR PREFERRED. The holders of the
Cumulative Preferred Stock of the par value of $20 per share, in addition
to the voting rights otherwise provided in this Article {Fourth} and as
provided by law, shall each be entitled to one {(1)} vote per share, voting
with holders of the Common Stock.
D. TERMS OF CUMULATIVE PREFERRED STOCK - SERIES A
Pursuant to the general preferences, voting powers, restrictions and
qualifications of the cumulative preferred stock of the Company authorized
by the stockholders at their annual meeting held on April 17, 1957, a
series of such preferred stock {shall} be designated "Cumulative Preferred
Stock - Series A" and <that> in addition to said general preferences,
<etc.> {voting powers, restrictions and qualifications}, the dividend rate,
the redemption prices, and the amounts payable on liquidation shall be as
follows:
<(a) DIVIDENDS> {1. Dividends} on said Cumulative Preferred Stock
- - Series A shall be at the rate of $.80 per share per annum, and no more,
and shall be cumulative from July 15, 1957. Said dividends, when declared,
shall be payable on the <15th> {fifteenth (15th)} days of January, April,
July and October in each year.
<(b) REDEMPTION PRICES> {2. Redemption prices} of said Cumulative
Preferred Stock - Series A shall be $22.50 per share if redeemed on or
before July 15, 1967 and $21.00 per <shall> {share} if redeemed after July
15, 1967, plus in all cases that portion of the quarterly dividend accrued
thereon to the redemption date and all unpaid dividends thereon, if any.
<(c) AMOUNT PAYABLE ON LIQUIDATION> {3. Amount payable on
liquidation} to each holder of said Cumulative Preferred Stock - Series A
upon any voluntary liquidation, dissolution or winding{-}up of the Company
shall be the then current redemption price thereof, and, if such action is
involuntary, $20.00 per share; plus in each case, all dividends accrued and
unpaid to the date of such payment.
E. TERMS OF CUMULATIVE PREFERRED STOCK - $.90 SERIES
Pursuant to the general {preferences}, voting powers,
restrictions and qualifications of the Company's <Cumulative Preferred>
{cumulative preferred} stock of the par value of $16 per share as set forth
in the Company's {Amended and Restated} Certificate of Incorporation as
amended by Amendment Resolution adopted by the stockholders and the Board
of Directors at their special meetings held August 15, 1962, a series of
such Preferred Stock of the par value of $16 per share shall be designated
"Cumulative Preferred Stock - $.90 Series" and, in addition to said general
preferences, voting powers, restrictions and qualifications <set forth in
said Certificate of Incorporation as previously amended>, the dividend
rate, the redemption prices and the amount payable on liquidation of said
series of Preferred Stock shall be as follows:
<(a) DIVIDENDS> {1. Dividends} on said {Cumulative Preferred
Stock -} $.90 Series shall be at the rate of $.90 per
share per annum and no more and shall be cumulative from the date of its
original issue. Said dividends, when declared, shall be payable on the
first {(1st)} days of February, May, August and November in each year.
<(b) REDEMPTION PRICES> {2. Redemption Prices} of said <$.90
Series> {Cumulative} Preferred Stock {- $.90 Series} shall be $17.00 per
share if redeemed on or before July 31, 1966 and $16.00 per share if
redeemed after July 31, 1966, plus in all cases that portion of the
quarterly dividend accrued thereon to the redemption date and all unpaid
dividends thereon, if any.
<(c) AMOUNTS PAYABLE ON LIQUIDATION> {3. Amounts payable on
liquidation} to each holder of said <$.90 Series> {Cumulative} Preferred
Stock {- $.90 Series} upon any voluntary liquidation, dissolution or
winding-up of the Company shall be the then current redemption price
thereof, and, if such action is involuntary, shall be $16.00 per share,
plus in each case all dividends accrued and unpaid to the date of such
payment.
F. TERMS OF PREFERENCE<,> STOCK. The Preference Stock shall rank
after, and be junior to, the Preferred Stock with respect to payment of
dividends, the amount payable upon shares in event of involuntary
liquidation and the amount payable upon shares in event of voluntary
liquidation. To the extent this {Amended and} Restated Certificate of
Incorporation has not fixed or determined the terms, limitations and
relative rights and {preferences} of the Preference Stock,
including without limitation, the voting rights thereof (including a
determination of the number of votes per share of such Preference Stock),
or has not established series and fixed and determined the variations as
among series, the Board of Directors shall have the authority to do so from
time to time. No holder of Preference Stock shall be entitled as such as a
matter of right to subscribe for or purchase any part of any stock of any
class of the Company or securities convertible into such stock now or
hereafter authorized, except as may otherwise be specifically provided in
the resolution or resolutions adopted by the Board of Directors at the time
shares of Preference Stock are first issued.
FIFTH: (a)(i) The Board of Directors shall consist of not less than
nine or more than fifteen persons (exclusive of directors, if any, elected
by the holders of one or more series of Preference Stock, which may at any
time be outstanding, voting separately as a class or series pursuant to the
provisions of this Amended and Restated Certificate of Incorporation
applicable thereto), the exact number to be fixed from time to time within
the foregoing limits exclusively by the Board of Directors pursuant to a
resolution adopted by the Board of Directors. The number of positions on
the Board of Directors, as fixed in accordance with the foregoing, is
referred to herein as the "number of directorships."
The directors (exclusive of directors, if any, elected by the holders
of one or more series of Preference Stock voting separately as a class or
series) shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, one class to hold office initially for a term expiring at the
annual meeting of stockholders to be held in 1989, another class to hold
office initially for a term expiring at the annual meeting of stockholders,
to be held in 1990, and another class to hold office initially for a term
expiring at the annual meeting of stockholders to be held in 1991, with the
members of each class to hold office until their successors are elected and
qualified. At each annual meeting of the stockholders of the Company, the
successors to the class of directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of their
election. The election of directors need not be by written ballot.
(ii) Subject to the rights of holders of any one or more series
of Preference Stock then outstanding with respect to directors elected by
the holders of such Preference Stock, advance notice of nominations for the
election of directors and advance notice of business or proposals to be
brought before stockholder meetings by a stockholder, other than
nominations or proposals brought by or at the direction of the Board of
Directors, shall be given in the manner provided in the Bylaws.
(iii) Except as otherwise provided pursuant to the provisions of
<Article Fourth,> Section 5 {of Paragraph B of Article Fourth} of this
Amended and Restated Certificate of Incorporation and subject to the
rights, if any, of holders of any one or more series of Preference Stock
then outstanding with respect to directors elected by the holders of such
Preference Stock, newly created directorships resulting from any increase
in the number of directorships shall be filled by the concurring vote of
the directors holding a majority of the directorships, which number of
directorships shall be the number prior to the vote of the increase.
Vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall be filled by the concurring vote
of the remaining directors then in office, though less than a quorum of the
Board of Directors. Any director elected in accordance with the two
preceding sentences shall hold office for the remainder of the full term of
the class of directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been
elected and qualified. No decrease in the number of directorships
constituting the entire Board of Directors shall shorten the term of any
incumbent director.
(iv) Any director of the Company may resign at any time <either
by oral tender of resignation at any meeting of the Board of Directors or>
by giving written notice thereof to the Company. Such resignation shall
take effect at the time specified therefor, and unless otherwise specified
with respect thereto, the acceptance of such resignation shall not be
necessary to make it effective. Except as otherwise provided pursuant to
the provisions of <Article Fourth,> Section 5 {of Paragraph B of Article
Fourth} of this Amended and Restated Certificate of Incorporation and
subject to the rights of holders of any one or more series of Preference
Stock then outstanding with respect to directors elected by the holders of
such Preference Stock, any director may be removed from office at any time,
but only for cause as defined below and only by the affirmative vote of the
holders of at least a majority of the combined voting power of all of the
then-outstanding shares of all classes and series of the <Company's>
{Company's} capital stock entitled to vote generally in the election of
directors (the "Voting Stock"), voting together as a single class, it being
understood that for all purposes of this Article Fifth,{ }each share of the
Voting Stock shall have the number of votes granted to it pursuant to
Article Fourth of this Amended and Restated Certificate of Incorporation.
For purposes of this Article Fifth, the term cause is defined as conviction
of a felony or gross negligence or willful misconduct in the performance of
a duty to the Company, as determined by the Board of Directors.
(v) Notwithstanding the foregoing, whenever the holders of any
one or more series of Preference Stock shall have the right, voting
separately as a class or series, to elect directors at an annual or special
meeting of stockholders, the election, term of office, filling of vacancies
and other features of such directorships shall be governed by the terms of
this Amended and Restated Certificate of Incorporation and the<.>
resolution or resolutions applicable thereto adopted by the Board of
Directors pursuant to Article Fourth hereof. Directors so elected shall
not be divided into classes unless expressly provided by such terms, and,
during the prescribed terms of office of such directors, the Board of
Directors shall consist of such directors in addition to the number of
directors determined as provided in Section (a)(i) of this Article Fifth.
(b) The Board of Directors and the stockholders shall have the power
to make, alter, amend and repeal the Bylaws of the Company as provided in
the Bylaws; provided, however, that, notwithstanding any other provisions
of this Amended and Restated Certificate of Incorporation or the Bylaws or
any provision of law which might otherwise permit a lesser vote or no vote,
but in addition to any affirmative vote of the holders of any particular
class or series of the Voting Stock required by law, the Bylaws or this
Amended and Restated Certificate of Incorporation, the affirmative vote of
the holders of at least 80 percent of the combined voting power of all the
then-outstanding shares of the Voting Stock, voting together as a single
class, shall be required to alter, amend or repeal any provision of the
Bylaws which is to the same effect as or which is referred to in any
provision of this Article Fifth.
(c) Except as otherwise provided pursuant to the provisions of
<Article Fourth,> Section 5 {of Paragraph B of Article Fourth} of this
Amended and Restated Certificate of Incorporation, special meetings of
stockholders of the Company may be called only by the Board of Directors
pursuant to a resolution adopted by the concurrent vote of the directors
holding a majority of the total number of directorships. The general
purpose or purposes for which a special meeting is called shall be stated
in the notice thereof, and no other business shall be transacted at such
meeting.
(d) The Board of Directors of the Company, when evaluating any offer
of another party (1) to make a tender or exchange offer for any equity
security of the Company, (2) to merge or consolidate the Company with or
into another corporation, or (3) to purchase or otherwise acquire all or a
substantial part of the properties and assets of the Company or any of its
subsidiaries, may, in connection with the exercise of its judgment in
determining what it reasonably believes is in the best interests of the
Company as a whole, give consideration to all such factors as the Board of
Directors determines to be relevant, including, without limitation:
(i) interests of the <Company's> {Company's} stockholders, long-
term as well as short-term, including the possibility that those interests
may be best served by the continued independence of the Company;
(ii) the interests of the customers of The Connecticut Water
Company;
(iii) whether the proposed transaction might violate federal or
state law;
(iv) the form and amount of consideration being offered in the
proposed transaction not only in relation to the then-current market price
for the outstanding capital stock of the Company, but also in relation to
the market price for the capital stock of the Company over a period of
years, the estimated price that might be achieved in a negotiated sale of
the Company or The Connecticut Water Company as a whole or in part to
either public or private entities or through orderly liquidation, the
estimated further value of the Company, the premiums over market price paid
for the securities of other corporations in similar transactions, current
political, economic and other factors bearing on securities prices, and the
<Company's> {Company's} financial condition and future prospects; and
(v) the social, legal and economic effects upon employees,
customers, suppliers and others having similar relationships with the
Company or The Connecticut Water Company, and the communities in which the
Company and The Connecticut Water Company conduct business, including,
without limitations, the public interest obligations imposed on The
Connecticut Water Company as an operating public utility and the effect or
impact of any such transaction on the ability of the Company, any
subsidiaries or any successor entity to provide prudent, adequate and
effective water supply service to the areas served by The Connecticut Water
Company.
In connection with such evaluation, the Board of Directors may conduct
such investigations and engage in such legal proceedings as the Board of
Directors may determine.
(e) Notwithstanding any other provision of this Amended and Restated
Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of
the holders of any particular class or series of the Voting Stock required
by law or this Restated Certificate of Incorporation, the affirmative vote
of the holders of at least 80 percent of the combined voting power of all
of the then-outstanding shares of the Voting Stock, voting together as a
single class, shall be required to alter, amend or repeal this Article
Fifth.
SIXTH<: That the amount of paid in capital with which this corporation
shall commence business is One Thousand Dollars ($1,000).
SEVENTH: That the duration of this corporation is unlimited.
EIGHTH>: The personal liability of any person who is or was a <Director>
{director} of the Company to the Company or its stockholders for monetary
damages for breach of duty as a <Director> {director} is hereby limited to
the amount of the compensation received by the <Director> {director} for
serving the Company during the year or years in which the violation
occurred so long as such breach did not <(a)>{(i)} involve a knowing and
culpable violation of law by the <Director, (b)> {director, (ii)} enable
the <Director> {director} or an associate, as defined in <subdivision (3)
of> Section 33-<374(d)> {840} of the Connecticut General Statutes, to
receive an improper personal economic gain, {(iii)} show a lack of good
faith and a conscious disregard for the duty of the <Director> {director}
to the Company under circumstances in which the <Director> {director} was
aware that his or her conduct or omission created an unjustifiable risk of
serious injury to the Company, <(d)>{(iv)} constitute a sustained and
unexcused pattern of inattention that amounted to an abdication of the
<Director's> {director's} duty to the Company, or <(e)>{(v)} create
liability under Section 33-<321> {757} of the Connecticut General Statutes.
Any lawful repeal or modification of this provision of the Amended and
Restated Certificate of Incorporation of the Company by the stockholders
and the Board of Directors of the Company shall not adversely affect any
right or protection of a person who is or was a <Director> {director} of
the Company existing at or prior to the time of such repeal or
modification.
{SEVENTH: (a) The Company shall, to the fullest extent permitted by
law, indemnify its directors from and against any and all of the
liabilities, expenses and other matters referred to in or covered by the
Connecticut Business Corporation Act. In furtherance and not in limitation
thereof, the Company shall indemnify each director for liability, as
defined in subsection (5) of Section 33-770 of the Connecticut General
Statutes, to any person for any action taken, or any failure to take any
action, as a director, except liability that (i) involved a knowing and
culpable violation of law by the director, (ii) enabled the director or an
associate, as defined in Section 33-840 of the Connecticut General
Statutes, to receive an improper personal economic gain, (iii) showed a
lack of good faith and a conscious disregard for the duty of the director
to the Company under circumstances in which the director was aware that his
or her conduct or omission created an unjustifiable risk of serious injury
to the Company, (iv) constituted a sustained and unexcused pattern of
inattention that amounted to an abdication of the director's duty to the
Company, or (v) created liability under Section 33-757 of the Connecticut
General Statutes; provided that nothing in this sentence shall affect the
indemnification of or advance of expenses to a director for any liability
stemming from acts or omissions occurring prior to the effective date of
this Article SEVENTH.
The Company shall indemnify each officer of the Company who is not a
director, or who is a director but is made a party to a proceeding in his
or her capacity solely as an officer, to the same extent as the Company is
permitted to provide the same to a director, and may indemnify such persons
to the extent permitted by Section 33-776 of the Connecticut General
Statutes.
The indemnification provided for herein 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 such 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 or officer and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(b) Expenses incurred by a director or officer of the Company in
defending a civil or criminal action, suit or proceeding shall be paid for
or reimbursed by the Company to the fullest extent permitted by law in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall be ultimately determined that such director
or officer is not entitled to be indemnified by the Company.
(c) The Company may indemnify and pay for or reimburse the expenses
of employees and agents not otherwise entitled to indemnification pursuant
to this Article Seventh on such terms and conditions as may be established
by the Board of Directors.
(d) No amendment to or repeal of this Article Seventh shall apply to
or have any effect on the indemnification of any director, officer,
employee or agent of the Company for or with respect to any acts or
omissions of such director, officer, employee or agent occurring prior to
such amendment or repeal, nor shall any such amendment or repeal apply to
or have any effect on the obligations of the Company to pay for or
reimburse in advance expenses incurred by a director, officer, employee or
agent of the Company in defending any action, suit or proceeding arising
out of or with respect to any acts or omissions occurring prior to such
amendment or repeal.
EIGHTH: Reference in this Amended and Restated Certificate of
Incorporation to a provision of the General Statutes of Connecticut or any
provision of Connecticut law set forth in such Statutes is to such
provision of the General Statutes of Connecticut, Revision of 1958, as
amended, or the corresponding provision(s) of any subsequent Connecticut
law. Reference in this Amended and Restated Certificate of Incorporation
to a provision of the Connecticut Business Corporation Act is to such
provision of the codification in the Connecticut General Statutes of the
Connecticut Business Corporation Act, as amended, or the corresponding
provision(s) of any subsequent Connecticut law.}
Exhibit B
<section> 33-757. LIABILITY FOR UNLAWFUL DISTRIBUTION
(a) A director who votes for or assents to a distribution made in violation
of section 33-687 or the certificate of incorporation is personally liable to
the corporation for the amount of the distribution that exceeds what could have
been distributed without violating said section or the certificate of
incorporation if it is established that he did not perform his duties in
compliance with section 33-756. In any proceeding commenced under this
section, a director has all of the defenses ordinarily available to a director.
(b) A director held liable under subsection (a) of this section for an
unlawful distribution is entitled to contribution: (1) From every other
director who could be held liable under subsection (a) of this section for the
unlawful distribution; and (2) from each shareholder for the amount the
shareholder accepted knowing the distribution was made in violation of section
33-687 or the certificate of incorporation.
(c) A proceeding under this section is barred unless it is commenced within
two years after the date on which the effect of the distribution was measured
under subsection (e) or (g) of section 33-687.
(d) For purposes of this section, a director shall be deemed to have voted
for a distribution if such director was present at the meeting of the board of
directors or committee thereof at the time such distribution was authorized and
did not vote in dissent therefrom, or if such director consented thereto
pursuant to section 33-749.
<section> 33-840. BUSINESS COMBINATIONS. DEFINITIONS
The terms used in sections 33-840 to 33-842, inclusive, shall be defined as
follows:
(1) "Affiliate", including the term "affiliated person", means a person
that directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, a specified person.
(2) "Associate", when used to indicate a relationship with any person,
means: (A) Any domestic or foreign corporation or organization, other than a
corporation or a subsidiary of the corporation, of which such person is an
officer, director, or partner or is, directly or indirectly, the beneficial
owner of ten per cent or more of any class of equity securities; (B) any trust
or other estate in which such person has a substantial beneficial interest or
as to which such person serves as trustee or in a similar fiduciary capacity;
and (C) any relative or spouse of such person, or any relative of such spouse,
who has the same home as such person or who is a director or officer of the
corporation or any of its affiliates.
(3) "Beneficial owner", when used with respect to any voting stock, means a
person: (A) That, individually or with any of its affiliates or associates,
beneficially owns voting stock directly or indirectly; or (B) that,
individually or with any of its affiliates or associates, has: (i) The right
to acquire voting stock, whether such right is exercisable immediately or only
after the passage of time, pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise; or (ii) the right to vote or direct the
voting stock pursuant to any agreement, arrangement or understanding; or (iii)
the right to dispose of or to direct the disposition of voting stock pursuant
to any agreement, arrangement or understanding; or (C) that, individually or
with any of its affiliates or associates, has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
voting stock with any other person that beneficially owns, or whose affiliates
or associates beneficially own, directly or indirectly, such shares of voting
stock.
(4) "Business combination", when used with respect to any corporation,
means: (A) Any merger, consolidation or share exchange of the corporation or
any subsidiary with (i) any interested shareholder or (ii) any other domestic
or foreign corporation, whether or not itself an interested shareholder, which
is, or after the merger, consolidation or share exchange would be, an affiliate
or associate of an interested shareholder that was an interested shareholder
prior to the transaction; (B) any sale, lease, exchange, mortgage pledge,
transfer or other disposition, other than in the usual and regular course of
business, in one transaction or a series of transactions in any twelve-month
period, to any interested shareholder or any affiliate or associate of any
interested shareholder, other than the corporation or any of its subsidiaries,
of any assets of the corporation or any subsidiary having, measured at the time
the transaction or transactions are approved by the board of directors of the
corporation, an aggregate book value as of the end of the corporation's most
recent fiscal quarter of ten per cent or more of the total market value of the
outstanding shares of the corporation or of its net worth as of the end of its
most recent fiscal quarter; (C) the issuance or transfer by the corporation,
or any subsidiary, in one transaction or a series of transactions, of any
equity securities of the corporation or any subsidiary which have an aggregate
market value of five per cent or more of the total market value of the
outstanding shares of the corporation to any interested shareholder or any
affiliate or associate of any interested shareholder, other than the
corporation or any of its subsidiaries, except pursuant to the exercise of
warrants, rights or options to subscribe to or purchase securities offered,
issued or granted pro rata to all holders of the voting stock of the
corporation or any other method affording substantially proportionate treatment
to the holders of voting stock; (D) the adoption of any resolution for the
liquidation or dissolution of the corporation or any subsidiary proposed by or
on behalf of an interested shareholder or any affiliate or associate of any
interested shareholder, other than the corporation or any of its subsidiaries;
or (E) any reclassification of securities, including any reverse stock split,
or recapitalization of the corporation, or any merger, consolidation or share
exchange of the corporation with any of its subsidiaries which has the effect,
directly or indirectly, in one transaction or a series of transactions, of
increasing by five per cent or more of the total number of outstanding shares,
the proportionate amount of the outstanding shares of any class of equity
securities of the corporation or any subsidiary which is directly or indirectly
owned by any interested shareholder or any affiliate or associate of any
interested shareholder, other than the corporation or any of its subsidiaries.
(5) "Common stock" means any shares other than preferred shares.
(6) "Control", including the terms "controlling", "controlled by" and "under
common control with", means the possession, directly or indirectly, of the
power to direct or cause the direction of the board of directors, the
management or the policies of a person, whether through the ownership of voting
securities, by contract, or otherwise, and the beneficial ownership of ten per
cent or more of the voting power of the voting stock of a corporation creates a
presumption of control.
(7) "Corporation" or "domestic corporation" means any corporation with
capital stock formed under the laws of this state before or after January 1,
1961, including a real estate investment trust.
(8) "Equity security" means: (A) Any share or similar security, certificate
of interest, or participation in any profit-sharing agreement, voting trust
certificate or certificate of deposit for a share of the corporation; (B) any
security convertible, with or without consideration, into any share of the
corporation, or any warrant, right or option to subscribe to or purchase any
share of the corporation; or (C) any put, call, straddle or other option or
privilege of buying any share of the corporation from or selling any share of
the corporation to another without being bound to do so.
(9) "Interested shareholder" means any person, other than the corporation or
any of its subsidiaries, that is the beneficial owner, directly or indirectly,
of ten per cent or more of the voting power of the outstanding shares of voting
stock of the corporation, or is an affiliate of the corporation and at any time
within the two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of ten per cent or more of the voting
power of the then outstanding shares of voting stock of the corporation. For
the purpose of determining whether a person is an interested shareholder, the
number of shares of voting stock deemed to be outstanding shall include shares
deemed owned by the person through application of subdivision (3) of this
section but shall not include any other shares of voting stock which may be
issuable to persons other than the person in question pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion rights,
exchange rights, warrants or options, or otherwise.
(10) "Market value" as of any date means: (A) In the case of shares of stock
of a corporation, the highest closing sale price during the thirty-day period
immediately preceding the date in question of a share of such stock on the
composite tape for New-York-Stock-Exchange-listed stocks, or, if such stock is
not quoted on the composite tape, on the New York Stock Exchange, or if such
stock is not listed on such exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during the
thirty-day period immediately preceding the date in question on the National
Association of Securities Dealers, Inc. automated quotations system or any
system then in use, or, if no such quotations are available, the fair market
value on the date in question of a share of such stock as determined by the
board of directors of the corporation in good faith; and (B) in the case of
property other than cash or stock, the fair market value of such property on
the date in question as determined by the board of directors of the corporation
in good faith.
(11) "Person" means a natural person, company, partnership, foreign or
domestic corporation, limited liability company, trust, unincorporated
organization, government or any other entity or political subdivision, agency
or instrumentality of a government. The term also includes two or more of the
foregoing acting as a partnership, limited partnership, syndicate or other
group for the purpose of acquiring, holding, voting or disposing of securities
of an issuer.
(12) "Share exchange" means an exchange offer or any other exchange of
securities of a person for the voting stock of a corporation.
(13) "Subsidiary" means any corporation of which voting stock having a
majority of the votes entitled to be cast is owned, directly or indirectly, by
the corporation.
(14) "Voting stock" means shares of capital stock of a corporation entitled
to vote generally in the election of directors.
OTHER MATTERS (6)
The Board of Directors knows of no other matters which may be presented for
consideration at the meeting. However, if any other matters properly come
before such meeting, the persons named in the enclosed proxy will vote in their
discretion on such matters.
STOCKHOLDER PROPOSALS
For business to be properly brought before an annual meeting by a
stockholder, the business must be an appropriate matter to be acted upon by the
stockholders at an annual meeting and the stockholder must have given proper
and timely notice thereof in writing to the Secretary of the Company. To be
timely, a stockholder's notice must be delivered to or mailed and received by
the Secretary of the Company at the General Offices of the Company not later
than the close of business on a day which is not less than 120 days prior to
the anniversary date of the immediately preceding annual meeting. A
stockholder's notice to the Secretary must set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address,
as they appear on the Company's books, of the stockholder proposing such
business, (c) the class and number of shares of the Company which are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business.
Stockholder proposals intended to be presented at the Annual Meeting of
Stockholders in 1999 must be received by the Company not later than December
24, 1998 in order to be considered for inclusion in the Company's proxy
statement and form of proxy relating to the 1999 Annual Meeting of
Stockholders.
Vincent F. Susco, Jr.
Corporate Secretary
March 18, 1998
THE COMPANY IS SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES
EXCHANGE ACT OF 1934 AND IN ACCORDANCE THEREWITH FILES AN ANNUAL REPORT ON FORM
10-K WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY WILL FURNISH A
COPY OF THE 1997 ANNUAL REPORT ON FORM 10-K FILED BY THE COMPANY, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, BUT WITHOUT EXHIBITS, WITHOUT
CHARGE TO ANY STOCKHOLDER MAKING A WRITTEN REQUEST THEREFOR ADDRESSED TO: VICE
PRESIDENT - FINANCE, CONNECTICUT WATER SERVICE, INC., 93 WEST MAIN STREET,
CLINTON, CONNECTICUT, 06413.
CONNECTICUT WATER SERVICE, INC.
COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING APRIL 24, 1998
The undersigned stockholder of Connecticut Water Service, Inc. hereby appoints
Marshall T. Chiaraluce and David C. Benoit or either of them, attorneys and
proxies for the undersigned, with power of substitution, to act for and to
vote, as designated herein, with the same force and effect as the undersigned,
all shares of the Company's Common Stock standing in the name of the
undersigned at the Annual Meeting of Stockholders of Connecticut Water Service,
Inc. to be held at the Company's Corporate Offices, 93 West Main Street,
Clinton, Connecticut, April 24, 1998, at 2 p.m., and any adjournments thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL GRANT
AUTHORITY TO VOTE FOR ALL NOMINEES FOR DIRECTOR AND WILL BE VOTED "FOR"
PROPOSALS, (2, 3A, 3B, 4, AND 5 ). IN THEIR DISCRETION, THE PROXIES WILL BE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
The undersigned hereby acknowledges receipt of notice of said meeting and the
related Proxy Statement.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
______________________________ _____________________________________
______________________________ _____________________________________
______________________________ _____________________________________
<PAGE>
PLEASE MARK VOTES AS IN THIS EXAMPLE
For With- For All
1) For election of all Directors, Hold Except
Marshall T. Chiaraluce, Charles E. Gooley,
Marcia L. Hincks, Robert F. Neal / / / / / /
If you do not wish your shares voted "FOR" a particular nominee, mark the "For
All Except" box and strike a line through the nominee(s) name. Your shares
will be voted for the remaining nominee(s).
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date______________________
________________________________ ______________________________
Shareholder sign here Co-owner sign here
2) Appointment of Arthur Andersen LLP For Against Abstain
as independent Auditors. / / / / / /
For Against Abstain
3a) Approval of Conforming Amendments. / / / / / /
For Against Abstain
3b) Approval of Corrective Amendment. / / / / / /
For Against Abstain
4) Approval of Indemnification Amendment. / / / / / /
For Against Abstain
5) Approval of Corporate Governance Amendment. / / / / / /
Mark box at right if comments or address change / /
have been noted on the reverse side of this card.
DETACH CARD
CONNECTICUT WATER SERVICE, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy material.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, April
24, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Connecticut Water Service, Inc.
<PAGE>
CONNECTICUT WATER SERVICE, INC.
CUMULATIVE PREFERRED STOCK -- SERIES A
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING APRIL 24, 1998
The undersigned stockholder of Connecticut Water Service, Inc. hereby appoints
Marshall T. Chiaraluce and David C. Benoit or either of them, attorneys and
proxies for the undersigned, with power of substitution, to act for and to
vote, as designated herein, with the same force and effect as the undersigned,
all shares of the Company's Cumulative Preferred Stock - Series A standing in
the name of the undersigned at the Annual Meeting of Stockholders of
Connecticut Water Service, Inc. to be held at the Company's Corporate Offices,
93 West Main Street, Clinton, Connecticut, April 24, 1998, at 2 p.m., and any
adjournments thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL GRANT
AUTHORITY TO VOTE FOR ALL NOMINEES FOR DIRECTOR AND WILL BE VOTED "FOR"
PROPOSALS, (2, 3A, 3B, 4, AND 5 ). IN THEIR DISCRETION, THE PROXIES WILL BE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
The undersigned hereby acknowledges receipt of notice of said meeting and the
related Proxy Statement.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
______________________________ _____________________________________
______________________________ _____________________________________
______________________________ _____________________________________
<PAGE>
PLEASE MARK VOTES AS IN THIS EXAMPLE
For With- For All
1) For election of all Directors, Hold Except
Marshall T. Chiaraluce, Charles E. Gooley,
Marcia L. Hincks, Robert F. Neal / / / / / /
If you do not wish your shares voted "FOR" a particular nominee, mark the "For
All Except" box and strike a line through the nominee(s) name. Your shares
will be voted for the remaining nominee(s).
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date______________________
________________________________ ______________________________
Shareholder sign here Co-owner sign here
2) Appointment of Arthur Andersen LLP For Against Abstain
as independent Auditors. / / / / / /
For Against Abstain
3a) Approval of Conforming Amendments. / / / / / /
For Against Abstain
3b) Approval of Corrective Amendment. / / / / / /
For Against Abstain
4) Approval of Indemnification Amendment. / / / / / /
For Against Abstain
5) Approval of Corporate Governance Amendment. / / / / / /
Mark box at right if comments or address change / /
have been noted on the reverse side of this card.
DETACH CARD
CONNECTICUT WATER SERVICE, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy material.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, April
24, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Connecticut Water Service, Inc.
