DEFERRED COMPENSATION PLAN
Published on March 27, 2001
Exhibit 10.22
CALIFORNIA WATER SERVICE GROUP
DEFERRED COMPENSATION PLAN
As Amended and Restated
Effective January 1, 2001
2
California Water Service Company
Supplemental Executive Retirement Plan
================================================================================
PURPOSE .................................................................1
ARTICLE 1 DEFINITIONS......................................................1
1.1 "Account Balance"............................................1
1.2 "Annual Base Salary".........................................1
1.3 "Annual Company Matching Amount".............................1
1.4 "Annual Deferral Amount".....................................1
1.5 "Annual Installment Method"..................................2
1.6 "Beneficiary"................................................2
1.7 "Beneficiary Designation Form" ..............................2
1.8 "Board" .....................................................2
1.9 "Change in Control"..........................................2
1.10 "Claimant" ..................................................3
1.11 "Code" ......................................................3
1.12 "Committee" .................................................3
1.13 "Company" ...................................................3
1.14 "Company Contribution Account"...............................3
1.15 "Company Contribution Amount"................................3
1.16 "Company Matching Account" ..................................3
1.17 "Deduction Limitation" ......................................3
1.18 "Deferral Account" ..........................................4
1.19 "Director" ..................................................4
1.20 "Directors Fees" ............................................4
1.21 "Disability" or "Disabled"...................................4
1.22 "Disability Benefit".........................................4
1.23 "Election Form"..............................................4
1.24 "Employee"...................................................4
1.25 "Employer(s)"................................................5
1.26 "ERISA"......................................................5
1.27 "401(k) Plan"................................................5
1.28 "Maximum 401(k) Amount"......................................5
1.29 "Meeting Fees"...............................................5
1.30 "Participant"................................................5
1.31 "Plan".......................................................5
1.32 "Plan Agreement".............................................5
1.33 "Plan Year"..................................................6
1.34 "Pre-Retirement Survivor Benefit"............................6
1.35 "Retirement," "Retire(s)" or "Retired".......................6
1.36 "Retirement Benefit".........................................6
1.37 "Short-Term Payout"..........................................6
1.38 "Termination Benefit"........................................6
1.39 "Termination of Employment"..................................6
1.40 "Trust"......................................................6
________________________________________________________________________________
1.41 "Unforeseeable Financial Emergency"..........................6
1.42 "Valuation Date".............................................7
1.43 "Withdrawal Amount"..........................................7
1.44 "Years of Service"...........................................7
ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY...............................7
2.1 Selection by Committee.......................................7
2.2 Enrollment Requirements......................................7
2.3 Eligibility; Commencement of Participation...................7
2.4 Termination of Participation and/or Deferrals................8
ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES............8
3.1 Minimum and Maximum Deferrals................................8
3.2 Election to Defer; Effect of Election Form...................9
3.3 Withholding of Annual Deferral Amounts.......................9
3.4 Other Annual Deferral Amounts................................9
3.5 Annual Company Matching Amount...............................9
3.6 Company Contribution Amount.................................10
3.7 Investment of Trust Assets..................................10
3.8 Vesting.....................................................10
3.9 Crediting/Debiting of Account Balances......................11
3.10 FICA and Other Taxes........................................12
3.11 Forfeiture for Criminal Acts................................13
ARTICLE 4 SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL
EMERGENCIES; WITHDRAWAL ELECTION................................13
4.1 Short-Term Payout...........................................13
4.2 Other Benefits Take Precedence Over Short-Term..............14
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies.................................................14
4.4 Withdrawal Election.........................................14
ARTICLE 5 RETIREMENT BENEFIT..............................................14
5.1 Retirement Benefit..........................................14
5.2 Payment of Retirement Benefit...............................15
5.3 Death Prior to Completion of Retirement Benefit.............15
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT.................................15
6.1 Pre-Retirement Survivor Benefit.............................15
ARTICLE 7 TERMINATION BENEFIT.............................................15
7.1 Termination Benefit.........................................15
ARTICLE 8 DISABILITY DEFERRALS, WAIVER AND BENEFIT........................16
8.1 Disability..................................................16
8.2 Continued Eligibility; Disability Benefit...................16
ARTICLE 9 BENEFICIARY DESIGNATION.........................................17
9.1 Beneficiary.................................................17
9.2 Beneficiary Designation; Change; Spousal Consent............17
9.3 Acknowledgment..............................................17
9.4 No Beneficiary Designation..................................17
9.5 Doubt as to Beneficiary.....................................17
9.6 Discharge of Obligations....................................18
ARTICLE 10 LEAVE OF ABSENCE................................................18
10.1 Paid Leave of Absence.......................................18
10.2 Unpaid Leave of Absence.....................................18
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION..........................18
11.1 Termination.................................................18
11.2 Amendment...................................................19
11.3 Plan Agreement..............................................19
11.4 Effect of Payment...........................................19
ARTICLE 12 ADMINISTRATION..................................................20
12.1 Committee Duties............................................20
12.2 Administration Upon Change In Control.......................20
12.3 Agents......................................................20
12.4 Binding Effect of Decisions.................................21
12.5 Indemnity of Committee......................................21
12.6 Employer Information........................................21
ARTICLE 13 OTHER BENEFITS AND AGREEMENTS...................................21
13.1 Coordination with Other Benefits............................21
ARTICLE 14 CLAIMS PROCEDURES...............................................21
14.1 Presentation of Claim.......................................21
14.2 Notification of Decision....................................22
14.3 Review of a Denied Claim....................................22
14.4 Decision on Review..........................................22
14.5 Legal Action................................................23
ARTICLE 15 TRUST...........................................................23
15.1 Establishment of the Trust..................................23
15.2 Interrelationship of the Plan and the Trust.................23
15.3 Distributions From the Trust................................23
ARTICLE 16 MISCELLANEOUS...................................................23
16.1 Status of Plan..............................................23
16.2 Unsecured General Creditor..................................23
16.3 Employer's Liability........................................24
16.4 Nonassignability............................................24
16.5 Not a Contract of Employment................................24
16.6 Furnishing Information......................................24
16.7 Terms.......................................................24
16.8 Captions....................................................24
16.9 Governing Law...............................................25
16.10 Notice......................................................25
16.11 Successors..................................................25
16.12 Spouse's Interest...........................................25
16.13 Incompetent.................................................25
16.14 Court Order.................................................25
16.15 Distribution in the Event of Taxation.......................26
16.16 Insurance...................................................26
16.17 Legal Fees To Enforce Rights After Change in Control........26
Purpose
The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated Employees and Directors who
contribute materially to the continued growth, development and future business
success of California Water Service Group, a California corporation, and its
subsidiaries and affiliates, if any, that sponsor this Plan. This Plan shall be
unfunded for tax purposes and for purposes of Title I of ERISA. The Plan was
first effective January 1, 1998 and is amended effective January 1, 2001 as
restated in this document.
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
"Account Balance" shall mean, with respect to a Participant, a
credit on the records of the Employer equal
to the sum of (i) the Deferral Account
balance, (ii) the vested Company Matching
Account balance and (iii) the vested
Company Contribution Account balance. The
Account Balance, and each other specified
account balance, shall be a bookkeeping
entry only and shall be utilized solely as
a device for the measurement and
determination of the amounts to be paid to
a Participant, or his or her designated
Beneficiary, pursuant to this Plan.
"Annual Base Salary" shall mean the annual cash compensation
relating to services performed during any
calendar year as listed on an Employer's
payroll records. Annual Base Salary shall
be calculated before reduction for
compensation voluntarily deferred or
contributed by the Participant pursuant to
all qualified or non-qualified plans of any
Employer and shall be calculated to include
amounts not otherwise included in the
Participant's gross income under Code
Sections 125 or 402(e)(3) pursuant to plans
established by any Employer; provided,
however, that all such amounts will be
included in
compensation only to the extent that, had
there been no such plan the amount would
have been payable in cash tot he
Participant.
"Annual Company Matching Amount" for any one Plan Year shall
be the amount determined in accordance with
Section 3.5.
"Annual Deferral Amount" shall mean that portion of a
Participant's Annual Base Salary and
Directors Fees that a Participant elects to
have, and is deferred, in accordance with
Article 3, for any one Plan Year. In the
event of a Participant's Retirement,
Disability (if deferrals cease in
accordance with Section 8.1), death or a
Termination of Employment prior to the end
of a Plan Year, such year's Annual Deferral
Amount shall be the actual amount withheld
prior to such event.
"Annual Installment Method" shall be an annual installment
payment over the number of years selected
by the Participant in accordance with
section 5.2 of this Plan, calculated as
follows: The Account Balance of the
Participant shall be calculated not later
than the close of business on the last
business day of the year, or sooner if
approved by the Committee. The annual
installment shall be calculated by
multiplying this balance by a fraction, the
numerator of which is one, and the
denominator of which is the remaining
number of annual payments due the
Participant. By way of example, if the
Participant elects the 5-year Annual
Installment Method, the first payment shall
be one-fifth (1/5) of the Account Balance,
calculated as described in this definition.
The following year, the payment shall be
one-fourth (1/4) of the Account Balance,
calculated as described in this definition.
"Beneficiary" shall mean one or more persons, trusts, estates
or other entities, designated in accordance
with Article 9, that are entitled to
receive benefits under this Plan upon the
death of a Participant.
"Beneficiary Designation Form" shall mean the form established
from time to time by the Committee that a
Participant completes, signs and returns to
the Committee to designate one or more
Beneficiaries.
"Board" shall mean the board of directors of the California
Water Service Group.
"Change in Control" shall be deemed to take place on the
occurrence of any of the following events:
(a) Any merger or consolidation of the California Water Service
Group or California Water Service Company ("Target Entity")
after which such Target Entity is not the surviving
organization, a majority of the capital stock of which is not
owned by the shareholders of the Target Entity immediately
prior to such merger or consolidation;
(b) A transfer of all or substantially all of the assets of the
Target Entity;
(c) Any other corporate reorganization in which there is a change
in ownership of the outstanding shares of the Target Entity
wherein thirty percent (30%) or more of the outstanding shares
of the Target Entity are transferred to any person;
(d) The acquisition by or transfer to a person (including all
affiliates or associates of such person) of "beneficial
ownership" (as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of capital stock of Target
Entity if after such acquisition or transfer such person (and
their affiliates or associates) is entitled to exercise thirty
percent (30%) or more of the outstanding voting power of all
capital stock of Target Entity entitled to vote in elections
of directors;
(e) The election to the Board of Directors of California Water
Service Group of candidates who were not recommended for
election by the Board of Directors of California Water Service
Group in office immediately prior to the election, if such
candidates constitute a majority of those elected in that
particular election; or
(f) Any other corporate reorganization, merger or consolidation
immediately after which thirty percent (30%) or more of the
stock ownership of the surviving company's outstanding shares
is owned by a person (or their affiliates and associates) who
did not own shares of the Target Entity immediately before the
transaction.
"Claimant" shall have the meaning set forth in Section 14.1.
"Code" shall mean the Internal Revenue Code of 1986, as it
may be amended from time to time.
"Committee" shall mean the committee described in Article 12.
"Company"shall mean California Water Service Group, a
California corporation, and any successor
to all or substantially all of the
Company's assets or business.
1.2 "Company Contribution Account" shall mean (i) the sum of the
Participant's Company Contribution Amounts, plus (ii) amounts credited
in accordance with all the applicable crediting provisions of this Plan
that relate to the Participant's Company Contribution Account, less
(iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Participant's
Company Contribution Account.
1.3 "Company Contribution Amount" shall mean, for any Plan Year, any amount
determined in accordance with Section 3.6.
"Company Matching Account" shall mean (i) the sum of all of a
Participant's Annual Company Matching
Amounts, plus (ii) amounts credited in
accordance with all the applicable
crediting provisions of this Plan that
relate to the Participant's Company
Matching Account, less (iii) all
distributions made to the Participant or
his or her Beneficiary pursuant to this
Plan that relate to the Participant's
Company Matching Account.
"Deduction Limitation" shall mean the following described
limitation on a benefit that may otherwise
be distributable pursuant to the provisions
of this Plan. Except as otherwise provided,
this limitation shall be applied to all
distributions that are "subject to the
Deduction Limitation" under this Plan. If
an Employer determines in good faith prior
to a Change in Control that there is a
reasonable likelihood that any compensation
paid to a Participant for a taxable year of
the Employer would not be deductible by the
Employer by reason of the limitation under
Code Section 162(m) or 280G, then to the
extent deemed necessary by the
Employer to ensure that the entire amount
of any distribution to the Participant
pursuant to this Plan prior to the Change
in Control is deductible, the Employer may
defer all or any portion of a distribution
under this Plan. Any amounts deferred
pursuant to this limitation shall continue
to be credited/debited with additional
amounts in accordance with Section 3.9
below, even if such amount is being paid
out in installments. The amounts so
deferred and amounts credited thereon shall
be distributed to the Participant or his or
her Beneficiary (in the event of the
Participant's death) at the earliest
possible date, as determined by the
Employer in good faith, on which the
deductibility of compensation paid or
payable to the Participant for the taxable
year of the Employer during which the
distribution is made will not be limited by
Section 162(m) or Section 280G, or if
earlier, the effective date of a Change in
Control. Notwithstanding anything to the
contrary in this Plan, the Deduction
Limitation shall not apply to any
distributions made after a Change in
Control.
"Deferral Account" shall mean (i) the sum of all of a
Participant's Annual Deferral Amounts, plus
(ii) amounts credited in accordance with
all the applicable crediting provisions of
this Plan that relate to the Participant's
Deferral Account, less (iii) all
distributions made to the Participant or
his or her Beneficiary pursuant to this
Plan that relate to his or her Deferral
Account.
"Director" shall mean any member of the board of directors of
any Employer.
"Directors Fees" shall mean the fees paid by any Employer
during a Plan Year, including retainer fees
and special awards, as compensation for
serving on the board of directors.
"Disability" or "Disabled" shall mean a period of disability
during which a Participant qualifies for
permanent disability benefits under the
Participant's Employer's long-term
disability plan, or, if a Participant does
not participate in such a plan, a period of
disability during which the Participant
would have qualified for permanent
disability benefits under such a plan had
the Participant been a participant in such
a plan, as determined in the sole
discretion of the Committee. If the
Participant's Employer does not sponsor
such a plan, or discontinues to sponsor
such a plan, Disability shall be determined
by the Committee in its sole discretion.
"Disability Benefit" shall mean the benefit set forth in
Article 8.
"ElectionForm" shall mean the form established from time to
time by the Committee that a Participant
completes, signs and returns to the
Committee to make an election under the
Plan.
"Employee" shall mean a person who is an employee of any
Employer.
"Employer(s)" shall mean the Company, including any of its
subsidiaries or affiliates (now in
existence or hereafter formed or acquired)
that have been designated by the Board to
participate in the Plan.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as it may be amended from time
to time.
"401(k) Plan" shall be the California Water Service Company
Savings Plan and Trust Agreement, as most
recently amended or restated by California
Water Service Company.
"Maximum 401(k) Amount" with respect to a Participant, shall
be the maximum amount of elective
contributions that can be made by such
Participant, consistent with Code Section
402(g) and the limitations of Code Section
401(k)(3), for a given plan year under the
401(k) Plan.
"Meeting Fees" shall mean the fees paid to a Director by an
Employer for attending meetings of the
board or committees of the board of such
Employer or the Company.
"Participant" shall mean any Employee or Director (i) who is
selected to participate in the Plan, (ii)
who elects to participate in the Plan,
(iii) who signs a Plan Agreement, an
Election Form and a Beneficiary Designation
Form, (iv) whose signed Plan Agreement,
Election Form and Beneficiary Designation
Form are accepted by the Committee, (v) who
commences participation in the Plan, and
(vi) whose Plan Agreement has not
terminated. A spouse or former spouse of a
Participant shall not be treated as a
Participant in the Plan or have an account
balance under the Plan, even if he or she
has an interest in the Participant's
benefits under the Plan as a result of
applicable law or property settlements
resulting from legal separation or divorce.
"Plan" shall mean the Company's Deferred Compensation Plan,
which shall be evidenced by this instrument
and by each Plan Agreement, as they may be
amended from time to time.
"Plan Agreement" shall mean a written agreement, as may be
amended from time to time, which is entered
into by and between an Employer and a
Participant. Each Plan Agreement executed
by a Participant and the Participant's
Employer shall provide for the deferral of
Annual Base Salary, at the Participant's
election entire benefit to which such
Participant is entitled under the Plan;
should there be more than one Plan
Agreement, the Plan Agreement bearing the
latest date of acceptance by the Employer
shall supersede all previous Plan
Agreements in their
entirety and shall govern such entitlement.
The terms of any Plan Agreement may be
different for any Participant, and any Plan
Agreement may provide additional benefits
not set forth in the Plan or limit the
benefits otherwise provided under the Plan;
provided, however, that any such additional
benefits or benefit limitations must be
agreed to by both the Employer and the
Participant.
"Plan Year" shall, except for the First Plan Year, mean a
period beginning on January 1 of each
calendar year and continuing through
December 31 of such calendar year.
"Pre-Retirement Survivor Benefit" shall mean the benefit set
forth in Article 6.
"Retirement," "Retire(s)" or "Retired" shall mean, with
respect to an Employee, severance from
employment from all Employers for any
reason other than a leave of absence, death
or Disability on or after the date at which
the age plus Years of Service total 60; and
shall mean with respect to a Director who
is not an Employee, severance of his or her
directorships with all Employers on or
after the later of (y) the attainment of
age seventy-five (75), or age seventy (70)
if the Director is also an Employee, or (z)
in the sole discretion of the Committee, an
age later than age seventy-five (75), or
age seventy (70) if the Director is also an
Employee. If a Participant is both an
Employee and a Director, Retirement shall
not occur until he or she Retires as both
an Employee and a Director, which
Retirement shall be deemed to be a
Retirement as a Director; provided,
however, that such a Participant may elect,
at least three years prior to Retirement
and in accordance with the policies and
procedures established by the Committee, to
Retire for purposes of this Plan at the
time he or she Retires
as an Employee, which Retirement shall be
deemed to be a Retirement as an Employee.
"Retirement Benefit" shall mean the benefit set forth in
Article 5.
"Short-Term Payout" shall mean the payout set forth in Section
4.1.
"Termination Benefit" shall mean the benefit set forth in
Article 7.
"Termination of Employment" shall mean the severing of
employment with all Employers, or service
as a Director of all Employers, voluntarily
or involuntarily, for any reason other than
Retirement, Disability, death or an
authorized leave of absence. If a
Participant is both an Employee and a
Director, a Termination of Employment shall
occur only upon the termination of the last
position held; provided, however, that such
a Participant may elect, at least three
years before Termination of Employment and
in accordance with the policies and
procedures established by the Committee, to
be treated for purposes of this Plan as
having experienced a Termination of
Employment at the time he or she ceases
employment with an Employer as an Employee.
"Trust" shall mean one or more trusts established pursuant to
that certain Master Trust Agreement, dated
as of January 1, 2001 between the Company
and the trustee named therein, as amended
from time to time.
"Unforeseeable Financial Emergency" shall mean an
unanticipated emergency that is caused by
an event beyond the control of the
Participant that would result in severe
financial hardship to the Participant
resulting from (i) a sudden and unexpected
illness or accident of the Participant or a
dependent of the Participant, (ii) a loss
of the Participant's property due to
casualty, or (iii) such other extraordinary
and unforeseeable circumstances arising as
a result of events beyond the control of
the Participant, all as determined in the
sole discretion of the Committee.
"Valuation Date" shall mean the date, no more than 30 days
before a distribution, that a Participant's
account is valued for the purposes of
calculating the amount of a distribution,
as determined by the Committee.
"Withdrawal Amount" shall mean the amount elected by a
Participant as a distribution pursuant to
Section 4.4 (net of the 10% withdrawal
penalty).
"Years of Service" shall mean the total number of full years
in which a Participant has been employed by
one or more Employers. For purposes of this
definition, a year of employment shall be a
365-day period (or 366-day period in the
case of a leap year) that, for the first
year of employment, commences on the
Employee's date of hiring and that, for any
subsequent year, commences on an
anniversary of that hiring date. Any
partial year of employment shall not be
counted.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be limited to a
select group of management and highly compensated Employees and
Directors of the Employers, as determined by the Committee in its sole
discretion. From that group, the Committee shall select, in its sole
discretion, Employees and Directors to participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation, each selected
Employee or Director shall complete, execute and return to the
Committee a Plan Agreement, an Election Form and a Beneficiary
Designation Form, all within 30 days after he or she is selected to
participate in the Plan. In addition, the Committee shall establish
from time to time such other enrollment requirements as it determines
in its sole discretion are necessary.
2.3 Eligibility; Commencement of Participation. Provided an Employee or
Director selected to participate in the Plan has met all enrollment
requirements set forth in this Plan and required by the Committee,
including returning all required documents to the Committee within the
specified time period, that Employee or Director shall commence
participation
in the Plan on the first day of the month following the month in which
the Employee or Director completes all enrollment requirements. If an
Employee or a Director fails to meet all such requirements within the
period required, in accordance with Section 2.2, that Employee or
Director shall not be eligible to participate in the Plan until the
first day of the Plan Year following the delivery to and acceptance by
the Committee of the required documents.
2.4 Termination of Participation and/or Deferrals. If the Committee
determines in good faith that a Participant no longer qualifies as a
member of a select group of management or highly compensated employees,
as membership in such group is determined in accordance with Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the
right, in its sole discretion, to (i) terminate any deferral election
the Participant has made for the remainder of the Plan Year in which
the Participant's membership status changes, (ii) prevent the
Participant from making future deferral elections and/or (iii)
immediately distribute the Participant's then Account Balance as a
Termination Benefit and terminate the Participant's participation in
the Plan.
ARTICLE 3
Deferral Commitments/Company Matching/Crediting/Taxes
3.1 Minimum and Maximum Deferrals.
(a) Annual Base Salary and Director's Fees. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral
Amount, Annual Base Salary and/or Director's Fees and Meeting
Fees in the following minimum amounts and applicable
percentage for each deferral elected:
- ---------------------------------- ------------------- -------------------------
Deferral Minimum Amount Maximum Percentage
- ---------------------------------- ------------------- -------------------------
Annual Base Salary $5,000 50%
- ---------------------------------- ------------------- -------------------------
Directors Fees and Meeting $5,000 100%
Fees (combined)
- ---------------------------------- ------------------- -------------------------
If an election is made for less than stated minimum amounts or
percentage, or if no election is made, the amount deferred
shall be zero.
(b) Short Plan Year. Notwithstanding the foregoing, if a
Participant first becomes a Participant after the first day of
a Plan Year, the minimum Annual Base Salary deferral shall be
an amount equal to the minimum set forth above, multiplied by
a fraction, the numerator of which is the number of complete
months remaining in the Plan Year and the denominator of which
is 12. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan
Year, the maximum Annual Deferral Amount, with respect to
Annual Base Salary, Directors Fees and Meeting Fees, shall be
limited to the amount of compensation not yet earned by the
Participant as of the date the Participant submits a Plan
Agreement and Election Form to the Committee for acceptance.
3.2 Election to Defer; Effect of Election Form.
(a) First Plan Year. In connection with a Participant's
commencement of participation in the Plan, the Participant
shall make an irrevocable deferral election for the Plan Year
in which the Participant commences participation in the Plan,
along with such other elections as the Committee deems
necessary or desirable under the Plan. For these elections to
be valid, the Election Form must be completed and signed by
the Participant, timely delivered to the Committee (in
accordance with Section 2.2 above) and accepted by the
Committee.
(b) Subsequent Plan Years. For each succeeding Plan Year, an
irrevocable deferral election for that Plan Year, and such
other elections as the Committee deems necessary or desirable
under the Plan, shall be made by timely delivering to the
Committee, in accordance with its rules and procedures, before
the end of the Plan Year preceding the Plan Year for which the
election is made, a new Election Form. If no such Election
Form is timely delivered for a Plan Year, the Annual Deferral
Amount shall be zero for that Plan Year.
3.3 Withholding of Annual Deferral Amounts. For each Plan Year, the Annual
Base Salary portion of the Annual Deferral Amount shall be withheld
from each regularly scheduled Annual Base Salary payroll in equal
amounts, as adjusted from time to time for increases and decreases in
Annual Base Salary. The Directors Fees or Meeting Fees portion of the
Annual Deferral Amount shall be withheld at the time the fees are or
otherwise would be paid to the Participant, whether or not this occurs
during the Plan Year itself.
3.4 Other Annual Deferral Amounts. Any portion of a Participant's Annual
Base Salary that is determined in good faith by the Employer as subject
to a reasonable likelihood of not being deductible by the Employer
solely by reason of sections 162(m) or 280G of the Code, shall, at the
discretion of the Committee, be treated as an Annual Deferral Amount.
Such amount shall be deemed to be an Annual Deferral Amount in the
taxable year of the Employer during which a loss of deduction would
occur.
3.5 Annual Company Matching Amount. A Participant's Annual Company Matching
Amount for any Plan Year shall be made by a Participant's Employer and
shall be equal to 50% of the Participant's Annual Deferral Amount for
such Plan Year, up to an amount that does not exceed 4% of the
Participant's Annual Base Salary, reduced by the amount of any matching
contributions made to the 401(k) Plan on his or her behalf for the plan
year of the 401(k) Plan that corresponds to the Plan Year. If a
Participant is not employed by an Employer, or is no longer providing
services as a Director, as of the last day of a Plan Year other than by
reason of his or her Retirement or death, the Annual Company Matching
Amount for such Plan Year shall be zero. In the event of Retirement or
death,
a Participant shall be credited with the Annual Company Matching Amount
for the Plan Year in which he or she Retires or dies.
3.6 Company Contribution Amount. For each Plan Year, an Employer in its
sole discretion may, but is not required to, credit any amount it
desires to any Participant's Company Contribution Account under this
Plan, which amount shall be for that Participant the Company
Contribution Amount for that Plan Year. The amount so credited to a
Participant may be smaller or larger than the amount credited to any
other Participant, and the amount credited to any Participant for a
Plan Year may be zero, even though one or more other Participants
receive a Company Contribution Amount for that Plan Year. The Company
Contribution Amount, if any, shall be credited no later than the last
day of the Plan Year. If a Participant is not employed by an Employer
no later than the last day of a Plan Year other than by reason of his
or her Retirement or death while employed, the Company Contribution
Amount for that Plan Year shall be zero.
3.7 Investment of Trust Assets. The Trustee of the Trust shall be
authorized, upon written instructions received from the Committee or
investment manager appointed by the Committee, to invest and reinvest
the assets of the Trust in accordance with the applicable Trust
Agreement, including the disposition of stock and reinvestment of the
proceeds in one or more investment vehicles designated by the
Committee.
3.8 Vesting.
(a) Subject to section 3.11, a Participant shall at all times be
100% vested in his or her Deferral Account and Company
Matching Account.
(b) Subject to Section 3.11, a Participant shall be 100% vested in
his or her Company Contribution Account upon death, disability
or Retirement. Prior to death, Disability or Retirement, a
Participant shall be vested in his or her Company Contribution
Account in accordance with the vesting of each Company
Contribution Amount, as directed by the Employer in its
discretion, at the time such contribution is credited to the
Company Contribution Account. If the Employer fails to direct
the vesting, the Committee shall direct the vesting of any
Company Contribution Amount.
(c) Notwithstanding anything to the contrary contained in this
Section 3.8, in the event of a Change in Control, a
Participant's Company Contribution Account shall immediately
become 100% vested (if it is not already vested in accordance
with the above vesting schedules).
(d) Notwithstanding subsection (c), at the Committee's discretion,
the vesting schedule for a Participant's Company Matching
Account may not be accelerated to the extent that the
Committee determines that such acceleration would cause the
deduction limitations of Section 280G of the Code to become
effective. In the event that all of a Participant's Company
Contribution Account and/or Company Matching Account is not
vested pursuant to such a determination, the Participant may
request independent verification of the Committee's
calculations with respect
to the application of Section 280G. In such case, the
Committee must provide to the Participant within 45 business
days of such a request an opinion from a nationally recognized
accounting firm selected by the Participant (the "Accounting
Firm"). The opinion shall state the Accounting Firm's opinion
that any limitation in the vested percentage hereunder is
necessary to avoid the limits of Section 280G and contain
supporting calculations. The cost of such opinion shall be
paid for by the Company.
3.9 Crediting/Debiting of Account Balances. In accordance with, and subject
to, the rules and procedures that are established from time to time by
the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the
following rules:
(a) Election of Measurement Funds. A Participant, in connection
with his or her initial deferral election in accordance with
Section 3.2(a) above, shall elect, on the Election Form, one
or more Measurement Fund(s) (as described in Section 3.9(c)
below) to be used to determine the additional amounts to be
credited to his or her Account Balance each business day on
which the Participant participates in the Plan, unless changed
in accordance with the next sentence. The Participant may (but
is not required to) elect, by submitting an Election Form to
the Committee that is accepted by the Committee, to change the
portion of his or her Account Balance allocated to each
previously or newly elected Measurement Fund and such election
shall be effective as soon as practicable.
(b) Proportionate Allocation. In making any election described in
Section 3.9(a) above, the Participant shall specify on the
Election Form, in increments of one (1) percentage points
(1%), the percentage of his or her Account Balance to be
allocated to a Measurement Fund (as if the Participant was
making an investment in that Measurement Fund with that
portion of his or her Account Balance).
(c) Measurement Funds. The Participant may elect one or more of
the measurement funds, based on certain mutual funds (the
"Measurement Funds") selected by the Committee and
communicated to the Participants for the purpose of crediting
additional amounts to his or her Account Balance
As necessary, the Committee may, in its sole discretion,
discontinue, substitute or add a Measurement Fund at anytime.
Each such action will take effect no later than the first day
of the calendar quarter that follows by thirty (30) days the
day on which the Committee gives Participants advance written
notice of such change.
(d) Crediting or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) will be
determined by the Committee, in its reasonable discretion,
based on the performance of the Measurement Funds themselves.
A Participant's Account Balance shall be credited or debited
on a daily basis based on the performance of each Measurement
Fund selected by the Participant, as determined by the
Committee in its sole discretion, as though (i) a
Participant's Account Balance were invested in the Measurement
Fund(s) selected
by the Participant, in the percentages applicable to such
Participant's Account, as of the close of business on each
business day, at the closing price on such date, subject to
reasonable delays for credits or debits after the Eastern
Standard Time close of the day's markets for publicly traded
funds; (ii) the portion of the Annual Deferral Amount that was
actually deferred during any calendar month were invested in
the Measurement Fund(s) selected by the Participant, in the
percentages applicable to such month, no later than the close
of business on the first business day after the day on which
such amounts are actually deferred from the Participant's
Annual Base Salary through reductions in his or her payroll,
at the closing price on such date; and (iii) any distribution
made to a Participant that decreases such Participant's
Account Balance ceased being invested in the Measurement
Fund(s), in the percentages applicable to such Participant's
Account, no earlier than the Valuation Date, at the closing
price on such date. The Participant's Annual Company Matching
Amount shall be credited to his or her Company Matching
Account for purposes of this Section 3.9(d) no later than the
close of business on the first business day in February of the
Plan Year following the Plan Year to which it relates.
(e) No Actual Investment. Notwithstanding any other provision of
this Plan that may be interpreted to the contrary, the
Measurement Funds are to be used for measurement purposes
only, and a Participant's election of any such Measurement
Fund, the allocation to his or her Account Balance thereto,
the calculation of additional amounts and the crediting or
debiting of amounts to a Participant's Account Balance shall
not be considered or construed in any manner as an actual
investment of his or her Account Balance in any such
Measurement Fund. In the event that the Company or the Trustee
(as that term is defined in the Trust), in its own discretion,
decides to invest funds in any or all of the Measurement
Funds, no Participant shall have any rights in or to such
investments themselves. Without limiting the foregoing, a
Participant's Account Balance shall at all times be a
bookkeeping entry only and shall not represent any investment
made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of
the Company.
3.10 FICA and Other Taxes.
(a) Annual Deferral Amounts. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of
the Participant's Annual Base Salary that is not being
deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes on such
Annual Deferral Amount. If necessary, the Committee may reduce
the Annual Deferral Amount in order to comply with this
Section 3.10.
(b) Company Matching Amounts. When a participant becomes vested in
a portion of his or her Company Matching Account, the
Participant's Employer(s) shall withhold from the
Participant's Annual Base Salary that is not deferred, in a
manner determined by the Employer(s), the Participant's share
of FICA and other
employment taxes. If necessary, the Committee may reduce the
vested portion of the Participant's Company Matching Account
in order to comply with this Section 3.10.
(c) Distributions. The Participant's Employer(s), or the trustee
of the Trust, shall withhold from any payments made to a
Participant under this Plan all federal, state and local
income, employment and other taxes required to be withheld by
the Employer(s), or the trustee of the Trust, in connection
with such payments, in amounts and in a manner to be
determined in the sole discretion of the Employer(s) and the
trustee of the Trust.
3.11 Forfeiture for Criminal Acts. Any Participant who admits or pleads "no
contest" to, or is convicted of, any criminal act against any Employer
shall forfeit all rights and benefits under the Plan (excluding a
Participant's aggregate Annual Deferral Amounts), regardless of age or
service.
ARTICLE 4
Short-Term Payout; Unforeseeable Financial Emergencies;
Withdrawal Election
4.1 Short-Term Payout. In connection with each election to defer an Annual
Deferral Amount, a Participant may irrevocably elect to receive a
future Short-Term Payout from the Plan with respect to such Annual
Deferral Amount. Subject to the Deduction Limitation, the Short-Term
Payout shall be a lump-sum payment in an amount that is equal to the
Annual Deferral Amount plus amounts credited or debited in the manner
provided in Section 3.9 above on that amount, determined at the
Valuation Date preceding the time that the Short-Term Payout becomes
payable (rather than the date of a Termination of Employment). Subject
to the Deduction Limitation and the other terms and conditions of this
Plan, each Short-Term Payout elected shall be paid out during a 60-day
period commencing immediately after the last day of any Plan Year
designated by the Participant that is at least three Plan Years after
the Plan Year in which the Annual Deferral Amount is actually deferred.
By way of example, if a three-year, Short-Term Payout is elected for
Annual Deferral Amounts that are deferred in the Plan Year commencing
January 1, 2001, the three-year, Short-Term Payout would become payable
during a 60-day period commencing January 1, 2005.
4.2 Other Benefits Take Precedence Over Short-Term. Should an event occur
that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral
Amount, plus amounts credited or debited thereon, that is subject to a
Short-Term Payout election under Section 4.1 shall not be paid in
accordance with Section 4.1 but shall be paid in accordance with the
other applicable Article.
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies.
If the Participant experiences an Unforeseeable Financial Emergency,
the Participant may petition the Committee to (i) suspend any deferrals
required to be made by a Participant and/or (ii) receive a partial or
full payout from the Plan. The payout shall not exceed the lesser of
the Participant's Account Balance, calculated as if such Participant
were
receiving a Termination Benefit, or the amount reasonably needed to
satisfy the Unforeseeable Financial Emergency. If, subject to the sole
discretion of the Committee, the petition for a suspension and/or
payout is approved, suspension shall take effect upon the date of
approval and any payout shall be made within 60 days of the date of
approval. The payment of any amount under this Section 4.3 shall not be
subject to the Deduction Limitation.
4.4 Withdrawal Election. A Participant (or, after a Participant's death,
his or her Beneficiary) may elect, at any time, to withdraw all of his
or her Account Balance, calculated as if there had occurred a
Termination of Employment as of the day of the election, less a
withdrawal penalty equal to 10% of such amount resulting in the net
Withdrawal Amount. This election can be made at any time, before or
after Retirement, Disability, death or Termination of Employment, and
whether or not the Participant (or Beneficiary) is in the process of
being paid pursuant to an installment payment schedule. If made before
Retirement, Disability or death, a Participant's Withdrawal Amount
shall be his or her Account Balance calculated as if there had occurred
a Termination of Employment as of the day of the election. No partial
withdrawals of the Withdrawal Amount shall be allowed. The Participant
(or his or her Beneficiary) shall make this election by giving the
Committee advance written notice of the election in a form determined
from time to time by the Committee. The Participant (or his or her
Beneficiary) shall be paid the Withdrawal Amount within 60 days of his
or her election. Once the Withdrawal Amount is paid, the Participant's
participation in the Plan shall terminate and the Participant shall not
be eligible to participate in the Plan until the beginning of the
second Plan Year following the year in which the withdrawal occurs. The
payment of this Withdrawal Amount shall not be subject to the Deduction
Limitation.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her Account
Balance.
5.2 Payment of Retirement Benefit. A Participant, in connection with his or
her commencement of participation in the Plan, shall elect on an
Election Form to receive the Retirement Benefit in a lump sum or
pursuant to an Annual Installment Method of one (1) to fifteen (15)
years. The Participant may annually change his or her election to an
allowable alternative payout period by submitting a new Election Form
to the Committee, provided that any such Election Form is submitted at
least one year prior to the Participant's Retirement and is accepted by
the Committee in its sole discretion. The Election Form most recently
accepted by the Committee at least one year prior to retirement shall
govern the payout of the Retirement Benefit. If a Participant does not
make any election with respect to the payment of the Retirement
Benefit, then such benefit shall be payable in a lump sum. The lump-sum
payment in an amount determined as the Valuation Date, shall be made,
or installment payments shall commence, no later than 60 days after the
effective date of the Participant's Retirement. Installments payable
after the year of Retirement shall be paid by March 1 of each
subsequent year of such payments. Any payment made shall be subject to
the Deduction Limitation.
5.3 Death Prior to Completion of Retirement Benefit. If a Participant dies
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and
shall be paid to the Participant's Beneficiary (a) over the remaining
number of years and in the same amounts as that benefit would have been
paid to the Participant had the Participant survived, or (b) in a lump
sum, if requested by the Beneficiary and allowed in the sole discretion
of the Committee, that is equal to the Participant's unpaid remaining
Account Balance.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction Limitation,
the Participant's Beneficiary shall receive a Pre-Retirement Survivor
Benefit in a single lump sum equal to the Participant's Account Balance
as of the Valuation Date, if the Participant dies before he or she
Retires, experiences a Termination of Employment or suffers a
Disability. The lump-sum payment shall be made, no later than 60 days
after the last day of the Plan Year in which the Committee is provided
with proof that is satisfactory to the Committee of the Participant's
death. Any payment made shall be subject to the Deduction Limitation.
ARTICLE 7
Termination Benefit
7.1 Termination Benefit. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be a
lump-sum payment equal to the Participant's Account Balance as of the
Valuation Date if a Participant experiences a Termination of Employment
prior to his or her Retirement, death or Disability. The lump-sum
payment shall be made no later than 60 days after the last day of the
Plan Year in which the Participant experiences the Termination of
Employment. Any payment made shall be subject to the Deduction
Limitation.
ARTICLE 8
Disability Deferrals, Waiver and Benefit
8.1 Disability.
(a) Deferrals. A participant who is determined by the Committee to
be Disabled may continue to have the Annual Base Salary
portion of the Annual Deferral Amount withheld for any period
the Participant continues to receive 100% of his or her Annual
Base Salary that was in effect prior to his or her Disability.
(b) Waiver of Deferral. A Participant who is determined by the
Committee to be suffering from a Disability shall be excused
from fulfilling that portion of the Annual Deferral Amount
commitment that would otherwise have been withheld from a
Participant's Annual Base Salary or Directors Fees or Meeting
Fees for the Plan Year during which the Participant first
suffers a Disability only if less than 100% of Annual Base
Salary. During the period of Disability, the Participant shall
not be allowed to make any additional deferral elections, but
will continue to be considered a Participant for all other
purposes of this Plan.
(c) Return to Work. If a Participant returns to employment, or
service as a Director, with an Employer, after a Disability
ceases, the Participant may elect to defer an Annual Deferral
Amount for the Plan Year following his or her return to
employment or service and for every Plan Year thereafter while
a Participant in the Plan; provided such deferral elections
are otherwise allowed and an Election Form is delivered to and
accepted by the Committee for each such election in accordance
with Section 3.2 above.
8.2 Continued Eligibility; Disability Benefit. A Participant suffering a
Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed, or in the service of an Employer as a
Director, and shall be eligible for the benefits provided for in
Articles 4, 5, 6 or 7 in accordance with the provisions of those
Articles. Notwithstanding the above, the Committee shall have the right
to, in its sole and absolute discretion and for purposes of this Plan
only, and must in the case of a Participant who is otherwise eligible
to Retire, deem the Participant to have experienced a Termination of
Employment, or in the case of a Participant who is eligible to Retire,
to have Retired, at any time (or in the case of a Participant who is
eligible to Retire, as soon as practicable) after such Participant is
determined to be suffering a Disability, in which case the Participant
shall receive a Disability Benefit equal to his or her Account Balance
at the time of the Committee's determination; provided, however, that
should the Participant otherwise have been eligible to Retire, he or
she shall be paid in accordance with Article 5. The Disability Benefit
may be paid in a lump sum within 60 days of the Committee's exercise of
such right. In the event the Disability is determined by the Committee
to be permanent, the Participant shall be deemed to be eligible to
Retire and receive benefits in accordance with Article 5. Any payment
made shall be subject to the Deduction Limitation.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the
Participant participates.
9.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. If the Participant names
someone other than his or her spouse as a Beneficiary, a spousal
consent, in the form designated by the Committee, must be signed by
that Participant's spouse and returned to the Committee. Upon the
acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The
Committee shall be entitled to rely on the last
Beneficiary Designation Form filed by the Participant and accepted by
the Committee prior to his or her death.
9.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received and acknowledged in
writing by the Committee or its designated agent.
9.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the Participant's
estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion, to cause
the Participant's Employer to withhold such payments until this matter
is resolved to the Committee's satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in
accordance with Section 3.3.
10.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of
absence from the employment of the Employer, the Participant shall
continue to be considered employed by the Employer and the Participant
shall be excused from making deferrals until the earlier of the date
the leave of absence expires or the Participant returns to a paid
employment status. Upon such expiration or return, deferrals shall
resume for the remaining portion of the Plan Year in which the
expiration or return occurs, based on the deferral election, if any,
made for that Plan Year. If no election was made for that Plan Year, no
deferral shall be withheld.
ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. Although each Employer anticipates that it will continue
the Plan for an indefinite period of time, there is no guarantee that
any Employer will continue the Plan
or will not terminate the Plan at any time in the future. Accordingly,
each Employer reserves the right to discontinue its sponsorship of the
Plan and/or to terminate the Plan at any time with respect to any or
all of its participating Employees and Directors, by action of its
board of directors. Upon the termination of the Plan with respect to
any Employer, the Plan Agreements of the affected Participants who are
employed by that Employer, or in the service of that Employer as
Directors, shall terminate and their Account Balances, determined as if
they had experienced a Termination of Employment on the date of Plan
termination or, if Plan termination occurs after the date upon which a
Participant was eligible to Retire, then with respect to that
Participant as if he or she had Retired on the date of Plan
termination, shall be paid to the Participants as follows: Prior to a
Change in Control, if the Plan is terminated with respect to all of its
Participants, an Employer shall have the right, in its sole discretion,
and notwithstanding any elections made by the Participant, to pay such
benefits in a lump sum or pursuant to an Annual Installment Method of
up to 15 years, with amounts credited and debited during the
installment period as provided herein. If the Plan is terminated with
respect to less than all of its Participants, an Employer shall be
required to pay such benefits in a lump sum. After a Change in Control,
the Employer shall be required to pay such benefits in a lump sum. The
termination of the Plan shall not adversely affect any Participant or
Beneficiary who has become entitled to the payment of any benefits
under the Plan as of the date of termination; provided however, that
the Employer shall have the right to accelerate installment payments
without a premium or prepayment penalty by paying the Account Balance
in a lump sum or pursuant to an Annual Installment Method using fewer
years (provided that the present value of all payments that will have
been received by a Participant at any given point of time under the
different payment schedule shall equal or exceed the present value of
all payments that would have been received at that point in time under
the original payment schedule).
11.2 Amendment. Any board may, at any time, amend or modify the Plan in
whole or in part with respect to that Employer by the action of its
board of directors; provided, however, that: (i) no amendment or
modification shall be effective to decrease or restrict the value of a
Participant's Account Balance in existence at the time the amendment or
modification is made, calculated as if the Participant had experienced
a Termination of Employment as of the effective date of the amendment
or modification or, if the amendment or modification occurs after the
date upon which the Participant was eligible to Retire, the Participant
had Retired as of the effective date of the amendment or modification,
and (ii) no amendment or modification of this Section 11.2 or Section
12.2 of the Plan shall be effective. The amendment or modification of
the Plan shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under the Plan as of the date of
the amendment or modification; provided, however, that the Employer
shall have the right to accelerate installment payments by paying the
Account Balance in a lump sum or pursuant to an Annual Installment
Method using fewer years (provided that the present value of all
payments that will have been received by a Participant at any given
point of time under the different payment schedule shall equal or
exceed the present value of all payments that would have been received
at that point in time under the original payment schedule).
11.3 Plan Agreement. Despite the provisions of Sections 11.1 and 11.2 above,
if a Participant's Plan Agreement contains benefits or limitations that
are not in this Plan document, the Employer may only amend or terminate
such provisions with the consent of the Participant.
11.4 Effect of Payment. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
Administration
12.1 Committee Duties. Except as otherwise provided in this Article 12, this
Plan shall be administered by a Committee which shall consist of the
Board, or such committee as the Board shall appoint. Members of the
Committee may be Participants under this Plan. The Committee shall also
have the discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of
this Plan and (ii) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection with the Plan.
Any individual serving on the Committee who is a Participant shall not
vote or act on any matter relating solely to himself or herself. When
making a determination or calculation, the Committee shall be entitled
to rely on information furnished by a Participant or the Company.
12.2 Administration Upon Change In Control. For purposes of this Plan, the
Company shall be the "Administrator" at all times prior to the
occurrence of a Change in Control. Upon and after the occurrence of a
Change in Control, the "Administrator" shall be an independent third
party selected by the Trustee and approved by the individual who,
immediately prior to such event, was the Company's Chief Executive
Officer or, if not so identified, the Company's Chief Financial Officer
(and if no Chief Financial Officer, the Vice President of Human
Resources) (the "Ex-CEO"). The Administrator shall have the
discretionary power to determine all questions arising in connection
with the administration of the Plan and the interpretation of the Plan
and Trust including, but not limited to benefit entitlement
determinations; provided, however, upon and after the occurrence of a
Change in Control, the Administrator shall have no power to direct the
investment of Plan or Trust assets or select any investment manager or
custodial firm for the Plan or Trust. Upon and after the occurrence of
a Change in Control, the Company must: (1) pay all reasonable
administrative expenses and fees of the Administrator; (2) indemnify
the Administrator against any costs, expenses and liabilities
including, without limitation, attorney's fees and expenses arising in
connection with the performance of the Administrator hereunder, except
with respect to matters resulting from the gross negligence or willful
misconduct of the Administrator or its employees or agents; and (3)
supply full and timely information to the Administrator or all matters
relating to the Plan, the Trust, the Participants and their
Beneficiaries, the Account Balances of the Participants, the date of
circumstances of the Retirement, Disability, death or Termination of
Employment of the Participants, and such other pertinent information as
the Administrator may reasonably require. Upon and after a Change in
Control, the
Administrator may be terminated (and a replacement appointed) by the
Trustee only with the approval of the Ex-CEO. Upon and after a Change
in Control, the Administrator may not be terminated by the Company.
12.3 Agents. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel who may
be counsel to any Employer.
12.4 Binding Effect of Decisions. The decision or action of the
Administrator with respect to any question arising out of or in
connection with the administration, interpretation and application of
the Plan and the rules and regulations promulgated hereunder shall be
final and conclusive and binding upon all persons having any interest
in the Plan.
12.5 Indemnity of Committee. All Employers shall indemnify and hold harmless
the members of the Committee, any Employee to whom the duties of the
Committee may be delegated, and the Administrator against any and all
claims, losses, damages, expenses or liabilities arising from any
action or failure to act with respect to this Plan, except in the case
of willful misconduct by the Committee, any of its members, any such
Employee or the Administrator.
12.6 Employer Information. To enable the Committee and/or Administrator to
perform its functions, the Company and each Employer shall supply full
and timely information to the Committee and/or Administrator, as the
case may be, on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement, Disability,
death or circumstances of the Retirement, Disability, death or
Termination of Employment of its Participants, and such other pertinent
information as the Committee or Administrator may reasonably require.
ARTICLE 13
Other Benefits and Agreements
13.1 Coordination with Other Benefits. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in
addition to any other benefits available to such Participant under any
other plan or program for employees of the Participant's Employer. The
Plan shall supplement and shall not supersede, modify or amend any
other such plan or program except as may otherwise be expressly
provided.
ARTICLE 14
Claims Procedures
14.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within 60 days
after such notice was received by the Claimant. All other claims must
be made within 180 days of the date on
which the event that caused the claim to arise occurred. The claim must
state with particularity the determination desired by the Claimant.
14.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in
writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and
such notice must set forth in a manner calculated to be
understood by the Claimant:
(i) the specific reason(s) for the denial of the claim,
or any part of it;
specific reference(s) to pertinent provisions of the
Plan upon which such denial was based;
a description of any additional material or
information necessary for the Claimant to perfect the
claim, and an explanation of why such material or
information is necessary; and
an explanation of the claim review procedure set
forth in Section 14.3 below.
14.3 Review of a Denied Claim. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly authorized
representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole
discretion, may grant.
14.4 Decision on Review. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood
by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon
which the decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 Legal Action. A Claimant's compliance with the foregoing provisions of
this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 15
Trust
15.1 Establishment of the Trust. The Company shall establish the Trust, and
each Employer shall at least annually transfer over to the Trust such
assets as the Employer determines, in its sole discretion, are
necessary to provide, on a present value basis, for its respective
future liabilities created with respect to the Annual Deferral Amounts,
Company Contribution Amounts, and Company Matching Amounts for such
Employer's Participants for all periods prior to the transfer, as well
as any debits and credits to the Participants' Account Balances for all
periods prior to the transfer, taking into consideration the value of
the assets in the trust at the time of the transfer.
15.2 Interrelationship of the Plan and the Trust. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the Trust
shall govern the rights of the Employers, Participants and the
creditors of the Employers to the assets transferred to the Trust. Each
Employer shall at all times remain liable to carry out its obligations
under the Plan.
15.3 Distributions From the Trust. Each Employer's obligations under the
Plan may be satisfied with Trust assets distributed pursuant to the
terms of the Trust, and any such distribution shall reduce the
Employer's obligations under this Plan.
ARTICLE 16
Miscellaneous
16.1 Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employee" within the meaning of ERISA Sections 201(2),
301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted
to the extent possible in a manner consistent with that intent.
16.2 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. For
purposes of the payment of benefits under this Plan, any and all of an
Employer's assets shall be, and remain, the general, unpledged
unrestricted assets of the Employer. An Employer's obligation under the
Plan shall be merely that of an unfunded and unsecured promise to pay
money in the future.
16.3 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer
and a Participant. An Employer shall have no obligation to a
Participant under the Plan except as expressly provided in the Plan and
his or her Plan Agreement.
16.4 Nonassignability. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or
convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are
expressly declared to be, unassignable and non-transferable. No part of
the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in
the event of a Participant's or any other person's bankruptcy or
insolvency or be transferable to a spouse as a result of a property
settlement or otherwise.
16.5 Not a Contract of Employment. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged to
be an "at will" employment relationship that can be terminated at any
time for any reason, or no reason, with or without cause, and with or
without notice, unless expressly provided in a written employment
agreement. Nothing in this Plan shall be deemed to give a Participant
the right to be retained in the service of any Employer, either as an
Employee or a Director, or to interfere with the right of any Employer
to discipline or discharge the Participant at any time.
16.6 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking
such physical examinations as the Committee may deem necessary.
16.7 Terms. Whenever any words are used herein in the masculine, they shall
be construed as though they were in the feminine in all cases where
they would so apply; and whenever any words are used herein in the
singular or in the plural, they shall be construed as though they were
used in the plural or the singular, as the case may be, in all cases
where they would so apply.
16.8 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
16.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State
of California without regard to its conflicts of laws principles.
16.10 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
Chief Financial Officer
California Water Service Company
1720 North First Street
San Jose, CA 95112
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered,
or sent by mail, to the last known address of the Participant.
16.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns
and the Participant and the Participant's designated Beneficiaries.
16.12 Spouse's Interest. The interest in the benefits hereunder of a spouse
of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by
such spouse in any manner, including but not limited to such spouse's
will, nor shall such interest pass under the laws of intestate
succession.
16.13 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of
that person's property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the care
and custody of such minor, incompetent or incapable person. The
Committee may require proof of minority, incompetence, incapacity or
guardianship, as it may deem appropriate prior to distribution of the
benefit. Any payment of a benefit shall be a payment for the account of
the Participant and the Participant's Beneficiary, as the case may be,
and shall be a complete discharge of any liability under the Plan for
such payment amount.
16.14 Court Order. The Committee is authorized to make any payments directed
by court order in any action in which the Plan or the Committee has
been named as a party. In addition, if a court determines that a spouse
or former spouse of a Participant has an interest in the Participant's
benefits under the Plan in connection with a property settlement or
otherwise, the Committee, in its sole discretion, shall have the right,
notwithstanding any election made by a Participant, to immediately
distribute the spouse's or former spouse's interest in the
Participant's benefits under the Plan to that spouse or former spouse.
16.15 Distribution in the Event of Taxation.
(a) In General. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the
Committee before a Change in Control, or the trustee of the
Trust after a Change in Control, for a distribution of that
portion of his or her benefit that has become taxable. Upon
the grant of such a petition, which grant shall not
be unreasonably withheld (and, after a Change in Control,
shall be granted), a Participant's Employer shall distribute
to the Participant immediately available funds in an amount
equal to the taxable portion of his or her benefit (which
amount shall not exceed a Participant's unpaid Account Balance
under the Plan). If the petition is granted, the tax liability
distribution shall be made within 90 days of the date when the
Participant's petition is granted. Such a distribution shall
affect and reduce the benefits to be paid under this Plan.
(b) Trust. If the Trust terminates in accordance with its terms
and benefits are distributed from the Trust to a Participant
in accordance therewith, the Participant's benefits under this
Plan shall be reduced to the extent of such distributions.
16.16 Insurance. The Employers, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for and
procure insurance on the life of the Participant, in such amounts and
in such forms as the Trust may choose. The Employers or the trustee of
the Trust, as the case may be, shall be the sole owner and beneficiary
of any such insurance. The Participant shall have no interest
whatsoever in any such policy or policies, and at the request of the
Employers shall submit to medical examinations and supply such
information and execute such documents as may be required by the
insurance company or companies to whom the Employers have applied for
insurance.
16.17 Legal Fees To Enforce Rights After Change in Control. The Company and
each Employer is aware that upon the occurrence of a Change in Control,
the Board or the board of directors of a Participant's Employer (which
might then be composed of new members) or a shareholder of the Company
or the Participant's Employer, or of any successor corporation might
then cause or attempt to cause the Company, the Participant's Employer
or such successor to refuse to comply with its obligations under the
Plan and might cause or attempt to cause the Company or the
Participant's Employer to institute, or may institute, litigation
seeking to deny Participants the benefits intended under the Plan. In
these circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change in Control, it should appear to any
Participant that the Company, the Participant's Employer or any
successor corporation has failed to comply with any of its obligations
under the Plan or any agreement thereunder or, if the Company, such
Employer or any other person takes any action to declare the Plan void
or unenforceable or institutes any litigation or other legal action
designed to deny, diminish or to recover from any Participant the
benefits intended to be provided, then the Company and the
Participant's Employer irrevocably authorize such Participant to retain
counsel of his or her choice at the expense of the Company and the
Participant's Employer (who shall be jointly and severally liable) to
represent such Participant in connection with the initiation or defense
of any litigation or other legal action, whether by or against the
Company, the Participant's Employer or any director, officer,
shareholder or other person affiliated with the Company, the
Participant's Employer or any successor thereto in any jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan document as of JANAUR 1,
2001.
CALIFORNIA WATER SERVICE GROUP, a
California corporation
By: Peter C Nelson
-----------------------------------------
Title: President and Chief Executive Officer
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