EXHIBIT 10.14
CALIFORNIA WATER SERVICE COMPANY
SAVINGS PLAN AND TRUST AGREEMENT
(May 1994 Revision)
CALIFORNIA WATER SERVICE COMPANY
SAVINGS PLAN AND TRUST AGREEMENT
(1994 Revision)
Background
California Water Service company initially established a
retirement savings plan in which all employees were eligible to
participate. That plan was then split into two plans: this Plan
for salaried employees and the Union Plan for the Employer's
employees who are Union members. Cash or deferred features were
added to each of those plans. Effective December 31, 1987, the
Employer terminated its PAYSOP and on January 1, 1988 transferred
to each of the savings plans, assets allocated to the accounts of
certain PAYSOP participants. Effective January 1, 1994, the Union
Plan is merged into this Plan. This 1994 revision amends and
restates the Plan to reflect changes required by the Tax Reform
Act of 1986 and other statutes and regulations and reflects the
merger of Union Plan into this Plan. This revision also
constitutes the trust agreement for Plan assets other than
Employer Stock. There is a separate trust agreement for Employer
Stock. This revision is effective on January 1, 1988 and such
other dates indicated herein and is a profit-sharing plan with a
cash or deferred feature. Capitalized terms are defined in Section 1.
Section 1. Definitions
1.1 General Rules
Section headings are for convenience only and, in case of
conflict, the text of the Plan controls. The singular includes the
plural unless the context indicates otherwise.
1.2 Definitions
Capitalized terms in this plan have the following definitions:
ALTERNATE PAYEE means a person described as such in Section
414(p) of the Internal Revenue Code and Section 206(d)(3)(B) of
ERISA.
BENEFICIARY -- See Paragraph (c) of Subsection 6.5 of
Section 6.
BOARD OF DIRECTORS means the Board of Directors of the
California Water Service Company.
COMMITTEE -- See Subsection 9.1 of Section 9.
DISABILITY means a physical or mental condition which
prevents the Participant from engaging in his or her usual
occupation and which is presumed to be permanent. Disability is
established by certification of a licensed physician appointed by
or otherwise acceptable to the Employer. The certification of the
physician is conclusive and binding on all parties.
EARNINGS means a Participant's current salary before
reduction for the amount of contribution under this Plan as listed
on the Employer's payroll records. Effective January 1, 1989 up to
and including December 31, 1993, the annual Earnings for each
Participant taken into account under the Plan for any year will
not exceed $200,000. This limitation will be adjusted by the
Commissioner of Internal Revenue at the same time and in the same
manner as under Section 415(d) of the Internal Revenue Code,
except that the dollar increase in effect on January 1 of any
calendar year is effective for Plan Years beginning in that
calendar year and the first adjustment to the $200,000 limitation
is effective January 1, 1990. In determining Earnings for a
Participant for purposes of the $200,000 limitation, the rules of
Section 414(q)(6) of the Internal Revenue Code apply, except the
term ''family'' includes only the spouse of the Participant and
any lineal descendants of the Participant who have not attained
age 19 before the close of the Plan Year. If, as a result of the
application of those rules, the adjusted $200,000 limitation is
exceeded, then the limitation is prorated among the affected
individuals in proportion to each such individual's Earnings as
determined under the Plan prior to application of the $200,000
limitation. Effective January 1, 1994, the annual Earnings of each
Participant taken into account under the Plan must not exceed
$150,000, as adjusted by the Commissioner of Internal Revenue in
accordance with Section 401(a)(17)(B) of the Internal Revenue
Code. The adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Earnings are
determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the
annual compensation limit described in the two preceding sentences
will be multiplied by a fraction the numerator of which is the
number of months in the determination period and the denominator
of which is 12.
EMPLOYEE means, up to and including December 31, 1993, any
person who is in the employ of the Employer and whose terms and
conditions of employment are neither governed by nor set forth in
a collective bargaining agreement. Effective January 1, 1994,
Employee means any person who is in the employ of the Employer.
EMPLOYEE CONTRIBUTION ACCOUNT -- See Subsection 3.1.
EMOLOYEE CONTRIBUTIONS -- See Subsection 3.1.
EMPLOYER means California Water Service Company, a
California corporation and any subsidiary of or company affiliated
with the Employer which subsidiary or affiliated company is
hereafter authorized by the Board of Directors to participate in
the Plan.
EMPLOYER CONTRIBUTION ACCOUNT -- See Subsection 3.3.
EMPLOYER CONTRIBUTIONS -- See Subsection 3.3.
EMPLOYER STOCK means the common stock of California Water
Service Company.
EMPLOYER STOCK ACCOUNT means the account established for
each Participant or Former Participant who has made an election to
invest in Employer Stock and for each Participant or Former
Participant in respect to whom a transfer was made to this Plan or
the Union Plan from the PAYSOP.
ERISA means the Employee Retirement Income Security Act of
1974.
FORMER PARTICIPANT means a Participant whose employment with
the Employer has terminated but who has an account balance under
the Plan which has not been paid in full.
FUNDS means the investment funds established by the
Committee in accordance with Paragraph (a) of Subsection 4.2.
NORMAL RETIREMENT DATE means the Participant or Former
Participant's 65th birthday.
Participant means an Employee who participates in the Plan as
described in Section 2.
PARTICIPANT ACCOUNTS means all accounts maintained under
this Plan on behalf of a Participant or Former Participant,
Beneficiary or Alternate Payee.
PAYSOP means the Payroll-Based Tax Credit Employee Stock
Ownership Plan of California Water Service Company which was
terminated effective December 31, 1987.
PLAN means, up to and including December 31, 1993, this
California Water Service Company Salaried Employees' Savings Plan;
effective January 1, 1994, the Plan is named the California Water
Service Company Savings Plan.
PLAN YEAR means the calendar year.
PRIOR PLAN means the California Water Service Company
Retirement Savings Plan, as amended and restated and in effect on
June 30, 1982.
PRIOR PLAN ACCOUNT means the account to which a
Participant's or Former Participant's account from the Prior Plan
was transferred.
QUALIFIED DOMESTIC RELATIONS ORDER means an order described
in Section 206(d)(3)(B) of ERISA and Section 414(p) of the
Internal Revenue Code.
SALARIED SAVINGS PLAN COMMITTEE -- See Subsection 9.1 of
Section 9.
TRUST FUND means the fund established in accordance with
Section 8.
UNION means the Utility Workers of America and the
International Federation of Professional and Technical Engineers,
both affiliated with the AFL-CIO.
UNION EMPLOYEE means an employee of the Employer whose terms
and conditions of employment are governed by or set forth in a
collective bargaining agreement.
UNION PLAN means the California Water Service Company Union
Employees' Savings Plan.
UNION PLAN PARTICIPANT means any participant in the Union
Plan.
UNION SAVINGS PLAN COMMITTEE -- See Subsection 9.1 of
Section 9.
YEAR means the Plan Year.
Section 2. Participation
2.1 Eligible Class of Employees
All Employees are eligible to participate in the Plan.
2.2 When an Employee Becomes a Participant - General Rule
Each Employee not described in Subsection 2.3 becomes a
Participant on the first day of the Year following the date of his
or her commencement of employment, provided he or she is an
Employee on that date. Notwithstanding the preceding sentence, no
person becomes a Participant prior to his or her proper completion
and return to the Employer of a form authorizing deferrals under
the Plan and specifying investments as provided in Subsection 4.2.
2.3 When an Employee Becomes a Participant - Special Rules
(a) Each person who was a Participant on December
31, 1987 continues to participate in the Plan as a Participant on
January 1, 1988.
(b) Each person who was a Former Participant on
December 31, 1987 continues to participate in the Plan as a Former
Participant on January 1, 1988.
(c) Each person who, on December 31, 1993, was a
participant in the Union Plan becomes a Participant in this Plan
on January 1, 1994.
(d) Each person who, on December 31, 1993, was a
former participant in the Union Plan becomes a Former Participant
in this Plan on January 1, 1994.
(e) Each person who, on December 31, 1987, (i) was
an Employee (as defined in this Plan on that date), (ii) was a
participant in the PAYSOP and (iii) was not a Participant in this
Plan, becomes a Participant on January 1, 1988.
(f) Each person who, on December 31, 1987, (i) was
not employed by the Employer, (ii) was a former participant in the
PAYSOP and (iii) was not a Participant in this Plan, becomes a
Former Participant on January 1, 1988.
2.4 Rehired Employees
(a) A Former Participant with a Participant Account
in the Plan who resumes employment as an Employee participates in
the Plan immediately upon reemployment. That Former Participant
may authorize deferrals as provided in Subsection 3.1 and by
specifying investments as provided in Subsection 4.2.
(b) A Former Participant who has received
distribution of the balance of his or her Participant Accounts in
the Plan may elect to participate in the Plan immediately after
becoming an Employee. He or she becomes a Participant by proper
completion and return to the Employer of a form authorizing
deferrals as provided in Subsection 3.1 and by specifying
investments as provided in Subsection 4.2.
(c) A former Employee who did not participate in the
Plan may elect, in writing, to participate in the Plan on the date
of his or her rehire as an Employee. He or she becomes a
Participant by proper completion and return to the Employer of a
form authorizing deferrals as provided in Subsection 3.1 and by
specifying investments as provided in Subsection 4.2.
2.5 Change in Employee Classification
(a) This section is effective only up to and
including December 31, 1993.
(b) If a person employed by the Employer becomes an
Employee eligible to participate in the Plan because his or her
terms and conditions of employment with the Employer cease to be
governed by or set forth in a collective bargaining agreement, he
or she commences participation in the Plan as of the date of the
change in his employee classification by proper completion and
return to the Employer of a form authorizing deferrals under the
Plan and specifying investments as provided in Subsection 4.2.
(c) If a person ceases to be an Employee eligible to
participate in the Plan because his or her terms and conditions of
employment with the Employer become governed by or set forth in a
collective bargaining agreement, he or she ceases participation in
the Plan as of the date of the change in his or her employee
classification. His or her Participant Account will be transferred
to the Union Plan as provided in Subsection 8.9.
Section 3. Contributions
3.1 Participant Contributions - Deferrals
(a) Each Participant (including Participants who are
at or beyond their Normal Retirement Age and still employed by the
Employer) may elect to defer one percent, or any full percent up
to and including 14%, of his or her Earnings. Effective January 1,
1994, the maximum percentage of Earnings deferred is 15%.
Deferrals begin within 15 days of receipt by the Employer of the
form authorizing deferrals under the Plan. Upon receipt of a
deferral election, but subject to Paragraph (b) of this Subsection
3.1, Subsection 3.2, and Subsection 3.5, the Employer reduces the
Earnings of the Participant by the percentage specified and
contributes that amount to an account for that Participant which
is known as his or her Employee Contribution Account, and
contributions to which are known as Employee Contributions.
(b) In addition to and not in lieu of any other
limitation contained in this Plan, the total amount deferred
pursuant to the deferral election of any Participant will not
exceed $7,000 (or such other amount as determined in applicable
Treasury Regulations) for any taxable year of the Participant.
3.2 Changes to Deferral Elections
(a) A Participant may change (i.e., increase or
decrease) his or her existing deferral election by supplying a
revised election form to the Employer at any time during a
calendar quarter, effective for the next pay period. No more than
one change may be made in any calendar quarter.
(b) A deferral election may be suspended (i.e.,
reduced to 0) at the option of the Participant by delivering a
written notice to the Employer at least 30 days prior to the
effective date of suspension and subject to the next paragraph.
This suspension provision applies only if the Participant does not
change his or her election in accordance with the provisions of
Paragraph (a) concerning quarterly changes to the deferral
election.
(c) In the event a Participant suspends deferrals
under Paragraph (b), he or she may, effective no less than 12
months after the effective date of the suspension, again elect to
make deferrals by furnishing the Employer with a completed
deferral authorization form requesting deductions to be made from
his or her Earnings.
(d) A Participant who takes a leave of absence
exceeding 30 days is prohibited from deferring any Earnings during
the period of his or her leave of absence or for a period of six
months, whichever is longer.
(e) Participants who make hardship withdrawals are
subject to suspension and limitations on making further deferrals.
See Appendix B.
(f) A Participant who makes a withdrawal from his
Prior Plan Account which is attributable to regular contributions
to the Prior Plan is prohibited from deferring any Earnings for 12
months from the date of withdrawal. A distribution is deemed
attributable to additional contributions to the Prior Plan until
such time as the Participant has withdrawn the aggregate amount of
additional contributions to the Prior Plan. Thereafter, all
distributions are deemed to be attributable to regular
contributions.
3.3 Employer Contributions
Each Year the Employer will make an Employer Contribution to
the Plan for allocation to the Employer Contribution Account of
each Participant who has made a deferral election described in
Subsection 3.1. The amount of the Employer Contribution for each
such Participant is equal to 50% of the Participant's Employee
Contribution for the Year which is not in excess of 6% of his or
her Earnings for that Year. In no event will any Employer
Contribution under this subsection be made on behalf of a
Participant while that Participant's deferrals are suspended
pursuant to Subsection 3.2. In addition, should the plan be top-
heavy, the Employer will make a minimum top-heavy contribution.
See Appendix C.
3.4 Payment of Contributions
(a) The Employer contributes Employee Contributions
to the Trust Fund no later than the earliest date by which the
deferral can be segregated from the Employer's general assets, but
in no event more than 90 days from the date on which the
Participant's deferred Earnings would have been payable to him or
her had the Participant not made a deferral election.
(b) The Employer makes all contributions other than
Employee Contributions to the Trust Fund no later than the last
day (as extended) for the filing of the Employer's federal income
tax return.
(c) The Committee will arrange to have all
contributions allocated to Participant Accounts as provided in
Section 4.
3.5 Limitation on Contributions
Deferrals under Section 3.1 and Employer Contributions under
Section 3.3 are limited as provided under the nondiscrimination
rules of Sections 401(k) and 401(m) of the Internal Revenue Code.
See Appendix A.
Section 4. Accounts
4.1 Participant Accounts
The Committee has established Participant Accounts for each
Participant or Former Participant. It has established an Employee
Contribution Account and Employer Contribution Account for each
Participant or Former Participant who has made a deferral of
Earnings. It has established a Prior Plan Account for each
Participant or Former Participant in respect to whom a transfer
was made to this Plan from the Prior Plan. It has established an
Employer Stock Account for each Participant or Former Participant
who has made an election to invest in Employer Stock and for each
Participant or Former Participant in respect to whom a transfer
was made to this Plan from the PAYSOP. The Committee will
establish similar accounts for Beneficiaries and Alternate Payees
with a segregated interest in the Plan.
4.2 Investment of Contributions
(a) The Committee will establish at least three
investment Funds which provide Participants with a broad range of
investment alternatives as described in Department of Labor
Regulations 2550.404c-1(3). The Committee may establish
additional Funds in its discretion.
(b) Employee Contribution Accounts and Prior Plan
Accounts may be invested in any of the Funds or may be divided
among those Funds, as elected by the Participant, Former
Participant, Beneficiary or Alternate Payee in accordance with
rules adopted by the Committee. The election must be delivered to
the Employer in writing. The Employer is the fiduciary designated
to receive investment instructions as described in Department of
Labor Regulations 2550.404c-l(b)(2)(A). If an individual has an
Employee Contribution Account and a Prior Plan Account, a single
election governs investment of both accounts. Under no
circumstances may an Employee Contribution Account or a Prior Plan
Account be invested in Employer Stock.
(c) Employer Contributions Accounts may be invested
entirely in Employer Stock or diversified among the Funds as
provided in Paragraph (b) of this Subsection 4.2.
(d) The Employer Stock Account may be invested only
in Employer Stock.
(e) The Plan permits an individual to direct that
future contributions be invested in and existing Participant
Accounts be transferred to or among investment Funds and, in the
case of Paragraph (c), the Employer Stock Account, provided,
however, that under no circumstances may an Employee Contribution
Account or a Prior Plan Account be invested in the Employer Stock
Account. The direction described in the preceding sentence must be
in writing, delivered to the Employer and may be made in a manner
prescribed by the Committee, but in any event, the Participant,
Former Participant or Beneficiary will be able to change
investments at least once in any three-month period. The written
election must be for a specific percentage of the account balance
or a flat dollar amount but may not be less than $1,000, unless
the entire balance in the appropriate account is less than $1,000.
4.3 Allocation to Accounts
(a) See Subsections 3.1 and 3.3 concerning
allocation of contributions to Employee Contribution Accounts and
Employer Contribution Accounts.
(b) As of the last day of the Year and at such
additional times as the Committee determines, the Participant
Accounts will be adjusted and valued to reflect gains or losses of
the investments of the funds in which invested. The gains and
losses of the investment Funds for the Year are allocated based on
the relative Participant Account values of each of the Participant
Accounts invested in that fund on the first day of that Year,
provided that the Committee may, in its discretion, establish
equitable rules to reflect contributions or withdrawals from
Participant Accounts during the year. The gains and losses in
Employer Stock are allocated to the Employer Stock Account holding
that stock.
4.4 Section 415 Limitation
(a) The Plan Year is the limitation year. During any
limitation year, no amount will be allocated to Participants'
Accounts in excess of the limitations established by Section 415
of the Internal Revenue Code and Treasury Regulations issued under
that section. That section and those regulations are incorporated
in this Plan by reference, provided that in applying the
limitations of Section 415(e), if the Plan is top-heavy as defined
in Appendix C, then Paragraphs (2)(B) and (3)(B) of Section 415(e)
will be applied by substituting "1.0" for "1.25.''
(b) In the case that the limitations in the
preceding paragraph are exceeded in respect to a Participant, the
Plan will return to the Participant his or deferrals described in
Subsection 3.1. Should that distribution fail to bring the
allocations within the limitations contained in the previous
paragraph, allocations to Participants' Accounts will be reduced
to comply with this section. The reduction of allocations is held
in an unallocated suspense account to be allocated and reallocated
to the Accounts of all Participants in succeeding Plan Years in
accordance with, and subject to, the limitations of the Plan and
the provisions of applicable Treasury Regulations. No profits or
losses will be allocated to the suspense account. Until all
amounts in the suspense account can be allocated, the Employer
will make no contributions to the Plan and amounts in the suspense
account will be used to reduce Employer contributions and will not
be distributed to Participants. Reduction in allocations under
this Plan and in allocations or benefit accruals under any other
plan maintained by any Employer in which the Participant
participates will be made in the following order:
(i) Reduction in allocation of Employer
Contributions;
(ii) Reduction in benefit accruals under the
California Water Service Pension Plan;
(iii) Reduction in allocations or benefits under any
other plan of an Employer of which the
Participant is a member.
4.5 Statement of Accounts
Each Participant, Former Participant, Beneficiary or
Alternate Payee who has an account in the Plan will receive a
statement showing the status of his or her Participant Accounts as
required by ERISA.
4.6 Vesting
All Participant Accounts are at all times 100% vested.
Section 5. Applying for Benefits
5.1 Application for Benefits
An application for Plan benefits must be in writing. The
application must be filed at the time and in the manner specified
by the Committee. Where the application is made under Subsections
5.4 or 5.5 or 5.6 and requests withdrawal of less than the balance
to the credit of the Participant or Former Participant in the
Plan, the application must specify the Fund or Funds or Employer
Stock Account from which the withdrawal is to be made. No more
than one withdrawal under Subsections 5.4, 5.5 and/or 5.6 may be
made in any 12-month period, except that a Participant who is
required to make a withdrawal under Subsection 5.4 as a condition
to making a withdrawal under Subsection 5.5 may make both such
withdrawals simultaneously.
5.2 Termination of Employment
A living Participant who terminates employment for any
reason may apply for benefits under this Plan. Benefits on
termination of employment will be in the form of a single sum of
cash, except that if the Participant has whole shares of Employer
Stock in his or her Employer Stock Account, those whole shares
will be distributed in kind.
5.3 Beneficiaries and Alternate Payees
A Beneficiary, Prior Participant or Alternate Payee may
withdraw all, but not less than all, of his or her interest in the
Plan at any time. Distribution will be in the form of a
single sum of cash, except that if the Beneficiary, Prior
Participant or Alternate Payee has whole shares of Employer Stock
in his or her Employer Stock Account, those whole shares will be
distributed in kind.
5.4 Prior Plan Account
A Participant with a Prior Plan Account may at any time
apply to withdraw from that account an amount not in excess of the
aggregate total contributions made on his or her behalf to the
Prior Plan less subsequent withdrawals. A Former Participant with
a Prior Plan Account may not withdraw from that account, except as
provided in Subsection 5.3.
5.5 Hardship Withdrawals
A Participant may make a hardship withdrawal as provided in
Appendix B. A Former Participant, Beneficiary or Alternate Payee
may not make a hardship withdrawal.
5.6 Disability Withdrawals
A Participant who is suffering from a Disability may make a
withdrawal from his or her Participant Accounts.
5.7 Excess Deferrals
If, for any taxable year of a Participant, the Participant
defers an amount which is included in income because it is in
excess of the limitation on exclusion for elective deferrals (as
provided in Section 402(g) of the Internal Revenue Code), then the
Participant may deliver to the Committee, not later than March 1
following the close of his or her taxable year, a written election
to allocate for distribution all or a portion of that amount. The
Committee may, at its discretion, cause to be distributed to the
Participant the amount subject to the election, together with the
earnings thereon.
Section 6. Benefits for Which No Application is Necessary
6.1 Form of Distribution
All distributions made under this Section 6 will be in the
form of a single sum of cash, except that if the Participant or
Former Participant has whole shares of Employer Stock in his or
her Employer Stock Account, those whole shares will be distributed
in kind.
6.2 Cash Out of Small Amounts
Where a Participant terminates employment and the balance in
his or her Participant Accounts is not and never has exceeded
$3,500, the Plan will make a distribution to him or her as soon as
possible after termination of employment of the balance in his
Participant Accounts. Notwithstanding the foregoing, if the
balance in the Participant Accounts of a Participant is or at any
time has been in excess of $3,500, no distribution will be made to
him or her before Normal Retirement Date, unless the Participant
requests distribution at an earlier time in writing.
6.3 Mandatory Distribution at Normal Retirement Date
If, upon reaching Normal Retirement Date, a Former
Participant, Beneficiary or Alternate Payee has a balance in his
or her Participant Accounts, the Plan will, as soon as possible,
distribute that balance to him or her.
6.4 Mandatory Distribution at Age 70-1/2
Notwithstanding any other provision of the Plan, if, upon
reaching age 70-1/2, a Participant has a balance in his or her
Participant Accounts, the Plan will, no later than April 1 of the
calendar year following the calendar year in which the Participant
reaches age 70-1/2, distribute to the Participant the balance to
the credit in his or her Participant Accounts. If further
contributions are thereafter made on the Participant's behalf, the
Plan will annually distribute to the Participant the contributions
and earnings thereon.
6.5 Death Benefits
(a) If a Participant, Former Participant or Alternate
Payee dies leaving a balance in his or her Participant Accounts,
his or her Beneficiary will receive benefits upon written
application filed with the Committee. The amount of such benefits
is the unpaid balance of Participant Accounts. If no application
for benefits is filed, the Committee will cause benefits to be
paid on or before the last day of the Plan Year in which occurs
the fifth anniversary of the death of the Participant, Former
Participant or Alternate Payee. Notwithstanding the foregoing, if
no application for benefits is filed and the Beneficiary is the
former spouse of the Participant or Former Participant, the
Committee will cause benefits to be paid on the date specified in
the preceding sentence or the date the Participant or Former
Participant would have attained age 70-1/2, whichever is later.
(b) If a Beneficiary dies leaving a balance in his or
her Accounts, his or her estate will receive benefits as of the
date of death. The amount of such benefits is the unpaid balance
of Participant Accounts.
(c) The Beneficiary of a Participant or Former
Participant is the spouse of the Participant or Former
Participant, provided that the Participant or Former Participant
may designate a Beneficiary other than his or her spouse in a
writing filed with the Committee. No designation or change in
designation is effective until received by the Committee, but,
once it has been so received, it takes effect as of the date the
notice was signed, subject to any payment made or other action
taken before receipt. To be valid, the designation must be
consented to by the spouse unless the Participant or Former
Participant establishes to the satisfaction of the Committee that:
(i) he or she has no spouse; (ii) his or her spouse cannot be
located; or (iii) other circumstances exist under which no consent
is required under applicable Treasury or Department of Labor
Regulations. The required spousal consent must be in writing,
must acknowledge its effect and be executed in the presence of a
notary public who is not employed by the Employer. Any designation
will be valid only with respect to the spouse who signs it. Any
designation may be changed in writing and the revised designation
requires spousal consent unless, in an earlier consent, the spouse
relinquished the right to require consent to subsequent
designations. An election may be revoked in writing without any
spousal consent.
(d) The Beneficiary of an Alternate Payee is the
person designated in a writing file , d by the Alternate Payee
with the Committee. If that person does not survive the Alternate
Payee or no person has been designated, the Beneficiary is the
Alternate Payee's estate.
6.6 Amounts Which Violate Special Anti-discrimination Rules
See Paragraph (a) of Section A-1 of Appendix A.
6.7 Excess Section 415 Allocations
See Paragraph (b) of Section 4.4.
Section 7. Statutory Distribution Rules
7.1 Internal Revenue Code Limitation on
Distributions.
(a) All distributions under this Plan will be made
in accordance with proposed Income Tax Regulations 1.401(a)(9)-l
and following sections (including the minimum distribution
incidental benefit requirement of 1.401(a)(9)-2), and the final
version of those regulations when they are issued.
(b) See Subsection 6.3 concerning mandatory
distributions at Normal Retirement Date for Former Participants,
Alternate Payees and Beneficiaries and Subsection 6.4 concerning
mandatory distributions at April 1st of the calendar year
following the calendar year in which a Participant reaches age 70-
1/2.
(c) All distributions under the Plan are made in a
single sum. Therefore if a Participant dies after distribution of
his or her interest in the Plan has begun, no distribution will be
made to the Participant's Beneficiary.
(d) If a Participant dies before distribution of his
or her interest in the Plan begins, distributions to the
Participant's Beneficiary will be made in a single payment and
will be completed by December 31 of the calendar year containing
the fifth anniversary of the Participant's death.
7.2 ERISA Distribution Limitations.
Unless a Participant or Former Participant otherwise elects,
benefits from the Plan will begin no later than the 60th day after
the latest of the close of the Plan Zear in which occurs:
i) the date on which he or she attends age
65, which is Normal Retirement Date,
ii) the 10th anniversary of the year in which
he or she commenced participation in the
Plan, or
iii) (iii) the Participant's termination of
service with any Employer.
Section 8. Plan Assets
8.1 Trust Fund
California Water Service Company has established the Trust
Fund, which is held in two separate trusts, as described in
Subsection 8.2. Contributions under the Plan and all other assets
of the Plan are held in the Trust Fund. In addition, up to and
including December 31, 1993, the assets held under this Plan may
be commingled for investment purposes only (and held in one trust
fund and/or insurance company contract or contracts) with the
assets of the Union Plan. Under these circumstances, separate
records of Participant Accounts under each of the plans will be
maintained by the respective administrative committees of each
plan. Effective January 1, 1994, the Union Plan is merged into
this Plan.
8.2 Separate Trusts
The assets of the Plan are held in two separate trusts which
collectively are called the Trust Fund. Employer Stock is held in
a trust of which Bank of America, N.T.&S.A. is the trustee. The
trust agreement of that trust is a part of the Plan and is
incorporated herein by reference. All other assets of the Plan are
held in the trust described in Subsection 8.3.
8.3 Trust Provisions
(a) This Subsection 8.3. contains the
provisions of the Plan concerning the trust which holds assets of
the Plan other than Employer Stock and constitutes the trust
agreement for that trust. The initial trustees of that trust are
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and they will
serve until they resign or are removed. The Board of Directors may
remove and appoint trustees in its discretion. Any trustee may
resign at any time upon at least 30 days' written notice to the
Board of Directors.
(b) The trustees accept and will hold and
administer the assets of the Plan held in trust that are now or
will in the future be delivered to them under the Plan.
(c) The trustees invest all Plan assets not
subject to control by the trust holding Employer Stock or by an
investment manager.
(d) The trustees value the Plan assets
which they hold at fair market value as of the last day of each
Plan Year and at such other times as determined by the Committee.
The trustees may retain one or more experts to value assets which
they hold and which are not publicly traded and the valuation of
the trustees acting on the advice of an expert is binding on all
parties having an interest in the trust.
(e) The trustees, have no responsibility to
determine whether Plan assets are sufficient to meet the
liabilities under the Plan, and, absent a breach of their
fiduciary duty, are not liable for payments or Plan liabilities in
excess of trust assets.
(f) Payments from the trust are made by the
trustees for any purpose authorized under the Plan on receipt of
directions from the Committee. Payments by the trustees are
delivered or mailed to the address supplied by the Committee and
the trustees' obligation to make those payments is satisfied on
delivery or mailing. The trustees have no obligation to determine
the identity of any person entitled to benefits or his or her
mailing address.
(g) If the trustees are employees of the
Employer, they are entitled to no compensation for their services.
A trustee or trustees not employed by the Employer is entitled to
reasonable compensation for services in accordance with the
written agreement between the trustee and the Employer. Any
trustee, whether or not employed by the Employer, is entitled to
reimbursement of reasonable expenses incurred in the
administration of the trust. A trustee's compensation and expenses
are paid by the Employer and if the Employer fails to make payment
are paid by the trust.
(h) Except to the extent that these powers
are given to an investment manager, the trustees are authorized in
their discretion as to Plan assets held in trust:
(A) To invest and reinvest Plan assets,
together with earnings, in common stock (except Employer Stock),
preferred stock, convertible preferred stock, shares of regulated
investment companies (mutual funds), bonds, debentures,
convertible debentures and bonds, mortgages, notes, time
certificates of deposit, commercial paper and other evidences of
indebtedness (including those issued by the trustee or its
affiliates, if it is a bank), other securities, annuity
contracts, options to buy or sell securities or other assets and
property (personal, real, or mixed, and tangible or intangible);
(B) To deposit or invest all or any part of
the assets of the Plan in savings accounts or certificates of
deposit or other deposits which bear a reasonable interest rate
in a bank or savings and loan association, including a trustee or
its affiliates if it is a bank or savings or loan association, if
such financial institution is supervised by the United States or
a state;
(C) To hold, manage, improve, repair and
control all property, real or personal, forming part of the Plan
assets; to sell, convey, transfer, exchange, partition, lease for
any term, even extending beyond the duration of the trust, and
otherwise dispose of the same from time to time in such manner,
for such consideration, and upon such terms and conditions as the
trustees determine;
(D) To have, respecting securities, all the
rights, powers and privileges of an owner, including the power to
give proxies, pay assessments and other sums deemed by the
trustees necessary for the protection of the trust; to vote any
corporate stock either in person or by proxy, with or without
power of substitution, for any purpose; to participate in voting
trusts, pooling agreements, foreclosures, reorganizations,
consolidations, mergers and liquidations, and in connection
therewith to deposit securities with and transfer title to any
protective or other committee under such terms as the trustees
may deem advisable; to exercise or sell stock subscriptions or
conversion rights;
(E) To hold in cash, without liability for
interest, that portion of the trust which is reasonable under the
circumstances, pending investments, or payment of expenses, or
the distribution of benefits;
(F) To take those actions as may be necessary
or desirable to protect the trust from loss due to the default on
mortgages or deeds of trust held in the trust, including the
appointment of agents or trustees in such jurisdictions as may
seem desirable, to transfer property to agents or trustees, to
grant to such agents such powers as are necessary or desirable to
protect the trust or its assets, to direct such agent or trustee,
or to delegate such power to direct, and to remove such agent or
trustee;
(G) To employ, with the prior written consent
of the Employer, such agents including custodians and counsel as
may be necessary in the trustees' discretion and to pay them
reasonable compensation; to settle, compromise or abandon all
claims and demands in favor of or against the trust assets;
(H) To invest in any common or collective
trust fund or pooled investment fund maintained by trustee, if it
is a bank, in which case the instrument creating the fund is
incorporated in this document by reference;
(I) To cause title to property of the trust to
be issued, held or registered in the individual names of the
trustees, in the name of its nominee(s) or agents in a securities
depositary, in federal reserve book-entry or bearer form or in
such form that title will pass by delivery;
(J) To exercise all of the further rights,
powers, options and privileges granted, provided for, or-vested
in trustees generally under the laws of the State of California,
so that the powers conferred upon the trustees are not in
limitation of any authority conferred by law, but are in addition
thereto; and
(K) To do all other acts necessary or
desirable for the proper administration of the trust assets, as
though the trustees were the absolute owners of those assets.
(a) Upon resignation or removal, any
trustee has the right to a settlement of his, her or its account,
which settlement may be made either by a judicial settlement in an
action instituted by the trustee or by the Committee, or by an
agreement of settlement between the trustee and the Committee.
8.4 Prohibited Investments.
(a) No investment will be made in any
security issued by the Employer, including Employer Stock (which
is held in a separate trust). No investment will be made in any
real property (or related personal property) which is leased to
the Employer.
(b) No investment will be made in any work
of art, any rug or antique, any metal or gem, any stamp or coin,
any alcoholic beverage or any other tangible personal property
designated by the Internal Revenue Service as "collectible" within
the meaning of Section 408(m) of the Internal Revenue Code.
8.5 Indicia of Ownership.
The indicia of ownership of all Plan assets will be
maintained within the jurisdiction of the District Courts of the
United States, except to the extent permitted by Department of
Labor Regulations.
8.6 Spendthrift Provision.
Benefits under the Plan may not be assigned or alienated. No
portion of the Plan's assets may be subject to levy or execution,
except a levy by the Internal Revenue Service. The provisions of
this Subsection 8.6 apply to a domestic relations order, but not
to a Qualified Domestic Relations Order.
8.7 Return of Contributions
(a) Except as provided in the Paragraphs
(b) and (c) of this Subsection 8.7, the assets of the Plan will
never revert to the Employer, and are held for the exclusive
purposes of providing benefits to Participants, Former
Participants and their Beneficiaries, and for defraying the
reasonable expenses of administering the Plan.
(b) In the case of a contribution which is
made by virtue of a mistake of fact, the contribution may be
returned to the Employer within one year after payment of the
contribution.
(c) Contributions to the Plan are
conditioned upon their deductibility under Section 404 of the
Internal Revenue Code. To the extent the deduction for
contributions is disallowed, contributions must be returned to the
Employer within one year after the disallowance of the deduction.
(d) The amount which is returned to the
Employer under Paragraph (b) or (c) is the excess of (i) the
amount contributed over (ii) the amount that would have been
contributed had there not occurred a mistake of fact or a mistake
in determining the deduction. Earnings attributable to the excess
contribution may not be returned to the Employer, but losses
attributable thereto must reduce the amount to be so returned.
(e) Notwithstanding the foregoing, in the
case of any amounts to be returned under Paragraph (b) or (c),
refunded contributions from the Participant's Employee
Contribution Account and earnings thereon will be paid by the
Employer to the Participant, less appropriate withholding for
Federal and State taxes.
8.8 Rollovers
(a) Effective January 1, 1993, a
Participant, Former Participant, Alternate Payee or Beneficiary
may direct the Committee in writing to make a direct transfer of
any distribution eligible for tax-free rollover under Section
402(c) of the Internal Revenue Code to (i) a defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code
which will accept the rollover, (ii) an individual retirement
account described in Section 408(a) of the Internal Revenue Code
or (iii) an individual retirement annuity described in Section
408(b) of the Internal Revenue Code. The Committee will make a
direct transfer described in clause (i) of .the preceding sentence
if the Participant, Former Participant, Alternate Payee or
Beneficiary provides evidence satisfactory to the Committee that
the plan is qualified under Section 401(a) and that it is willing
to accept the transfer. The Committee will make a direct transfer
described in clause (ii) or (iii) of the preceding sentence if the
Participant, Former Participant, Alternate Payee or Beneficiary
provides evidence satisfactory to the Committee that the
individual retirement arrangement is an individual retirement
account as described in Section 408(a) of the Internal Revenue
Code or is an individual retirement annuity as described in
Section 408(b) of the Internal Revenue Code, whichever is
applicable.
(b) The Committee may, in its discretion,
cause the Trust Fund to accept rollover contributions (as
described in Section 402(c) of the Internal Revenue Code) to the
Plan from a Participant or in a direct rollover in respect to the
Participant from (i) another plan qualified under Section 401(a)
of the Internal Revenue Code, or (ii) from a conduit individual
retirement account described in Section 408(a) of the Internal
Revenue Code. The Committee may require such documentation as, in
its discretion, it deems appropriate to establish that the
rollover is described in Section 402(c) of the Internal Revenue
Code. No rollover will be accepted from or in respect to a Former
Participant, Beneficiary or Alternate Payee.
8.9 Transfers on Change of Employee Classification
This Subsection applies up to and including December 31,
1993. The Participant Account of a person whose employee
classification changes from that of an Employee eligible to
participate in the Plan to that of an employee whose terms and
conditions of employment with the Employer become governed by or
set forth in a collective bargaining agreement, will be
transferred to the trust of the Union Plan by the trustees of this
Plan as soon as administratively feasible. The Trust Fund is
authorized to accept the transfer of the account balance of a
person who becomes an Employee participating hereunder as a result
of an employee classification change from the trustees of the
Union Plan.
Section 9. Plan Administration
9.1 Committee Administers Plan
(a) The Plan is administered -by a
committee which is the Plan's named fiduciary, as provided in
ERISA. The name of the committee up to and including December 31,
1993 is the Salaried Savings Plan Committee. The Salaried Savings
Plan Committee is also referred to, up to and including December
31, 1993 as the "Committee.'' The Union Plan is administered, up
to and including December 31, 1993 by the Union Savings Plan
Committee. Effective January 1, 1994, the Salaried Savings Plan
Committee and the Union Savings Plan Committee constitute the
Savings Plan Committee which administers this Plan and is a named
fiduciary. Effective January 1, 1994, the Savings Plan Committee
is also referred to as the "Committee."
(b) Up to and including December 31, 1993,
the Salaried Savings Plan Committee consists of three members
appointed by the Board of Directors. The Board of Directors may
remove those members at its discretion. Effective January 1, 1994,
the Savings Plan Committee consists of the Savings Plan Salaried
Sub-committee of three members appointed by the Board of Directors
and of the Savings Plan Union Sub-committee consisting of two
members appointed by the Board of Directors and of two members
appointed by the Utility Workers of America. The Board of
Directors may remove those members of the Committee appointed by
it at its discretion. The Utility Workers of America may remove
those members of the Committee appointed by it at its discretion.
(c) This paragraph is effective January 1,
1994. Th-, Savings Plan Union Sub-committee decides all matters
involving Participant or Former Participant whose terms and
conditions of employment are or were governed by or set forth in a
collective bargaining agreement and his or her Beneficiary or
Alternate Payee. The Savings Plan Salaried Sub-committee decides
all matters involving a Participant or Former Participant whose
terms and conditions of employment are not or were not governed by
or set forth in a collective bargaining agreement and his or her
Beneficiary or Alternate Payee. If a Participant of Former
Participant was, at various times, both a salaried Employee and an
Employee who was a member of a Union, his or her status at the
time closest to the time of Committee action governs. The
Committee as a whole, consisting of both sub-committees, decides
all matters not involving a specific individual, for example the
establishment of Plan Rules or investment Funds.
(d) The Committee, and each sub-committee,
acts by a majority of its members, unless it has less than three
members, in which case it acts unanimously. The Committee and
each sub-committee, may act by meeting, unanimous written consent,
phone meeting or unanimous consent by facsimile or wire. Each
member of the Committee or a sub-committee has one vote.
(e) No member of the Committee may vote on
any question affecting his or her specific individual benefit
under the Plan. If, for this or any other reason, there are no
members eligible to act, the functions of the Committee may be
exercised by the Board of Directors.
(f) The expenses of the members of the
Committee for attending Committee meetings are borne by the
Employer. The Committee members receive no compensation for
attending meetings or other work performed as Committee members.
9.2 Duties and Powers of the Committee
The Committee has full power to administer the Plan and to
construe and apply all of its provisions. The Plan affords the
Committee complete discretion in its actions. In amplification of
its powers and duties, but not by way of limitation, the
Committee:
(a) Is responsible for the compilation and
maintenance of all records necessary for the Plan except
those records maintained by the trustees of the Trust Fund
or Employer;
(b) Authorizes the payment of all benefits as they
become payable under the Plan, and directs the trustees of
the Trust Fund to provide those benefits;
(c) Makes rules and regulations for the
administration of the Plan not inconsistent with the Plan;
(d) Engages such legal, actuarial, accounting and
other professional services as it may deem proper, unless
those services have been provided for at the request of the
Employer;
(e) Appoints in its discretion, an investment
manager or managers (as that term is defined in Section
3(38) of ERISA), in accordance with Section 402(c)(3) of
ERISA to manage, acquire or dispose of the assets of the
Plan;
(f) Does and performs such other matters as may be
provided for in other parts of this Plan.
9.3 Reliance on Experts
The members of the Committee, the Employer and its officers
and directors are entitled to rely conclusively upon all tables,
valuations, certificates and reports furnished by any actuary or
accountant employed by the Employer or Committee and upon all
opinions of counsel or other experts and they and each of them are
to be fully protected as to any action taken by them in good faith
in reliance upon any such tables, valuations, certificates,
reports or opinions.
9.4 Plan Expenses
The Employer will pay the reasonable costs of administering
the Plan, including fees, if any, of the trustees or any
investment manager appointed by the Committee.
9.5 Procedure for Domestic Relations Orders.
(a) Any Participant, Former Participant,
Beneficiary, Alternate Payee or person claiming to be an Alternate
Payee may file a writing with the Committee designating counsel to
act on his or her behalf. The Committee will deal directly with
designated counsel and provide the designated counsel with copies
of all writings furnished to the Participant, Former Participant,
Beneficiary, Alternate Payee or person claiming to be an Alternate
Payee.
(b) The Plan encourages parties to domestic
relations cases and their attorneys to resolve issues involving
rights under the Plan without recourse to litigation. To the
extent that the parties to a domestic relations case and any
Alternate Payee under a previous Qualified Domestic Relations
Order agree to a proposed order and the Committee or its counsel
determines that the order, when entered, will be a Qualified
Domestic Relations Order, then the procedures described in this
Subsection 9.5 will not be used. If the parties do not agree or
the Committee or its counsel does not determine that the order,
when entered, will be a Qualified Domestic Relations Order, then
the remaining procedures of this Subsection 9.5 will apply.
(c) Upon receipt of any domestic relations
order by the trustees of the Trust Fund or agent for service of
process, the recipient will promptly notify the Committee in
writing. Upon receipt of any domestic relations order by the
Committee, or receipt of written notification pursuant to the
preceding sentence, the Committee will promptly give written
notification to the Participant in respect to whom the domestic
relations order is received and any Alternate Payee named in any
earlier Qualified Domestic Relations Order received by the
Committee. The notification will describe the procedures of this
Subsection 9.5 for determining the qualified status of domestic
relations orders and of the right of an Alternate Payee to
designate a representative for receipt of copies of notices that
are sent to the Alternate Payee with respect to domestic relations
orders. All recipients of the written notification and their
counsel are, within 14 days of receipt of the notice from the
Committee, entitled to file written comments with the Committee
concerning the qualified status of the domestic relations order.
(d) The Committee will, within 60 days of
receipt of the domestic relations order, either (i) make a written
determination as to whether the domestic relations order in
question is a Qualified Domestic Relations order, or (ii) submit
the issue to a court of competent jurisdiction for its decision.
The Committee will give prompt written notification to the
Participant in respect to whom the domestic relations order is
received and to any Alternate Payee named in any earlier Qualified
Domestic Relations Order received by the Committee of its
determination as to whether the domestic relations order in
question is a Qualified Domestic Relations Order or of the name
and address of the court to which the issue has been submitted for
decision.
(e) During any period in which the issue of
whether a domestic relations order is a Qualified Domestic
Relations order is being determined (by the Committee, by a court
of competent jurisdiction or otherwise), the Committee will
separately account for the amounts which would have been payable
to the Alternate Payee during such period if the order had been
determined to be a Qualified Domestic Relations Order.
(f) If within 18 months, the order (or
modification thereof) is determined to be a Qualified Domestic
Relations Order, the Committee will pay or credit the amounts
separately accounted for to the person or persons entitled
thereto. If within 18 months it is determined that the order is
not a Qualified Domestic Relations Order, or the issue as to
whether such order is a Qualified Domestic Relations Order is not
resolved, then the Committee will pay or credit the amounts
separately accounted for (and any interest or earnings thereon) to
the person or persons who would have been entitled to such amounts
if there had been no order or, if the Committee has notice that
either party to the domestic relations proceedings is attempting
to rectify the order, it may delay payment of benefits until the
end of such 18-month period. Any determination that an order is a
Qualified Domestic Relations Order which is made after the close
of the 18-month period, will be applied prospectively only. As
used in this Subsection 9.5, the 18-month period begins on the
date on which the first payment would be required to be made under
the domestic relations order.
9.6 Claims Procedure
(a) Claims for benefits under the Plan must
be submitted in writing to the Committee. The Committee will act
on the claim within 90 days of receipt, unless special
circumstances require an extension of time, in which case the
Committee will notify the claimant in writing that those
circumstances exist and act on the claim within 180 days of
receipt. If a claim for benefits is denied, in whole or in part,
the Committee will furnish the claimant with a written notice of
denial which (i) specifies the reasons for the denial, (ii) refers
to the pertinent provisions of the Plan on which the denial is
based, (iii) describes any additional material or information
necessary for the perfection of the claim and explains why such
material or information is necessary and (iv) explains the claim
review procedures of Paragraph (b) of this Subsection 9-6.
(b) The claimant may, within 60 days of
receipt of the notice of denial described in the preceding
paragraph, make a written request for review of that denial. The
written request must be in writing filed with the Committee. On
receipt of a written request for review, the Committee will permit
the claimant to review any documents in its possession or in the
possession of the Employer which are reasonably pertinent to the
claim. The claimant may submit to the Committee written comments
on the denial of his or her claim for benefits. The Committee
will act on the request for review within 60 days of receipt,
unless special circumstances require an extension of time, in
which case the Committee will notify the claimant in writing that
those circumstances exist and act on the request for review within
120 days of receipt. If the request for review is denied, in
whole or in part, the Committee will furnish the claimant with a
written notice of denial which (i) specifies the reasons for the
denial, (ii) refers to the pertinent provisions of the Plan on
which the denial is based, (iii) describes any additional material
or information necessary for the perfection of the claim and
,explains why such material or information is necessary.
9.7 Service of Process.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ are designated as
agents of the Plan for the service of legal process.
Section 10. Changes to the Plan
10.1 Amendments
The Plan may be amended in writing by any corporate officer
of California Water Service Company to comply with the
requirements of ERISA and/or the Internal Revenue Code. The Plan
may be amended in writing for any other purpose by any two
corporate officers of California Water Service Company. No
amendment will permit any Plan assets to be used for or diverted
to purposes other than for the exclusive benefit of Participants,
Former Participants, Beneficiaries and Alternate Payees under the
Plan, except as permitted by ERISA and the Internal Revenue Code.
No amendment may decrease an accrued benefit, eliminate or reduce
an early retirement benefit or a retirement-type subsidy, or
eliminate an optional form of benefit,
10.2 Merger, Consolidation or Transfer
In the event of any merger or consolidation with, or
transfer of assets or liabilities to, any other plan, each
Participant or Former Participant will be entitled to receive a
benefit if the Plan were to terminate immediately after the
merger, consolidation, or transfer, which is not less than the
benefit he or she would have been entitled to receive if the Plan
had terminated immediately before the merger, consolidation, or
transfer.
10.3 Termination
The Plan is adopted with the intent of maintaining it
permanently. Nevertheless, the Employer reserves the right to
terminate the Plan (totally or partially) at any time and to
discontinue or reduce contributions. In the event of a complete or
partial termination or the permanent discontinuance of
contributions, the interest of each affected Participant, Former
Participant and Beneficiary remains fully vested. Plan
termination, reduction or discontinuance of contributions is
accomplished by the -preparation of an amendment in writing. The
amendment is executed as described in Section 10.1 and the signed
amendment is filed with the Plan Records. Parties are notified in
writing as required by ERISA.
Section 11. General Provisions
11.1 Liability of Employer and Employment.
Neither the creation or maintenance of this Plan nor any
amendment to it may be construed as giving any right to any
Employee, Participant, Former Participant, Beneficiary or
Alternate Payee against the Employer, its officers or employees,
or against the trustees of the Trust Fund except as provided
herein and by ERISA, and all liabilities under this Plan must be
satisfied out of the Trust Fund. Participation in the Plan does
not give any Participant any right to be retained in the employ of
the Employer.
11.2 Employer Records.
The records of the Employer with respect to age, service,
employment history, compensation, absence, illnesses, and all
other relevant matters are conclusive for purposes of the
administration of this Plan.
SIGNATURE PAGE
IN WITNESS WHEREOF, the Employer has caused these presents
to be duly executed on the 23rd day of May 1994.
CALIFORNIA WATER SERVICE COMPANY
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its V.P., C.F.O., Treasurer
Appendix A
to
California Water Service Company
Savings Plan and Trust Agreement
(1994 Revision)
Special Anti-discrimination Rules
for
Cash and Deferred Elections and Matching Contributions
Section A-1 Adjustments to Meet Limits on Cash or Deferred
Elections
(a) The provisions of this section apply
notwithstanding any contrary provision of this Plan. If, for any
Plan Year, the aggregate amount of Earnings which is paid over to
the Trust Fund pursuant to the cash or deferred election of a
Participant exceeds either Limit A or Limit B of Section A-2
below, then within 2-1/2 months after the last day of that Plan
Year the excess contributions and any income attributable thereto
will be distributed as provided in the following paragraphs. In
addition, Employer Contributions made in respect to excess
contributions which are returned are forfeited and will be used to
reduce further Employer Contributions to the Plan.
(b) The cash or deferred election of the
Highly Compensated Participants will be reduced in order of their
percentage elections (or dollar amount elections, if applicable)
beginning with those with the highest elections. For example, if
the applicable limit is 7.5% of compensation and Highly-
Compensated Participants A, B and C have elected to defer 10%, 8%
and 6% respectively, the reduction would be as follows: A's
election is first reduced to 8%, the same percentage election as B
who is the Highly-Compensated Participant next in order. Since the
applicable limit is still exceeded, A's election is further
reduced to 7.5%, as is the election of B. At this point, the
applicable limit is met.
(c) An amount equal to the excess of the
Earnings deferred under the initial election over the Earnings
deferred under the reduced election, together with the income
earned by the Plan thereon, will be returned to each Highly-
Compensated Participant whose election is reduced. In the example
in the preceding paragraph, A's election is reduced 2.5% (from 10%
to 7.5%) and B's election is reduced .5% (from 8% to 7.50-0.
Therefore, an amount equal to 2.5% of A's Earnings and .5% of B's
Earnings is distributed, together with the income on the amounts
distributed. The income on excess contributions for the Plan Year
is that portion of the income of the Participant's Employee
Contribution Account for the Plan Year in question multiplied by a
fraction the numerator of which is the excess Earnings deferred
and the denominator of which is the total balance in the
Participant's Employee Contribution Account. The income on excess
contributions for the period between the end of the Plan Year in
which an excess contribution was made and the date of return is
equal to 10% of the income for that Plan Year (as calculated under
the preceding sentence) multiplied by the number of calendar
months that have elapsed since the end of the Plan Year. For
purposes of determining the number of calendar months that have
elapsed, a distribution occurring on or before the 15th day of the
month will be treated as having been made on the last day of the
preceding month and a distribution occurring after such 15th day
will be treated as having been made on the first day of the next
month.
(d) In determining the excess deferrals of
a highly Highly-Compensated Participant who is either a 5% owner
or one of the ten most Highly-Compensated Participants and is
thereby subject to the family aggregation rules of Section
414(q)(6) of the Internal Revenue Code,
(i) if the Highly-Compensated Participant's ADP
is determined by combining the contributions and
compensation of all family members, then the ADP is
reduced to the extent required to (I) enable the Plan
to satisfy Limit A or B, or (II) cause such Highly-
Compensated Participant's ADP to equal the ratio of
the Highly-Compensated Participant with the next
highest ADP. This process is repeated until the Plan
satisfies Limit A or B; or
(ii) if the ADP determined by combining the
contributions and compensation of all eligible family
members who are highly compensated without regard to
family aggregation, the ADP is reduced in accordance
with clause (i), but not below the ADP of eligible
non-highly compensated family members; excess
deferrals are determined by taking into account the
contributions of the eligible family members who are
highly compensated without regard to family
aggregation and are allocated among such family
members in proportion to their deferrals; if further
reduction of the ADP is required, excess deferrals
resulting from this reduction are determined by taking
into account the deferrals of all eligible family
members and are allocated among such family members in
proportion to their deferrals; and
(iii) The amount of excess deferrals to be
distributed will be reduced by excess deferrals
previously distributed for the Participant's taxable
year ending in the same Plan Year and excess deferrals
to be distributed for the Plan Year beginning in the
Participant's taxable year; and
(iv) For the purposes of the foregoing, a family
member is the spouse and lineal ascendants and
descendants (and spouses of such ascendants and
descendants) of any Employee or former Employee,
taking legal adoptions into account.
Section A-2 Limits on Cash or Deferred Elections
Section 401(k)(3) of the Internal Revenue Code and the
regulations thereunder are incorporated in this Plan by reference.
The limitation contained in Section 401(k)(3)(A)(ii)(I) is
referred to in this Plan as Limit A and that contained in Section
401(k)(3)(A)(ii)(II) is referred to as Limit B. For purposes of
calculating Limit A or B, the following rules apply:
(i) The ADP of all eligible Employees will
be taken into account.
(ii) An eligible Employee is any Employee
who is directly or indirectly eligible to make a
cash or deferred election under the Plan and
includes an Employee who would be a Participant
but for the failure to make such an election, an
Employee whose right to make such an election
has been suspended because of an election (other
than certain one-time elections) not to
participate, because of receipt of a
distribution or because his or her compensation
is below a stated amount.
(iii) A cash or deferred election under
the Plan will be taken into account in
calculating the ADP for a Plan Year only if it
is allocated to the Participant's Employee
Contribution Account as of a date within the
Plan Year and only if the allocation is not
contingent on participation in the Plan or
performance of services after the date of
allocation and is actually paid to the Trust
Fund no later than 12 months after the end of
the Plan Year to which the election relates.
(iv) In the case of an Employee who is
eligible to participate in the Plan and who
makes no cash or deferred election under the
Plan, the contribution ratio that is to be
included in the ADP is zero.
(v) All cash or deferred elections which
are made under two or more plans that are
aggregated for purposes of Sections 401(a)(4)
and 410(b) (other than Section 410(b)(2)(A)(ii))
of the Internal Revenue Code are to be treated
as made under a single plan and if two or more
plans are permissively aggregated for purposes
of Section 401(k) of the Internal Revenue Code,
the aggregated plans must satisfy Sections
401(a)(4) and 410(b) of the Internal Revenue
Code as though they were a single plan.
(vi) In the case of a highly Highly-
Compensated Participant who is either a 5% owner
or one of the ten most Highly-Compensated
Participants and is thereby subject to the
family aggregation rules of Section 414(q)(6) of
the Internal Revenue Code, the ADP for the
family group (which is treated as one Highly-
Compensated Participant) is the greater of (a)
the ADP determined by combining the
contributions and compensation of all eligible
family members who are highly compensated
without regard to family aggregation or (b) the
ADP determined by combining the contributions
and compensation of all eligible family members.
Except to the extent taken into account in the
preceding sentence, the contributions and
compensation of all family members are
disregarded in determining the ADPs for the
groups of Highly-Compensated Participants and
those who are not Highly-Compensated
Participants.
Section A-3 Adjustment to Meet Limits on Employer Matching
Contributions
(a) The provisions of this section apply
notwithstanding any contrary provision of this Plan. If, for any
Plan Year, the aggregate amount of Employer Contributions which is
paid over to the Trust Fund for any Participant exceeds either
Limit C or Limit D of Section A-4 below, then within 2-1/2 months
after the last day of that Plan Year, the excess contributions and
any income attributable thereto will be distributed as provided in
the following paragraphs.
(b) The adjustment made under this Section
A-3 will be made following the adjustments, if any, made under
Section A-1. The adjustment of the aggregate amount of Employer
matching contributions of the Highly-Compensated Participants will
be made in a manner similar to the reduction of cash or deferred
elections under Section A-1.
(c) An amount equal to the excess Employer
Contributions, together with the earnings thereon, will be
returned to each Highly-Compensated Participant in respect of whom
an adjustment is made under this Section A-3. The earnings on
excess Employer Contributions for the Plan Year is that portion of
the income of the Participant's Employer Contribution Account for
the Plan Year in question multiplied by a fraction the numerator
of which is the excess Employer Contributions and the denominator
of which is the total balance in the Participant's Employer
Contribution Account. The earnings on excess contributions for the
period between the end of the Plan Year in which an excess
contribution was made and the date of return is equal to 10% of
the income for that Plan Year (as calculated under the preceding
sentence) multiplied by the number of calendar months that have
elapsed since the end of the Plan Year. For purposes of
determining the number of calendar months that have elapsed, a
distribution occurring on or before the 15th day of the month will
be treated as having been made on the last day of the preceding
month and a distribution occurring after such 15th day will be
treated as having been made on the first day of the next month.
(d) In determining excess Employer
Contributions of a Highly-Compensated Participant who is either a
5% owner or one of the ten most Highly-Compensated Participants
and is thereby subject to the family aggregation rules of Section
414(q)(6) of the Internal Revenue Code,
(i) if the Highly-Compensated Participant's ACP
is determined by combining the contributions and
compensation of all family members, then the ACP is
reduced to the extent required to (I) enable the Plan
to satisfy Limit C or D, or (II) cause such Highly-
Compensated Participant's ACP to equal the ratio of
the Highly-Compensated Participant with the next
highest ACP. This process is repeated until the Plan
satisfies Limit C or D; or
(ii) if the ACP determined by combining the
contributions and compensation of all eligible family
members who are highly compensated without regard to
family aggregation, the ACP is reduced in accordance
with clause (i), but not below the ACP of eligible non
highly compensated family members; excess aggregate
contributions are determined by taking into account
the contributions of the eligible family members who
are highly compensated without regard to family
aggregation and are allocated among such family
members in proportion to their contributions; if
further reduction of the ACP is required, excess
aggregate contributions resulting from this reduction
are determined by taking into account the
contributions of all eligible family members and are
allocated among such family members in proportion to
their contributions; and
(iii) For the purposes of the foregoing, a
family member is the spouse and lineal ascendants and
descendants (and spouses of such ascendants and
descendants) of any Employee or former Employee,
taking legal adoptions into account.
Section A-4.1 Limits on Employer Matching Contributions
Section 401(m)(2) of the Internal Revenue Code and the
regulations thereunder are incorporated in this Plan by reference.
The limitation contained in Section 401(m)(2)(A)(i) is referred to
in this Plan as Limit C and that contained in Section
401(m)(2)(A)(ii) is referred to as Limit D. For purposes of
calculating Limit C or D, the following rules apply:
(i) The ACP of all eligible Employees will be
taken into account,
(ii) An eligible Employee is any Employee who
is directly or indirectly eligible to receive an
Employer Contribution and includes an Employee who
would be a Participant or would receive an Employer
Contribution but for the failure to make a cash or
deferred election, an Employee whose right to make a
cash or deferred election has been suspended because
of an election (other than certain one-time elections)
not to participate because of receipt of a
distribution or because his or her compensation is
below a stated amount.
(iii) In the case of an Employee who is
eligible to participate in the Plan and who makes or
receives no Employer Contribution, the contribution
ratio that is to be included in the ACP is zero.
(iv) An Employer Contribution is taken into
account for a Plan ~(ear only if it is M made on
account of the Participant's cash or deferred election
for the Plan Year, II) allocated to the Participant's
Employer Contribution Account during that Plan Year
and (III) paid to the Trust Fund by the end of the
12th month following the close of the Plan Year.
(v) All Employer Contributions that are made
under two or more plans that are aggregated for
purposes of Sections 401(a)(4) and 410(b) (other than
Section 410(b)(2)(A)) of the Internal Revenue Code are
to be treated as made under a single plan and if two
or more plans are permissively aggregated for purposes
of Section 401(m) of the Internal Revenue Code, the
aggregated plans must satisfy Sections 401(a)(4) and
410(b) of the Internal Revenue Code as though they
were a single plan,
(vi) In the case of a highly Highly-Compensated
Participant who is either a 5% owner or one of the ten
most Highly-Compensated Participants and is thereby
subject to the family aggregation rules of Section
414(q)(6) of the Internal Revenue Code, the ACP for
the family group (which is treated as one Highly-
Compensated Participant) is the greater of (a) the ACP
determined by combining the contributions and
compensation of all eligible family members who are
highly compensated without regard to family
aggregation or (b) the ACP determined by combining the
contributions and compensation of all eligible family
members. Except to the extent taken into account in
the preceding sentence, the contributions and
compensation of all family members are disregarded in
determining the actual contribution percentages for
the groups of Highly-Compensated Participants and
those who are not Highly Compensated Participants.
Section A-5 Multiple Use Limitations
For purposes of Section A-4, the provisions of Income Tax
Regulations Section.401(m)-2 are incorporated herein by reference.
Section A-6 Definitions
For purposes of this Appendix A, the following words have
the meanings set next to them:
(a) ACP means actual contribution
percentage as defined in Section 401(m)(3) of the Internal Revenue
Code.
(b) ADP means actual deferral percentage as
defined in Section 401(k)(3)(B) of the Internal Revenue Code.
(c) Highly-Compensated Participant means
any Participant who performs service during the Plan Year for
which the determination is being made and who is:
(i) an employee who is a 5% owner, as defined in
Section 416(i)(1)(iii) of the Internal Revenue Code,
at any time during that or the preceding Plan Year; or
(ii) an employee who receives compensation,,
(which for all purposes of this Appendix is as defined
in Section 415(c)(3) of the Internal Revenue Code,
i.e., compensation received by the employee from the
Employer during the applicable period and also
includes, for each employee, elective or salary
reduction contributions to a cafeteria plan, cash or
deferred arrangement or tax-sheltered annuity) in
excess of $75,000 (adjusted as provided in Treasury
Regulations issued under Section 415(d) of the
Internal Revenue Code) during the preceding Plan Year;
or
(iii) an employee who receives compensation in
excess of $50,000 (adjusted as provided in Treasury
Regulations issued under Section 415(d) of the
Internal Revenue Code) during the preceding Plan Year
and is a member of the top-paid group for the
preceding Plan Year (which consists of the top 20% of
employees ranked on the basis of compensation received
during the Plan Year) and excluding employees who have
not completed six months of service, those who
normally work less than 17-1/2 hours per week, those
normally working not more than six months during any
year, those who have not attained age 21, those
employees who are included in a unit of employees
covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between
employee representatives and the Employer (which for
all purposes of this Appendix A includes all entities
aggregated with the Employer under Subsections (b),
(c), (m) or (o) of Section 414 of the Internal Revenue
Code), which agreement satisfies Section 7701(a)(46)
and the Treasury Regulations thereunder, and
nonresident aliens who have received no earned income
(within the meaning of Section 911(d)(2) of the
Internal Revenue Code) from the Employer which
constitutes income from sources within the United
States (within the meaning of Section 861(a)(3) of the
Internal Revenue Code); or
(iv) an employee who is an officer (but not more
than 50 employees (or, if less, the greater of three
employees or 10%, of all employees) of the Employer,
within the meaning of Section 416(i) of the Internal
Revenue Code, during the preceding Plan Year and who
receives compensation in the preceding Plan Year
greater than 50% of the dollar limitation in effect
under Section 415(b)(1)(A) of the Internal Revenue
Code for the preceding Plan Year (or if no officer has
compensation greater than that amount, the highest
paid officer); or
(v) an employee who is both (I) described in
clauses (ii), (iii) or (iv) above when those clauses
are modified to substitute the Plan Year for which the
determination is being made for the preceding Plan
Year and (II) one of the 100 employees who receive the
most compensation from the Employer during the Plan
Year for which the determination is being made; or
(vi) a former employee who, in the Plan Year he
separated from service or in any Plan Year ending on
or after his or her 55th birthday, was rendering
service to the Employer and was a Highly-Compensated
Participant as defined in this Section A-6.
(d) Non-Highly-Compensated Participant
means any Participant other than a Highly-Compensated Participant
Appendix B
to
California Water Service Company Savings Plan and Trust Agreement
(1994 Revision)
Hardship Withdrawals
1. Introduction. To assist you as a Participant in
meeting immediate and heavy financial needs, the Plan allows
withdrawals from your Participant Accounts (except earnings in
your Employee Contribution Account) because of hardship. This
Appendix describes who qualifies for hardship withdrawals and how
to apply for them. No hardship distributions are made to Former
Participants, Beneficiaries or Alternate Payees.
2. You Must Have an Immediate and Heavy Financial Need.
You have an immediate and heavy financial need only if you require
money for any of the following reasons:
Funeral expenses for a member of your family; or
Medical expenses which you, your husband or wife or
dependent incurs. A medical expense is the kind of
expense for which you can take a deduction on your
federal income tax return under Section 213(d) of the
Internal Revenue Code and a dependent is someone for
whom you are authorized to take a dependency exemption
on your federal income tax return in accordance with
Section 152 of the Internal Revenue Code; or
A downpayment when purchasing your principal 1
residence (but not mortgage payments or a downpayment
on a second or vacation home); or
Payment of tuition for the next 12 months at a
college, trade, graduate or professional school which
you, your husband or wife, child or dependent attends
after high school (but not tuition at a private
secondary school); or
A payment which is necessary to avoid eviction from
your principal residence or to avoid foreclosure on
the mortgage or deed of trust on your principal
residence.
3. The Hardship Withdrawal Must Be Necessary to Satisfy
Your Financial Need After You Have Used Up Your Other Resources.
Before making a hardship withdrawal, you must have used all of
your other financial resources which are reasonably available to
you. The amount available for a hardship withdrawal is the amount
you require to meet your immediate and heavy financial need plus
an amount necessary to pay federal and state income tax on the
distribution less any amounts available from other financial
resources, including the financial resources of your husband or
wife and your minor children to the extent that they are
reasonably available. For example, you must first use a vacation
home which is owned by you and your husband or wife as a source of
funds, although you need not use funds held for your children in
an irrevocable trust or under the Uniform Gifts to Minors Act. You
must show that you cannot meet your immediate and heavy financial
needs from any of the following sources:
Reimbursement for your financial need or compensation
from insurance or other sources (for example if you
incur medical expenses from an auto accident you must
show that payment of those expenses is not available
from insurance or from another party who is at fault);
and
Reasonable sale of your assets (and those of your
husband or wife or minor children), but only if the
sale itself would not cause an immediate and heavy
financial need (for example, you are not required to
sell your home at a substantial loss in a falling real
estate market to meet your financial need and you are
not required to sell it if you then had to rent living
accommodations at a rental which would cause you
immediate and heavy financial need); and
Borrowing from a commercial source, such as a bank,
savings and loan, credit union or loan company under
commercially reasonable terms (unless it is clear that
you cannot repay the loan); and
Stopping your before-tax (deferrals) contributions to
this Plan; and
Taking distributions, whether or not they are taxable,
which are available under this or any other plan in
which you, your husband or wife or minor child
participate; and
Taking a nontaxable loan available under any other
plan in which you, your husband or wife or minor child
participate.
4. You Must Have a Sufficient Amount Available for
Distribution. You must have a sufficient amount in the Plan which
is available for distribution. If there is not a sufficient
amount, you do not qualify for a hardship withdrawal. Here are
rules to determine whether your interest in the Plan is sufficient
for a hardship withdrawal:
You cannot obtain a distribution in excess of your
interest in the Plan;
You cannot obtain a distribution of any portion of
your interest in the Plan which is subject to a
Qualified Domestic Relations Order;
You cannot withdraw from your Employee Contribution
Account an amount in excess of the amount contributed
and not previously distributed -- in other words, you
generally cannot make a hardship withdrawal from
earnings on your before-tax contributions (deferrals).
5. How to Apply for a Hardship Withdrawal. Before making
an application for a hardship withdrawal, carefully read this
Appendix. If you have any questions, such as the amount of your
interest in the Plan which is available for a hardship withdrawal,
you may call the Human Resources Department. If you believe that
you qualify for a hardship withdrawal and have attempted to obtain
funds from other sources as described above in paragraph 3, you
may file a written application with the Committee. In your
application, explain in your own words what your immediate and
heavy financial need is, the amount of money required to meet that
need and explain how you have attempted to obtain the funds from
other sources (including each of those listed in paragraph 3) and
have been unable to do so. If you are married, your husband or
wife must consent to the hardship withdrawal on a form which you
may obtain from the Human Resources Department and your husband or
wife's signature must be witnessed by a notary public not employed
by the Employer. When the Committee has received all necessary
information, it will consider your application in an objective and
nondiscriminatory manner under the rules of this Appendix, the
Plan and applicable law and regulations. You will then be
notified whether you qualify for a hardship distribution and the
amount of that distribution. The Committee's decision is final.
6. Making a Hardship Withdrawal Will Affect Your
Participation in the Plan. If you make a hardship withdrawal, you
will be suspended from making before-tax (compensation deferral)
contributions to the Plan for 12 months after you receive the
withdrawal. The Plan provides that your before-tax contributions
for each of your taxable years (normally the calendar year) are
limited to $7,000, or a higher amount permitted by regulations
issued by the Internal Revenue Service. For your taxable year
following the year you receive a hardship withdrawal, the $7,000
(or higher) limit for contributions to the Plan is further reduced
by the amount of your before-tax contributions during the year you
made the hardship withdrawal
Appendix C
to
California Water Service Company Savings Plan and Trust Agreement
(1994 Revision)
Top-Heavy Provisions
Section C-1. Minimum Contribution.
a) For each Participant who is not a Key
Employee (whether or not a former Key Employee) and who is
employed by any Employer on the last day of the Plan Year,
his or her Employer will make a minimum contribution for any
Plan Year in which the Plan is a top-heavy. The
determination of top-heavy status is described in Section C-
2. The minimum contribution is described in paragraph (b) of
this Section C-1.
b) The minimum contribution is 3% of the
Participant's Compensation for the Plan Year, or if, less,
the highest percentage at which such contributions are made
under the Plan for the Plan Year on behalf of a Key
Employee. For purposes of this paragraph (b), all defined
contribution plans required to be included in the
Aggregation Group shall be treated as one Plan and deferrals
made under Section 3.1 are included in the Compensation of
Key Employees. In calculating the minimum contribution, any
Employee deferral and any contributions or benefits under
Chapter 21 of the Internal Revenue Code (relating to the
Federal Insurance Contributions Act), Title II of the Social
Security Act, or any other Federal or state law are not
counted toward the minimum contribution.
Section C-2. Top-Heavy Determination.
(a) If the Plan is not required to be
included in an Aggregation Group with other plans, then it is top-
heavy only if, when considered by itself, it is a top-heavy plan
and it is not included in a permissive Aggregation Group that is
not a top-heavy group.
(b) If the Plan is required to be included
in an Aggregation Group with other plans, it is top-heavy only if
the Aggregation Group, including any permissively aggregated
plans, is top-heavy.
(c) If the Plan is not top-heavy and is not
required to be included in an Aggregation Group, then it is not
top-heavy even if it is permissively aggregated in an Aggregation
Group which is a top-heavy group.
Section C-3. Calculation of Top-Heavy Ratios.
(a) For any Plan Year, the Plan is top-heavy and an
Aggregation Group is a top-heavy group if, as of the Determination
Date, the sum of the Cumulative Accrued Benefits and the
Cumulative Accounts of Employees who are Key Employees for the
Plan Year exceeds 60% of a similar sum determined for all
Employees, excluding former Key Employees.
Section C-4. Cumulative Accounts.
(a) Cumulative Account means the sum of the
amount of a Participant's accounts under the Plan or under all
defined contribution plans included in an Aggregation Group (for
aggregated plans) determined as of the Determination Date,
increased by and contributions due before the Determination Date.
(b) Cumulative Accrued Benefit means the
sum of the present value of a Participant's accrued benefits under
a defined benefit plan (for an unaggregated plan) or under all
defined benefit plans included in an Aggregation Group (for
aggregated plans), determined under the actuarial assumptions set
forth in that plan or plans, as of the most recent plan valuation
date within a 12-month period ending on the Determination Date as
if the Participant voluntarily terminated service as of such
valuation date.
(c) Accounts and benefits are calculated by
including all amounts attributable to both employer and employee
contributions.
(d) Accounts and benefits are increased by
the aggregate distributions during the five-year period ending on
the Determination Date made with respect to a Participant under
the plan or plans as the case may be, or under a terminated plan
which, if it had not been terminated, would have been required to
be included in the Aggregation Group.
Section C-5. Additional Definitions.
For purposes of this Appendix C, the following definitions
apply:
(a) Aggregation Group means a plan or group
of plans which includes all plans maintained by any Employer in
which a Key Employee is a Participant or which enables any plan in
which a Key Employee is a Participant to meet the requirements of
Section 401(a)(4) or Section 410 of the Internal Revenue Code, as
well as all other plans selected by the Employer for permissive
aggregation, the inclusion of which would not prevent the group of
plans from continuing to meet the requirements of those sections.
(b) Compensation means the employee's
wages, salaries, fees for professional services and other amounts
received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of
employment with the Employer to the extent that the amounts are
includible in gross income (including, but not limited to
compensation for services on the basis of a percentage of profits,
bonuses, fringe benefits and reimbursement other expense
allowances under a nonaccountable plan (as described in Income Tax
Regulations Section 62-2(c)). Compensation also includes amounts
described in Sections 104(a)(3), 105(a), and 105(h) of the
Internal Revenue Code, but only to the extent that these amounts
are includible in gross income of the employee and amounts paid or
reimbursed by the Employer for moving expenses incurred by an
employee, but only to the extent that at the time of payment it is
reasonable to believe that these amounts are not deductible by the
Employee under Section 217 of the Internal Revenue Code.
Compensation does not include contributions made by the Employer
to a plan of deferred compensation to the extent that, before
application of the limitations contained in Section 415 of the
Internal Revenue Code, the contributions are not includible in
gross income for the employee for the taxable year in which
contributed. Notwithstanding the foregoing, Compensation for the
purpose of calculating a Participant's minimum top-heavy
contribution also includes amounts which the Participant defers
under Section 3.1 and amounts contributed by the Employer to a
cafeteria plan (as defined in Section 125 of the Internal Revenue
Code) for the Participant. Up to and including December 31, 1993,
the annual Compensation for each Participant taken into account
under this Appendix C for any year will not exceed $200,000. This
limitation will be adjusted by the Secretary of the Treasury at
the same time and in the same manner as under Section 415(d) of
the Internal Revenue Code, except that the dollar increase in
effect on January 1 of any calendar year is effective for Plan
Years beginning in that calendar year and the first adjustment to
the $200,000 limitation is effective January 1, 1990. In
determining Compensation for a Participant for purposes of the
$200,000 limitation, the rules of Section 414(q)(6) of the
Internal Revenue Code apply, except the term "family" includes
only the spouse of the Member and any lineal descendants of the
Member who have not attained age 19 before the close of the Plan
Year. If, as a result of the application of those rules, the
adjusted $200,000 limitation is exceeded, then the limitation is
prorated among the affected individuals in proportion to each such
individual's Compensation as determined under the Plan prior to
application of the $200,000 limitation. Effective January 1,
1994, the annual amount constituting Compensation for purposes of
this Appendix C must not exceed $150,000 as adjusted by the
Commissioner of Internal Revenue in accordance with Section
401(a)(17)(B) of the Internal Revenue Code. The adjustment in
effect for a calendar year applies to any period, not exceeding 12
months over which Compensation is determined (determination
period) beginning in such calendar year. If a determination
period consists of fewer than 12 months, the annual Compensation
limit described in the two preceding sentences will be multiplied
by a fraction, the numerator of which is the number of months in
the determination period and the denominator of which is 12.
(c) Determination Date means the last day
of the preceding Plan Year.
(d) Employer means any entity which
contributes to this Plan and any of the following entities of
which the Employer is a member: (i) a controlled group of
corporations (as defined in Section 414(b) of the Internal Revenue
Code), (ii) a group of trades or businesses under common control
(as defined in Section 414(c) of the Internal Revenue Code), (iii)
an affiliated service group (as defined in Section 414(m) of the
Internal Revenue Code) and (iv) an organization or arrangement
described in Income Tax Regulations issued under Section 414(o) of
Internal Revenue Code.
(e) Key Employee means any employee or
former employee (and the Beneficiaries of such employee) if,
during the Plan Year in question or any of the four preceding Plan
Years, he or she is or was:
(i) an officer of any Employer, if such
officer's compensation exceeds 50% of the dollar
limitations under Section 415(b)(1)(A) of the Internal
Revenue Code;
(ii) one of the ten employees owning (or
considered as owning within the meaning of Section 318
of the Internal Revenue Code) the largest interest in
any Employer, if such employee's compensation exceeds
100% of the dollar limitation under Section
415(c)(1)(A) of the Internal Revenue Code;
(iii) a 5% owner (as described in Section
416(i)(2)(B)(i) of the Internal Revenue Code) of any
Employer; or
(iv) a 1% or more owner (as described in
Section 416(i)(1)(B)(ii) of the Internal Revenue Code)
of any Employer having annual Compensation of more
than $150,000. For purposes of clause (i), employees
described in Section 414(q)(8) of the Internal Revenue
Code are excluded and no more than 50 (or if less, the
greater of three or 10% of the employees are treated
as officers). For purposes of clause (ii), if two
employees have the same interest in an Employer, the
employee having greater annual compensation is treated
as having a larger interest. The term Key Employee
includes a beneficiary of a Key Employee.
FIRST AMENDMENT
TO THE
CALIFORNIA WATER SERVICE COMPANY
SAVINGS PLAN AND TRUST AGREEMENT
(May 1994 Revision)
The California Water Service Company Savings Plan and Trust
Agreement (the "Plan") is amended to merge the California Water
Service Company Salaried Employees' Savings Plan into this Plan
effective December 31, 1994 in lieu of December 31, 1993.
Dated: March 30, 1995
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President, Chief Financial Officer and Treasurer
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Director of Human Resources
Amendment No. 2 to the
California Water Service Company
Savings Plan and Trust Agreement
(May 1994 Revision)
The California Water Service Company Savings Plan and Trust
Agreement (May 1994 Revision) (the "Plan"), previously amended on
March 30, 1995, is hereby further amended as follows:
1. Effective January 1, 1996, the second sentence of
Subsection 3.3 is amended to change from 6% to 7% the percentage
of Earnings used to calculate Employer Contributions to the Plan.
Effective January 1, 1997, that sentence is further amended to
change the percentage to 8.
2. Effective January 1, 1997, Subsection 2.2 is amended
to read as follows:
An Employee may elect to become a Participant on the
date his or her employment begins or as of the first
day of any payroll period thereafter, provided the
Employee properly completes and returns such forms as
the Committee may require with respect to deferral and
investment elections.
3. Effective December 12, 1994, the following Subsection
3.6 is added to Section 3:
3.6 Military Service
Notwithstanding any provision of this Plan to the
contrary, contributions, benefits and service credit
with respect to qualified military service will be
provided in accordance with section 414(u) of the
Internal Revenue Code.
4. To the extent permitted under section 411 (d)(6) of
the Internal Revenue Code and IRS regulations and guidance
thereunder, effective January 1, 1997, Subsection 6.4 is amended
to read as follows:
6.4 Other Mandatory Distributions
In the case of a Participant who remains employed by
the Company after his or her Normal Retirement Date,
his or her Participant Account balance will be
distributed as soon as practicable following
termination of employment with the Company.
Notwithstanding the foregoing, the Account balance of
a participant who is a 5 percent owner of the Company
(as defined in section 416 of the Internal Revenue
Code) shall be distributed on April 1 following the
calendar year in which the Participant attains age 70-
1/2.
IN WITNESS WHEREOF, this amendment is executed by two duly
authorized officers on this 31st day of December 1996.
CALIFORNIA WATER SERVICE COMPANY
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President, Chief Financial Officer and Treasurer
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Director of Human Resources
Amendment No. 3 to the
California Water Service Company
Savings Plan and Trust Agreement
(May 1994 Revision)
The California Water Service Company Savings Plan and Trust
Agreement (May 1994 Revision) (the "Plan"), previously amended on
December 31, 1996, is hereby further amended as follows in order
to clarify the meaning of certain provisions of the Plan and to
state the correct name of the trustee for the Employer Stock fund:
1. The following definition is added to Section 1.2:
Trustees means the trustees of the trust holding Plan
assets other than Employer Stock, who are appointed by
the Board of Directors.
2. The definition of "Committee" shall be deleted from
Section 1.2 and the term "Committee" is changed to "Trustees"
wherever it appears in the Plan.
3. The first two sentences of Section 6.3(c) are amended
to read as follows:
The Beneficiary of a Participant or Former Participant
is the person or persons he or she designates in
writing filed with the Trustees, provided that the
Beneficiary of a married Participant or Former
Participant will be his or her spouse on the date of
death, unless the spouse has consented to the
designation of another Beneficiary in the manner set
forth below. If an unmarried Participant or Former
Participant dies without having properly designated a
Beneficiary, the unpaid balance of his or her
Participant Accounts will be paid to his or her
estate.
4. The first sentence of Section 6.4, as amended by
Amendment No. 2, is hereby
further amended to read as follows:
The Participant Account balance of a Participant who
remains employed by the Company after his or her
Normal Retirement Date will be distributed as soon as
practicable following termination of employment,
provided that he or she may elect, at any time before
termination of employment but after he or she attains
age 70-1/2, to receive an in-service distribution of
his or her Participant Account balance as of the date
of his or her election.
5. Section 8.2 is amended by changing the term "Bank of
America, N.T.&S.A."
to "First Trust, or any successor trustee appointed by the Board
of Directors."
6. Section 9. 1 is amended in its entirety to read as
follows:
9.1 Trustees Administer Plan
(a) The Plan is administered by the Trustees.
The Trustees are the Plan's named
fiduciary within the meaning of ERISA.
The rules and procedures in this Section 9
apply to the Trustees' administration of
the Plan other than the administration and
management of Plan assets as set forth in
Section 8.3.
(b) The Trustees act by a majority, unless
there are fewer than three Trustees, in
which case they act unanimously. The
Trustees may act by meeting, unanimous
written consent, phone meeting or
unanimous consent by facsimile or wire.
Each Trustee has one vote.
(c) No Trustee may vote on any question
affecting his or her specific individual
benefit under the Plan. If, for this or
any other reason, there are no members
eligible to act, the functions of the
Trustees may be exercised by the Board of
Directors.
(d) The expenses of the Trustees for attending
meetings are borne by the Employer. The
Trustees receive no compensation for
attending meetings or other work performed
as Trustees.
IN WITNESS WHEREOF, this amendment is executed by two duly
authorized officers
on this 15th day of January, 1997.
CALIFORNIA WATER SERVICE COMPANY
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President, Chief Financial Officer and Treasurer
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President and Director of Human Resources
Amendment No. 4 to the
California Water Service Company
Savings Plan and Trust Agreement
(May 1994 Revision)
The California Water Service Company Savings Plan and Trust
Agreement (May 1994 Revision) (the "Plan"), previously amended on
December 31, 1996, is hereby further amended effective January 1,
1998, in order to clarify the meaning of certain provisions of the
Plan and to make changes deemed desirable:
Section 4.2 ( c) is amended to read as follows:
Employer Contribution Accounts may be invested in any
of the Funds, in Employer Stock or in a combination of
any or all of the Funds and Employer Stock in
accordance with the requirements for elections set
forth in Paragraph (b) above and with rules adopted by
the Committee.
IN WITNESS WHEREOF, this amendment is executed by two duly
authorized officers on this 11th day of February, 1998.
CALIFORNIA WATER SERVICE COMPANY
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President, Chief Financial Officer and Treasurer
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President and Director of Human Resources
EXHIBIT 10.15
CALIFORNIA WATER SERVICE GROUP
DIRECTORS DEFERRED COMPENSATION PLAN
January 1, 1998
TABLE OF CONTENTS
Page
A. INTRODUCTION 1
B. PARTICIPATION 1
1. Eligibility to Participate 1
2. Election to Participate by Eligible Directors 1
3. Notification of Eligible Directors 2
C. AMOUNTS OF DEFERRAL 2
1. Minimum Deferral 2
2. Maximum Deferral 2
3. Failure to Defer Minimum Amount 2
D. VESTING 2
E. PAYMENT OF DEFERRED DIRECTORS' FEES 2
1. Book Account and Earnings Credit 2
2. Length of Deferral and Time of Payment 3
3. Method of Payment 4
F. HARDSHIP DISTRIBUTIONS 4
G. BENEFITS ON DEATH 4
1. Amount, Method of Payment, and Time of Payment 4
2. Designation of Beneficiary 5
H. SOURCE OF PAYMENT 5
I. MISCELLANEOUS 6
1. No Assignment 6
2. Applicable Law; Severability 6
3. Other Benefits 6
4. Right to Serve as Director 6
J. ADMINISTRATION OF THE PLAN 7
1. In General 7
2. Elections and Notices 7
K. AMENDMENT OR TERMINATION OF THE PLAN 7
L. DEFINITIONS 8
CALIFORNIA WATER SERVICE GROUP
DIRECTORS DEFERRED COMPENSATION PLAN
A. INTRODUCTION
This Plan is established to further enhance the Company's ability to
attract and retain outside members of its Board. Capitalized words are
defined in Paragraph L.
B. PARTICIPATION
1. Eligibility to Participate
Each member of the Board who is not an employee of the Company
or a subsidiary of the Company is eligible to elect to participate in this
Plan and is an Eligible Director. If a person ceases to be an Eligible
Director, he shall, however, remain a Participant in the Plan until all
amounts credited to his Account, adjusted for any subsequent gains or
losses, are paid out under the terms of the Plan (or until death, if
earlier).
2. Election to Participate by Eligible Directors
Each Eligible Director may become a Participant in the Plan by
electing to defer Directors' Fees in accordance with the terms of this
Plan, specifying one or more Measuring Investments and specifying the
method of payment. An election to defer shall be in writing, shall be
irrevocable and shall be made at the time and in the form specified by the
Plan Administrator. On electing to defer Directors' Fees under this Plan,
the Eligible Director shall be deemed to accept all of the terms and
conditions of this Plan.
All elections to defer amounts under this Plan shall be made
pursuant to an election executed and filed with the Plan Administrator
before the amounts so deferred are earned. All such elections to defer
Directors' Fees shall be executed and filed with the Plan Administrator
prior to the first day of each Year.
3. Notification of Eligible Directors
The Plan Administrator shall annually notify each Eligible
Director that he may participate in the Plan for the next Year.
C. AMOUNTS OF DEFERRAL
1. Minimum Deferral
The minimum amount of Directors' Fees that may be deferred by a
Participant under this Plan for any Year is $5,000.
2. Maximum Deferral
The maximum amount of Directors' Fees which a Participant may
defer under this Plan for any Year is 100% of the Participant's Directors'
Fees for such Year.
3. Failure to Defer Minimum Amount
In the event a Participant does not defer at least $5,000 of
Directors' Fees in any Year for any reason, he shall be paid the portion of
his Account attributable to such Year as soon as practicable after the end
of the calendar quarter in which the Plan Administrator determines that the
minimum deferral cannot be met.
D. VESTING
A Participant shall be fully vested in the amount credited to his
Account under the Plan.
E. PAYMENT OF DEFERRED DIRECTORS' FEES
1. Book Account and Earnings Credit
Directors' Fees deferred by a Participant under the Plan shall
be credited to a separate bookkeeping Account of the Company for such
Participant. Separate Accounts or sub-Accounts may be established for each
Year for which the Participant elects to defer Directors' Fees and/or for
each Measuring Investment of the Participant. The Account or Accounts of
each Participant shall be increased or decreased as of the last day of each
month to reflect gains or losses as if each Account were invested in the
Measuring Investment specified by the Participant. The Participant may
file a new designation of Measuring Investment or Investments at any time.
In that event the Participant's Account shall be adjusted as if the
Account were invested in accordance with the new Measuring Investment or
Investments as soon as practicable after the filing of his new designation.
2. Length of Deferral and Time of Payment
a. An Eligible Director shall irrevocably elect in writing,
and file with the Plan Administrator at the same time as he makes any
election to defer Directors' Fees, the period of deferral with respect to
such election. Amounts may be deferred to January 1 of the second (2nd)
Year following the Year in which the election is filed or to any subsequent
January 1, subject to section b. below.
b. Payment from a Participant's Account shall begin no later
than the day on which he ceases to be an Eligible Director, or as soon
thereafter as is practicable. Notwithstanding the previous sentence, if a
person ceases to be an Eligible Director because he becomes an employee of
the Company, payment from his Account shall begin (i) no later than the day
on which his employment with the Company terminates, or as soon thereafter
as practicable or, if later (ii) the date to which payment is deferred
under Paragraph E-2, section a.
c. The Participant's Account shall reflect earnings and
losses through the last day of the month preceding the date of
distribution.
2. Method of Payment
All amounts payable from the Participant's Account shall be
subject to a single method of payment election which is filed with the Plan
Administrator at the time of the Participant's initial election to defer.
The method of payment election is irrevocable. Payment of the amount
credited to the Participant's Account shall be made in a single sum
distribution or in one, two, three, four or five annual installments
payable on January 1 of each Year beginning in the Year elected in
Paragraph E-2, section a. above. The amount of installment payments shall
be adjusted to reflect earnings and losses until the Participant's Account
is fully paid. If a Participant fails to file a method of payment
election, payment of the amount credited to his Account shall be made in a
single sum distribution.
B. HARDSHIP DISTRIBUTIONS
Upon application of any Participant demonstrating hardship, the Plan
Administrator may make a distribution of part or all of the amounts
credited to his Account. "Hardship" shall mean an emergency or unexpected
situation in the Participant's financial affairs, including illness or
accident involving the Participant, his dependents or other members of his
family, a financial need reasonably beyond the Participant's control, or
another significant hardship, as determined by the Plan Administrator.
C. BENEFITS ON DEATH
1. Amount, Method of Payment, and Time of Payment
If a Participant dies before all amounts credited to his
Account have been paid, the remaining amounts credited shall be paid to his
Beneficiary. Payment shall be made in accordance with the method of
payment elected in Paragraph E-3 above. If the Participant has not
commenced receiving benefits, the single sum payment or initial installment
payment shall be made as soon as practicable after the last day of the
month in which the Participant's death occurs.
2. Designation of Beneficiary
A Participant may designate any person or entity as his
Beneficiary, but may not designate more than one person or any person that
is not a natural person without the approval of the Plan Administrator.
Designation shall be in writing and shall become effective only when filed
with (and, if appropriate, approved by) the Plan Administrator. Such
filing must occur before the Participant's death. A Participant may change
the Beneficiary, from time to time, by filing a new written designation
with (and, if appropriate, approved by) the Plan Administrator. If the
Participant is married, any Beneficiary designation which does not provide
that the Participant's spouse is to receive at least one-half of the
Participant's Account shall only become effective when approved in writing
by the Participant's spouse. If no Beneficiary is designated, the value of
the Participant's Account shall be paid to his estate.
D. SOURCE OF PAYMENT
Amounts paid under this Plan shall be paid from the general funds of
the Company, and each Participant and his Beneficiaries shall be no more
than unsecured general creditors of the Company with no special or prior
right to any assets of the Company for payment of any obligations
hereunder. Nothing contained in this Plan shall be deemed to create a
trust of any kind for the benefit of any Participant or Beneficiary, or
create any fiduciary relationship between the Company and any Participant
or Beneficiary with respect to any assets of the Company. Without limiting
the generality of the foregoing, the Company may, but need not, invest in a
Measuring Investment or Measuring Investments. No Participant or
Beneficiary shall have any interest in such investment and such investment
shall not cause this Plan to be a funded plan within the meaning of the
Internal Revenue Code.
E. MISCELLANEOUS
1. No Assignment
The benefits provided under this Plan may not be alienated,
assigned, transferred, pledged, or hypothecated by any person, at any time.
These benefits shall be exempt from the claims of creditors or other
claimants and from all orders, decrees, levies, garnishments or executions.
2. Applicable Law; Severability
The Plan hereby created shall be construed, administered, and
governed in all respects in accordance with the laws of the State of
California. If any provision of this instrument shall be held by a court
of competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereunder shall continue to be effective.
3. Other Benefits
No Participant, Eligible Director or Beneficiary shall have any
right to any payment or benefit hereunder except to the extent provided in
the Plan.
4. Right to Serve as Director
The rights of any person to serve as a Director of the Company
shall not be enlarged, guaranteed or affected by reason of the provisions
of the Plan.
ADMINISTRATION OF THE PLAN
1. In General
The Plan Administrator shall interpret and administer the Plan
and carry out its provisions. The Plan Administrator may delegate to one
or more officers or employees of the Company (or an affiliate) all or a
portion of its duties and authority under the Plan. The Company shall
indemnify any officer or employee to whom administrative duties and
authority are delegated against all liability arising in connection with
administration of the Plan, except that such indemnification shall not
apply to gross negligence or willful misconduct.
The Plan Administrator (or its delegate) shall adopt such rules
and regulations for carrying out the Plan as it may deem necessary or
appropriate. Decisions of the Plan Administrator shall be final and
binding on all parties who have or claim any interest in the Plan.
The Plan Administrator may employ or retain agents to perform
such clerical, accounting, and other services as it may require in carrying
out the provisions of the Plan.
2. Elections and Notices
All elections and notices made under this Plan shall be in
writing and filed with the Plan Administrator at the time and in the manner
specified by it. All elections to defer under this Plan shall be
irrevocable.
F. AMENDMENT OR TERMINATION OF THE PLAN
The Company, by action of the Board (excluding Participants and
Eligible Directors), may at any time or from time to time modify or amend
any or all of the provisions of the Plan or may at any time terminate the
Plan. Such action shall be prospective only and shall not adversely affect
the rights of any Participant or Beneficiary to any benefit previously
earned under the Plan. The Plan Administrator may change the Measuring
Investment or Investments at any time. In that case, the Accounts under
the Plan shall be adjusted in accordance with the new Measuring Investment
or Investments from the effective date of such change.
Upon termination of the Plan, Directors' Fees previously deferred,
adjusted for gains and losses to the date of termination, shall promptly be
paid in single sums to the respective Participants or Beneficiaries
entitled thereto.
G. DEFINITIONS
For purposes of the Plan, the following terms have the meanings
indicated:
1. "Account(s)" means the deferred Directors' Fees Account(s)
maintained under the Plan for a Participant in accordance with Paragraph
E-1.
2. "Beneficiary" means any person(s) or legal entity(ies)
designated by the Participant or otherwise determined in accordance with
Section G.
3. "Board" means the Board of Directors of the Company.
4. "Company" means California Water Service Group, a California
corporation.
5. "Directors' Fees" means a Participant's monthly retainer fees,
but does not include fees for attending meetings
6. "Effective Date" means January 1, 1998.
7. "Eligible Director" means a member of the Board who is eligible
to participate in the Plan.
8. "Measuring Investment(s)" means any member of one or more
families of regulated investment funds or a fixed income investment. For
the purpose of the preceding sentence, a fixed income investment bears
interest at the average effective interest cost on the long term debt of
California Water Service Company during the Year determined from its
filings with the California Public Utilities Commission for such Year, or
if there is no such filing, determined by the Company's Treasurer. The
Measuring Investment(s) is specified in Appendix "A" attached hereto and
made a part hereof.
9. "Participant" means an Eligible Director who elects to
participate in the Plan in accordance with Paragraph B-2.
10. "Plan" means this California Water Service Group Directors
Deferred Compensation Plan as embodied herein and as amended from time to
time.
11. "Plan Administrator" is the Company.
12. "Year" means the calendar year.
13. The masculine pronoun shall be deemed to include the feminine,
and a singular number shall be deemed to include the plural unless a
different meaning is plainly required by the context.
Executed effective January 1, 1998, in the City of San ▇▇▇▇,
County of Santa ▇▇▇▇▇, State of California.
CALIFORNIA WATER SERVICE GROUP
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer
and Treasurer
CALIFORNIA WATER SERVICE COMPANY
DIRECTORS DEFERRED COMPENSATION PLAN
APPENDIX "A"
Measuring Investments
1. Fixed Income Investment as defined in Paragraph L, Section 7
of the Plan.
2. Vanguard Family of Mutual Funds.
3. Fidelity Family of Mutual Funds.
January 1998
EXHIBIT 10.16
CALIFORNIA WATER SERVICE GROUP
DIRECTORS RETIREMENT PLAN
This document summarizes the California Water Service Group ("Group")
Retirement Plan ("Plan") for members of the Board of Directors. The
Plan is effective January 1, 1998. It replaces the former California
Water Service Company Directors Retirement Plan (the "Former Plan").
The Plan is intended to recognize a director's service commitment to
the Group by providing retirement income.
1. The mandatory retirement age for directors who are employees of the
Group or its subsidiaries shall be age 70. The mandatory retirement
age for directors who are not employees of the Group or its
subsidiaries shall be age 75.
2. Each director who has served as a member of the Board of Directors
for a period of at least five years shall be eligible to participate in
the Plan. Service as a director of California Water Service Company
prior to January 1, 1998 shall be included when determining that the
five year service period requirement has been met.
3. Upon retirement from the Board, each director who has served for a
period of at least five years shall receive an annual retirement
benefit. The retirement benefit will be equal to the annual retainer
that is paid to non employee, active directors of the Group at the time
the director retires from the Board. The annual retirement benefit
will be paid for a period equal to the number of years the retiring
director served on the Board up to a maximum of 10 years or death,
whichever is earlier. The period of service will include service as a
director of California Water Service Company prior to January 1, 1998
or until the death of the director, whichever is earlier. Retirement
benefit payments will be made monthly at the same time as retainer
payments are made to active directors.
4. The Board reserves the right to adopt resolutions which alter,
amend, modify, or terminate the Plan at any time. However, future
resolutions may not, in any way, reduce the benefits to which a
director shall have become entitled prior to adoption of the
resolution.
5. In the event of a Director's death prior to retirement who has
served on the Board for a period of at least five years, the Director's
designated beneficiary will receive annual benefits to which the
director was entitled. The benefit will be determined under terms of
the Plan as if the Director had retired on the date of his
or her death. Benefit payments will be made to the beneficiary in
accordance with the provisions of Paragraph 3. Benefits will be
payable for a period equal to the number of years the Director served
on the Board, including service on the Board of California Water
Service Company prior to January 1, 1998, up to a maximum of 10 years.
Payment of the survivor benefit will commence the month following the
Director's death.
6. In the event of a Director's death following retirement, the
balance of his or her retirement benefit, if any, will be paid to the
retired Director's designated beneficiary, or in accordance with his or
her will or the laws of descent and distribution.
7. A Director may, from time to time, revoke his or her beneficiary
designation and file a new beneficiary designation with the Board.
8. Benefits earned under the former Plan and for which payment had
commenced as of the adoption date of this Plan will continue to be paid
in accordance with provisions of the former plan.
9. This Plan is a nonqualified, nonfunded plan. In the event of
bankruptcy of the Group, the participants will be general creditors of
the Group.
EXHIBIT 10.17
A logo of Bank of America with the words BA was placed in the top left
corner of this page.
Bank of America Business Loan Agreement
National Trust and Savings Association
This Agreement dated as of March 16, 1998, is among Bank of
America National Trust and Savings Association (the "Bank"), California
Water Service Group ("Borrower 1") and CWS Utility Services ("Borrower
2") (Borrower 1 and Borrower 2 are sometimes referred to collectively as
the "Borrowers" and individually as the "Borrower").
1. LINE OF CREDIT AMOUNT AND TERMS
1.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will
provide a line of credit to the Borrowers. The amount of the line
of credit (the "Commitment") is Twenty Five Million Dollars
($25,000,000).
(b) This is a revolving line of credit with a within line facility for
letters of credit. During the availability period, the Borrowers
may repay principal amounts and reborrow them.
(c) The Borrowers agree not to permit the outstanding principal
balance of the line of credit plus the outstanding amounts of any
letters of credit, including amounts drawn on letters of credit
and not yet reimbursed, to exceed the Commitment.
1.2 Availability Period. The line of credit is available between the
date of this Agreement and April 30, 1999 (the "Expiration Date") unless
any Borrower is in default.
1.3 Interest Rate.
(a) Unless the Borrowers elect an optional interest rate as described
below, the interest rate is the Bank's Reference Rate minus 0.5
percentage point.
(b) The Reference Rate is the rate of interest publicly announced from
time to time by the Bank in San Francisco, California, as its
Reference Rate. The Reference Rate is set by the Bank based on
various factors, including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a
reference point for pricing some loans. The Bank may price loans
to its customers at, above, or below the Reference Rate. Any
change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of a
change in the Bank's Reference Rate.
1.4 Repayment Terms.
(a) The Borrowers will pay interest on April 1, 1998, and then monthly
thereafter until payment in full of any principal outstanding
under this line of credit.
(b) The Borrowers will repay in full all principal and any unpaid
interest or other charges outstanding under this line of credit no
later than the Expiration Date.
1.5 Optional Interest Rates. Instead of the interest rate based on
the Bank's Reference Rate, the Borrower may elect to have all or
portions of the line of credit (during the availability period) bear
interest at the rate(s) described below during an interest period agreed
to by the Bank and the Borrower. Each interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and, if
the interest period is longer than one month, then on the first day of
each month during the interest period. At the end of any interest
period, the interest rate will revert to the rate based on the Reference
Rate, unless the Borrower has designated another optional interest rate
for the portion. Upon the occurrence of an event of default under this
Agreement, the Bank may terminate the availability of optional interest
rates for interest periods commencing after the default occurs.
1.6 Fixed Rate. The Borrower may elect to have all or portions of the
principal balance of the line of credit bear interest at the Fixed Rate,
subject to the following requirements:
(a) The "Fixed Rate" means the fixed interest rate the Bank and the
Borrower agree will apply to the portion during the applicable
interest period.
(b) The interest period during which the Fixed Rate will be in effect
will be one year or less.
(c) Each Fixed Rate portion will be for an amount not less than the
following:
(i) for interest periods of 91 days or longer, Five Hundred
Thousand Dollars ($500,000).
(ii) for interest periods of between 30 days and 90 days, One
Million Dollars ($1,000,000).
(iii) for interest periods of between 2 days and 29 days, an amount
which, when multiplied by the number of days in the
applicable interest period, is not less than thirty million
(30,000,000) dollar-days.
(iv) for interest periods of 1 day, Fifteen Million Dollars
($15,000,000).
(d) The Borrower may not elect a Fixed Rate with respect to any
portion of the principal balance of the line of credit which is
scheduled to be repaid before the last day of the applicable
interest period.
(e) Any portion of the principal balance of the line of credit already
bearing interest at the Fixed Rate will not be converted to a
different rate during its interest period.
(f) Each prepayment of a Fixed Rate portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the
amount of accrued interest on the amount prepaid, and a prepayment
fee equal to the amount (if any) by which
(i) the additional interest which would have been payable on the
amount prepaid had it not been paid until the last day of the
interest period, exceeds
(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the certificate of
deposit market for a period starting on the date on which it
was prepaid and ending on the last day of the interest period
for such portion.
1.7 LIBOR Rate. The Borrower may elect to have all or portions of the
principal balance bear interest at the LIBOR Rate plus 1.25 percentage
points
Designation of a LIBOR Rate portion is subject to the following
requirements:
(a) The interest period during which the LIBOR Rate will be in effect
will be one, two, or three weeks, or one, two, three, four, five,
six, seven, eight, nine, ten, eleven, or twelve months. The first
day of the interest period must be a day other than a Saturday or
a Sunday on which the Bank is open for business in California, New
York and London and dealing in offshore dollars (a "LIBOR Banking
Day"). The last day of the interest period and the actual number
of days during the interest period will be determined by the Bank
using the practices of the London inter-bank market.
(b) Each LIBOR Rate portion will be for an amount not less than the
following:
(i) for interest periods of four months or longer, Five Hundred
Thousand Dollars ($500,000).
(ii) for interest periods of one, two or three months, One Million
Dollars ($1,000,000).
(iii) for interest periods of one, two, or three weeks, an amount
which, when multiplied by the number of days in the
applicable interest period, is not less than thirty million
(30,000,000) dollar-days.
(c) The "LIBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one
percent. (All amounts in the calculation will be determined by
the Bank as of the first day of the interest period.)
LIBOR Rate = London Inter-Bank Offered Rate
divided by
(1.00 - Reserve Percentage)
Where,
(i) "London Inter-Bank Offered Rate" means the interest rate at
which the Bank's London Branch, London, Great Britain, would
offer U.S. dollar deposits for the applicable interest period
to other major banks in the London inter-bank market at
approximately 11:00 a.m. London time two (2) London Banking
Days before the commencement of the interest period. A
"London Banking Day" is a day on which the Bank's London
Branch is open for business and dealing in offshore dollars.
(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in Federal Reserve Board Regulation
D, rounded upward to the nearest 1/100 of one percent. The
percentage will be expressed as a decimal, and will include,
but not be limited to, marginal, emergency, supplemental,
special, and other reserve percentages.
(d) The Borrower shall irrevocably request a LIBOR Rate portion no
later than 12:00 noon San Francisco time on the LIBOR Banking Day
preceding the day on which the London Inter-Bank Offered Rate will
be set, as specified above. For example, if there are no
intervening holidays or weekend days in any of the relevant
locations, the request must be made at least three days before the
LIBOR Rate takes effect.
(e) The Borrower may not elect a LIBOR Rate with respect to any
principal amount which is scheduled to be repaid before the last
day of the applicable interest period.
(f) Any portion of the principal balance already bearing interest at
the LIBOR Rate will not be converted to a different rate during
its interest period.
(g) Each prepayment of a LIBOR Rate portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the
amount of accrued interest on the amount prepaid and a prepayment
fee as described below. A "prepayment" is a payment of an amount
on a date earlier than the scheduled payment date for such amount
as required by this Agreement. The prepayment fee shall be equal
to the amount (if any) by which:
(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been
prepaid, exceeds
(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the domestic
certificate of deposit market, the eurodollar deposit market,
or other appropriate money market selected by the Bank, for a
period starting on the date on which it was prepaid and
ending on the last day of the interest period for such
portion (or the scheduled payment date for the amount
prepaid, if earlier).
(h) The Bank will have no obligation to accept an election for a LIBOR
Rate portion if any of the following described events has occurred
and is continuing:
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of a LIBOR Rate portion are not
available in the London inter-bank market; or
(ii) the LIBOR Rate does not accurately reflect the cost of a
LIBOR Rate portion.
1.8 Letters of Credit. This line of credit may be used for financing
standby letters of credit with a maximum maturity of 365 days but not to
extend more than 90 days beyond the Expiration Date. The standby
letters of credit may include a provision providing that the maturity
date may be automatically extended each year for an additional year
unless the Bank gives written notice to the contrary; provided, however,
that each letter of credit shall include a final maturity date which
shall not be subject to automatic extension. The amount of the letters
of credit outstanding at any one time, (including amounts drawn on the
letters of credit and not yet reimbursed), may not exceed Ten Million
Dollars ($10,000,000).
Each Borrower agrees:
(a) any sum drawn under a letter of credit may, at the option of the
Bank, be added to the principal amount outstanding under this
Agreement. The amount will bear interest and be due as described
elsewhere in this Agreement.
(b) if there is a default under this Agreement, to immediately prepay
and make the Bank whole for any outstanding letters of credit.
(c) The issuance of any letter of credit and any amendment to a letter
of credit is subject to the Bank's written approval and must be in
form and content satisfactory to the Bank and in favor of a
beneficiary acceptable to the Bank.
(d) to sign the Bank's form Application and Agreement for Standby
Letter of Credit.
(e) to pay any issuance and/or other fees that the Bank notifies the
Borrowers will be charged for issuing and processing letters of
credit for the Borrowers.
(f) to allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.
2. EXPENSES
The Borrowers agree to reimburse the Bank for any expenses it incurs in
the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to,
reasonable attorneys' fees, including any allocated costs of the Bank's
in-house counsel.
3. DISBURSEMENTS, PAYMENTS AND COSTS
3.1 Requests for Credit. Each request for an extension of credit will
be made in writing in a manner acceptable to the Bank, or by another
means acceptable to the Bank.
3.2 Disbursements and Payments. Each disbursement by the Bank and
each payment by the Borrowers will be:
(a) made at the Bank's branch (or other location) selected by the Bank
from time to time;
(b) made for the account of the Bank's branch selected by the Bank
from time to time;
(c) made in immediately available funds, or such other type of funds
selected by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may,
at its discretion, require the Borrowers to sign one or more
promissory notes.
3.3 Telephone Authorization.
(a) The Bank may honor telephone instructions for advances or
repayments or for the designation of optional interest rates given
by any one of the individual signer(s) of this Agreement or a
person or persons authorized in writing by any one of the
signer(s) of the Agreement.
(b) Advances will be deposited in and repayments will be withdrawn
from Borrower 1's account, or such
other accounts with the Bank as designated in writing by the
Borrowers.
(c) The Borrowers indemnify and excuse the Bank (including its
officers, employees, and agents) from all liability, loss, and
costs in connection with any act resulting from telephone
instructions it reasonably believes are made by any individual
authorized by the Borrowers to give such instructions. This
indemnity and excuse will survive this Agreement's termination.
3.4 Direct Debit.
(a) The Borrowers agree that interest and any fees will be deducted
automatically on the due date from Borrower 1's checking account.
(b) The Bank will debit the account on the dates the payments become
due. If a due date does not fall on a banking day, the Bank will
debit the account on the first banking day following the due date.
(c) The Borrowers will maintain sufficient funds in the account on the
dates the Bank enters debits authorized by this Agreement. If
there are insufficient funds in the account on the date the Bank
enters any debit authorized by this Agreement, the debit will be
reversed.
3.5 Banking Days. Unless otherwise provided in this Agreement, a
banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California. All payments and disbursements
which would be due on a day which is not a banking day will be due on
the next banking day. All payments received on a day which is not a
banking day will be applied to the credit on the next banking day.
3.6 Taxes. The Borrowers will not deduct any taxes from any payments
they make to the Bank. If any government authority imposes any taxes or
charges on any payments made by the Borrowers, the Borrowers will pay
the taxes or charges. Upon request by the Bank, the Borrowers will
confirm that they have paid the taxes by giving the Bank official tax
receipts (or notarized copies) within 30 days after the due date.
However, the Borrowers will not pay the Bank's net income taxes.
3.7 Additional Costs. The Borrowers will pay the Bank, on demand, for
the Bank's costs or losses arising from any statute or regulation, or
any request or requirement of a regulatory agency which is applicable to
all national banks or a class of all national banks. The costs and
losses will be allocated to the loan in a manner determined by the Bank,
using any reasonable method. The costs include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and
commitments for credit.
3.8 Interest Calculation. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the basis
of a 360-day year and the actual number of days elapsed. This results
in more interest or a higher fee than if a 365-day year is used.
3.9 Interest on Late Payments. At the Bank's sole option in each
instance, any amount not paid when due under this Agreement (including
interest) shall bear interest from the due date at the Bank's Reference
Rate minus 0.5 percentage point.. This may result in compounding of
interest.
3.10 Default Rate. Upon the occurrence and during the continuation of
any default under this Agreement, advances under this Agreement will at
the option of the Bank bear interest at a rate per annum which is 2.0
percentage points higher than the rate of interest otherwise provided
under this Agreement. This will not constitute a waiver of any event of
default.
4. CONDITIONS
The Bank must receive the following items, in form and content
acceptable to the Bank, before it is required to extend any credit to
the Borrowers under this Agreement:
4.1 Authorizations. Evidence that the execution, delivery and
performance by each Borrower (and each guarantor) of this Agreement and
any instrument or agreement required under this Agreement have been duly
authorized.
4.2 Governing Documents. A copy of each Borrower's articles of
incorporation.
4.3 Other Items. Any other items that the Bank reasonably requires.
5. REPRESENTATIONS AND WARRANTIES
When the Borrowers sign this Agreement, and until the Bank is repaid in
full, each Borrower makes the following representations and warranties.
Each request for an extension of credit constitutes a renewed
representation:
5.1 Organization of Borrowers. Each Borrower is a corporation duly
formed and existing under the laws of the state where organized.
5.2 Authorization. This Agreement, and any instrument or agreement
required hereunder, are within each Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational papers.
5.3 Enforceable Agreement. This Agreement is a legal, valid and
binding agreement of each Borrower, enforceable against each Borrower in
accordance with its terms, and any instrument or agreement required
hereunder, when executed and delivered, will be similarly legal, valid,
binding and enforceable.
5.4 Good Standing. In each state in which each Borrower does
business, it is properly licensed, in good standing, and, where
required, in compliance with fictitious name statutes.
5.5 No Conflicts. This Agreement does not conflict with any law,
agreement, or obligation by which any Borrower is bound.
5.6 Financial Information. All financial and other information that
has been or will be supplied to the Bank, is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrowers' (and any guarantor's) financial condition, including
all material contingent liabilities.
(b) in form and content required by the Bank.
(c) in compliance with all government regulations that apply.
5.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending
or threatened against any Borrower, which, if lost, would impair the
Borrowers' or any Borrower's financial condition or that of any
Borrower's business, or would impair any Borrower's ability to repay the
loan, except as have been disclosed in writing to the Bank.
5.8 Permits, Franchises. Each Borrower possesses all permits,
memberships, franchises, contracts and licenses required and all
trademark rights, trade name rights, patent rights and fictitious name
rights necessary to enable it to conduct the business in which it is now
engaged.
5.9 Other Obligations. No Borrower is in default on any obligation
for borrowed money, any purchase money obligation or any other material
lease, commitment, contract, instrument or obligation.
5.10 Income Tax Returns. No Borrower has any knowledge of any pending
assessments or adjustments of its income tax for any year.
5.11 No Event of Default. There is no event which is, or with notice
or lapse of time or both would be, a default under this Agreement.
5.12 Location of Borrowers. Each Borrower's place of business (or, if
any Borrower has more than one place of business, its chief executive
office) is located at the address listed under the Borrowers' signature
on this Agreement.
5.13 Year 2000 Compliance.
(a) The Borrower has (i) conducted a comprehensive review and
assessment of all areas of its business that could be adversely
affected by the "year 2000 problem" (that is, the risk that
computer applications may not be able to properly perform date-
sensitive functions after December 31, 1999), (ii) developed a
detailed plan and timeline for addressing the year 2000 problem on
a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. The Borrower reasonably
anticipates that all computer applications that are material to
its business will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1,
2000 (i.e., be "year 2000 compliant").
(b) The Borrower has made written inquiry of each of its key
suppliers, vendors, and customers with respect to the year 2000
problem and, based on that inquiry, believes that each of them
will on a timely basis be year 2000 compliant in all material
respects. For the purposes of this paragraph, "key suppliers,
vendors, and customers" refers to those suppliers, vendors and
customers of the Borrower the business failure of which would with
reasonable probability result in a material adverse change in the
Borrower's business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the
credit.
6. COVENANTS
The Borrowers agree, so long as credit is available under this Agreement
and until the Bank is repaid in full:
6.1 Use of Proceeds. To use the proceeds of the credit only for short
term operating capital and for issuing standby letters of credit.
6.2 Financial Information. To provide the following financial
information and statements and such additional information as requested
by the Bank from time to time:
(a) Within 90 days of Borrower 1's fiscal year end, Borrower 1's
annual financial statements. These financial statements must be
audited (with an opinion not qualified in any manner, including
not qualified due to possible failure to take all appropriate
steps to successfully address year 2000 system issues) by a
Certified Public Accountant ("CPA") acceptable to the Bank. The
statements shall be prepared on a consolidated basis.
(b) Within 90 days of Borrower 2's fiscal year end, Borrower 2's
annual financial statements. These financial statements may be
Borrower prepared.
(c) Within 60 days of the period's end, Borrower 1's quarterly
financial statements with supplemental schedules. These financial
statements may be Borrower prepared. The statements shall be
prepared on a consolidated and consolidating basis.
(d) Within 60 days of the period's end, Borrower 2's quarterly
financial statements. These financial statements may be Borrower
prepared.
(e) Copies of Borrower 1's Form 10-K Annual Report and Form 8-K ( if
applicable) Current Report within 90 days of Borrower 1's fiscal
year end.
(f) Copies of Borrower 1's Form 10-Q Quarterly Report within 60 days
after the end of each quarterly accounting period.
(g) By April 30, 1998, copies of Borrower 2's business plan and
statements of cash flow covering the 12 month period ending April
30, 1999.
(h) Within 90 days of its fiscal year end, the annual financial
statements of California Water Service Company. These financial
statements must be audited (with an unqualified opinion) by a CPA
acceptable to the Bank.
(i) Within 60 days of the period's end, California Water Service
Company's quarterly financial statements. These financial
statements may be company prepared.
(j) Promptly, upon sending or receipt, copies of any management
letters and correspondence relating to management letters, sent or
received by the Borrowers to or from the Borrowers' auditor.
6.3 Other Debts. Not to have outstanding or incur any direct or
contingent debts or lease obligations (other than those to the Bank), or
become liable for the debts of others without the Bank's written
consent, which will not be unreasonably withheld. This does not
prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of
business.
(c) Obtaining surety bonds in the usual course of business.
(d) Debts, lines of credit and leases in existence on the date of this
Agreement disclosed in writing to the Bank.
6.4 Other Liens. Not to create, assume, or allow any security
interest or lien (including judicial liens) on property any Borrower now
or later owns, except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed in
writing to the Bank.
6.5 Out of Debt Period. To repay any advances in full, and not to
draw any additional advances on the Borrowers' revolving line of credit,
for a period of at least 30 consecutive days in each calendar year,
beginning with the period between the date of this Agreement and
December 31, 1998 and each calendar year thereafter.
6.6 Notices to Bank. To promptly notify the Bank in writing of:
(a) any lawsuit over One Million Dollars ($1,000,000) against any one
or more of the Borrowers in the aggregate (or any guarantor).
(b) any substantial dispute between any Borrower (or any guarantor)
and any government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in any Borrower's (or any guarantor's)
financial condition or operations.
(e) any change in any Borrower's name, legal structure, place of
business, or chief executive office if such Borrower has more than
one place of business.
6.7 Books and Records. To maintain adequate books and records.
6.8 Audits. To allow the Bank and its agents to inspect the
Borrowers' properties and examine, audit and make copies of books and
records at any reasonable time. If any of the Borrowers' properties,
books or records are in the possession of a third party, the Borrowers
authorize that third party to permit the Bank or its agents to have
access to perform inspections or audits and to respond to the Bank's
requests for information concerning such properties, books and records.
6. 9 Compliance with Laws. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body
with authority over each Borrower's business.
6.10 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises each Borrower now has.
6.11 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep each Borrower's properties in good working
condition.
6.12 Cooperation. To take any action requested by the Bank to carry
out the intent of this Agreement.
6.13 General Business Insurance. To maintain insurance as is usual for
the business it is in.
6.14 Additional Negative Covenants. Not to, without the Bank's written
consent, which will not be unreasonably withheld:
(a) engage in any business activities substantially different from the
Borrowers' present business.
(b) liquidate or dissolve the Borrowers' business.
(c) enter into any consolidation, merger, or other combination, or
become a partner in a partnership, a member of a joint venture, or
a member of a limited liability company where any single
transaction exceeds Two Million Five Hundred Thousand Dollars
($2,500,000).
(d) sell, assign, lease, transfer or otherwise dispose of any assets
for less than fair market value, or enter into any agreement to do
so.
(e) sell, assign, lease, transfer or otherwise dispose of all or a
substantial part of the Borrowers' business or the Borrowers'
assets.
(f) enter into any sale and leaseback agreement covering any of its
fixed or capital assets.
(g) acquire or purchase a business or its assets, where any single
transaction exceeds Two Million Five Hundred Thousand Dollars
($2,500,000).
(h) convert to limited liability partnership status.
(i) with respect to Borrower 1, not to enter into any agreement that
would restrict California Water Service Company's ability to
declare and pay dividends to Borrower 1.
6.15 Bond Rating. With respect to Borrower 1, to maintain an
investment grade bond rating on their rated securities as defined by
▇▇▇▇▇'▇ Investors Service, Inc. and Standard and Poor's Corporation.
7. DEFAULT
If any of the following events occur, the Bank may do one or more of the
following: declare the Borrowers in default, stop making any additional
credit available to the Borrowers, and require the Borrowers to repay
their entire debt immediately and without prior notice. If an event of
default occurs under the paragraph entitled "Bankruptcy," below, with
respect to any Borrower, then the entire debt outstanding under this
Agreement will automatically become due immediately.
7.1 Failure to Pay. Any Borrower fails to make a payment under this
Agreement when due.
7.2 False Information. Any Borrower has given the Bank false or
misleading information or representations.
7.3 Bankruptcy. Any Borrower (or any guarantor) files a bankruptcy
petition, a bankruptcy petition is filed against any Borrower (or any
guarantor), or any Borrower (or any guarantor) makes a general
assignment for the benefit of creditors.
7.4 Receivers. A receiver or similar official is appointed for any
Borrower's (or any guarantor's) business, or the business is terminated.
7.5 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or
more trade creditors against any one or more of Borrowers in an
aggregate amount of One Million Dollars ($1,000,000) or more in excess
of any insurance coverage.
7.6 Judgments. Any judgments or arbitration awards are entered
against any one or more of the Borrowers (or any guarantor), or any one
or more of the Borrowers (or any guarantor) enters into any settlement
agreements with respect to any litigation or arbitration, in an
aggregate amount of One Million Dollars ($1,000,000) or more in excess
of any insurance coverage.
7.7 Government Action. Any government authority takes action that the
Bank believes materially adversely affects any Borrower's, (or any
guarantor's) financial condition or ability to repay.
7.8 Material Adverse Change. A material adverse change occurs or is
reasonably likely to occur, in any Borrower's, (or any guarantor's)
financial condition, properties or prospects, or ability to repay the
loan.
7.9 Cross-default. Any default occurs under any agreement in
connection with any credit any Borrower (or any guarantor) or California
Water Service Company has obtained from anyone else or which any
Borrower (or any guarantor) or California Water Service Company has
guaranteed if the default consists of failing to make a payment when due
or gives the other lender the right to accelerate the obligation.
7.10 Default under Related Documents. Any guaranty, subordination
agreement, security agreement, deed of trust, or other document required
by this Agreement is violated or no longer in effect.
7.11 Other Bank Agreements. Any Borrower (or any guarantor) fails to
meet the conditions of, or fails to perform any obligation under any
other agreement any Borrower (or any guarantor) has with the Bank or
any affiliate of the Bank.
7.12 Other Breach Under Agreement. Any Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of
this Agreement not specifically referred to in this Article.
8. ENFORCING THIS AGREEMENT; MISCELLANEOUS
8.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be
made under generally accepted accounting principles, consistently
applied.
8.2 California Law. This Agreement is governed by California law.
8.3 Successors and Assigns. This Agreement is binding on the
Borrowers' and the Bank's successors and assignees. The Borrowers agree
that they may not assign this Agreement without the Bank's prior
consent. The Bank may sell participations in or assign this loan, and
may exchange financial information about the Borrowers with actual or
potential participants or assignees. If a participation is sold or the
loan is assigned, the purchaser will have the right of set-off against
the Borrowers.
8.4 Arbitration.
(a) This paragraph concerns the resolution of any controversies or
claims between any one or more of Borrowers and the Bank,
including but not limited to those that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or delivered
in connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between any one or more of Borrowers and the Bank, including
claims for injury to persons, property or business interests
(torts).
(b) At the request of any Borrower or the Bank, any such controversies
or claims will be settled by arbitration in accordance with the
United States Arbitration Act. The United States Arbitration Act
will apply even though this Agreement provides that it is governed
by California law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial
rules of arbitration.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the
equivalent of the filing of a lawsuit, and any claim or
controversy which may be arbitrated under this paragraph is
subject to any applicable statute of limitations. The arbitrators
will have the authority to decide whether any such claim or
controversy is barred by the statute of limitations and, if so, to
dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and
enforced.
(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration,
arises from or relates to an obligation to the Bank secured by
real property located in California. In this case, both the
Borrowers and the Bank must consent to submission of the claim or
controversy to arbitration. If both parties do not consent to
arbitration, the controversy or claim will be settled as follows:
(i) The Borrowers and the Bank will designate a referee (or a
panel of referees) selected under the auspices of the
American Arbitration Association in the same manner as
arbitrators are selected in Association-sponsored
proceedings;
(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be
an active attorney or a retired judge; and
(iv) The award that results from the decision of the referee (or
the panel) will be entered as a judgment in the court that
appointed the referee, in accordance with the provisions of
California Code of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrowers or the
Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrowers or the Bank,
including the suing party, to submit the controversy or claim to
arbitration if the other party contests the lawsuit. However, if
the controversy or claim arises from or relates to an obligation
to the Bank which is secured by real property located in
California at the time of the proposed submission to arbitration,
this right is limited according to the provision above requiring
the consent of both the Borrowers and the Bank to seek resolution
through arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale
under the deed of trust or mortgage, or to proceed by judicial
foreclosure.
8.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank
retains all rights, even if it makes a loan after default. If the Bank
waives a default, it may enforce a later default. Any consent or waiver
under this Agreement must be in writing.
8.6 Administration Costs. The Borrowers shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering
this Agreement.
8.7 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection
with the enforcement or preservation of any rights or remedies under
this Agreement and any other documents executed in connection with this
Agreement, and including any amendment, waiver, "workout" or
restructuring under this Agreement. In the event of a lawsuit or
arbitration proceeding, the prevailing party is entitled to recover
costs and reasonable attorneys' fees incurred in connection with the
lawsuit or arbitration proceeding, as determined by the court or
arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any
similar or successor statute, the Bank is entitled to recover costs and
reasonable attorneys' fees incurred by the Bank related to the
preservation, protection, or enforcement of any rights of the Bank in
such a case. As used in this paragraph, "attorneys' fees" includes the
allocated costs of in-house counsel.
8.8 Joint and Several Liability.
(a) Each Borrower agrees that it is jointly and severally liable to
the Bank for the payment of all obligations arising under this
Agreement, and that such liability is independent of the
obligations of the other Borrower(s). The Bank may bring an
action against any Borrower, whether an action is brought against
the other Borrower(s).
(b) Each Borrower agrees that any release which may be given by the
Bank to the other Borrower(s) or any guarantor will not release
such Borrower from its obligations under this Agreement.
(c) Each Borrower waives any right to assert against the Bank any
defense, setoff, counterclaim, or claims which such Borrower may
have against the other Borrower(s) or any other party liable to
the Bank for the obligations of the Borrowers under this
Agreement.
(d) Each Borrower agrees that it is solely responsible for keeping
itself informed as to the financial condition of the other
Borrower(s) and of all circumstances which bear upon the risk of
nonpayment. Each Borrower waives any right it may have to require
the Bank to disclose to such Borrower any information which the
Bank may now or hereafter acquire concerning the financial
condition of the other Borrower(s).
(e) Each Borrower waives all rights to notices of default or
nonperformance by any other Borrower under this Agreement. Each
Borrower further waives all rights to notices of the existence or
the creation of new indebtedness by any other Borrower.
(f) The Borrowers represent and warrant to the Bank that each will
derive benefit, directly and indirectly, from the collective
administration and availability of credit under this Agreement.
The Borrowers agree that the Bank will not be required to inquire
as to the disposition by any Borrower of funds disbursed in
accordance with the terms of this Agreement.
(g) Each Borrower waives any right of subrogation, reimbursement,
indemnification and contribution (contractual, statutory or
otherwise), including without limitation, any claim or right of
subrogation under the Bankruptcy Code (Title 11 of the U.S. Code)
or any successor statute, which such Borrower may now or hereafter
have against any other Borrower with respect to the indebtedness
incurred under this Agreement. Each Borrower waives any right to
enforce any remedy which the Bank now has or may hereafter have
against any other Borrower, and waives any benefit of, and any
right to participate in, any security now or hereafter held by the
Bank.
8.9 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the
Bank and the Borrowers concerning this credit; and
(b) replace any prior oral or written agreements between the Bank and
the Borrowers concerning this credit; and
(c) are intended by the Bank and the Borrowers as the final, complete
and exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other
agreements required by this Agreement, this Agreement will prevail.
8.10 Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to
the addresses on the signature page of this Agreement, or to such other
addresses as the Bank and the Borrowers may specify from time to time in
writing.
8.11 Headings. Article and paragraph headings are for reference only
and shall not affect the interpretation or meaning of any provisions of
this Agreement.
8.12 Counterparts. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed
an original but all such counterparts shall constitute but one and the
same agreement.
This Agreement is executed as of the date stated at the top of the first
page.
Bank of America
National Trust and Savings
Association California Water Service Group
/s/▇▇▇▇ ▇▇▇▇▇▇▇ /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ▇▇▇▇ ▇▇▇▇▇▇▇ By:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Title: Vice President, Chief Financial
Officer and Treasurer
CWS Utility Services
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:Vice President, Chief Financial
Officer and Treasurer
Address where notices to the Bank
are to be sent:
San ▇▇▇▇ Regional Commercial Banking ▇▇▇▇▇▇
#▇▇▇▇
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Address where notices to
the Borrowers
are to be sent:
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Bank of America
Amendment to Documents
AMENDMENT NO. 1 TO BUSINESS LOAN AGREEMENT
This Amendment No. 1 (the "Amendment") dated as of March 16,1998,
is between Bank of America National Trust and Savings Association
(the "Bank") and California Water Service Company (the "Borrower")
RECITALS
A. The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of April 4, 1997 (the "Agreement").
B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.3 In Subparagraph 1.1(a) of the Agreement, the amount "Twenty-
Five Million Dollars ($25,000,000)" is substituted for the
amount "Fifty Million Dollars ($50,000,000)."
2.4 Paragraph 6.3 of the Agreement is amended to read in its
entirety as follows:
6.5 Financial Information. To provide the following financial
information and statements and such additional information as
requested by the Bank from time to time:
(c) Within 90 days of the Borrower's fiscal year end, the
Borrower's annual financial statements. These financial
statements must be audited (with an unqualified opinion) by a
Certified Public Accountant ("CPA") acceptable to the Bank.
(d) Within 60 days of the period's end, the Borrower's quarterly
financial statements. These financial statements may be
Borrower prepared.
(e) Within 90 days of its fiscal year end, California Water Service
Group's annual financial statements. These financial
statements must be audited (with an unqualified opinion) by a
Certified Public Account ("CPA") acceptable to the Bank. The
statements shall be prepared on a consolidated basis.
(f) Within 60 days of the period's end, the quarterly financial
statements of California Water Service Group, including
supplemental schedules. These financial statements may be
company prepared and shall be prepared on a consolidated and
consolidating basis.
(g) Within 90 days of its fiscal year end, the annual financial
statements of CWS Utility Services. These financial statements
may be company prepared.
(h) Within 60 days of the period's end, the quarterly financial
statements of CWS Utility Services. These financial statements
may be company prepared.
(i) Copies of California Water Service Group's Form 10-K Annual
Report and Form 8-K (if applicable.). Current Report within 90
days of its fiscal year end.
(j) Copies of California Water Service Group's Form 10-Q Quarterly
Report within 60 days after the end of each quarterly
accounting period.
2.3 The first sentence of Paragraph 6.4 of the Agreement is
amended to read in its entirety as follows:
6.4 Other Debts. Not to have outstanding or incur any direct or
contingent debt (other than those to the Bank), or become
liable for the debt of others without the Bank's consent, which
will not be unreasonably withheld.
2.5 Paragraph 6.15 of the Agreement is amended to read in its
entirely as follows:
6.6 Additional Negative Covenants. Not to, without the Bank's
written consent, which will not be unreasonably withheld:
(o) engage in any business activities substantially different from
the Borrower's present business.
(p) Liquidate or dissolve the Borrower's business.
(q) enter into any consolidation, merger, or other combination, or
become a partner in a partnership, a member of a joint venture,
or a member of a limited liability company where any single
transaction exceeds Two Million Five Hundred Thousand Dollars
($2,500,000).
(r) sell, assign, lease, transfer or otherwise dispose of any
assets for less than fair market value, or enter into any
agreement to do so.
(s) sell, assign, lease, transfer or otherwise dispose of all or a
substantial part of the Borrower's business or the Borrower's
assets.
(t) enter into any sale and leaseback agreement covering any of its
fixed or capital assets.
(u) acquire or purchase a business or its assets, where any single
transaction exceeds Two Million Five Hundred Thousand Dollars
($2,500,000).
(v) convert to limited liability partnership status.
2.1 Paragraph 7.9 of the Agreement is amended to read in its
entirety as follows:
7.2 Cross Default. Any default occurs under any agreement in
connection with any credit the Borrower (or any guarantor) or
CWS Utility Services has obtained from anyone else or which the
Borrower (or any guarantor) or CWS Utility Services has
guaranteed if the default consists of failing to make a payment
when due or gives the other lender the right to accelerate the
obligation.
2.3 A new Paragraph 7.13 is added to the Agreement which reads in
its entirety as follows:
7.4 Guarantor Covenants. The California Water Service Group fails
to comply with the following covenant:
(m) Bond Rating. To maintain an investment grade bond rating on
its rated securities as defined by ▇▇▇▇▇'▇ Investors Service,
Inc., and Standard & Poors' Corporation.
1. Conditions. This Amendment will be effective when the Bank
receives the following items, in form and content acceptable to
the Bank:
3.2 A Guarantee signed by California Water Service Group in the
amount of Twenty-Five Million Dollars ($25,000,000).
3.3 Evidence that the execution, delivery and performance by the
Borrower and any guarantor of the Amendment and any instrument
or agreement required under this Amendment have been duly
authorized.
4. Effect of Amendment. Except as provided in this Amendment, all
of the terms and conditions of the Agreement shall remain in
full force and effect.
This Amendment is executed as of the date stated at the beginning
of this Agreement.
Bank of America
National Trust and Savings Association California Water Service
Company
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President Vice President, CFO
and Treasurer