EX-10.27



 










CONNECTICUT WATER SERVICE, INC.

AND SUBSIDIARIES




EMPLOYEES CODE OF CONDUCT

January 1, 2007

(A revision of Appendix B, Employee Handbook)




	 	 	 
	 	 	Index
	Our Principals
	 	1
	Government & Regulatory Agencies who oversee our business
	 	2
	Shareholders who own our business
	 	3
	Customers who receive our service
	 	4
	Business Practices
	 	5
	Confidential Information
	 	5
	Conflict of Interest
	 	5-7
	Prohibition of Gifts to Public Officials and State Employees
	 	7
	Campaign Contributions
	 	8
	Code of Conduct Violations and Audit Misconduct Reporting
	 	9
	Q&A
	 	10
	Appendix
	 	A-1






 









 





CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES




EMPLOYEES CODE OF CONDUCT




January 1, 2007




Our Principles



Ethical conduct is fundamental to good business. The nature
of our business imposes special obligations of public trust upon
us. We are committed to meeting those obligations without
compromise. Accordingly, the highest standards of ethical conduct,
regulatory compliance, and legal behavior govern our actions.
Business will be conducted with our best skills and judgment for
the benefit of shareholders, customers, employees, and the
environment.



The Company, as a conservator of the environment, is committed to
managing natural resources in a manner that promotes water conservation,
source protection, and preservation of open space while meeting our
customer’s needs for a high quality drinking water.



We encourage employees to make suggestions or to discuss work-related
problems or ethical issues with their immediate supervisor, any officer
of the Company, or through the Employees’ Rotating Suggestion Committee.



The following are guidelines to emphasize those ethical, regulatory,
and legal responsibilities of the Company so that we maintain and
strengthen our public trust.




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Government and Regulatory Agencies

who oversee our business



Regulatory Compliance— The Company operates as a highly regulated
business. The agencies that regulate our business are Environmental
Protection Agency, Internal Revenue Service, Department of Labor,
Occupational Safety and Health Administration, and the Securities and
Exchange Commission, plus many other federal, state, and local agencies,
such as the Connecticut Department of Public Utility Control. The Company
is committed to operating in compliance with applicable laws and
regulations and provides training and communicates to employees regarding
the requirements of these agencies. Employees should be knowledgeable
about such regulatory requirements as they pertain to their job and
generally as they pertain to the Company.



You are required to immediately report regulatory violations, suspected
regulatory violations, or potentially harmful/dangerous conditions to a
supervisor, Company officer, or the Company’s Ethics Officer. If the call
(personally or anonymously) concerns misconduct of the Company’s
preparation of financial statements, audit, or disclosure of financial
statements, the Chairman of the Audit Committee will be advised of the
matter to be investigated.



Regulatory Agency Investigations, Inspections, and Requests for
Information— We cooperate with all government investigations, inspections,
and requests for information. During a government inspection never:





	 	•	 	conceal, destroy, or alter Company documents
	 
	 	•	 	lie or make misleading statements to a government investigator
	 
	 	•	 	attempt to cause another employee to fail to provide accurate information




In the event the Company undergoes a federal investigation, any employee
who cooperates with a federal investigation, including a securities fraud
investigation, or any provision of federal law relating to fraud against
shareholders, cannot be discharged,
demoted, harassed, or in any other manner discriminated against in the
terms and conditions of his employment because s/he has lawfully provided
information in such investigations.




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Shareholders

who own our business



We provide accurate and timely information about our business to our
investors, the media, and the general public.





	 	•	 	The release of information to our investors is handled by
Corporate Communications. If you receive an inquiry from the
media, immediately refer the caller to Corporate Communications,
the Chief Financial Officer, or the Manager of Public Affairs.
	 
	 	•	 	The issuance of financial information is based on a system of
internal controls and a procedure for timely disclosure. The
Company has established a system of internal controls to safeguard
Company assets against loss and unauthorized use or disposition
and to assure that financial statements are prepared, reviewed,
and disclosed to ensure the quality and accuracy of the
information presented. While the President/CEO and the Vice
President/CFO certify the quality and accuracy of our financial
statements quarterly and annually, it is every employee’s
responsibility to abide by these internal controls. Such controls,
in the form of procedures, are communicated to employees, and if
you have a question on any procedure within your department,
please discuss it with your supervisor or a Company officer.
	 
	 	•	 	The Company has established and communicated a policy that forbids
employees from disclosing material, non-public information. If
you possess material information that the Company has not yet
disclosed publicly, you may not buy or sell CTWS securities or
disclose such information to anyone who is not an officer of the
Company. (See Appendix A for full policy.)





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Customers

who receive our service



The Company is committed to a high standard of water quality, customer
service and customer satisfaction. Employees have an obligation to consider
customers in all of our activities and to work to ensure that their needs are met.
In dealing with customers, employees are expected to:





	•	 	Demonstrate that the Company is committed to
providing a high quality of service in an efficient manner;
	 
	•	 	Apply our customer policies, practices and programs in
a fair, equitable and nondiscriminatory manner;
	 
	•	 	Respond to customer inquiries and requests in a
prompt, courteous and accurate manner;
	 
	•	 	Avoid any action that will endanger the health or
safety of the public, and promptly correcting and reporting any
unsafe condition or hazard.





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Business Practices



Confidential Information— Company information, including among other
things, financial data, mergers/acquisitions, business processes and procedures,
computer programs, wage and salary information, customer/supplier/subcontractor
and other information and developments not released to the general public, must be
used solely for Company purposes and never for personal gain. Confidential
information must not be shared with anyone outside of the Company unless they have
a legitimate need to know in order to do business with us. Employees who have
access to Company confidential information must protect that information from
disclosure. Additionally, employees who have access to confidential information
shall not reveal the source or content of such information to individuals within
the company, except as necessary for business purposes.



Conflict of Interest — Employees should conduct their personal or
business affairs in a manner that will avoid any likelihood of conflict,
or the appearance of a conflict, between their performance and
responsibilities to the Company and their personal other business
interests. Employees should not participate in any activity that could
conflict with—or appear to conflict with—their performance or
responsibilities to the Company. Following are possible conflicts of
interest situations:





	•	 	Personal business relationships — Personal business
relationships should not influence the decisions you make for the
Company. You should disclose to the Company’s Ethics Officer any
financial interest that you or your immediate family have in
Connecticut Water’s suppliers, customers, or competitors. Nominal
ownership of common stock of a publicly owned corporation will not of
itself be considered a conflict and need not be disclosed.
	 
	•	 	Organizational relationships — If you or an immediate
member of your family serves as a director, officer, or consultant
with any company that does business with us, you should disclose
these obligations in writing to the Company’s Ethics Officer even if
you receive no money for your services.




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	•	 	Outside employment — Any outside employment or business activity must
not conflict with the employee’s ability to perform his or her work at the
Company. Such employment or            business activity should not utilize
Company time or property or create a conflict of interest. Do not accept
outside employment with our competitors, suppliers, or any business that
poses a conflict of interest with Connecticut Water.
	 
	•	 	Employees should never accept money,
gifts, or services that would appear to undermine or influence good
business judgment or accept anything that could be construed as an
attempt to influence the performance of duties or to favor a
supplier, customer, or competitor. The following examples and
guidelines are provided:
	 
	 	 	Money: No employee may solicit or accept any cash, tip or
compensation in conjunction with services provided on behalf of the
Company.
	 
	 	 	Gifts: On occasion, employees may accept gifts such as novelties or
promotional items of a nominal value if:






	 	•	 	the gift complies with the giver’s company’s rules
	 
	 	•	 	the gift was not solicited
	 
	 	•	 	open disclosure of the gift would not embarrass the Company or the people involved






Entertainment: Employees may accept an occasional invitation to an event, entertainment, or
meals if the activity is infrequent and of reasonable value. Employees should reciprocate, as
appropriate, to prevent the appearance of an obligation.


The possible conflicts of interest noted above are examples and are not all inclusive.
If you have any question about whether a relationship or activity presents a conflict of
interest, consult with the Corporate Secretary. Possible conflict of interest matters,
involving officers or board members, will be reviewed during the annual proxy process by
the Corporate Secretary who will refer any questionable matter to the Board’s Corporate
Governance Committee or the independent members of the full Board for a determination.




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Political Process— The Company supports employees’ rights to participate in
government activities and the political process but needs to ensure that such activities
do not create a conflict or an appearance of a conflict of interest.




	 	•	 	To avoid any suggestion of an indirect corporate
contribution to a candidate, an employee may not work on behalf of
candidate’s campaign during working hours or at any time use Company
facilities for that purpose.
	 
	 	•	 	The Company will not reimburse employees for
financial or personal time contributed to political campaigns.
	 
	 	•	 	An employee accepting public office or
serving on a public body acts as an individual, not as a
representative of the Company.
	 
	 	•	 	Employees must exercise good judgment in
relationships with government officials and employees. It is
important that we not place these officials in compromising
positions. Even the appearance of compromise would reflect adversely
upon the official and the Company.





Prohibition of Gifts to Public Officials

or State Employees



The State’s Code of Ethics for Public Officials prohibits public officials or
State employees from accepting certain gifts from registered lobbyists and individuals or
entities doing or seeking to do business with, or regulated by, the official or employee’s
State agency or department. While there are exceptions to the general ban, they are very
specific. The most common exceptions to the gift ban are gifts with a value of $10 or less
(e.g. pens, mugs, etc.), provided that the annual aggregate of such gifts from a single
source is under $50, and up to $50 worth of food and beverage in a calendar year, provided
that the giver is in attendance when the food or beverage is consumed.



Penalties for violating the gift ban can apply equally to both the giver and the
recipient. Accordingly, all Company employees must contact Daniel J. Meaney, Corporate
Secretary, 800-428-3985, ext. 3016, before giving any gifts to any public official or state
employee to ensure that such gifts are being given in compliance with the State’s Code of
Ethics.




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Campaign Contributions



In addition, Connecticut enacted campaign reform legislation, effective
December 31, 2006, that “principals” (defined below) of the Company may not
contribute or solicit campaign contributions for a candidate for election to one
of Connecticut’s Constitutional State Offices (e.g., the Governor or the Attorney
General), a party committee or a political committee authorized to provide
financial support to such a campaign at any time when the Company has a single
agreement or contract with the State of Connecticut (or any of its branches, departments or agencies) valued at
$50,000 or more in a fiscal year, or one or more agreements or contracts valued at
$100,000 in the aggregate in a fiscal year. The same prohibitions exist during a
Request for Proposal process for prospective contract business with the State. If
the Company has any existing or proposed contracts valued at the same levels as
above with the Legislative branch (General Assembly), the new legislation also
imposes similar personal contribution bans on Company “principals” with respect to
committees for General Assembly candidates (i.e., State Senate or State
Representatives), political action committees supporting such candidates, and
state party committees.



For purposes of the above bans, the term “principal” means members of the
Company’s board of directors, 5% or greater stockholders, certain executive
officers, employees having managerial or discretionary responsibilities for
administering the State contract, the spouses and dependent children of any of
the foregoing persons, and political action committees established by or on
behalf of any of the foregoing persons.

Accordingly, all Company officers, directors, managerial personnel MUST verify
with Daniel J. Meaney, Corporate Secretary, 860-669-8630, ext. 3016, their own
status and the status of the Company’s contracts under the new legislation,
before they (or their spouses or dependent children) make or solicit campaign
contributions to or for candidates for election to any of the Constitutional
State Offices or to the General Assembly.




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Code of Conduct Violations and

Company Audit Misconduct



Each employee has a responsibility to report any activity which appears to
violate laws, regulations (including misconduct related to the preparation,
issuance, and disclosure of financial information), policies, and this Code of
Conduct.



If you report a violation, please provide the time, location, names of people
involved, and other details so that either the Human Resources Department or an
independent member of the Board of Directors can investigate. You can report
anonymously—you are not required to provide your name. You may call or send a
confidential note to



Daniel J. Meaney

Corporate Secretary

Connecticut Water Service, Inc. 

93 West Main Street 

Clinton, CT 06413

860-669-8630, ext. 3016



Prohibition Against Retaliation —  The Company prohibits retaliation and/or
retribution against any person who in good faith reports an ethical concern or
violation of the Code of Conduct. However, anyone who uses the Code of Conduct to
spread falsehoods, threaten others, or damage another person’s reputation will be
subject to disciplinary action up to and including termination.




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THE
CONNECTICUT WATER COMPANY 

Code of Conduct — January 2007 — Sample Q&A





	Q.	 	A customer of the Company, asked me to look up the name and address of another customer in
the Company’s customer database. Should I carry out this simple request from a customer?
	 
	A.	 	No. Access to customer information is for purposes specific to our business only.
	 
	Q.	 	Can I share customer information with friends I work with here at the company?
	 
	A.	 	No. Only share information that is critical to the task. For example, if you need to send an
e-mail containing customer information to another employee, only include the information
necessary to complete the request.
	 
	Q.	 	I heard in advance of a public announcement that the Company’s earnings are going up/down
and it would be a great time to buy/sell the stock. I don’t own very much, but I let my
mother know so she doesn’t miss out when others will be making money.
	 
	A.	 	You have violated the
law by “tipping” material, non-public information. You, your mother, and the other employee
who shared such advance information may be subject to legal penalties.
	 
	Q.	 	When I was visiting an internet chat room, I noticed a former employee was criticizing
the Company and I responded, setting facts straight, because it was unfair to the Company.

	 
	A.	 	It is inappropriate for employees, other than those authorized, to respond to media
comments/information about the company, however well-intentioned.
	 
	Q.	 	I’d like to run for selectman or serve on a commission in my hometown which happens to be
customer of the company. I’m a manager and view community service as good citizenship.
	 
	A.	 	It would be a conflict of interest for an employee to be a manager at the company and have a
managerial capacity at a town with whom the company does business.
	 
	Q.	 	May I accept a gift from a vendor? Can I give a vendor a gift?
	 
	A.	 	In general, employees are generally prohibited from offering/giving that is connected to a
specific transaction to any current or potential customer/vendor. However, gifts and
gratuities (trinkets, meals, business courtesies) that are not connected to a transaction or
proceeding are acceptable, if they are customary, do not exceed a certain value, do not
violate the vendor’s policy, or do not violate any laws or regulations.
	 
	Q.	 	I have a request for a check for a political campaign but I feel uncomfortable
questioning it especially when it was authorized by the appropriate manager. Who
can I ask to be sure?
	 
	A.	 	If in doubt about a request that seems to violate the Code of
Conduct, please contact Dan Meaney, Corporate Secretary, ext. 3016 or
dmeaney@ctwater.com.
You can do so confidentially and anonymously.





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Appendix A-1




Non-Public Information and Insider Trading



Connecticut Water Service, Inc. (CTWS) and its subsidiaries, including The Connecticut Water
Company (collectively, the “Company”), have an Insider Trading Policy that forbids employees from
disclosing material non-public information about the Company or the companies it deals with, or
from profiting from such nonpublic information. If you possess material information that the
Company has not disclosed publicly, you may not buy or sell CTWS securities or disclose such
information to anyone who is not an officer of the company.



In addition, because the CTWS shareholders and the investing public should be afforded time to
receive the information and act upon it, employees who possess material non-public information
should not engage in any transactions in CTWS securities until the third business day after such
information has been released.



Anyone who purchases or sells securities on the basis of material inside information, or who
discloses material inside information to someone else who purchases or sells securities on the
basis of such information, may be subject to serious consequences including civil penalties of up
to three times the profit gained or loss avoided, criminal fines of up to $1,000,000, and
imprisonment for a term of up to 10 years. In addition, the Company may impose sanctions, including
dismissal for cause, for failure to comply with the Company’s policy.



These penalties apply whether or not you derive any personal benefit. In fact, the Securities and
Exchange Commission has imposed large penalties on tippers of inside information even though the
tippers did not profit from their tippee’s trading. The restrictions described herein also apply to
your family members and other persons living in your household. For the purpose of this policy,
material information includes any information that a reasonable investor would consider important
in a decision to buy, hold or sell stock. In short, any information which could reasonably affect
the price of the stock, positively or negatively. Examples include:





	 	•	 	change in revenues or earnings of the Company
	 
	 	•	 	change in the value or composition of any of the Company’s assets
	 
	 	•	 	change in operations, such as a significant interruption or curtailment of service
	 
	 	•	 	contemplated acquisition of another company or its securities or disposition of an existing business or
significant assets
	 
	 	•	 	offer by another company to acquire the Company
	 
	 	•	 	contemplated issuance of securities or stock split/stock dividend
	 
	 	•	 	significant drinking water violations
	 
	 	•	 	adverse actions by the DPUC, DPH or DEP
	 
	 	•	 	commencement of a new business, negotiation of a major contract or loss
of the same
	 
	 	•	 	change in management or dividend policy
	 
	 	•	 	initiation or termination of litigation




If you have any questions about specific transactions or about this Policy, please contact
Dan Meaney, Corporate Secretary, Ext. 3016.