Document:

EX-10.2

 

Exhibit 10.2

AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

     This Agreement, made this 2nd day of January 2007 by and between THE CONNECTICUT WATER COMPANY
(hereinafter referred to as the “Employer”) and MARSHALL T. CHIARALUCE (hereinafter referred to as
the “Employee”).

WITNESSETH THAT:

     WHEREAS, the Employee is and is expected to render valuable services to the Employer, and

     WHEREAS, the Employer desires to ensure that it will have the benefit of the Employee’s
services until he reaches retirement, and

     WHEREAS, the Employer wishes to assist the Employee in providing for the financial
requirements of the Employee in the event of his retirement, disability or death; and

     WHEREAS, the Company and the Employee entered into a Supplemental Executive Retirement
Agreement dated December 16, 1991, as amended by a First Amendment dated August 13, 1999, and a
Second Amendment dated December 17, 2003; and

     WHEREAS, the parties wish to amend and restate the Supplemental Retirement Agreement to comply
with Section 409A of the Internal Revenue Code of 1986, as amended, and to change certain
definitions.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
herein contained, the parties hereto agree to enter into this Amended and Restated Supplemental
Executive Retirement Agreement, as follows:

	1.	 	SUPPLEMENTAL RETIREMENT BENEFIT

     a. Normal or Deferred Retirement. If, upon or after the Employee’s attainment of age
65, the Employee’s employment shall be terminated and he shall be eligible to receive a benefit
under The Connecticut Water Company Employees’ Retirement Plan (hereinafter referred to as the
“Retirement Plan”), the Employee shall be entitled to receive pursuant to this Agreement a benefit
having a value equal to an annual benefit for his life of (a) 60% of the Employee’s Average
Earnings reduced by (b) the annual benefit payable to the Employee under the Retirement Plan in
the form of a single life annuity for the life of the Employee (whether or not the benefit under
the Retirement Plan is actually paid in such form), commencing at the same time as of which
benefits commence hereunder, and further reduced by (c) the annual benefit payable to the Employee,
under the South Central Connecticut Regional Water Authority Salaried Employees’ Retirement Plan,
in the form of a single life annuity for the life

 

 

of the Employee (whether or not the benefit
under such Plan is actually paid in such form) commencing at the same time as of which benefits
commence hereunder. Such benefit will be payable in accordance with Section 2 below. The date as
of which benefits commence hereunder is the first day of the month following the Employee’s
retirement, even though actual payment is delayed in accordance with Section 2 hereof.

     b. Early Retirement. If, upon or after the Employee’s attainment of age 55 and
prior to attainment of age 65, the Employee’s employment shall be terminated and he shall be
eligible to receive a benefit under the Retirement Plan, the Employee shall be entitled to
receive pursuant to this Agreement a benefit having a value equal to an annual benefit for his
life of (a) 60% of the Employee’s Average Earnings reduced by (b) the annual benefit payable to
the Employee under the Retirement Plan in the form of a single life annuity for the life of the
Employee (whether or not the benefit under the Retirement Plan is actually paid in such form)
commencing at age 65 (whether or not the benefit under the Retirement Plan commences at such
time) and further reduced by (c) the annual benefit payable to the Employee under the South
Central Connecticut Regional Water Authority Salaried Employees’ Retirement Plan, in the form of
a single life annuity for the life of the Employee (whether or not the benefit payable under such
Plan is actually payable in such form) commencing at age 65 (whether or not the benefit under
such Plan commences at such time). If such benefit shall commence to be paid prior to the
Employee’s attainment of age 62, such benefit shall be reduced by 4% for each complete year by
which the date of benefit commencement precedes his attainment of age 62. Such benefit shall be
paid in accordance with Section 2 below.

     c. For purposes of a. and b. above, “Average Earnings” shall have the meaning set forth in
the Retirement Plan, except that in determining Average Earnings, Annual Earnings (as defined in
the Retirement Plan) shall not be limited to the OBRA ‘93 annual compensation limit, the annual
compensation limit imposed under the Economic Growth and Tax Relief Reconciliation Act of 2001
(“EGTRRA”), or any similar limit on annual compensation under Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the “Code”), imposed by any future legislation.

     In determining Average Earnings, if the Employee retires under this Agreement on or after
attainment of age 62, Annual Earnings shall also include the value of all of the following: (1)
Cash Units, (2) Restricted Stock, (3) Performance Shares awarded to a Participant under the
Connecticut Water Service, Inc. Performance Stock Program (the “Program”) for any year in which
such awards are made, including awards made prior to the time the change in the definition of
Average Earnings was adopted, and (4) Director’s fees paid to Employee not otherwise included in
the definition of Average Earnings, including such fees paid prior to the date of this Amended and
Restated Agreement. Notwithstanding the foregoing, in no event shall awards which are long-term
awards or PARSAs be taken into account in determining Average Earnings. The value of such awards
(other than long-term awards or PARSAs) shall be included within
Annual Earnings in the year in which such amounts are finally determined and actually
awarded, and Director’s fees shall be taken into account in the year paid. Such amounts, if
credited to a Performance Share Account, shall not be counted a second time when payment is made
from such Account.

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     The calculation of the benefit set forth in a. and b. above, and of all other benefits
payable under this Agreement, shall be performed by the Committee under the Retirement Plan, and
the calculations and interpretations of such Committee shall be final and binding on the parties
hereto.

     The Employee will not be deemed to have retired unless he has experienced a separation from
service as defined in Section 409A of the Code.

     d. Disability Benefit. If the Employee’s employment shall be terminated by a
disability such that the Employee is considered eligible for a full disability pension under the
provisions of the Social Security Act, the Employee shall be entitled to receive pursuant to this
Agreement a benefit having a value equal to an annual benefit for his life calculated in the
manner set forth in b. above; provided, however, that the reduction factor pursuant to b. above
shall be .72 if the Employee’s benefit commencement date precedes age 62 by more than 7 complete
years. The Employee will not be deemed to have terminated employment unless he has experienced a
separation from service as defined in Section 409A of the Code. Such benefit shall be paid in
accordance with Section 2 below.

     e. Absence of Other Benefits. No benefits shall be paid to the Employee pursuant to
this Agreement other than as provided in a. through d. above.

     2. TERMS AND CONDITIONS OF BENEFIT. The annual lifetime benefit calculated in
accordance with Section 1 hereof shall be paid in monthly installments on the first day of each
month. Such installments paid pursuant to 1.a, 1.b or 1.d shall be calculated as if the were to
commence to be paid on the first day of the first month following the Employee’s retirement or
termination of employment. However, actual payment will commence on the first day of the eighth
(8th) month following the date of the Employee’s retirement or termination of
employment, although the first payment shall include all payments that would have been made had
payments commenced on the first day of the month following the Employee’s retirement or
termination of employment. The first installment made pursuant to 1.a., 1.b. or 1.d shall be
equal to eights (8) such installments.

     The form in which the benefit hereunder shall be paid is, if the Employee is unmarried, an
annuity for the life of the Employee only and, if the Employee is married, an annuity for the life
of the Employee with the provision that after the Employee’s death, 50% of the annual benefit that
was payable to the Employee shall be continued to the Employee’s surviving spouse for life (a
“Joint and Survivor Annuity”). The benefit payable as a Joint and Survivor Annuity shall be
calculated by applying to the benefit
calculated in accordance with Section 1.a., 1.b. or 1.d. hereof, as appropriate, the factors
for the 50% contingent annuity option set forth in the Retirement Plan.

     Monthly installments of benefits shall cease to be paid as of the first day of the month
following the date of the Employee’s death, unless a Joint and Survivor Annuity was then in
effect, in which event the installments shall cease as of the first day of the month following the
death of the Employee’s surviving spouse.

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     3. DEATH BENEFIT. If the Employee has attained age 55 while in service with the
Employer and dies thereafter but prior to the commencement of benefits pursuant to this Agreement,
and if the Employee’s spouse or other beneficiary is entitled, to a death benefit under
the Retirement Plan, said spouse or other beneficiary shall be entitled to receive a death benefit
pursuant to this Plan. However, if the Employee is survived by his spouse, such spouse shall be
deemed to be entitled to receive a spousal pre-retirement death benefit under the Retirement Plan
even if a waiver of such spousal pre-retirement death benefit is in effect under such Plan. The
amount of said death benefit shall be determined as if the Employee had retired on the day prior
to his death with either a Joint and Survivor Annuity in effect, if his spouse survives him, or a
five years certain and life annuity (as described in the Retirement Plan) in effect, if his spouse
does not survive him. If the benefit is determined under a Joint and Survivor Annuity,
installment payments shall begin on the first day of the first month following the Employee’s
death. If the benefit is determined under a five years certain and life annuity, it shall be paid
in an actuarially equivalent lump sum, as determined by the Committee under the Retirement Plan
using the appropriate factors set forth in the Retirement Plan. Such lump sum payment shall be
made on the fifteenth (15th) day following the Employee’s death.

     No other death benefits shall be payable in the event of the Employee’s death prior to
the commencement of benefits hereunder.

     4. LIMITATION OF BENEFIT. If the Employee’s employment shall be terminated for cause
involving fraud, dishonesty, moral turpitude, gross misconduct, gross failure to perform his
duties, or disclosure of secret or other confidential information of the Employer to any
competitor or to any person not authorized to receive such information, neither the Employee, his
spouse nor his estate shall be entitled to receive any benefit under this Agreement.

     5. ABSENCE OF FUNDING. Benefits payable pursuant to this Agreement shall not be
funded, and the Employer shall not be required to segregate or earmark any of its assets for the
benefit of the Employee, his spouse or his estate. Such benefits shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the Employee, his spouse or his estate, and any attempt to anticipate,
alienate, transfer, assign or attach these benefits shall be void. The Employee, his spouse or
his estate shall have only a contractual right against the Employer for the benefits hereunder and
shall have the status of general unsecured creditors. Notwithstanding the foregoing, in order to
pay benefits pursuant to this Agreement, the Employer may establish a grantor trust (hereinafter
the “Trust”) within the meaning of Section 671 of the Internal Revenue Code of 1986, as amended.
Some or all of the assets of the Trust may be dedicated to providing benefits to the Employee, his
spouse or his estate pursuant to this Agreement, but, nevertheless, all assets of the Trust shall
at all times remain subject to the claims of the Employer’s general creditors in the event of the
Employer’s bankruptcy or insolvency.

     6. MISCELLANEOUS.

     a. This Agreement may be amended at any time by mutual written agreement of the parties
hereto, but no amendment shall operate to give the Employee, his spouse, his estate or

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any other
beneficiary, either directly or indirectly, any interest whatsoever in any funds or assets of the
Employer, except the right to receive the payments herein provided and the right to receive such
payments from assets held in the Trust.

     b. This Agreement shall not supersede any other contract of employment, whether oral or in
writing, between the Employer and the Employee, nor shall it affect or impair the rights and
obligations of the Employer and the Employee, respectively, thereunder. Nothing contained herein
shall impose any obligation on the Employer to continue the employment of the Employee.

     c. This Agreement shall be construed in all respects under the laws of the State of
Connecticut.

     (d) This Agreement has been prepared with reference to Section 409A of the Internal
Revenue Code and should be interpreted in a manner consistent with Section 409A. In the event
that any part of the Agreement is determined to be in violation of 409A, such part of the
Agreement shall be automatically revised to be in compliance with Section 409A in such way as
most closely approximates the intent of the parties.

     IN WITNESS WHEREOF, the Employer and the Employee have executed this Agreement as of the day
and year above written.

	 	 	 	 	 	 	 
	 	 	THE CONNECTICUT WATER COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Michele G. DiAcri
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Its Assistant Corporate Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Marshall T. Chiaraluce	 	 
	 	 	 	 	 
	 	 	Marshall T. Chiaraluce	 	 

-5-EX-10.3

 

Exhibit 10.3

AMENDED AND RESTATED

DEFERRED COMPENSATION AGREEMENT

     THIS AGREEMENT (the “Deferred Compensation Agreement”) is made as
of the 2nd day of January 2007 and between The Connecticut Water Company (together with any affiliated companies hereinafter
collectively referred to as the “Employer”) and Marshall T. Chiaraluce (hereinafter
referred to as the “Employee”).

WITNESSETH:

     WHEREAS, the Employee is among a select group of management or highly compensated employees
of the Employer;

     WHEREAS, the Employer and the Employee entered into an Amended and Restated Deferred
Compensation Agreement dated May 14, 1999; and

     WHEREAS, the parties wish to amend and restate the Deferred Compensation Agreement to comply
with Section 409A of the Internal Revenue Code as amended;

     WHEREAS, the Employer and the Employee are willing to enter into this Amended and Restated
Deferred Compensation Agreement (the “Agreement”) on the terms herein set forth, effective as of
the date first above written;

     NOW, THEREFORE, in consideration of the premises and the mutual and dependent promises herein,
the parties hereto agree as follows:

     1. DEFERRED COMPENSATION. The Employee may file a written election with the Employer
in the form attached to this Agreement or such other form as may be approved by the Employer to
defer up to 12 percent (12%) of the Employee’s salary. Such amount shall be credited to a Deferred
Compensation Account as provided in Section 2 hereof. This election to defer the receipt of salary
must be made before the beginning of the calendar year for which the salary is earned and shall
remain in effect, unless terminated or changed, or until the date the Employee ceases to be an
employee of the Employer. Any election termination or change of a deferral election must be made
on a form provided by the Employer for such purpose and may only be made with respect to salary
which will be earned on and after the January 1 following the Employer’s receipt of such form
provided that such form is received at least seven (7) days prior to the applicable January 1.

     2. DEFERRED COMPENSATION ACCOUNT. The Employer shall maintain on its books and
records a Deferred Compensation Account to record its liability for future payments of deferred
compensation and interest thereon required to be paid to the Employee or his beneficiary
pursuant to this Agreement. However, the Employer shall not be required to segregate or
earmark any of its assets for the benefit of the Employee or his beneficiary. The amount
reflected in said Deferred Compensation Account shall be available for the

 

 

Employer’s general corporate purposes and shall be available to the Employer’s general
creditors. The amount reflected in said Deferred Compensation Account shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors of the Employee or his beneficiary, and any attempt to
anticipate, alienate, transfer, assign or attach the same shall be void. Neither the Employee
nor his beneficiary may assert any right or claim against any specific assets of the Employer.
The Employee or his beneficiary shall have only a contractual right against the Employer for
the amount reflected in said Deferred Compensation Account and shall have the status of general
unsecured creditors. Notwithstanding the foregoing, in order to pay amounts which may become
due under this Agreement, the Employer may establish a grantor trust (hereinafter the “Trust”)
within the meaning of Section 671 of the Internal Revenue Code of 1986, as amended. The assets
in such Trust shall at all times be subject to the claims of the general creditors of the
Employer in the event of the Employer’s bankruptcy or insolvency, and neither the Employee nor
any beneficiary shall have any preferred claim or right, or any beneficial ownership interest
in, any such assets of the Trust prior to the time such assets are paid to an Employee or
beneficiary pursuant to this Agreement.

     The Employer shall credit to said Deferred Compensation Account the amount of any salary
to which the Employee becomes entitled and which is deferred pursuant to Section 1 hereof, such
amount to be credited as of the first business day of each month. The Employer shall also
credit to said Deferred Compensation Account an Interest Equivalent in the amount and manner
set forth in Section 3 hereof.

     3. PAYMENT OF DEFERRED COMPENSATION

     (a) Termination of Employment On or After Attainment of Age 55. If the Employee’s
employment should terminate on or after his attainment of age fifty-five (55) for any reason other
than death or an account of “Cause” as defined in subsection (c) below, he shall be entitled to
receive payment of the entire amount of his Deferred Compensation Account including an Interest
Equivalent, as described below, in the form of an actuarially equivalent life annuity providing for
equal annual payments for the life of the Employee. Such actuarially equivalent life annuity shall
be computed on the basis of a mortality table that assumes a life expectancy of age eighty (80) and
uses the Interest Factor described below. The first annuity payment under this subsection shall be
paid eight (8) months following the date of the Employee’s termination of employment, and
subsequent payments shall be made on anniversaries of that date.

     There shall be credited to the Employee’s Deferred Compensation Account as of each January 1
and July 1, commencing with January 1, 1992 until payment of such account begins, as additional
deferred compensation, an Interest Equivalent equal to fifty percent (50%) of the product of (i)
the AAA Corporate Bond Yield Averages published by Moody’s Bond Survey for the Friday ending on
or immediately preceding the applicable January 1 and July 1 plus 2 percentage points (the
“Interest Factor”), multiplied by (ii) the balance of the Employee’s Deferred Compensation
Account, including the amount of Interest Equivalent previously credited to such Employee’s
account, as of the preceding day (i.e., December 31 or June 30). The Interest Factor used to
compute the annuity payable upon the Employee’s termination of

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employment on or after his attainment of age fifty-five (55) shall be calculated based upon
the Interest Factor as of the January 1 or July 1 immediately preceding the date of the
Employee’s termination of employment, whichever shall fall nearer to the date of the
Employee‘s termination of employment.

     (b) Termination of Employment Prior to Attainment of Age 55. If the Employee’s
employment should terminate prior to his attainment of age fifty-five (55) for any reason other
than death or on account of “Cause” as defined in subsection (c) below, the Employee shall be
entitled to receive payment in a lump sum of the entire amount of his Deferred Compensation
Account, including the same Interest Equivalent as described in subsection (a) above. Payment
under this subsection shall be made on the date which is eight (8) months following the
Employee’s termination of employment.

     (c) Termination of Employment for Cause.

     (i) If the employment of the Employee is terminated by the Employer for Cause, the
Employee shall be entitled only to a return of amounts deferred pursuant to Section 1
hereof.

     (ii) If the Employee is so terminated on or after age 55, payment shall be made in
accordance with the terms of Section 3(a) above. However, the Employee shall not be
entitled to the Interest Equivalent for any years prior to such termination, and such
Interest Equivalent shall not be included in determining Employee’s benefit hereunder.
An Interest Factor shall be utilized in calculating the amount of the annuity payable in
accordance with the last sentence of subsection (a) above.

     (iii) If the Employee is so terminated prior to attainment of age 55, payment of
the return of amounts deferred (excluding any Interest Equivalent) shall be made in a
lump sum on the date which is eight (8) months following the Employee’s termination of
employment.

     (iv) As used in this Agreement, the term “Cause” shall mean:

	 	(A)	 	the Employee’s rendering, while employed by the Employer, of
any services, assistance or advice, either directly or indirectly, to any
person, firm or organization competing with, or in opposition to, the
Employer;
	 
	 	(B)	 	the Employee’s allowing, while employed by the Employer, any
use of his name by any person, firm or organization competing with, or in
opposition to, the Employer; or
	 
	 	(C)	 	willful misconduct by the Employee, including, but not
limited to, the commission by the Employee of a felony or the perpetration
by the Employee of a common law fraud upon the Employer.

     (d) Death While Employed. Notwithstanding anything to the contrary contained in

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the foregoing, if the Employee should die while employed by the Employer, his beneficiary,
designated pursuant to Section 4 hereof, shall receive in a lump sum, in lieu of the amount(s)
otherwise payable to the Employee under this Agreement, a death benefit equal to the greater of
(i) the Hypothetical Death Benefit, as defined in subsection (f) hereof, and (ii) the entire
amount of his Deferred Compensation Account at the date of his death, assuming that an Interest
Equivalent were credited to such account as of each January 1 and July 1, occurring after the
first deferral hereunder until the date of death at the rate set forth in subsection (a) hereof.
Such beneficiary shall receive such death benefit on the thirtieth (30th) day following
the death of the Employee.

     (e) Death After Termination of Employment.

     (i) If the Employee should die after the termination of his employment, whether
prior to or on or after attainment of age 55, and prior to the date on which payment of
his Deferred Compensation Account has commenced in the form of an annuity in accordance
with subsection (a) or has been paid in the form of a lump sum as provided in subsection
(b), his beneficiary, designated pursuant to Section 4 hereof, shall receive in a lump
sum, in lieu of the amount(s) otherwise payable to the Employee under this Agreement, a
death benefit equal to the entire amount of the Employee’s Deferred Compensation
Account, including the same Interest Equivalent as described in subsection (a) above, at
the date of his death, provided that the Employee’s employment shall not have terminated
on account of “Cause” as defined in subsection (c) hereof. In the event that the
Employee should die after the termination of his employment for “Cause,” whether prior
to or on or after attainment of age 55, and in either case prior to the date upon which
payment of his Deferred Compensation Account has been made or has commenced, his
beneficiary, designated pursuant to Section 4 hereof, shall receive a return of the
amounts deferred (excluding any Interest Equivalent). No Interest Equivalent shall be
credited to the Employee‘s Deferred Compensation Account in the event of the
Employee’s death after his termination on account of “Cause” as provided in subsection
(c) hereof. In either case, the Employee’s beneficiary shall receive such death benefit
on the thirtieth (30th) day following the death of the Employee.

     (ii) If the Employee should die after the termination of his employment with the
Employer on or after attainment of age 55 (not on account of “Cause”) and after the date
on which payment of his Deferred Compensation Account and the Interest Equivalent set
forth in subsection (a) hereof has commenced in the form of an annuity as provided in
subsection (a), no additional benefits shall be payable under this Agreement after the
Employee’s death except to the extent that the Employee did not receive prior to his
death benefits in an amount equal to or greater than the Employee’s Deferred
Compensation Account plus any Interest Equivalent credited thereto, as of the date of
the Employee’s death. If the Employee dies prior to receiving benefits equal to or
greater than the Employee’s Deferred Compensation Account plus any Interest Equivalent
credited thereto as of the date of the Employee’s death, his beneficiary shall be
entitled to a lump sum payment, thirty (30) days following Employee’s death, equal to
the difference between benefits paid to the

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Employee hereunder and the Employee’s Deferred Compensation account, plus any
Interest Equivalent credited thereto, as of the date of the Employee’s death.

     (iii) If the Employee should die after the termination of his employment with the
Employer on or after attainment of age 55 on account of “Cause” and after the date
payments have commenced to him in the form of an annuity as provided in subsection (c),
no additional benefits shall be payable under this Agreement after the Employee’s death
except to the extent the Employee did not receive prior to his death benefits in an
amount equal to or greater than the amounts deferred (excluding any Interest Equivalent
earned while employed). In such event, his beneficiary shall be entitled to a lump sum
payment, thirty (30) days following Employee’s death, equal to the difference between
benefits paid to the Employee hereunder and the amounts deferred (excluding any Interest
Equivalent earned while employed).

     (iv) If the Employee should die after the termination of his employment with the
Employer and after the date on which payment has been paid to him in the form of a lump
sum pursuant to subsection (b) or (c), no additional benefits shall be payable upon the
Employee’s death.

     (f) Hypothetical Death Benefit. For purposes of this Agreement, the term
“Hypothetical Death Benefit” shall mean a lump sum benefit equal to the proceeds of any policy of
key-man life insurance on the life of the Employee, of which the Employer is owner and beneficiary,
and which policy is designated by the Employer as subject to the provisions hereof, reduced
by (i) the amount of any tax imposed on the Employer with respect to such proceeds and (ii) the
cost to the Employer of any tax deductions postponed as a result of salary deferrals pursuant to
Section 1 hereof and increased by (iii) the tax deduction to the Employer which would
result from payment of the Hypothetical Death Benefit to a beneficiary of the Employee. For
purposes of (ii) above, an opportunity cost factor of six (6) percent pre-tax interest will be
applied during the period of postponed deductions under (ii). The calculation of the Hypothetical
Death Benefit shall be done by the Employer, whose calculation shall be final and binding on the
Employee and his beneficiary. Anything herein to the contrary notwithstanding, the Employer shall
not be required to purchase a policy of key-man life insurance on the life of any Employee, and any
such policy purchased by the Employer, and all proceeds thereof, shall remain at all times
available to the Employer’s general creditors.

     (g) Termination of Employment. In order for the Employee to be considered to have
terminated employment with the Employer, the Employee must have incurred a separation from service
from the Employer (and all related companies) within the meaning of Section 409A of the Code.

     4. BENEFICIARY. The Employee has notified or will in the future notify the Employer
of the person or persons entitled to receive payments on the death of the Employee. For the
purposes of this Agreement, such person or persons are herein referred to collectively as the
“beneficiary.” The person whom an Employee designates as his beneficiary for this purpose must
be one of the following: the Employee‘s spouse; father, mother, sister, brother, son
or daughter. The beneficiary may also be a legal ward living with and dependent on the

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Employee at the time of his death. If the Employee dies and has not designated a
beneficiary, his beneficiary shall be his spouse, if living; otherwise, his beneficiary shall be
deemed to be his estate. An Employee’s beneficiary designation may be changed at any time by the
Employee giving written notice to the Employer of such change. The rights of any beneficiary
presently or hereafter designated are subject to any changes made in this Agreement by the
Employee and the Employer.

     5. WITHHOLDING. The Employer shall be permitted to withhold from any payment to the
Employee or his beneficiary hereunder all federal, state or other taxes which may be required with
respect to such payment.

     6. ARBITRATION. In the event that a dispute shall arise with respect to any of the
provisions of this Agreement, either the Employer or the Employee or his beneficiary, as the case
may be, may give written notice to the other stating the claims that said party desires to
arbitrate, and naming an arbitrator. Within ten (10) days after the receipt of such notice, the
party receiving same shall appoint a second arbitrator by written notice to be sent to the party
who requested arbitration. Within ten (10) days after receipt of such notice of appointment of
the second arbitrator, the two (2) arbitrators so appointed shall meet to select a third
arbitrator and shall give written notice of such selection to the Employer and the Employee or
his beneficiary. The decision of a majority of the arbitrators shall be conclusive and binding
upon the Employer and the Employee or his beneficiary. All notices hereunder shall be by
registered mail addressed to the last known address of the party entitled to receive notice. The
Employer and the Employee shall each pay their own costs incurred in the arbitration proceeding;
provided, however, that the arbitrators may require that the losing party reimburse the
prevailing party for its costs if it shall be determined that the claim which gave rise to the
dispute was without substantial foundation.

     7. MISCELLANEOUS.

     (a) This Agreement shall be binding upon the parties hereto, their heirs, executors,
administrators, successors and assigns. The Employer agrees that it will not be a party to any
merger, consolidation or reorganization unless and until its obligations hereunder shall be
expressly assumed by its successor or successors.

     (b) This Agreement may be amended at any time by mutual written agreement of the parties
hereto, but no amendment shall operate to give the Employee, or any beneficiary designated by him,
either directly or indirectly, any interest whatsoever in any funds or assets of the Employer,
except the right to receive the payments herein provided.

     (c) Deferrals under this Agreement may be suspended by the Employer effective as of any
January 1, following the time that tax or other laws are enacted or interpreted which result or
will result in costs to the Employer significantly in excess of those contemplated at the time of
the execution hereof. In the event of such suspension, the Employer‘s sole obligation
shall be to pay to the Employee in accordance with Section 3 above. In no event may deferrals be
ceased during a calendar year by action of either the Employer or the Employee, or both.

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     (e) This Agreement shall not supersede any contract of employment, whether oral or written,
between the Employer and the Employee, nor shall it affect or impair the rights and obligations of
the Employer and the Employee, respectively, thereunder. Nothing contained herein shall impose any
obligation on the Employer to continue the employment of the Employee.

     (f) If Moody’s Bond Survey shall cease to publish the Corporate Bond Yield Averages referred
to in Section 3 hereof, a similar average selected by the Board of Directors of the Employer, in
its sole discretion, shall be used.

     (g) This Agreement shall be executed in duplicate, and each executed copy of this
Agreement shall be deemed an original.

     (h) This Agreement shall be construed in all respects under the laws of the State of
Connecticut, subject to applicable federal law.

     (i) This Agreement has been prepared with reference to Section 409A of the Internal
Revenue Code and should be interpreted and administered in a manner consistent with Section
409A. In the event that any part of the Agreement is determined to be in violation of 409A,
such part of the Agreement shall be automatically revised to be in compliance with Section 409A
in such way as most closely approximates the intent of the parties.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of
the day and year first above written.

	 	 	 	 	 	 	 
	 	 	THE CONNECTICUT WATER COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Michele G. DiAcri	 	 
	 

	 	 	 	 

     Its Assistant Corporate Secretary
	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Marshall T. Chiaraluce	 	 
	 	 	 	 	 
	 	 	Marshall T. Chiaraluce	 	 

-7-

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