Exhibit 4.12
California Water Service Company $20,000,000 8.15% Series C Senior Note
Agreement, maturing on November 1, 2030 as First Supplement to Note Agreement
dated as of October 1, 2000
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CALIFORNIA WATER SERVICE COMPANY
FIRST SUPPLEMENT TO NOTE AGREEMENT
Dated as of October 1, 2000
Re: $20,000,000 8.15% Series C Senior Notes
Due November 1, 2030
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FIRST SUPPLEMENT TO NOTE AGREEMENT
Dated as of
October 1, 2000
To the Purchasers named in
Schedule A hereto
Ladies and Gentlemen:
This First Supplement to Note Purchase Agreement (the "First
Supplement") is between California Water Service Company (the "Company") whose
address is 0000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 and the
institutional investors named on Schedule A attached hereto (the "Purchasers").
Reference is hereby made to that certain Note Agreement dated as of
March 1, 1999 (the "Note Agreement") between the Company and the purchasers
listed on Schedule I thereto. All capitalized terms not otherwise defined herein
shall have the same meaning as specified in the Note Agreement. Reference is
further made to Section 4.3 thereof which requires that, prior to the delivery
of any Additional Notes, the Company and each Additional Purchaser shall execute
and deliver a Supplement.
The Company hereby agrees with the Purchaser(s) named on Schedule A
hereto as follows:
1. The Company has authorized the issue and sale of $20,000,000
aggregate principal amount of its 8.15% Series C Senior Notes due November 1,
2030 (the "Series C Notes"). The Series C Notes, together with the Series B
Notes initially issued pursuant to the Note Agreement and each Series of
Additional Notes which may from time to time be issued pursuant to the
provisions of Section 1.4 of the Note Agreement, are collectively referred to as
the "Notes" (such term shall also include any such notes issued in substitution
therefor pursuant to Section 9.2 of the Note Agreement). The Series C Notes
shall be substantially in the form set out in Exhibit 1 hereto with such changes
therefrom, if any, as may be approved by the Purchaser(s) and the Company.
2. Subject to the terms and conditions hereof and as set forth in the
Note Agreement and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to each Purchaser,
and each Purchaser agrees to purchase from the Company, Series C Notes in the
principal amount set forth opposite such Purchaser's name on Schedule A hereto
at a price of 100% of the principal amount thereof on the closing date hereafter
mentioned.
1
3. Delivery of the $20,000,000 in aggregate principal amount of the
Series C Notes will be made at the offices of Xxxxxxx and Xxxxxx, 000 Xxxx
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000 against payment therefor in Federal
Reserve or other funds current and immediately available at the principal office
of Bank of America, ABA No. 000000000, Account No. 14879-00161, Account Name:
California Water Service Company Security Sales, in the amount of the purchase
price at 11:00 A.M., San Francisco, California time, on October 24, 2000 or such
later date (not later than October 31, 2000) as shall mutually be agreed upon by
the Company and the Purchasers of the Series C Notes (the "Closing Date").
4. Prepayment of Notes.
(a) Required Prepayments. No prepayments are required to be made with
respect to the Series C Notes prior to the expressed maturity date thereof other
than prepayments made in connection with an acceleration of the Series C Notes
pursuant to the provisions of Section 6.3 of the Note Agreement.
(b) Optional Prepayment with Premium. Upon compliance with Section 4(d)
below the Company shall have the privilege, at any time and from time to time,
of prepaying the outstanding Notes of any Series, either in whole or in part
(but if in part then in a minimum principal amount of $100,000) by payment of
the principal amount of the Notes of such Series, or portion thereof to be
prepaid, and accrued interest thereon to the date of such prepayment, together
with a premium equal to the Make-Whole Amount, determined as of five Business
Days prior to the date of such prepayment pursuant to this Section 4(b).
(c) Optional Prepayment at Par in the Event of Condemnation. In the
event a Material Condemnation shall have occurred with respect to any property
of the Company or a Restricted Subsidiary, then upon compliance with Section
4(d) below the Company shall have the privilege of applying the proceeds of any
condemnation award received in connection with such Material Condemnation to the
prepayment of the principal amount of the Notes of any Series then outstanding,
or any portion thereof to the extent of such proceeds, together with accrued
interest thereon to the date of such prepayment. Any optional prepayment made
pursuant to this Section 4(c) shall be without premium.
(d) Notice of Optional Prepayments. The Company will give notice of any
prepayment of the Notes pursuant to Section 4(b) or 4(c) to each Holder of Notes
to be prepaid not less than 30 days nor more than 60 days before the date fixed
for such optional prepayment specifying (a) such date, (b) the Section of this
First Supplement under which the prepayment is to be made, (c) the principal
amount of the Holder's Notes to be prepaid on such date, (d) whether a premium
may be payable, (e) the date when the premium, if any, will be calculated, (f)
the estimated premium, together with a reasonably detailed computation of such
estimated premium, and (g) the accrued interest applicable to the prepayment.
Such notice of prepayment shall also certify all facts, if any, which are
conditions precedent to any such prepayment. Notice of prepayment having been so
given, the aggregate principal amount of the Notes to be prepaid specified in
such notice, together with accrued interest thereon and the premium, if any,
payable with respect thereto shall become due and payable on the prepayment date
specified in said notice. Not later than two Business Days prior to the
prepayment date
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specified in such notice, the Company shall provide each Holder of a Note to be
prepaid written notice of the premium, if any, payable in connection with such
prepayment and, whether or not any premium is payable, a reasonably detailed
computation of the Make-Whole Amount.
(e) Application of Prepayments. In the case of each partial prepayment
of the Notes pursuant to the provisions of Section 4(b) or 4(c), the principal
amount of the Notes of the Series to be prepaid shall be allocated among all of
the Notes of such Series at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof.
(f) Direct Payment. Notwithstanding anything to the contrary contained
in the Note Agreement, this First Supplement or the Notes, in the case of any
Note owned by any Holder that is a Purchaser, Additional Purchaser or any other
Institutional Holder which has given written notice to the Company requesting
that the provisions of this Section 4(f) shall apply, the Company will
punctually pay when due the principal thereof, interest thereon and premium, if
any, due with respect to said principal, without any presentment thereof,
directly to such Holder at its address set forth herein or such other address as
such Holder may from time to time designate in writing to the Company or, if a
bank account with a United States bank is so designated for such Holder, the
Company will make such payments in immediately available funds to such bank
account, marked for attention as indicated, or in such other manner or to such
other account in any United States bank as such Holder may from time to time
direct in writing.
(g) Make Whole Amount. The term "Make-Whole Amount" shall mean with
respect to the Series C Notes in connection with any prepayment or acceleration,
the following: the excess, if any, of (a) the aggregate present value as of the
date of such prepayment of each dollar of principal being prepaid and the amount
of interest (exclusive of interest accrued to the date of prepayment) that would
have been payable in respect of such dollar if such prepayment had not been
made, determined by discounting such amounts at the Reinvestment Rate from the
respective dates on which they would have been payable, over (b) 100% of the
principal amount of the outstanding Series C Notes being prepaid. If the
Reinvestment Rate is equal to or higher than 8.15%, the Make-Whole Amount shall
be zero. For purposes of any determination of the Make-Whole Amount for the
Series C Notes, the following terms have the following meanings:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the
yield reported on page "USD" of the Bloomberg Financial Markets
Services Screen (or, if not available, any other nationally recognized
trading screen reporting on-line intraday trading in the United States
government Securities) at 10:00 A.M. (Chicago, Illinois time) for the
United States government Securities have a maturity (rounded to the
nearest month) corresponding to the Remaining Life to Maturity of the
principal of the Notes being prepaid or (2) in the event that no
nationally recognized trading screen reporting on-line intraday trading
in the United States government Securities is available, Reinvestment
Rate shall mean 0.50%, plus the arithmetic mean of the yields for the
two columns under the heading "Week Ending" published in the
Statistical Release under the caption "Treasury Constant Maturities"
for the maturity (rounded to the nearest month) corresponding to the
Remaining Life to Maturity of the principal being prepaid. If no
maturity exactly corresponds to such Remaining Life to Maturity, yields
for the published maturity next longer than the Remaining Life to
Maturity and for the published
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maturity next shorter than the Remaining Life to Maturity shall be
calculated pursuant to the immediately preceding sentence and the
Reinvestment Rate shall be interpolated from such yields on a
straight-line basis, rounding in each of such relevant periods to the
nearest month. For the purposes of calculating the Reinvestment Rate,
the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.
"Statistical Release" shall mean the then most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve System and
which establishes yields on actively traded U.S. Government Securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination hereunder, then such other
reasonably comparable index which shall be designated by the Holders
holding 66-2/3% in aggregate principal amount of the outstanding Series
C Notes, subject to approval of the Company which approval will not be
unreasonably withheld.
"Remaining Life to Maturity" of the principal amount of the
Series C Notes being prepaid shall mean, as of the time of any
determination thereof, the number of years (calculated to the nearest
one-twelfth) which will elapse between the date of determination and
the final maturity of the Series C Notes being prepaid.
5. Closing Conditions.
(a) Conditions. The obligation of each Purchaser to purchase the Series
C Notes on the Closing Date shall be subject to the performance by the Company
of its agreements hereunder which by the terms hereof are to be performed at or
prior to the time of delivery of the Series C Notes and to the following further
conditions precedent:
(i) Closing Certificate. Such Purchaser shall have received a
certificate dated the Closing Date, signed by the President or a Vice
President of the Company, the truth and accuracy of which shall be a
condition to such Purchaser's obligation to purchase the Series C Notes
proposed to be sold to such Purchaser and to the effect that (1) the
representations and warranties of the Company set forth in Exhibit 2
hereto are true and correct on and with respect to the Closing Date,
(2) the Company has performed all of its obligations hereunder which
are to be performed on or prior to the Closing Date, and (3) no Default
or Event of Default has occurred and is continuing.
(ii) Compliance Certificate. Such Purchaser shall have
received a certificate dated the Closing Date, signed by the Senior
Financial Officer of the Company stating that such officer has reviewed
the provisions of the Note Agreement and this First Supplement and
setting for the information and computation (in sufficient detail)
required in order to establish whether the Company is in compliance
with Section 5.6 of the Note Agreement on the Closing Date.
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(iii) Legal Opinions. Such Purchaser shall have received from
McCutchen, Doyle, Xxxxx & Xxxxxxx LLP, counsel for the Company, and
Xxxxxxx and Xxxxxx, special counsel for the Purchasers, their opinions
dated the Closing Date, in form and substance satisfactory to such
Purchaser, and covering the matters set forth respectively in Exhibits
3 and 4 hereto.
(iv) Regulatory Approval. Prior to the Closing Date, the issue
and sale of the Series C Notes shall have been duly authorized or
approved by appropriate order of the Public Utilities Commission of the
State of California (the "Commission"). Such order shall be final and
in full force and effect and not subject to any appeal, hearing,
rehearing or contest. All conditions contained in any such order which
are to be fulfilled on or prior to the issuance of the Series C Notes
shall have been fulfilled. The Company shall have delivered to the
Purchasers and their special counsel a certified copy of such order and
the application therefor.
(v) Related Transactions. The Company shall have consummated
the sale of the entire principal amount of the Series C Notes scheduled
to be sold on the Closing Date pursuant to this First Supplement.
(vi) Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this First Supplement,
and all documents necessary to the consummation thereof, shall be
satisfactory in form and substance to such Purchaser and such
Purchaser's special counsel, and such Purchaser shall have received a
copy (executed or certified as may be appropriate) of all legal
documents or proceedings taken in connection with the consummation of
said transactions.
(vii) Purchase Permitted By Applicable Law. On the Closing
Date, the purchase of Series C Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which any Purchaser is subject,
without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular
investment, (b) not violate any applicable law or regulation
(including, without limitation, Regulation U, T or X of the Board of
Governors of the Federal Reserve System) and (c) not subject any
Purchaser to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect
on the date hereof. If requested by any Purchaser, such Purchaser shall
have received an Officer's Certificate certifying as to such matters of
fact as such Purchaser may reasonably specify to enable such Purchaser
to determine whether such purchase is so permitted.
(viii) Payment of Special Counsel Fees. The Company shall have
paid, on or before the Closing Date, the fees, charges and
disbursements of the Purchasers' special counsel referred to in (iii)
above, to the extent reflected in a statement of such counsel rendered
to the Company at least one Business Day prior to the Closing Date.
(ix) Private Placement Number. A Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with
the Securities
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Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Series C Notes.
(b) The obligation of the Company to deliver the Series C Notes
hereunder is subject to the conditions that (i) the Commission shall have
authorized the issuance and sale by the Company of the Series C Notes at the
price herein provided and said authorization shall be in full force and effect
and (ii) the entire principal amount of the Series C Notes scheduled to be sold
on the Closing Date pursuant to this First Supplement shall have been tendered
by the Purchasers. If the condition specified in this Section 5(b) shall not
have been fulfilled prior to or on the Closing Date, this First Supplement and
all the obligations of the Company hereunder, except as provided in Section 9.4
of the Note Agreement, may be cancelled by the Company.
(c) If on the Closing Date the Company fails to tender to any Purchaser
the Series C Notes to be issued to any Purchaser on such date or if the
conditions specified in Section 5(a) have not been fulfilled, such Purchaser may
thereupon elect to be relieved of all further obligations under this First
Supplement. Without limiting the foregoing, if the conditions specified in
Section 5(a) have not been fulfilled, such Purchaser may waive compliance by the
Company with any such condition to such extent as such Purchaser may in its sole
discretion determine. Nothing in this Section 5(c) shall operate to relieve the
Company of any of its obligations hereunder or to waive any Purchaser's rights
against the Company.
6. Each Purchaser represents and warrants that the representations and
warranties set forth in Section 3.2 of the Note Agreement are true and correct
on the date hereof with respect to the Series C Notes purchased by such
Purchasers.
7. The Company and each Purchaser agree to be bound by and comply with
the terms and provisions of the Note Agreement as if such Purchaser were an
original signatory to the Note Agreement.
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The execution hereof shall constitute a contract between the Company
and the Purchaser(s) for the uses and purposes hereinabove set forth, and this
agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.
CALIFORNIA WATER SERVICE COMPANY
By ______________________________________
Name: _________________________________
Title: ________________________________
Accepted as of October 1, 2000
[VARIATION]
By ______________________________________
Name: _________________________________
Title: ________________________________
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INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF SERIES C
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
SUN LIFE ASSURANCE COMPANY OF CANADA $5,000,000
Xxx Xxx Xxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Investment Xxxxxxxxxx/Xxxxxxx Xxxxxxxxxx, XX #0000
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"California Water Service Company, 8.15% Senior Notes, Series C, due November 1,
2030 , PPN 130789 L@7, principal, premium or interest") to:
Bank of New York
P&I Department
ABA #000-000-000
Account #: IOC 566
Re: California Water Service Corporation
For Further Credit: IOC 566
Account: 249061
Notices
All notices of mandatory payment, on or in respect of the Notes and written
confirmation of each such payment and any audit confirmation to:
Sun Life Assurance Company of Canada
Xxx Xxx Xxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Manager, Investment Accounting SC #1395
All other notices and communications, including notices of optional prepayments,
to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
SCHEDULE A
(to Supplement)
PRINCIPAL AMOUNT OF SERIES C
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
Three separate Notes in the
amount of $2,250,000,
SUN LIFE ASSURANCE COMPANY OF CANADA $500,000 and
One Sun Life Park $500,000, respectively
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Investment Xxxxxxxxxx/Xxxxxxx Xxxxxxxxxx, XX #0000
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"California Water Service Company, 8.15% Senior Notes, Series C, due November 1,
2030, PPN 130789 L@7, principal, premium or interest") to:
Citibank, N.A.
Attention: Gay Quitch
ABA #000-000-000
Account: 00000000
For Further Credit: Account No.: 199541
Notices
All notices of mandatory payment, on or in respect of the Notes and written
confirmation of each such payment and any audit confirmation to:
Sun Life Assurance Company of Canada
Xxx Xxx Xxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Manager, Investment Accounting SC #1395
All other notices and communications, including notices of optional prepayments,
to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
A-2
PRINCIPAL AMOUNT OF SERIES C
NOTES TO BE PURCHASED
NAME AND ADDRESS OF PURCHASER
SUN LIFE OF CANADA (INTERNATIONAL) LIMITED $1,000,000
Xxx Xxx Xxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Investment Xxxxxxxxxx/Xxxxxxx Xxxxxxxxxx, XX #0000
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"California Water Service Company, 8.15% Senior Notes, Series C, due November 1,
2030, PPN 130789 L@7, principal, premium or interest") to:
Citibank, N.A.
Attention: Gay Quitch
ABA #000-000-000
Account: 00000000
For Further Credit: Account No.: 849141
Notices
All notices of mandatory payment, on or in respect of the Notes and written
confirmation of each such payment and any audit confirmation to:
Sun Life Assurance Company of Canada
Xxx Xxx Xxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Manager, Investment Accounting SC #1395
All other notices and communications, including notices of optional prepayments,
to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Sun Life of Canada
(International) Limited
Taxpayer I.D. Number: 00-0000000
A-3
PRINCIPAL AMOUNT OF SERIES C
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
SUN LIFE ASSURANCE COMPANY OF CANADA $750,000
Xxx Xxx Xxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Investment Xxxxxxxxxx/Xxxxxxx Xxxxxxxxxx, XX #0000
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"California Water Service Company, 8.15% Senior Notes, Series C, due November 1,
2030, PPN 130789 L@7, principal, premium or interest") to:
Bank of New York
P&I Department
ABA #000-000-000
Account #: IOC 566
Re: California Water Service Corporation
For Further Credit: IOC 566
Account: 275431
Notices
All notices of mandatory payment, on or in respect of the Notes and written
confirmation of each such payment and any audit confirmation to:
Sun Life Assurance Company of Canada
Xxx Xxx Xxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Manager, Investment Accounting SC #1395
All other notices and communications, including notices of optional prepayments,
to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
A-4
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASER SERIES C NOTES TO BE
PURCHASED
CENTRE LIFE/UNUM LIFE INSURANCE TRUST $10,000,000
c/o Provident Investment Management, LLC
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Private Placements
Telefacsimile: (000) 000-0000
Confirmation: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds to:
Hare & Co.
x/x Xxx Xxxx xx Xxx Xxxx
Xxx Xxxx, Xxx Xxxx
XXX #021 000 018
BNF: 10C566
Attn: PP P&I Department
Ref: A/C Name and Cusip
Custodial Account Number 056904
Please reference: Issuer: California Water Service Company
PPN: 130789 L@7
Coupon: 8.15%
Maturity: November 1, 2030
Principal=$__________
Interest=$___________
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: HARE & CO.
Taxpayer I.D. Number: 00-0000000
A-5
[FORM OF SERIES C NOTE]
THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER, PLEDGE OR
OTHER DISPOSITION THEREOF MAY BE MADE ONLY (1) IN A TRANSACTION REGISTERED UNDER
SAID ACT OR (2) IF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.
CALIFORNIA WATER SERVICE COMPANY
8.15% Series C Senior Note
Due November 1, 2030
PPN: 130789 L@7
No. October __, 2000
$
California Water Service Company, a California corporation (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on the first day of November, 2030
the principal amount of
DOLLARS ($____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 8.15% per annum from the date hereof until maturity, payable
semiannually on the first day of each May and November in each year (commencing
on the first of such dates after the date hereof) and at maturity. The Company
agrees to pay interest on overdue principal (including any overdue required or
optional prepayment of principal) and premium, if any, and (to the extent
legally enforceable) on any overdue installment of interest, at the rate of
10.15% per annum after the due date, whether by acceleration or otherwise, until
paid. Both the principal hereof and interest hereon are payable at the principal
office of the Company in San Jose, California in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts.
EXHIBIT 1
(to Supplement)
This Note is one of a series of Notes (the "Notes") issued pursuant to
a supplement to the Note Agreement dated as of March 1, 1999 (as from time to
time amended and supplemented, the "Note Agreement"), between the Company, the
Purchasers named therein and Additional Purchasers of Notes from time to time
issued pursuant to any Supplement to the Note Agreement. This Note and the
holder hereof are entitled equally and ratably with the holders of all other
Notes of all Series from time to time outstanding under the Note Agreement to
all the benefits provided for thereby or referred to therein. Each holder of
this Note will be deemed, by its acceptance hereof, to have made the
representation set forth in Section 3.2 of the Note Agreement, provided that
such holder may (in reliance upon information provided by the Company, which
shall not be unreasonably withheld) make a representation to the effect that the
purchase by such holder of any Note will not constitute a non-exempt prohibited
transaction under Section 406(a) of ERISA.
This Note and the other Notes outstanding under the Note Agreement may
be declared due prior to their expressed maturity dates, all in the events, on
the terms and in the manner and amounts as provided in the Note Agreement.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreement.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of California
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
CALIFORNIA WATER SERVICE COMPANY
By
Name: _________________________________
Title: ________________________________
E1-2
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Purchaser that:
1. Corporate Organization, Subsidiaries. The Company is duly
organized and existing and in good standing under and by virtue of the laws of
the State of California and is duly authorized and empowered to own and operate
its properties and to carry on its business, all as and in the places where such
properties are now owned and operated and such business is conducted. The
Company has no Subsidiaries.
2. Corporate Authority. The Company has full corporate power and
corporate authority to sell and issue the Series C Notes. The issuance and sale
of the Series C Notes and the execution and delivery of the First Supplement
will have been duly authorized by the Board of Directors of the Company and by
the Public Utilities Commission of the State of California (the "Commission")
prior to the Closing Date, and no other action is required to be taken by, and
no consents or approvals are required to be obtained from, the shareholders of
the Company or any public body or bodies, and no other corporate action of the
Company is requisite to such issue and sale.
3. Business and Property. Each Purchaser has heretofore been
furnished with a copy of the Company Information which generally sets forth the
principal properties of the Company and the business conducted and proposed to
be conducted by the Company.
4. Indebtedness. Annex A attached hereto correctly describes all
Current Debt, Funded Debt and Capitalized Leases of the Company outstanding on
October 1, 2000.
5. Financial Statements and Reports. The Company has furnished each
Purchaser with a copy of its audited financial reports for 1998 and 1999
hereinafter called the "Company Reports," and copies of the Annual Reports and
Forms 10-K filed by California Water Service Group ("CWSG") hererinafter called
the "CWSG Reports" with the Securities and Exchange Commission for 1997, 1998
and 1999, together with all reports or documents required to be filed by CWSG
pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended, since the filing of the 1999 Form 10-K. The Company has also furnished
each Purchaser with an audited quarterly financial statement for the Company and
Forms 10-Q for CWSG for the fiscal quarters ended March 31, 2000 and June 30,
2000 (the "Quarterly Reports"). The financial statements contained in the
foregoing Company Reports, the CWSG Reports, Forms 10-K, the Quarterly Reports
and such other reports and documents were prepared in accordance with generally
accepted accounting principles upon a consistent basis and are complete and
correct and the balance sheets included therein fairly present the financial
condition of the Company or CWSG, as the case may be, as at the respective dates
thereof and the Statements of Income, Common Shareholders' Equity and Cash Flows
included therein fairly present the results of the operations of the Company for
the periods covered thereby, subject in the case of unaudited statements to
normal year-end adjustments.
6. Material Contracts. The Company has no contracts or commitments,
whether contingent or other, which are material to the Company and which were
not made in the ordinary
EXHIBIT 2
(to Supplement)
course of business. Certain material contracts related to water supply are
listed in Annex B hereto. The Company has no contracts or commitments,
contingent or other, which materially and adversely affect or in the future may
(so far as the Company can foresee) materially and adversely affect the Company
or its business, property, assets, operations or condition, financial or other.
As at December 31, 1999, there were no material liabilities of the Company
(other than those under contracts entered into in the normal and ordinary course
of business), actual, contingent or accrued, which were not reflected in the
Company Reports and CWSG Reports except for (i) liability in respect of
uncompleted construction work under open contracts in connection with the
Company's construction program and (ii) the obligations of the Company to
contribute to a pension plan, an employees' savings plan and a health and
welfare plan.
7. No Material Adverse Change. (a) There has been no change in the
condition of the Company, financial or other, from that set forth or reflected
in the Company Information, other than changes which may have occurred in the
ordinary course of business or by reason of ordinary dividends paid or declared
or outstanding First Mortgage Bonds redeemed by the Company in accordance with
their terms, and no such changes in the ordinary course of business have been
material adverse changes.
(b) Since December 31, 1999, neither the business, operations,
properties nor assets of the Company have been adversely affected in any
material way by any casualties such as fire, windstorm, riot, strike, explosion,
accident, flood, earthquake, lockout, sabotage, activities of armed forces, act
of God or the public enemy or condemnation of properties by the United States
government or any municipal governmental agency, authority or body.
8. Title to Properties. The Company is engaged in the business of a
public utility water company serving all or a portion of the California cities
and communities listed in the 1999 Company Report and paragraph 9 hereof. The
Company has good and merchantable title, subject only to the lien of the
Mortgage Indenture and to current tax and assessment liens, rights-of-way,
easements and certain minor liens, encumbrances, clouds or defects in title
which do not materially affect the use thereof, to all the material water
distribution facilities (including, without limitation, transmission and
distribution mains, pump stations, xxxxx, storage tanks and reservoirs) and
other material units of property used in its business except as follows:
(a) most of the offices, except its principal office, are in
leased premises and some xxxxx, well sites and other minor distribution
facilities are rented; and
(b) several xxxxx are located on property which the Company does
not own but in which it has an easement for the location of such xxxxx;
and except as to easements and rights-of-way and certain parcels of land (not
exceeding for said parcels of land an aggregate book value of $250,000) with
respect to which there is a possibility of reverter if the property ceases to be
used for public utility purposes, and, except that the greater portion of its
transmission and distribution systems is located in public highways and streets
and in rights-of-way owned by the Company over lands of others, the Company's
title thereto is fee simple. Except for parcels of land having an aggregate book
value of not more than $250,000, the Company has good and merchantable title to
all its other property and assets
E-2-2
subject only to the lien of the Mortgage Indenture and the lien of the Xxxxxxxxx
Mortgage Indenture and to current tax and assessment liens and minor liens and
encumbrances which do not materially affect the use thereof. All of the
properties of the Company are located in the State of California and
substantially all of the properties of the Company used or useful in its public
utility business are subject to the Mortgage Indenture. As used herein, the term
"Xxxxxxxxx Mortgage Indenture" means the Trust Indenture dated as of August 1,
1954, as supplemented from time to time, from the Company, as successor to
Xxxxxxxxx Water Company ("Xxxxxxxxx") and Chase Manhattan Bank and Trust
Company, National Association, as Trustee, which provides a lien on properties
owned by Xxxxxxxxx immediately prior to the merger described in paragraph 9
hereof which lien secures $9,000,000 in aggregate principal amount of Dominguez
bonds which were assumed by the Company upon the merger.
9. Franchises. The Company has, in its judgment, adequate franchises
and permits without burdensome restrictions (other than those typically
contained in franchises and permits of this type) to allow the Company to
conduct the business in which it is engaged.
The Company has two classes of franchises to install and operate water
pipes and mains under public streets and highways:
(a) so-called "constitutional" franchises obtained by virtue of
the provisions of Article XI, Section 19, of the California Constitution, as in
effect prior to 1911; and
(b) franchises granted pursuant to statutory authority.
The Company believes, based on the advice of counsel (which is itself
based upon the assumption of the accuracy of information obtained by the Company
from sources believed to be reliable that the following cities served by the
Company were all incorporated prior to 1911:
Bakersfield Marysville South San Xxxxxxxxx
Xxxxx Oroville Stockton
Dixon Redondo Beach Visalia
Hermosa Beach Xxxxxxx Willows
King City San Mateo
Xxxxxxxxx Xxxxx
that water distribution systems were constructed and service furnished to the
inhabitants of each by various predecessors of the Company prior to 1911, and
that there were no public water works owned or controlled by the municipality in
any of them prior to 1911), that the Company has a "constitutional" franchise in
each of the above cities and under such constitutional franchise has a perpetual
right which was not repealed by the repeal of Article XI, Section 19, of the
California Constitution to continue to occupy public streets of each of said
cities with its pipes and mains and to lay down additional pipes and mains in
said streets for the supplying of water, subject to reasonable regulation by the
respective municipalities. The Company also believes, based on the advice of
counsel, that this right is not limited to streets in which pipes or mains were
laid prior to 1911 but extends at least to all streets in the said
municipalities as they existed at the date of repeal of the constitutional
provision in 1911 and probably also extends to
E-2-3
territory incorporated into each respective city after such repeal, although
this latter question remains somewhat in doubt in the absence of a final
decision of the courts thereon. The Company holds either by assignment or as
original grantee franchises granted under statutory authority by the Counties of
Xxxx, Los Angeles, San Xxxxxxx, Santa Xxxxx and Monterey, the Cities of
Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View,
Bakersfield, Commerce, San Xxxxxx, Rolling Hills Estates and Thousand Oaks, and
the Towns of Los Altos Hills and Xxxxxxxx. Following incorporation of the City
of Rancho Palos Verdes in 1973, the Company made franchise payments to the City
and the City accepted the same as successor in interest to the grantor's rights
under the Company's former franchise from the County of Los Angeles; the City
has agreed that the Company may exercise its rights in the City under its
current County franchise until the expiration of that franchise in 2012. The
Company's franchises from the Cities of Palos Verdes Estates, Menlo Park and
Woodside terminated in 1977, 1993 and 1994, respectively. While none of the
Cities and the Company have executed a new franchise agreement, the Company has
made and will continue to make franchise payments to each of the Cities in
accordance with the provisions of the prior franchise. In other areas where the
Company has no franchise, the Company or its predecessors have distributed water
for many years and, to the Company's knowledge, no question has ever been raised
as to the right to make such distribution and to maintain all pipes and mains
necessary therefor.
On May 25, 2000, Xxxxxxxxx Service Corporation was merged into the
Company and subsequently Xxxxxxxxx and its subsidiaries were also merged into
the Company (collectively, the "merger"). The Company acquired in the Xxxxxxxxx
merger operations in the following cities, counties, townships or localities
that Xxxxxxxxx previously served:
Bodfish Kernville Mountain Shadows
Carson Lake Xxxxxx Onyx
Compton Lakeland Torrance
Duncans Xxxxx Lancaster Squirrel Valley
Fremont Valley Xxxxx Valley Xxxxxxx Heights
Guerneville Long Beach Los Angeles County
Harbor City Lucerne Xxxx County
Water distribution systems were constructed and service furnished to the
inhabitants of the localities currently known as Carson, Compton, Harbor City,
Long Beach and Torrance by various predecessors of the Company prior to 1911 and
the Company believes that it has a prior right to operate in these locations
which right was not extinguished by the incorporation of these cities subsequent
to 1911. Except as noted below, Xxxxxxxxx has no franchises from these cities
and has made no franchise payments to them and, to the Company's knowledge, no
question has ever been raised as to the right to make water distribution and to
maintain all pipes and mains necessary therefor.
As to the remaining localities, Xxxxxxxxx has received written
franchise agreements which are in full force and effect and has paid all
franchise fees to date, with the exception of Compton and the City of Xxxxxx
Revelopment Project #2, as to which the franchises expired without renewal in,
respectively, 1994 and 1998. Xxxxxxxxx continued to provide water services to
Compton and the City of Xxxxxx Revelopment Project #2 subsequent to the
expiration
E-2-4
of the respective franchises, and to pay franchise fees, and to the Company's
knowledge no question has ever been raised as to the right to make such
distribution and to maintain all pipes and mains necessary therefor.
10. Condition of Assets. The physical assets of the Company are in
sound operating condition, there are no material arrears in the maintenance of
any such physical assets and the Company believes that its sources of water are
adequate to meet its requirements for the foreseeable future.
11. Pending Litigation, Proceedings. (a) There are no actions, suits or
proceedings pending at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or, to the knowledge of the Company,
threatened against or affecting the Company not adequately covered by insurance
or for which reserves adequate in the Company's judgment have not been
established which involve, in the opinion of the Company, a reasonable
possibility of judgments or liabilities exceeding $500,000 in the aggregate net
of insurance, or which may, in the opinion of the Company result in any material
adverse change in the business or properties or in the condition, financial or
other, of the Company, or the ability of the Company to perform its obligations
under the First Supplement or the Series C Notes.
(b) There are no proceedings pending or, to the knowledge of the
Company, threatened against the Company before or by any federal, state or
municipal commission, board or other administrative agency, which materially and
adversely affect the water rates of the Company presently in effect.
(c) The Company is not in default with respect to any order, writ,
injunction or decree of any court, or any federal, state or municipal
commission, board or other administrative agency and the Company has complied
with all applicable statutes and regulations of the United States of America and
of any state, municipality or agency of any thereof, in respect of the conduct
of its business known or believed by the Company to be applicable thereto, the
failure to comply with which could reasonably be expected to have a material
adverse effect on the Company or its properties.
12. No Condemnation Proceedings. Since January 1, 1995, no elections
have been held or other actions taken authorizing the commencement of
proceedings for condemnation of any of the properties of the Company. However,
from time to time there are expressions of interest made by public bodies,
elected or appointed municipal officials, persons seeking political position or
citizens groups urging acquisition of the Company's facilities in one or more of
the communities served by the Company. The Company does not believe that any
acquisition by a city or municipality of its properties by condemnation or
threat thereof would be adverse to the holders of the Series C Notes.
13. No Burdensome Restrictions. The Company is not subject to any
burdensome corporate restrictions in its Articles of Incorporation, By-Laws or
otherwise, which materially and
E-2-5
adversely affect or in the future may (so far as the Company can foresee)
materially and adversely affect the Company or its business, property, assets,
operations or condition, financial or other.
14. Regulatory Status, Approval. (a) The Company is not a registered
holding company or a subsidiary of a registered holding company and the Company
is not required to register under the Public Utility Holding Company Act of
1935, as amended. The Company is subject to the jurisdiction of the Commission.
(b) No consent of, approval or authorization by, filing or registration
with, or notice to any governmental or public authority or agency is required
for the issuance, sale or delivery of the Series C Notes or the execution,
delivery or performance of the First Supplement, other than the authorization of
the Commission, which authorization has been duly obtained, is in full force and
effect and is not subject to any appeal, hearing, rehearing or contest. All
conditions contained in any such authorization which were to be fulfilled on or
prior to the issuance of the Series C Notes have been fulfilled. The Company has
furnished to your special counsel true, correct and complete copies of said
authorization and all applications heretofore filed with or submitted to the
Commission in connection with its action to obtain said authorization.
15. No Defaults, Compliance with Other Instruments. The Company is not
in default under any outstanding indentures, contracts or agreements which are
material to the Company including, without limitation, the Mortgage Indenture;
and on the Closing Date there will not exist any condition which would be a
default under any such indenture, contract or agreement. The execution and
delivery of the First Supplement, the consummation of the transactions therein
provided for and compliance with the provisions of the First Supplement and the
Series C Notes by the Company will not violate or result in any breach of the
terms, conditions or provisions of, or constitute a default under, its Articles
of Incorporation, By-Laws or any indenture, mortgage, deed of trust, bank loan
or credit agreement, or other material agreement or instrument to which the
Company is a party or by which the Company may be bound, nor will such acts
result in the violation of any applicable law, rule, regulation or order
applicable to the Company of any court or governmental authority having
jurisdiction in the premises or in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever, upon any property or assets of
the Company.
16. Leases. The Company has the right to, and does, enjoy peaceful and
undisturbed possession under all material leases to which it is a party or under
which it is operating. All such leases are valid, subsisting and in full force
and effect, and the Company is not in default under any thereof and no event has
occurred and is continuing, and no condition exists that, after notice or
passage of time or both could become a material default under any such Lease.
17. Use of Proceeds. The Company will use the gross proceeds derived
from the sale of the Series C Notes under the First Supplement to refinance
existing Indebtedness and to finance a portion of the Company's general
construction program. None of the transactions contemplated in the First
Supplement (including, without limitation thereof, the use of the proceeds from
the sale of the Series C Notes) will violate or result in a violation of Section
7 of the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including without limitation, Regulations U, T and X of the
Board of Governors of the Federal
E-2-6
Reserve System, 12 C.F.R., Chapter II. The Company does not own or intend to
carry or purchase any "margin stock" within the meaning of said Regulation U,
including margin stock originally issued by it. None of the proceeds from the
sale of the Series C Notes will be used to purchase or carry (or refinance any
borrowing the proceeds of which were used to purchase or carry) any margin
stock.
18. ERISA. (a) The fair market value of all assets under all "employee
pension benefit plans" (as such term is defined in Section 3(2) of ERISA),
maintained by the Company, as from time to time in effect, exceeded as of
December 31, 1999, the last annual valuation date, the actuarial present value
of all benefits vested under the Plans by more than $15,846,000.
(b) Neither any of the Plans nor any of the trusts created thereunder,
nor any trustee or administrator thereof, has engaged in a "prohibited
transaction," as such term is defined in Section 4975 of the Code which could
subject the Plans or any of them, any such trust, or any trustee or
administrator thereof, or any disqualified person with respect to the Plans to
the tax or penalty on prohibited transactions imposed by said Section 4975,
except that, with respect to any actions or omissions of administrators,
trustees, other fiduciaries, parties in interest or disqualified persons of or
in respect to the Plans (other than employees of the Company), the Company has
no knowledge that any of such persons has committed a prohibited transaction,
nor has the Company participated knowingly in or knowingly undertaken to conceal
a prohibited transaction with or by any of such persons nor enabled any of them
to commit a prohibited transaction.
(c) Neither any of the Plans subject to Title IV of ERISA nor any
trusts related to such plans have been terminated, nor have there been any
Reportable Events, as that term is defined in Section 4043 of ERISA (as modified
by the regulations thereunder), in respect of those plans since the effective
date of ERISA.
(d) Neither any of the Plans which are subject to Section 302 of ERISA
nor any trusts related to such plans have incurred any "accumulated funding
deficiency," as such term is defined in said Section 302 (whether or not
waived), since the effective date of ERISA.
(e) The consummation of the transactions provided for in the First
Supplement and compliance by the Company with the provisions thereof and the
Series C Notes issued thereunder will not involve any prohibited transaction
within the meaning of ERISA or Section 4975 of the Code.
19. Taxes. All Federal, state and local taxes and assessments due from
the Company have been (a) fully paid or adequately provided for on the books of
the Company in accordance with generally accepted accounting principles or (b)
are being contested in good faith by the Company. There has been no examination
of the Federal income tax returns of the Company by the Internal Revenue Service
subsequent to the examinations of the returns for tax years 1984-1991.
20. Compliance with Laws. To the best of the Company's knowledge, after
due inquiry, the Company is in compliance with all applicable Federal, state, or
local laws, statutes, rules,
E-2-7
regulations or ordinances relating to public heath, safety or the environment,
including, without limitation, relating to releases, discharges, emissions or
disposals to air, water, land or ground water, to the withdrawal or use of
ground water, to the use, handling or disposal of polychlorinated biphenyls
(PCB's), asbestos or urea formaldehyde, to the treatment, storage, disposal or
management of hazardous substances (including, without limitation, petroleum,
its derivatives, by-products or other hydrocarbons), and to exposure to
hazardous substances, the failure to comply with which could reasonably be
expected to have a material adverse effect on the Company or its properties. The
Company does not know of any liability of the Company under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Section 9601
et seq.) with respect to any property now or heretofore owned or leased by the
Company.
21. Full Disclosure. The financial statements referred to in the First
Supplement do not, nor does the First Supplement, the Company Information or any
written statement (including without limitation the 1999 Company Report and the
1999 CWSG Report) furnished by the Company to you in connection with the
negotiation of the sale of the Series C Notes, contain any untrue statement of a
material fact or, taken together, omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact which
the Company has not disclosed to you in writing which materially affects
adversely nor, so far as the Company can now foresee, will materially affect
adversely the properties, business, prospects, profits or condition (financial
or otherwise) of the Company or the ability of the Company to perform its
obligations under the Note Agreement, the First Supplement or the Series C
Notes.
22. Private Offering. Neither the Company, directly or indirectly, nor
any agent on its behalf has offered or will offer the Series C Notes or any
similar Security or has solicited or will solicit an offer to acquire the Series
C Notes or any similar Security from or has otherwise approached or negotiated
or will approach or negotiate in respect of the Series C Notes or any similar
Security with any Person other than the Purchasers and not more than four (4)
other institutional investors, each of whom was offered a portion of the Series
C Notes at private sale for investment. Neither the Company, directly or
indirectly, nor any agent on its behalf has offered or will offer the Series C
Notes or any similar Security or has solicited or will solicit an offer to
acquire the Series C Notes or any similar Security from any Person so as to
cause the issuance and sale of the Series C Notes not to be exempt from the
provisions of Section 5 of the Securities Act of 1933, as amended.
X-0-0
XXXXXXX XXXX, FUNDED DEBT AND CAPITALIZED LEASES
AS OF OCTOBER 1, 2000
1. Current Debt
$18,000,000 borrowed under the Company's bank line of credit with Bank
of America.
2. Funded Debt
$116,345,000 outstanding under the Company's various series of First
Mortgage Bonds.
$193,000 due to the City of Los Altos for the purchase of the North Los
Altos Water System.
$20,000,000 Series A Senior Notes due November 1, 2025.
$20,000,000 Series B Senior Notes due November 1, 2028.
$4,000,000 First Mortgage Bonds, Series J due 2023 of Xxxxxxxxx Water
Company ("Xxxxxxxxx").*
$5,000,000 First Mortgage Bonds, Series K due 2012 of Xxxxxxxxx.*
$3,236,000 California Department of Water Resources Loans due 2011-2032
of Xxxxxxxxx*.
3. Capitalized Leases
None.
__________________________
* Assumed by the Company on October 12, 2000
ANNEX A
(to Exhibit 2)
MATERIAL WATER SUPPLY CONTRACTS
1. Water Supply Contract between the Company and the County of Butte
relating to the Company's Oroville District.
2. Water Supply Contract between the Company and Xxxx County Water Agency
relating to the Company's Bakersfield District.
3. Water Supply Contract between the Company and Stockton East Water
District relating to the Company's Stockton District.
4. Second Amended Contract between the Company and Stockton East Water
District relating to the Company's Stockton District.
5. Settlement Agreement and Master Water Sales Contract between the City
and County of San Francisco and Certain Suburban Purchasers.
6. Supplement to Settlement Agreement and Master Water Sales Contract
between the Company and the City and County of San Francisco relating
to the Company's Bear Gulch District.
7. Supplement to Settlement Agreement and Master Water Sales Contract
between the Company and the City and County of San Francisco relating
to the Company's San Xxxxxx District.
8. Supplement to Settlement Agreement and Master Water Sales Contract
between the Company and the City and County of San Francisco relating
to the Company's San Mateo District.
9. Supplement to Settlement Agreement and Master Water Sales Contract
between the Company and the City and County of San Francisco relating
to the Company's South San Francisco District.
10. Water Supply Contract between the Company and Santa Xxxxx Valley Water
District relating to the Company's Los Altos District.
11. Water Supply Contract between the Company and Pacific Gas and Electric
Company related to the Company's Oroville District.
12. Water Supply Contract between the Company and Alameda County Flood
Control and Water Conservation District related to the Company's
Livermore District.
13. Water Supply Contract between the Company and Xxxxxxx Valley Municipal
Water District regarding the Company's Westlake District.
ANNEX B
(to Exhibit 2)
14. Water Supply Contract between Xxxxxxxxx Water Company, ARCO Products
Company and West Basin Municipal Water District relating to recycled
water.*
__________________________
* Assumed By The Company On October 12, 2000
E-2-2
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of McCutchen, Doyle, Xxxxx & Xxxxxxx LLP, counsel
for the Company, which is called for by Section 5(a)(iii) of the First
Supplement, shall be dated the Closing Date and addressed to the Purchasers,
shall be satisfactory in scope and form to the Purchasers and shall be to the
effect that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of
California, has the corporate power and the corporate authority to
execute and perform the First Supplement and to issue the Series C
Notes and has the full corporate power and the corporate authority to
conduct the activities in which it is now engaged.
2. The Note Agreement and the First Supplement have been
duly authorized by all necessary corporate action on the part of the
Company, have been duly executed and delivered by the Company and
constitute the legal, valid and binding contract of the Company
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law).
3. The Series C Notes have been duly authorized by all
necessary corporate action on the part of the Company, have been duly
executed and delivered by the Company and constitute the legal, valid
and binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance
and similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
4. No approval, consent or withholding of objection on the
part of, or filing, registration or qualification with, any
governmental body, Federal or state, is necessary in connection with
the execution and delivery of the First Supplement or the Series C
Notes other than the authorization of the Commission, which
authorization has been duly obtained, and is in full force and effect.
5. The issuance and sale of the Series C Notes and the
execution, delivery and performance by the Company of the First
Supplement do not violate or result in any breach of any of the
provisions of or constitute a default under or result in the creation
or imposition of any Lien upon any of the property of the Company
pursuant to the provisions of the Articles of Incorporation or By-laws
of the Company or any agreement or other instrument listed as a
material contract in the Company's most recent Annual Report.
EXHIBIT 3
(to Supplement)
6. Based upon the representations set forth in Section 6 of
the First Supplement, the issuance, sale and delivery of the Series C
Notes under the circumstances contemplated by the First Supplement do
not, under existing law, require the registration of the Series C Notes
under the Securities Act of 1933, as amended, or the qualification of
the First Supplement or an indenture under the Trust Indenture Act of
1939, as amended.
7. Based upon the assumption of the accuracy of information
obtained by the Company from sources believed to be reliable that the
following cities served by the Company were all incorporated prior to
1911:
Bakersfield Marysville South San Xxxxxxxxx
Xxxxx Oroville Stockton
Dixon Redondo Beach Visalia
Hermosa Beach Xxxxxxx Willows
King City San Mateo
Xxxxxxxxx Xxxxx
that water distribution systems were constructed and service furnished
to the inhabitants of each by various predecessors of the Company prior
to 1911, and that there were no public water works owned or controlled
by the municipality in any of them prior to 1911, in the opinion of
such counsel, the Company has a "constitutional" franchise in each of
the above cities and under such constitutional franchise has a
perpetual right which was not repealed by the repeal of Article XI,
Section 19, of the California Constitution to continue to occupy public
streets of each of said cities with its pipes and mains and to lay down
additional pipes and mains in said streets for the supplying of water,
subject to reasonable regulation by the respective municipalities as
they existed at the date of repeal of the constitutional provision in
1911 and probably also extends to territory incorporated into each
respective city after such repeal, although this latter question
remains somewhat in doubt in the absence of a final decision of the
courts thereon.
On May 25, 2000, Xxxxxxxxx Service Corporation was merged into the
Company and subsequently Xxxxxxxxx and its subsidiaries were also merged into
the Company (collectively, the "Merger"). The Company acquired in the Xxxxxxxxx
merger operations in the following cities, counties, townships or localities
that Xxxxxxxxx previously served:
Bodfish Kernville Mountain Shadows
Carson Lake Xxxxxx Onyx
Compton Lakeland Torrance
Duncans Xxxxx Lancaster Squirrel Valley
Fremont Valley Xxxxx Valley Xxxxxxx Heights
Guerneville Long Beach Los Angeles County
Harbor City Lucerne Xxxx County
Water distribution systems were constructed and service furnished to the
inhabitants of the localities currently known as Carson, Compton, Harbor City,
Long Beach and Torrance by
E3-2
various predecessors of the Company prior to 1911 and the Company believes that
it has a prior right to operate in these locations which right was not
extinguished by the incorporation of these cities subsequent to 1911. Except as
noted below, Xxxxxxxxx has no franchises from these cities and has made no
franchise payments to them and, to the Company's knowledge, no question has ever
been raised as to the right to make water distribution and to maintain all pipes
and mains necessary therefor.
As to the remaining localities, Xxxxxxxxx has received written
franchise agreements which are in full force and effect and has paid all
franchise fees to date, with the exception of Compton and the City of Xxxxxx
Revelopment Project #2, as to which the franchises expired without renewal in,
respectively, 1994 and 1998. Xxxxxxxxx continued to provide water services to
Compton and the City of Xxxxxx Revelopment Project #2 subsequent to the
expiration of the respective franchises, and to pay franchise fees, and to the
Company's knowledge no question has ever been raised as to the right to make
such distribution and to maintain all pipes and mains necessary therefor.
The opinion of McCutchen, Doyle, Xxxxx & Xxxxxxx LLP shall cover such
other matters relating to the sale of the Series C Notes as the Purchasers may
reasonably request. With respect to matters of fact on which such opinion is
based, such counsel shall be entitled to rely on appropriate certificates of
public officials and officers of the Company.
E3-3
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Xxxxxxx and Xxxxxx, special counsel to the
Purchasers, called for by Section 5(a)(iii) of the First Supplement, shall be
dated the Closing Date and addressed to the Purchasers, shall be satisfactory in
form and substance to the Purchasers and shall be to the effect that:
1. The Company is a corporation, validly existing and in
good standing under the laws of the State of California and has the
corporate power and the corporate authority to execute and deliver the
First Supplement and to issue the Series C Notes.
2. The Note Agreement and the First Supplement have been
duly authorized by all necessary corporate action on the part of the
Company, have been duly executed and delivered by the Company and
constitute the legal, valid and binding contract of the Company
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law).
3. The Series C Notes have been duly authorized by all
necessary corporate action on the part of the Company, have been duly
executed and delivered by the Company and constitute the legal, valid
and binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance
and similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Series C Notes
under the circumstances contemplated by the First Supplement do not,
under existing law, require the registration of the Series C Notes
under the Securities Act of 1933, as amended, or the qualification of
an indenture under the Trust Indenture Act of 1939, as amended.
The opinion of Xxxxxxx and Xxxxxx may rely upon the opinion of
McCutchen, Doyle, Xxxxx & Enersen LLP, as to matters of California law. The
opinion of Xxxxxxx and Xxxxxx shall also state that the opinion of McCutchen,
Doyle, Xxxxx & Enersen LLP, is satisfactory in scope and form to Xxxxxxx and
Xxxxxx and that, in their opinion, the Purchasers are justified in relying
thereon.
In rendering the opinion set forth in paragraph 1 above, Xxxxxxx and
Xxxxxx may rely, as to matters referred to in paragraph 1, solely upon an
examination of the Articles of Incorporation certified by, and a certificate of
good standing of the Company from, the Secretary of State of the State of
California, the By-laws of the Company and the general business corporation law
of the State of California.
With respect to matters of fact upon which such opinion is based,
Xxxxxxx and Xxxxxx may rely on appropriate certificates of public officials and
officers of the Company and upon representations of the Company and the
Purchasers delivered in connection with the issuance and sale of the Series C
Notes.
E3-2
Exhibit 4.13 Thirteenth Supplemental Trust Indenture whereby California
Water Service Company became the successor to Xxxxxxxxx Water
Corporation in the original trust indenture for Xxxxxxxxx
Water Corporation dated August 1, 1954 (Exhibit 4.13 to Form
10-K dated December 31, 2000)
THIS INSTRUMENT CONSTITUTES, AMONG OTHER THINGS, AN AMENDMENT TO A SECURITY
AGREEMENT WHICH CREATED A SECURITY INTEREST IN PERSONAL PROPERTY
CALIFORNIA WATER SERVICE COMPANY
(SUCCESSOR TO XXXXXXXXX WATER COMPANY)
TO
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
Trustee
THIRTEENTH SUPPLEMENTAL TRUST INDENTURE
Dated as of October 1, 2000
Amending and Supplementing Indenture Dated as of August 1, 1954
E3-3
THIS THIRTEENTH SUPPLEMENTAL TRUST INDENTURE (the "Thirteenth
Supplemental Trust Indenture"), is made and entered into as of the first day of
October, 2000, by and between California Water Service Company, a corporation
organized and existing under the laws of the State of California (the
"Corporation"), the successor by merger to Xxxxxxxxx Water Company
("Xxxxxxxxx"), and CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION,
with reference to the following recitals:
RECITALS
WHEREAS, by that certain Trust Indenture dated as of August 1, 1954
(hereinafter referred to as the "Original Indenture") between Xxxxxxxxx and
Title Insurance and Trust Company (the "Former Trustee"), which was recorded in
the Office of the County Recorder of the County of Los Angeles, State of
California, on October 8, 1954, in Book 45791, Page 1, Official Records of said
County, Xxxxxxxxx created its First Mortgage Series A 3-3/4% Bonds of 1954
(hereinafter called the "Series A Bonds"), and also granted, bargained, sold,
released, conveyed, confirmed, assigned, transferred, pledged and set over unto
the Former Trustee certain of its properties, real and personal, in order, inter
alia, to secure the payment of the principal of, and premium (if any) and
interest on, all bonds at any time issued and outstanding under the Original
Indenture and all indentures supplemental thereto (said Original Indenture and
all indentures supplemental thereto, including this Thirteenth Supplemental
Trust Indenture, being hereinafter referred to collectively as the "Indenture"),
all upon the terms, conditions and trusts therein specified; and
WHEREAS, there was issued under the Original Indenture One Million
Dollars ($1,000,000) principal amount of Series A Bonds, none of which is
outstanding on the date hereof; and
WHEREAS, by that certain First Supplemental Trust Indenture dated as of
August 1, 1956 (hereinafter referred to as the "First Supplemental Trust
Indenture"), between Xxxxxxxxx and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on August 1, 1956, in Book 51901, Page 374, Official Records of said County,
Xxxxxxxxx modified and amended certain provisions of the Original Indenture and
created its First Mortgage Series B 4% Bonds of 1976 (hereinafter called the
"Series B Bonds"), and there was issued under the First Supplemental Trust
Indenture Five Hundred Thousand Dollars ($500,000) principal amount of Series B
Bonds, none of which is outstanding on the date hereof; and
WHEREAS, by that certain Second Supplemental Trust Indenture dated as
of August 1, 1958 (hereinafter referred to as the "Second Supplemental Trust
Indenture"), between the Xxxxxxxxx and the Former Trustee, which was recorded in
the Office of the County Recorder of the County of Los Angeles, State of
California, on August 7, 1958, in Book D-179, Page 936, Official Records of said
County, Xxxxxxxxx modified and amended certain provisions of the Original
Indenture, as theretofore modified, amended and supplemented, and created its
First Mortgage Series C 5% Bonds of 1978 (hereinafter called the "Series C
Bonds"), and there was issued under the Second Supplemental Trust Indenture
Seven Hundred Thousand Dollars
($700,000) principal amount of Series C Bonds, none of which is outstanding on
the date hereof; and
WHEREAS, by that certain Third Supplemental Trust Indenture dated as of
May 1, 1961 (hereinafter referred to as the "Third Supplemental Trust
Indenture"), between Xxxxxxxxx and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on August 2, 1961, in Book S-942, Page 305, Official Records of said County,
Xxxxxxxxx modified and amended certain provisions of the Original Indenture, as
theretofore modified, amended and supplemented, and created its First Mortgage
Series D, 5-1/2% Bonds of 1981 (hereinafter called the "Series D Bonds"), and
there was issued under the Third Supplemental Trust Indenture Seven Hundred and
Fifty Thousand Dollars ($750,000) principal amount of Series D Bonds, none of
which is outstanding on the date hereof; and
WHEREAS, by that certain Fourth Supplemental Trust Indenture dated as
of March 1, 1962 (hereinafter referred to as the "Fourth Supplemental Trust
Indenture"), between Xxxxxxxxx and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles State of California,
on May 22, 1962, in Book D-1622, Page 826, Official Records of said County,
Xxxxxxxxx modified and amended certain provisions of the Original Indenture, as
theretofore modified, amended and supplemented; and
WHEREAS, by that certain Fifth Supplemental Trust Indenture dated as of
August 1, 1966 (hereinafter referred to as the "Fifth Supplemental Trust
Indenture"), between Xxxxxxxxx and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on October 17, 1966, as Instrument No. 160, Official Records of said County,
Xxxxxxxxx modified and amended certain provisions of the Original Indenture, as
theretofore modified, amended and supplemented, and created its First Mortgage
Series E 6-1/8% Bonds of 1986 (hereinafter called the "Series E Bonds"), and
there was issued under the Fifth Supplemental Trust Indenture One Million Two
Hundred Thousand Dollars ($1,200,000) principal amount of Series E Bonds, none
of which is outstanding on the date hereof; and
WHEREAS, by that certain Sixth Supplemental Trust Indenture dated as of
May 1, 1972 (hereinafter referred to as the "Sixth Supplemental Trust
Indenture"), between Xxxxxxxxx and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on July 21, 1972, as Instrument No. 856, Official Records of said County,
Xxxxxxxxx modified and amended certain provisions of the Original Indenture, as
theretofore modified, amended and supplemented, and created its First Mortgage
Series F 8% Bonds of 1997 (hereinafter called the "Series F Bonds"), and there
was issued under the Sixth Supplemental Trust Indenture One Million Two Hundred
Thousand Dollars ($1,200,000) principal amount of Series F Bonds, none of which
is outstanding at the date hereof; and
WHEREAS, by that certain Seventh Supplemental Trust Indenture dated as
of November 1, 1975 (hereinafter referred to as the "Seventh Supplemental Trust
Indenture"), between Xxxxxxxxx and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on December 2, 1975 as Instrument No. 2557, Official Records of said County,
Xxxxxxxxx modified and amended certain provisions of the Original Indenture, as
theretofore modified, amended and supplemented, and created its First
-2-
Mortgage Series G 10% Bonds of 1995 (hereinafter called the "Series G Bonds"),
and there was issued under the Seventh Supplemental Trust Indenture One Million
Six Hundred Thousand Dollars ($1,600,000) principal amount of Series G Bonds,
none of which is outstanding at the date hereof; and
WHEREAS, by that certain Eighth Supplemental Trust Indenture dated as
of August 1, 1978 (hereinafter referred to as the "Eighth Supplemental Trust
Indenture"), between Xxxxxxxxx and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on August 31, 1978 as Instrument No. 78- 964382, Official Records of said
County, Xxxxxxxxx modified and amended certain provisions of the Original
Indenture, as theretofore modified, amended and supplemented, and created its
First Mortgage Series H 9-3/8% Bonds of 1998 (hereinafter called the "Series H
Bonds"), and there was issued under the Eighth Supplemental Trust Indenture Two
Million Dollars ($2,000,000) principal amount of Series H Bonds, none of which
is outstanding at the date hereof; and
WHEREAS, by that certain Ninth Supplemental Trust Indenture dated as of
September 20, 1982 (hereinafter referred to as the "Ninth Supplemental Trust
Indenture"), between Xxxxxxxxx and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on September 30, 1982 as Instrument No. 82- 988617, Official Records of said
County, Xxxxxxxxx modified and amended certain provisions of the Original
Indenture, as theretofore modified, amended and supplemented, and created its
First Mortgage Series I 16-3/4% Bonds of 1992 (hereinafter called the "Series I
Bonds"), and there was issued under the Ninth Supplemental Trust Indenture One
Million Five Hundred Thousand Dollars ($1,500,000) principal amount of Series I
Bonds, none of which is outstanding on the date hereof; and
WHEREAS, by that certain Tenth Supplemental Trust Indenture dated as of
March 9, 1990 (hereinafter referred to as the "Tenth Supplemental Trust
Indenture"), between Xxxxxxxxx and Manufacturers Hanover Trust Company of
California as trustee, which was recorded in the Office of the County Recorder
of the County of Los Angeles, State of California, on July 24, 1990 as
Instrument No. 00-0000000, Official Records of said County, Xxxxxxxxx modified
and amended certain provisions of the Original Indenture, as theretofore
modified, amended and supplemented; and
WHEREAS, by that certain Eleventh Supplemental Trust Indenture dated as
of December 8, 1992 (hereinafter referred to as the "Eleventh Supplemental Trust
Indenture"), between Xxxxxxxxx and Chemical Trust Company of California, as
successor trustee, which was recorded in the Office of the County Recorder of
the County of Los Angeles, State of California, on December 9, 1992 as
Instrument No. 00-0000000, Official Records of said County, Xxxxxxxxx modified
and amended certain provisions of the Original Indenture, as theretofore
modified, amended and supplemented and created its First Mortgage Series J 8.86%
Bonds of 2023 (hereinafter called the "Series J Bonds"), and there has been
issued under the Eleventh Supplemental Trust Indenture Four Million Dollars
($4,000,000) principal amount of Series J Bonds, all of which are outstanding on
the date hereof; and
-3-
WHEREAS, by that certain Twelfth Supplemental Trust Indenture dated as
of December 1, 1997 (hereinafter referred to as the "Twelfth Supplemental Trust
Indenture"), between Xxxxxxxxx and Xxxxx Manhattan Bank and Trust Company,
National Association, as successor and currently acting trustee (hereinafter,
the "Trustee"), which was recorded in the Office of the County Recorder of the
County of Los Angeles, State of California, on December 15, 1997 as Instrument
No. 97-1966671, Official Records of said County, Xxxxxxxxx modified and amended
certain provisions of the Original Indenture, as theretofore modified, amended
and supplemented and created its First Mortgage Series K 6.94% Bonds due 2012
(hereinafter called the "Series K Bonds"), and there has been issued under the
Twelfth Supplemental Trust Indenture Five Million Dollars ($5,000,000) principal
amount of Series K Bonds, all of which are outstanding on the date hereof; and
WHEREAS, on May 25, 2000, Xxxxxxxxx Services Corporation, which is the
parent company (the "Parent") of Xxxxxxxxx (the "Holding Company Merger") was
merged into the Corporation pursuant to an Agreement and Plan of Reorganization
dated November 13, 1998 as amended by Amendment No. 1 dated March 22, 1999 (the
"Amended Merger Agreement") among the Parent, the Corporation and California
Water Service Group (which is the parent company of the Corporation) and on or
prior to October 31, 2000 (i) Xxxxxxxxx is merging into the Corporation with the
Corporation becoming the successor to Xxxxxxxxx in all respects including under
the Indenture (the "Merger" and the date of the merger being the "Merger Date")
and (ii) the Corporation desires to amend the Indenture in the manner
hereinafter set forth; and
WHEREAS, in order for the Merger to occur in accordance with and
pursuant to Section 1 of Article IX of the Indenture the requisite consent
thereto in writing signed by the holders of not less than two-thirds (2/3) of
the principal of all bonds outstanding under the Indenture (the Series J Bonds
and Series K Bonds being the only bonds outstanding under the Indenture) has
been received and filed with the Trustee authorizing and assenting to the
Merger; and
WHEREAS, Section 3 of Article X of the Indenture provides that the
Corporation and the Trustee may enter into indentures supplemental thereto for
the purposes, among other things, of amending provisions of the Indenture and
the supplemental indentures to the extent permitted in the Indenture; and
WHEREAS, the Board of Directors of the Corporation, at a meeting duly
convened and held, has duly authorized the execution and delivery of this
Thirteenth Supplemental Trust Indenture (hereinafter sometimes called the
"Thirteenth Supplemental Indenture"); and
WHEREAS, all things necessary to make this Thirteenth Supplemental
Trust Indenture a valid, binding and legal instrument in accordance with its
terms, have been done and performed; and
WHEREAS, in accordance with and pursuant to Article XII, Section 3 of
the Indenture, the requisite consent in writing signed by holders of not less
than three-fourths (3/4) of the principal amount of all bonds outstanding under
the Indenture, has been received and filed with the
-4-
Trustee, authorizing and assenting to the modification and amendments of those
certain provisions of the Indenture as hereinafter set forth;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In consideration of the premises and of the mutual covenants herein
contained, and for other valuable considerations, receipt whereof is hereby
acknowledged, it is hereby covenanted, declared and agreed by and between the
parties hereto as follows:
ARTICLE ONE
SUBSTITUTION OF SUCCESSOR CORPORATION
Section 1.01. Assumption of Indenture Obligations. Effective the Merger
Date, the Corporation, as successor to Xxxxxxxxx, assumes the due and punctual
payment of the principal of (and premium, if any) and interest on all the bonds
at any time outstanding under the Indenture and the performance of every
covenant and condition of the Indenture to be performed or observed by the
Corporation.
Section 1.02. Mortgage of Property. The Corporation, in order to better
secure the principal of and interest (and premium, if any) on all bonds of the
Corporation at any time outstanding under the Indenture according to their tenor
and effect and the performance of and compliance with the covenants and
conditions in the Indenture contained, does hereby mortgage, assign, grant,
bargain, sell and convey unto the Trustee, and to its successors in said trust,
forever, all of the property, rights and franchises owned by Xxxxxxxxx
immediately prior to the Merger which is subject to the lien of the Indenture
including the properties described in Exhibit A attached hereto and made a part
hereof (collectively, the "mortgaged property") and no other property, rights or
franchises now owned or hereafter acquired by the Corporation, provided that the
Corporation does hereby mortgage, assign, grant, bargain, sell and convey unto
the Trustee and its successors the following properties acquired by the
Corporation on or after the Merger Date, to wit:
(1) all betterments, extensions, improvements, additions,
repairs, renewals, replacements, substitutions and alterations to,
upon, for and of the property or franchises, or both, subject to the
lien of the Indenture, and all property constituting appurtenances of
the mortgaged property;
(2) all property acquired or constructed with the proceeds of
any insurance on any part of the mortgaged property or with the
proceeds of any part of the mortgaged property released from the lien
of the Indenture or a prior lien or disposed of free from any such
lien, or taken by eminent domain, or purchased by a public authority;
and
(3) all property acquired in pursuance of the covenants
herein contained to maintain and preserve and keep the mortgaged
property in good condition, repair and working order, or in pursuance
of any other covenant or agreement herein contained to be performed by
the Corporation;
-5-
in trust, nevertheless, for the same purposes and upon the same conditions as
are set forth in the Original Indenture, any such acquired property which is
described in clauses (1), (2) and (3) of this Section 1.02 becoming mortgaged
property upon being so acquired.
ARTICLE TWO
AMENDMENTS TO ARTICLES II, III AND V
Section 2.01. Amendment to Article II. In the second full paragraph of
Section 5(a) of Article II which contains the definition of "Permanent
Additions" the phrase in the first and second lines which reads `shall mean
additions to "Gross Plant Investments" ' is amended to read `shall mean
additions subject to the lien of this indenture to "Gross Plant Investments".'
Section 2.02. Amendment to Article III. Notwithstanding any other
provisions of Article III to the contrary, effective on the Merger Date no new
series of bonds will be issued under this indenture, provided the foregoing
limitation will not prevent or restrict the issuance of bonds to transferees,
successors or assigns of holders of Series J and K Bonds from time to time and
for any other reasons permitted hereunder other than in connection with the
issuance of a new series of bonds.
Section 2.03. Amendments to Article V. (a) Section 6 of Article V is
amended by changing the phrase "real property" in the fifth line of Section 6 to
read "real property subject to the lien of this indenture".
(b) Section 12 of Article V is amended (i) in the first full paragraph
by changing the phrase "covering property worn-out," in the sixth line thereof
to read "covering property subject to the lien of this indenture which is
worn-out," and (ii) in the third paragraph by (A) changing the phrase in the
eighth line which reads "charges for depreciation" to read "charges for
depreciation for the plant subject to the lien of this indenture" and (B)
changing the phrase "in depreciable plant" in the tenth and eleventh lines to
read "in depreciable plant subject to the lien of this indenture".
(c) Section 13 of Article V is amended (i) in the second paragraph by
changing the phrase "cause an examination of its properties and operations to be
made by an engineer" appearing in the sixth and seventh lines to read "cause an
examination of its properties subject to the lien of this indenture and its
operations relating thereto to be made by an engineer" and (ii) in the last
paragraph by adding the phrase "subject to the lien of this indenture" following
each of the two phrases contained therein which read "Corporation's depreciable
properties".
(d) Section 16 of Article V is hereby deleted.
(e) Section 18 of Article V is hereby deleted and a new Section 18 is
added which reads as follows:
"Section 18. The following covenants are for the benefit of
both the Series J Bonds and the Series K Bonds which covenants may not
be amended, modified or waived without the written consent of the
holders of 66 2/3% in aggregate principal
-6-
amount of bonds then outstanding of each such series of bonds. The
Corporation covenants and agrees that from and after the Merger Date as
follows (terms not otherwise defined in Sections 18.1 through 18.7 are
defined in Section 18.8):
Section 18.1. Nature of Business. Neither the Corporation nor
any Subsidiary will engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then
be engaged in by the Corporation and its Subsidiaries would be
substantially changed from the general nature of the business engaged
in by the Corporation on the Merger Date.
Section 18.2. Limitations on Current Debt and Funded Debt. (a)
The Corporation will not, and will not permit any Restricted Subsidiary
to, create, assume or incur or in any manner be or become liable in
respect of any Current Debt or Funded Debt, except:
(1) The following Current Debt and Funded Debt of
the Corporation and Funded Debt of its Restricted Subsidiaries
outstanding as of October 1, 2000 set forth on Schedule I
hereto (all such Funded Debt of the Restricted Subsidiaries is
assumed on the Merger Date by the Corporation);
(2) Additional Funded Debt of the Corporation,
provided that at the time of issuance thereof and after giving
effect thereto and to the application of the proceeds thereof:
(i) Consolidated Funded Debt shall not
exceed 66-2/3% of Consolidated Total Capitalization,
and
(ii) Net Income Available for Interest
Charges for any period of 12 consecutive calendar
months during the immediately preceding 14
consecutive calendar months prior to the issuance of
such Funded Debt shall have been at least 175% of
Pro Forma Interest Charges for such 12-month period;
(3) Additional unsecured Current Debt of the
Corporation;
(4) Current Debt or Funded Debt of a Restricted
Subsidiary owed to the Corporation or to a Wholly-owned
Restricted Subsidiary; and
(5) Funded Debt of the Corporation issued after the
Merger Date evidenced by First Mortgage Bonds, provided that
the Corporation shall have complied with the requirements of
Section 18.7 hereof.
(b) Indebtedness described in or issued or incurred in
accordance with the limitations of Section 18.2(a)(1) may be renewed,
extended or refunded without regard to Section 18.2(a)(2), provided
that the principal amount thereof remaining unpaid at the time of such
renewal, extension or refunding shall not be increased.
-7-
(c) Any corporation which becomes a Restricted Subsidiary
after the Merger Date shall for all purposes of this Section 18.2 be
deemed to have created, assumed or incurred at the time it becomes a
Restricted Subsidiary all Funded Debt of such corporation existing
immediately after it becomes a Restricted Subsidiary.
Section 18.3. Limitation on Liens. The Corporation will not,
and will not permit any Restricted Subsidiary to, create or incur, or
suffer to be incurred or to exist, any Lien on its or their property or
assets, whether now owned or hereafter acquired, or upon any income or
profits therefrom, or transfer any property for the purpose of
subjecting the same to the payment of obligations in priority to the
payment of its or their general creditors, or acquire or agree to
acquire, or permit any Restricted Subsidiary to acquire, any property
or assets upon conditional sales agreements or other title retention
devices, except:
(a) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen, provided that the payment thereof shall not be overdue or
the payment is overdue but is being contested in good faith by
proceedings which will prevent the sale of material property or
material interference with the use thereof by the Corporation or
Restricted Subsidiary owning the same and adequate reserves are set
aside on its books;
(b) Liens of or resulting from any litigation or legal
proceeding which are currently being contested in good faith by
appropriate proceedings and for which the Corporation or the relevant
Restricted Subsidiary shall have set aside on its books, reserves
deemed by it to be adequate with respect thereto, unless the judgment
they secure shall not have been stayed, bonded or discharged within 60
days of its entry;
(c) Liens incidental to the conduct of the Corporation's
business or the ownership of properties and assets (including Liens in
connection with worker's compensation, unemployment insurance and other
like laws, warehousemen's and attorneys' liens and statutory landlords'
liens) and Liens to secure the performance of bids, tenders or trade
contracts, or to secure statutory obligations, surety or appeal bonds
or other Liens of like general nature incurred in the ordinary course
of business and not in connection with the borrowing of money; provided
in each case, the obligation secured is not overdue or, if overdue, is
being contested in good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements,
licenses or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other restrictions
as to the use of real properties, which are necessary for the conduct
of the activities of the Corporation and its Restricted Subsidiaries or
which customarily exist on properties of corporations engaged in
similar activities and similarly situated and which do not in any event
materially impair their use in the operation of the business of the
Corporation and its Restricted Subsidiaries;
-8-
(e) Liens securing Indebtedness of a Restricted Subsidiary to
the Corporation or to another Restricted Subsidiary;
(f) Leases on property owned by the Corporation or a
Restricted Subsidiary wherein the Corporation or such Restricted
Subsidiary is the lessor thereunder, provided that (i) the Rentals
payable under any lease are for fair rental value and otherwise contain
appropriate provisions to protect and preserve the Corporation's or
such Restricted Subsidiary's interest in such property and (ii) any
such lease will not interfere with the ordinary course of business of
the Corporation or such Restricted Subsidiary;
(g) Liens existing as of the Merger Date and reflected in
Schedule II hereto;
(h) Liens created or incurred after the Merger Date given
pursuant to pollution control, industrial revenue or other similar tax
exempt financings of the Corporation to secure the payment of the
purchase price incurred in connection with the acquisition of fixed
assets useful and intended to be used in carrying on the business of
the Corporation or its Restricted Subsidiaries, provided that (i) the
Liens shall attach solely to the fixed assets acquired or purchased,
(ii) at the time of acquisition of such fixed assets, the Indebtedness
secured by Liens thereon shall not exceed the total purchase price of
such fixed assets, (iii) such Indebtedness shall have been incurred
within the applicable limitations provided in Section 18.2(a), and (iv)
the aggregate principal amount of all Indebtedness secured by Liens
described in this clause (h) shall not at any time exceed an amount
equal to 10% of Consolidated Total Assets;
(i) Liens created or incurred on or after the Merger Date
given to secure Indebtedness of the Corporation and its Restricted
Subsidiaries in addition to the Liens permitted by the preceding
clauses (a) through (h) hereof, provided that all Indebtedness secured
by such Liens shall have been incurred within the limitations provided
in Section 18.2(a)(5);
(j) Liens created or incurred after the Merger Date in
addition to the Liens permitted by the preceding clauses (a) through
(i) hereof, provided that (i) the aggregate principal amount of all
Indebtedness secured by such Liens shall not at any time exceed an
amount equal to 10% of Consolidated Total Capitalization and (ii) all
such Indebtedness shall have been incurred within the applicable
limitations provided in Section 18.2; and
(k) any extension, renewal or refunding of any Lien permitted
by the preceding clauses (a) through (i) hereof in respect of the same
property theretofore subject to such Lien in connection with the
extension, renewal or refunding of the Indebtedness secured thereby;
provided that (i) such extension, renewal or refunding of Indebtedness
shall be without increase in the principal amount remaining unpaid as
of the date of such extension, renewal or refunding, and (ii) such Lien
shall attach solely to the same such property.
-9-
Section 18.4. Mergers, Consolidations and Sales of Assets. (a)
The Corporation will not, and will not permit any Restricted Subsidiary
to, (i) consolidate with or be a party to a merger with any other
corporation or (ii) sell, lease or otherwise dispose of all or any
substantial part (as defined in paragraph (d) of this Section 18.4) of
the assets of the Corporation and its Restricted Subsidiaries (other
than sales in the ordinary course of business or sales of properties
sold pursuant to any Condemnation); provided, however, that:
(1) any Restricted Subsidiary may merge or
consolidate with or into the Corporation or any Wholly-owned
Restricted Subsidiary so long as in any merger or
consolidation involving the Corporation, the Corporation shall
be the surviving or continuing corporation;
(2) the Corporation may consolidate or merge with or
into, and may sell all or substantially all of its assets in a
single transaction to, any other corporation if (i) the
corporation which results from such consolidation, merger or
sale (the "surviving entity") is organized under the laws of
any state of the United States or the District of Columbia,
(ii) the due and punctual payment of the principal of and
premium, if any, and interest on all of the Series J Bonds and
Series K Bonds, according to their tenor, and the due and
punctual performance and observation of all of the covenants
in the Bonds and this indenture to be performed or observed by
the Corporation are expressly assumed in writing by the
surviving entity and the surviving entity shall furnish to the
holders of the Bonds an opinion of counsel reasonably
satisfactory to such holders to the effect that the instrument
of assumption has been duly authorized, executed and delivered
and constitutes the legal, valid and binding contract and
agreement of the surviving entity enforceable in accordance
with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles, and
(iii) at the time of such consolidation, merger or sale and
immediately after giving effect thereto, (A) no Default or
Event of Default would exist and (B) the surviving entity
would be permitted by the provisions of Section 18.2(a)(2) to
incur at least $1.00 of additional Funded Debt; and
(3) any Restricted Subsidiary may sell, lease or
otherwise dispose of all or any substantial part of its assets
to the Corporation or any Wholly-owned Restricted Subsidiary.
(b) The Corporation will not permit any Restricted Subsidiary
to issue any shares of stock of any class (including as "stock" for the
purposes of this Section 18.4 any warrants, rights or options to
purchase or otherwise acquire stock or other Securities exchangeable
for or convertible into stock) of such Restricted Subsidiary to any
Person other than the Corporation or a Restricted Subsidiary, unless
immediately after the consummation of such transaction and after giving
effect thereto, such Restricted Subsidiary shall remain a Restricted
Subsidiary of the Corporation.
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(c) The Corporation will not sell, transfer or otherwise
dispose of any shares of stock of any Restricted Subsidiary or any
Indebtedness of any Restricted Subsidiary, and will not permit any
Restricted Subsidiary to sell, transfer or otherwise dispose of (except
to the Corporation or a Restricted Subsidiary) any shares of stock or
any Indebtedness of any other Restricted Subsidiary, unless:
(1) the Board of Directors of the Corporation shall
have determined, as evidenced by a resolution thereof, that
the proposed sale, transfer or disposition of said shares of
stock and Indebtedness is in the best interests of the
Corporation;
(2) said shares of stock and Indebtedness are sold,
transferred or otherwise disposed of to a Person, for cash or
other property and on terms reasonably deemed by the Board of
Directors to be adequate and satisfactory;
(3) in the case of the sale, transfer, or
disposition of all shares of stock and Indebtedness of a
Restricted Subsidiary, such Restricted Subsidiary shall not
have any continuing investment in the Corporation or any other
Restricted Subsidiary not being simultaneously disposed of;
(4) in the case of the sale, transfer, or
disposition of less than all of the shares of stock of a
Restricted Subsidiary, immediately after the consummation of
the transaction and after giving effect thereto, such
Restricted Subsidiary shall remain a Restricted Subsidiary of
the Corporation; and
(5) such sale or other disposition does not involve
a substantial part (as hereinafter defined) of the
consolidated assets of the Corporation and its Restricted
Subsidiaries.
(d) As used in this Section 18.4, a sale, lease or other
disposition of assets shall be deemed to be a "substantial part" of the
assets of the Corporation and its Restricted Subsidiaries if the book
value of such assets, when added to the book value of all other assets
sold, leased or otherwise disposed of by the Corporation and its
Restricted Subsidiaries (other than in the ordinary course of business
including without limitation property sold pursuant to any
Condemnation) during the immediately preceding 12 months, exceeds 10%
of Consolidated Total Assets, determined as of the end of the
immediately preceding fiscal year, provided, however, that for purposes
of the foregoing calculation, there shall not be included the book
value attributable to assets the proceeds from the disposition of which
were or are applied within 180 days of the date of sale of such assets
to either (1) the acquisition of assets useful and intended to be used
in the operation of the business of the Corporation and its Restricted
Subsidiaries as described in Section 18.1 and having a fair market
value (as determined in good faith by the Board of Directors of the
Corporation) at least equal to the assets so disposed of, or (2) the
prepayment at any applicable prepayment premium, on a pro rata basis,
of Funded Debt of the Corporation, provided that in the event the
assets which are the subject of any such sale or disposition are
subject to (A) the Lien of the Mortgage Indenture, such proceeds shall
be applied first to the prepayment of the First Mortgage Bonds as and
to the extent
-11-
required by the terms of the Mortgage Indenture or (B) the Lien of this
indenture, such proceeds shall be applied first to the redemption of
the Series J Bonds and Series K Bonds outstanding hereunder as and to
the extent required by the terms of this indenture. It is understood
and agreed by the Corporation that any such proceeds paid and applied
to the redemption of the Series J or Series K Bonds as hereinabove
provided shall be redeemed as and to the extent provided in this
indenture.
Section 18.5. Guaranties. The Corporation will not, and will
not permit any Restricted Subsidiary to, become or be liable in respect
of any Guaranty except Guaranties by the Corporation which are limited
in amount to a stated maximum dollar exposure or which constitute
Guaranties of obligations incurred by any Restricted Subsidiary and
otherwise permitted by the provisions of this Agreement.
Section 18.6. Transactions with Affiliates. Except for water
quality testing and analysis services performed for San Xxxx Water
Company, the Corporation will not, and will not permit any Restricted
Subsidiary to, enter into or be a party to any transaction or
arrangement with any Affiliate (including, without limitation, the
purchase from, sale to or exchange of property with, or the rendering
of any service by or for, any Affiliate), except in the ordinary course
of and pursuant to the reasonable requirements of the Corporation's or
such Restricted Subsidiary's business and upon fair and reasonable
terms no less favorable to the Corporation or such Restricted
Subsidiary than would obtain in a comparable arm's-length transaction
with a Person other than an Affiliate.
Section 18.7. Note Exchange Upon Issuance of First Mortgage
Bonds. (a) In the event that the Corporation shall issue additional
First Mortgage Bonds under and pursuant to the Mortgage Indenture, then
the Corporation shall, concurrently with the issuance of such
additional First Mortgage Bonds, exchange all of the outstanding Notes
of each Series issued by the Corporation (excluding Series J Bonds and
Series K Bonds issued under this indenture for First Mortgage Bonds of
a new series (the "Exchange Bonds")). The Exchange Bonds of each new
series shall be issued under and secured by the Mortgage Indenture,
shall rank pari passu with all other First Mortgage Bonds issued and
outstanding under the Mortgage Indenture, shall have payment and
maturity terms identical to the Series of Notes for which they were
exchanged, shall have required and optional prepayment provisions and
provisions relating to amounts payable upon acceleration of maturity
identical to those applicable to the Series of Notes for which they
were exchanged and shall otherwise be in the form required by the
Mortgage Indenture.
(b) The Corporation covenants and agrees to take all actions
necessary for the due authorization, execution and delivery of such
Exchange Bonds including, without limitation, (i) the filing of
applications with the Commission in order to obtain the requisite
approvals, authorizations and orders necessary for the issuance of the
Exchange Bonds, (ii) compliance with all requirements of the Mortgage
Indenture, (iii) the taking of all other actions the holders of the
Notes may reasonable request in connection with the delivery of the
Exchange Bonds, including the delivery of legal opinions and an
exchange agreement between the Corporation and the Holders in form and
substance reasonably satisfactory to the Holders of 66-2/3% of the
Notes of each Series then outstanding.
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Section 18.8. Definitions. Unless the context otherwise
requires, the terms hereinafter set forth when used in this Article V
and elsewhere in this indenture shall have the following meanings and
the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
"Affiliate" shall mean any Person (other than a Restricted
Subsidiary) (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Corporation, (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of the Corporation or (iii) 5%
or more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Corporation or a Subsidiary. The term
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or
otherwise.
"Capitalized Lease" shall mean any lease the obligation for
Rentals with respect to which is required to be capitalized on a
consolidated balance sheet of the lessee and its subsidiaries in
accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of the date
of any determination thereof the amount at which the aggregate Rentals
due and to become due under all Capitalized Leases under which such
Person is a lessee would be reflected as a liability on a consolidated
balance sheet of such Person.
"Commission" shall mean the Public Utilities Commission of the
State of California.
"Condemnation" with respect to any property shall have
occurred if all or any portion of such property shall have been
condemned or taken for any public or quasi-public use under any
governmental law, order, or regulation or by right of eminent domain or
sold to a municipality or other public body or agency or any other
entity having the power of eminent domain or the right to purchase or
order the sale of such property (a "Condemning Authority"), or any
third-party designated by any such Condemning Authority, under threat
of condemnation.
"Consolidated Funded Debt" shall mean all Funded Debt of the
Corporation and its Restricted Subsidiaries, determined on a
consolidated basis eliminating intercompany items.
"Consolidated Net Income" for any period shall mean the gross
revenues of the Corporation and its Restricted Subsidiaries for such
period less all expenses and other proper charges (including taxes on
income), determined on a consolidated basis after eliminating earnings
or losses attributable to outstanding Minority Interests, but excluding
in any event:
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(a) any gains or losses on the sale or other disposition of
Investments or fixed or capital assets, and any taxes on such excluded
gains and any tax deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary
accrued prior to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any corporation (other than a
Restricted Subsidiary), substantially all the assets of which have been
acquired in any manner by the Corporation or any Restricted Subsidiary,
realized by such corporation prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Restricted Subsidiary) with which the Corporation or a Restricted
Subsidiary shall have consolidated or which shall have merged into or
with the Corporation or a Restricted Subsidiary prior to the date of
such consolidation or merger;
(f) net earnings of any business entity (other than a
Restricted Subsidiary) in which the Corporation or any Restricted
Subsidiary has an ownership interest unless such net earnings shall
have actually been received by the Corporation or such Restricted
Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any Restricted
Subsidiary which for any reason is unavailable for payment of dividends
to the Corporation or any other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of
the equity in any Subsidiary at the date of acquisition thereof over
the amount invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of
the Corporation or any Restricted Subsidiary;
(k) any reversal of any contingency reserve, except to the
extent that provision for such contingency reserve shall have been made
from income arising during such period; and
(l) any other extraordinary, or nonrecurring gain or loss.
"Consolidated Net Worth" shall mean, as of the date of any
determination thereof the amount of the capital stock accounts (net of
treasury stock, at cost) plus (or minus in the case of a deficit) the
surplus in retained earnings of the Corporation and its Restricted
Subsidiaries as determined on a consolidated basis in accordance with
GAAP.
-14-
"Consolidated Total Assets" shall mean, as the date of any
determination thereof, total assets of the Corporation and its
Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Capitalization" shall mean the sum of (i)
Consolidated Funded Debt, and (ii) Consolidated Net Worth.
"Current Debt" of any Person shall mean as of the date of any
determination thereof (i) all Indebtedness of such Person for borrowed
money other than Funded Debt of such Person and (ii) Guaranties by such
Person of Current Debt of others.
"First Mortgage Bonds" shall mean and include all secured
mortgage bonds issued by the Corporation under and pursuant to the
Mortgage Indenture.
"Funded Debt" of any Person shall mean (i) all Indebtedness of
such Person for borrowed money or which has been incurred in connection
with the acquisition of assets in each case having a final maturity of
one or more than one year from the date of origin thereof (or which is
renewable or extendible at the option of the obligor for a period or
periods more than one year from the date of origin), including all
payments in respect thereof that are required to be made within one
year from the date of any determination of Funded Debt, whether or not
the obligation to make such payments shall constitute a current
liability of the obligor under GAAP, (ii) all Capitalized Rentals of
such Person, and (iii) all Guaranties by such Person of Funded Debt of
others.
"GAAP" shall mean generally accepted accounting principles at
the time in the United States.
"Guaranties" by any Person shall mean all obligations (other
than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing, or
otherwise creating contingent liability with respect to, any
Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (i) to purchase
such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase
or payment of such Indebtedness or obligation, (y) to maintain working
capital or other balance sheet condition or otherwise to advance or
make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to lease property or to purchase Securities or
other property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. Notwithstanding the
foregoing, the Corporation's obligations in respect of long term water
supply contracts shall not be treated as Guaranties under this
Agreement. For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Indebtedness for
-15-
borrowed money shall be deemed to be Indebtedness equal to the
principal amount of such Indebtedness for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or
liability or any dividend shall be deemed to be Indebtedness equal to
the maximum aggregate amount of such obligation, liability or dividend.
"Indebtedness" of any Person shall mean and include all
obligations of such Person which in accordance with GAAP shall be
classified upon a balance sheet of such Person as liabilities of such
Person, and in any event shall include all (i) obligations of such
Person for borrowed money or which has been incurred in connection with
the acquisition of property or assets, (ii) obligations secured by any
Lien upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such
obligations, (iii) obligations created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and
remedies of the seller, lender or lessor under such agreement in the
event of default are limited to repossession or sale of property, (iv)
Capitalized Rentals and (v) Guaranties of obligations of others of the
character referred to in this definition. Notwithstanding the
foregoing, the term "Indebtedness" as it relates to the Corporation
shall not include obligations of the Corporation with respect to
advances for construction from third parties.
"Interest Charges" of any Person for any period shall mean all
interest and all amortization of debt discount and expense on any
particular Indebtedness of such Person for which such calculations are
being made. Computations of Interest Charges on a pro forma basis for
(a) Indebtedness having a variable interest rate, (b) Indebtedness
bearing interest at different fixed rates, (c) Indebtedness with
respect to which interest has not begun to accrue as of the date of any
determination of Interest Charges or (d) Indebtedness with respect to
which interest shall not become payable until a specified date which is
more than one year after the date of any such determination, shall, in
all such cases, be calculated at the rate equal to the greater of (i)
the rate in effect on the date of any determination and (ii) the
average interest rate payable on all Funded Debt of such Person during
the three-month period immediately preceding the date of any
determination.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute or
contract, and including but not limited to the security interest lien
arising from a mortgage, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The
term "Lien" shall include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements) affecting property of such
Person. For the purposes of this Agreement, the Corporation or a
Restricted Subsidiary shall be deemed to be the owner of any property
which it has acquired or holds subject to a conditional sale agreement,
Capitalized Lease or other arrangement, in any such case, pursuant to
which title to the property has been retained by or vested in some
other Person for security purposes and such retention or vesting shall
constitute a Lien.
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"Merger" shall mean the merger of Xxxxxxxxx Water Company into
the Corporation.
"Merger Date" shall mean the date on which the Merger becomes
effective.
"Minority Interests" shall mean any shares of stock of any
class of a Restricted Subsidiary (other than directors' qualifying
shares as required by law) that are not owned by the Corporation and/or
one or more of its Restricted Subsidiaries. Minority Interests shall be
valued by valuing Minority Interests constituting preferred stock at
the voluntary or involuntary liquidating value of such preferred stock,
whichever is greater, and by valuing Minority Interests constituting
common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method of valuing
Minority Interests in preferred stock.
"Mortgage Indenture" shall mean the Corporation's Mortgage of
Chattels and Trust Indenture, dated April 1, 1928, as such Trust
Indenture may be amended, supplemented or modified from time to time.
"Net Income Available for Interest Charges" for any period
shall mean the sum of (i) Consolidated Net Income during such period
plus (to the extent deducted in determining Consolidated Net Income),
(ii) all provisions for any Federal, state or other income taxes made
by the Corporation and its Restricted Subsidiaries in a manner
consistent with GAAP during such period and (iii) Interest Charges of
the Corporation and its Restricted Subsidiaries during such period.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, and a government or agency or
political subdivision thereof.
"Pro Forma Interest Charges" for any period shall mean, as of
the date of any determination thereof, the maximum aggregate amount of
Interest Charges which would have become payable by the Corporation and
its Restricted Subsidiaries in such period determined on a pro forma
basis giving effect as of the beginning of such period to the
incurrence of any Funded Debt thereof (including Capitalized Rentals)
and the concurrent retirement of outstanding Funded Debt or Current
Debt or termination of any Capitalized Leases thereof.
"Rentals" shall mean and include as of the date of any
determination thereof all fixed payments (including as such all
payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by the
Corporation or a Restricted Subsidiary, as lessee or sublessee under a
lease of real or personal property, but shall be exclusive of any
amounts required to be paid by the Corporation or a Restricted
Subsidiary (whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar charges.
Fixed rents under any so-called "percentage leases" shall be computed
solely on the basis of the
-17-
minimum rents, if any, required to be paid by the lessee regardless of
sales volume or gross revenues.
"Restricted Subsidiary" shall mean any Subsidiary (i) which is
organized under the laws of the United States or any State thereof;
(ii) which conducts substantially all of its business and has
substantially all of its assets within the United States; (iii) of
which at least 80% (by number of votes) of the Voting Stock is
beneficially owned, directly or indirectly, by the Corporation and/or
one or more Restricted Subsidiaries; and (iv) which is designated by
the Board of Directors of the Corporation, or any Director or committee
of Directors duly designated by such Board of Directors, to be included
in the definition of Restricted Subsidiary for all purposes of this
Agreement, provided that, at the time of such designation and after
giving effect thereto, no Default or Event of Default shall have
occurred hereunder.
"Security" shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
The term "subsidiary" shall mean as to any particular parent
corporation any corporation of which more than 50% (by number of votes)
of the Voting Stock shall be beneficially owned, directly or
indirectly, by such parent corporation. The term "Subsidiary" shall
mean a subsidiary of the Corporation.
"Unrestricted Subsidiary" shall mean any Subsidiary which is
not a Restricted Subsidiary.
"Voting Stock" shall mean Securities of any class or classes,
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
"Wholly-owned" when used in connection with any Subsidiary
shall mean a Subsidiary of which all of the issued and outstanding
shares of stock (except shares required as directors' qualifying
shares) and all Funded Debt and Current Debt shall be owned by the
Corporation and/or one or more of its Wholly-owned Subsidiaries.
Where the character or amount of any asset or liability or
item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made
for the purposes of this Section 18, the same shall be done in
accordance with GAAP, to the extent applicable, except where such
principles are inconsistent with the requirements of this Section 18."
ARTICLE THREE
AMENDMENTS TO ARTICLES VI, VIII, IX, XV AND XVI
Section 3.01. Amendments to Article VI. (a) Section 1 of Article VI is
hereby restated in its entirety to read as follows:
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"Section 1. Immediately prior to the consummation of the
Merger on the Merger Date, all shares of stock of the following
subsidiaries of the Corporation, excepting such shares of stock as may
be necessary to qualify directors, have been duly assigned and
delivered by the Corporation to the Trustee and are being held by it
and shall continue to be held by it subject in all respects to the lien
and operation of this indenture: (a) Arden Water Company, (2) Antelope
Valley Water Company, (3) Kernville Domestic Water Company, (4)
Lakeland Water Company and (5) Redwood Valley Water Company (such
shares so held by the Trustee being hereafter collectively referred to
as "pledged securities"); provided, however, that if any subsidiary,
the stock of which constitutes pledged securities, is merged into the
Corporation, the stock of such subsidiary shall forthwith be released
from the lien of this indenture. From and after the Merger Date, no
other shares of stock owned by the Corporation shall be subject to
Article VI.
The Trustee shall not be obligated to examine into or pass
upon the validity or genuineness of any of the pledged securities and
the Trustee shall be entitled to assume that any pledged securities
presented for deposit hereunder are genuine and valid and what they
purport to be, and any endorsement and assignments thereof are genuine
and legal."
(b) Section 10 of Article VI is hereby deleted.
Section 3.02. Amendments to Article VIII. Section 1 of Article VIII
containing events of default is hereby amended by deleting the event of default
described in paragraph (g) and adding the following events of default in new
paragraphs (g) and (h):
"(g) Default shall be made in the payment when due (whether by
lapse of time, by declaration, by call for redemption or otherwise) of
the principal of or interest on any Funded Debt or Current Debt (other
than bonds secured hereby) of the Corporation or any Restricted
Subsidiary aggregating in excess of $5,000,000 in principal amount
outstanding and such default shall continue beyond the period of grace,
if any, allowed with respect thereto; or
(h) Default or the happening of any event shall occur under
any indenture (including, without limitation, the Mortgage Indenture),
agreement or other instrument under which any Funded Debt or Current
Debt (other than bonds secured hereby) of the Corporation or any
Restricted Subsidiary aggregating in excess of $5,000,000 in principal
amount outstanding may be issued and such default or event shall
continue for a period of time sufficient to permit the acceleration of
the maturity of any Funded Debt or Current Debt of the Corporation or
any Restricted Subsidiary outstanding thereunder."
Section 3.03. Amendments to Article IX. (a) Section 1 of Article IX is
hereby restated in its entirety to read as follows:
"Section 1. The Corporation may consolidate, merge or sell all
or substantially all of its assets in accordance with the provisions of
Section 18.4 of Article V.
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(b) The first sentence of Section 2 of Article IX is modified by
deleting the phrase:
"all of its property as an entirety, after obtaining the
necessary consents as aforesaid,"
and substituting in lieu thereof the following phrase:
"all or substantially all of its assets, and the requirements
of Section 18.4 of Article V shall have been satisfied,"
Section 3.04. Deletion of Articles XV and XVI. Articles XV and XVI are
hereby deleted in their entirety.
ARTICLE FOUR
MISCELLANEOUS
Section 1. The Corporation covenants and agrees that it will cause this
Thirteenth Supplemental Trust Indenture to be duly and properly filed for record
and recorded in the Office of the County Recorder of Los Angeles County and of
each county in which it has or shall acquire real property, with all convenient
speed, so that due and legal notice of its terms will be given, and that it will
be properly and legally filed and recorded and indexed, and that an appropriate
financing statement, fixture filing and other statements will be filed in such
public offices as may be necessary to establish of record the lien of the
Indenture upon the properties described herein against all persons whomsoever.
Section 2. This Thirteenth Supplemental Trust Indenture shall be
construed in connection with and as part of the Original Indenture, as
heretofore modified, amended and supplemented, and whenever in said Original
Indenture as heretofore modified, amended and supplemented, the words "this
Indenture" or "this indenture" are used, they shall be construed to mean and
include this Thirteenth Supplemental Trust Indenture in addition to all other
supplemental indentures.
-20-
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed by their Presidents or Vice Presidents, respectively, as of the day and
year first above written.
CALIFORNIA WATER SERVICE COMPANY, a
California corporation
By:________________________________
Name___________________________
Title__________________________
CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION
By:________________________________
Name___________________________
Title__________________________
-00-
XXXXX XX XXXXXXXXXX )
) SS.
COUNTY OF LOS ANGELES )
On ______________, 2000, before me, ______________, Notary Public,
personally appeared ________________, proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
-----------------------------------
Signature of Notary
-00-
XXXXX XX XXXXXXXXXX )
) SS.
COUNTY OF LOS ANGELES )
On ______________, 2000, before me, ______________, Notary Public,
personally appeared ________________, proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
-----------------------------------
Signature of Notary
SCHEDULE I
DESCRIPTION OF CURRENT DEBT AND FUNDED DEBT OF THE
CORPORATION AND THE FUNDED DEBT OF ITS SUBSIDIARIES
1. Current Debt of the Company outstanding on October 1, 2000 as follows:
$18,000,000 borrowed under the Company's bank line of credit with Bank of
America.
2. Funded Debt (other than Capitalized Rentals) of the Company outstanding on
October 1, 2000 was as follows:
$116,345,000 outstanding under the Company's various series of First
Mortgage Bonds.
$193,000 due to the City of Los Altos for the purchase of the North Los
Altos Water System.
$20,000,000 Series A Senior Notes due November 1, 2025.
$20,000,000 Series B Senior Notes due November 1, 2028.
3. *Funded Debt of Restricted Subsidiaries outstanding on October 1, 2000 was
as follows:
$4,000,000 Series J First Mortgage Bonds due 2023 of Xxxxxxxxx Water
Company.
$5,000,000 Series K First Mortgage Bonds due 2012 of Xxxxxxxxx Water
Company.
$259,000 DWR Loan to Arden Water Company.
$1,894,000 DWR Loans to Kernville Domestic Water Company.
$925,000 DWR Loans to Xxxxxxxxx Water Company.
________________________
* All Funded Debt of Restricted Subsidiaries is assumed by the Corporation on
the Merger Date.
California Water Service Group
Deferred Compensation Plan
================================================================================
SCHEDULE II
DESCRIPTION OF LIENS EXISTING ON THE MERGER DATE
$116,345,000 of various series of First Mortgage Bonds of the Corporation
*$4,000,000 Series J Bonds due 2023 of Xxxxxxxxx Water Company
*$5,000,000 Series K Bonds due 2012 of Xxxxxxxxx Water Company
_______________________
* Assumed by the Corporation on the Merger Date
--------------------------------------------------------------------------------
Executiion Copy
