Exhibit 4.15
================================================================================
California Water Service Company
Fifth Supplement to Note Agreement
Dated as of November 1, 2002
Re: $20,000,000 5.29% Series G Senior Notes
Due November 1, 2022
================================================================================
68
Fifth Supplement to Note Agreement
Dated as of
November 1, 2002
To the Purchasers named in
Schedule A hereto
Ladies and Gentlemen:
This Fifth Supplement to Note Purchase Agreement (the "Fifth
Supplement") is between California Water Service Company (the "Company") whose
address is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 Purchasers 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 5.29% Series G Senior Notes due November 1,
2022 (the "Series G Notes"). The Series G Notes, together with the Series B
Notes initially issued pursuant to the Note Agreement, the Series C Notes issued
pursuant to the First Supplement to Note Agreement dated as of October 1, 2000,
the Series D Notes issued pursuant to the Second Supplement to Note Agreement
dated as of September 1, 2001, the Series E Notes issued pursuant to the Third
Supplement to Note Agreement dated as of May 1, 2002, the Series F Notes issued
pursuant to the Fourth Supplement to Note Agreement dated as of August 15, 2002
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 G 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
Purchasers 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 G 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.
-69-
3. Delivery of the $20,000,000 in aggregate principal amount of the
Series G Notes will be made at the offices of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ against payment therefor in Federal
Reserve or other funds current and immediately available at the principal office
of Bank of America, ABA No. ▇▇▇▇▇▇▇▇▇, 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 November 19, 2002 or
such later date (not later than November 22, 2002) as shall mutually be agreed
upon by the Company and the Purchasers of the Series G Notes (the "Closing
Date").
4. Prepayment of Notes.
(a) Required Prepayments. On November 1, 2012 and on November 1 of each
year thereafter to and including November 1, 2021, the Company will prepay
$1,818,181.82 principal amount (or such lesser principal amount as shall then be
outstanding) of the Notes at par and without payment of the Make-Whole Amount or
any premium, provided that upon any partial prepayment permitted by Section 4(b)
or 4(c), the principal amount of each required prepayment of the Notes becoming
due under this Section 4(a) on and after the date of such prepayment or purchase
shall be reduced in the same proportion as the aggregate unpaid principal amount
of the Notes is reduced as a result of such prepayment or purchase. No other
prepayments are required to be made with respect to the Series G Notes prior to
the expressed maturity date thereof other than prepayments made in connection
with an acceleration of the Series G 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
-70-
(a) such date, (b) the Section of this Fifth 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 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 Fifth 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" means, with respect
to any Series G Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called Principal
of such Note over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:
"Called Principal" means, with respect to any Series G Note,
the principal of such Note that is to be prepaid pursuant to Section
4(b) or has become or is declared to be immediately due and payable
pursuant to Section 6.3 of the Note Agreement, as the context requires.
-71-
"Discounted Value" means, with respect to the Called Principal
of any Series G Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that on
which interest on the Series G Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Series G Note, 0.50%, plus the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New York City
time) on the fifth Business Day preceding the Settlement Date with
respect to such Called Principal, on the display page of the Bloomberg
Financial Markets Services Screen PX1 or the equivalent screen provided
by Bloomberg Financial Markets Commodities News for actively traded
U.S. Treasury securities having a maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date, or
(ii) if such yields are not reported as of such time or the yields
reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding
the Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury ▇▇▇▇
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the maturity closest to and
greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the maturity closest to and less than the
Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Series G Note, all payments of such Called
Principal and interest thereon that would be due after the Settlement
Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of the Series G Notes, then the amount of
the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be
paid on such Settlement Date pursuant to Section 4(b) hereof or Section
6.3 of the Note Agreement.
-72-
"Settlement Date" means, with respect to the Called Principal
of any Series G Note, the date on which such Called Principal is to be
prepaid pursuant to Section 4(b) hereof or has become or is declared to
be immediately due and payable pursuant to Section 6.3 of the Note
Agreement, as the context requires.
5. Closing Conditions.
(a) Conditions. The obligation of each Purchaser to purchase the Series
G 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 G 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 G 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 Fifth Supplement and
setting forth 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.
(iii) Legal Opinions. Such Purchaser shall have received from
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel for the Company, and ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇,
special counsel for the Purchasers, their opinions dated the Closing
Date, in form and substance satisfactory to such Purchasers, 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 G 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 G 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.
-73-
(v) Related Transactions. The Company shall have consummated
the sale of the entire principal amount of the Series G Notes scheduled
to be sold on the Closing Date pursuant to this Fifth Supplement.
(vi) Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Fifth 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 G 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 Valuation Office of the National Association of
Insurance Commissioners) shall have been obtained for the Series G
Notes.
(b) The obligation of the Company to deliver the Series G Notes
hereunder is subject to the conditions that (i) the Commission shall have
authorized the issuance and sale by the Company of the Series G 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 G Notes scheduled to be sold
on the Closing Date pursuant to this Fifth 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 Fifth 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 G 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
-74-
obligations under this Fifth 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 G 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.
-75-
California Water Service Company
Fifth Supplement
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President, Chief Financial Officer
and Treasurer
-76-
California Water Service Company
Fifth Supplement
Accepted as of November 1, 2002
AMERICAN GENERAL LIFE INSURANCE
COMPANY OF NEW YORK
By: AIG Global Investment Corp.,
Investment Advisor
By/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
-77-
California Water Service Company
Fifth Supplement
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Authorized Signatories
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Authorized Signatories
AMERICAN HERITAGE LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Authorized Signatories
-78-
California Water Service Company
Fifth Supplement
▇▇ ▇▇▇▇▇▇ LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President - Private Investments
GE CAPITAL LIFE ASSURANCE COMPANY OF
NEW YORK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President - Private Investments
-79-
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER SERIES G NOTES TO BE
PURCHASED
ALLSTATE LIFE INSURANCE COMPANY $5,000,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Private Placements Department
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds, identifying the name of the Issuer, the Private
Placement Number preceded by "DPP" and the payment as principal, interest or
premium, in the exact format as follows:
Notices
All notices of scheduled payments and written confirmation of each such payment,
to be addressed:
Allstate Insurance Company
Investment Operations--Private Placements
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Private Placements
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
SCHEDULE A
(to Supplement)
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER SERIES G NOTES TO BE
PURCHASED
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK $3,000,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Private Placements Department
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsmile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds, identifying the name of the Issuer, the Private
Placement Number preceded by "DPP" and the payment as principal, interest or
premium, in the exact format as follows:
Notices
All notices of scheduled payments and written confirmation of each such payment,
to be addressed:
Allstate Insurance Company
Investment Operations--Private Placements
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Private Placements
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
A-2
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER SERIES G NOTES TO BE
PURCHASED
AMERICAN HERITAGE LIFE INSURANCE COMPANY $2,000,000
c/o Allstate Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Private Placements Department
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds, identifying the name of the Issuer, the Private
Placement Number preceded by "DPP" and the payment as principal, interest or
premium, in the format as follows:
Notices
All notices of scheduled payments and written confirmation of each such payment,
to be addressed:
Allstate Insurance Company
Investment Operations--Private Placements
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Private Placements
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
A-3
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER SERIES G NOTES TO BE
PURCHASED
▇▇ ▇▇▇▇▇▇ LIFE INSURANCE COMPANY $5,500,000
c/o GE Asset Management
Account: ▇▇ ▇▇▇▇▇▇ Life Insurance Company
Two Union Square, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Department, Private Placements
Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
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, 5.29% Senior Notes, Series G, due November
15, 2022, PPN 130789 M# 4, principal, premium or interest") to:
Notices
All notices with respect to payments and written confirmation of each such
payment, to be addressed:
GE Asset Management
Account: ▇▇ ▇▇▇▇▇▇ Life Insurance Company
Two Union Square, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Accounting
Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
All other notices and communications (including original note agreement,
conformed copy of the note agreement, amendment requests, financial statements)
to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: ▇▇▇▇▇▇▇ & CO.
Taxpayer I.D. Number: None (Foreign Company)
A-4
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER SERIES G NOTES TO BE
PURCHASED
GE Capital Life Assurance Company of New York $1,500,000
c/o GE Financial Assurance
Account: GE Capital Life Assurance Company of New York
Two Union Square, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Department, Private Placements
Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
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, 5.29% Senior Notes, Series G, due November
15, 2022, PPN 130789 M# 4, principal, premium or interest") to:
Notices
All notices with respect to payments and written confirmation of each such
payment to be addressed:
GE Financial Assurance
Account: GE Capital Life Assurance Company of New York
Two Union Square, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Accounting
Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
All other notices and communications (including original note agreement,
conformed copy of the note agreement, amendment requests, financial statements)
to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: ▇▇▇▇▇▇▇ & CO.
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
A-5
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER SERIES G NOTES TO BE
PURCHASED
AMERICAN GENERAL LIFE INSURANCE COMPANY $3,000,000
OF NEW YORK
c/o AIG Global Investment Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇-▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Overnight Mailing Address:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇-▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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, 5.29% Senior Notes, Series G, due November 1,
2022, PPN 130789 M# 4, principal or interest") to:
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
American General Assurance Company of New York and PA 45
c/o State Street Bank Corporation
Insurance Services
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Duplicate payment notices and all other correspondences to be addressed to
American General Life Insurance Company of New York and PA 45 as first provided
above with a copy to:
AIG Global Investment Corporation
Legal Department - Investment Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
A-6
[FORM OF SERIES G 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
5.29% Series G Senior Note
Due November 1, 2022
PPN 130789 M# 4
No. November 19, 2002
$
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, 2022,
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 5.29% 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
7.29% 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
the Fifth Supplement (the "Fifth 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 Company will make the required prepayments of principal on the
dates and in the amounts specified in Section 4(a) of the Fifth Supplement and
at maturity will pay the principal balance due. 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: ______________________________
E 1-2
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 G Notes. The issuance and sale
of the Series G Notes and the execution and delivery of the Fifth 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
September 30, 2002.
5. Financial Statements and Reports. The Company has furnished each
Purchaser with a copy of its audited financial reports for 1999, 2000 and 2001
hereinafter called the "Company Reports," and a copy of Form 10-K filed by
California Water Service Group ("CWSG") hereinafter called the "CWSG 10-K" with
the Securities and Exchange Commission for 2001, 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 CWSG
10-K. The Company has also furnished each Purchaser with an unaudited quarterly
financial statement for the Company for the fiscal quarter ended September 30,
2002, and Forms 10 Q for CWSG for the fiscal quarter ended September 30, 2002
(the "Quarterly Reports"). The financial statements contained in the foregoing
Company Reports, the CWSG 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.
EXHIBIT 2
(to Supplement)
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 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 of December 31, 2001, 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 10-K 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, 2001, 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 2001 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, ▇▇▇▇▇, storage tanks and reservoirs) and
other material units of property used in its business except as follows:
(a) some of the offices, but not its principal office, are in
leased premises and some ▇▇▇▇▇, well sites and other minor distribution
facilities are rented; and
(b) several ▇▇▇▇▇ are located on property which the Company
does not own but in which it has an easement for the location of such
▇▇▇▇▇;
E 2-2
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 $1,000,000) 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 $1,000,000, the Company has good and merchantable title
to all its other property and assets subject only to the lien of the Mortgage
Indenture and the lien of the ▇▇▇▇▇▇▇▇▇ 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 "▇▇▇▇▇▇▇▇▇ Mortgage Indenture" means the Trust
Indenture dated as of August 1, 1954, as supplemented from time to time, between
the Company, as successor to ▇▇▇▇▇▇▇▇▇ Water Company ("▇▇▇▇▇▇▇▇▇") and U.S.
Bank, as Trustee, which provides a lien on properties owned by ▇▇▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Oroville Stockton
Dixon Redondo Beach Visalia
Hermosa Beach ▇▇▇▇▇▇▇ Willows
King City San Mateo
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
E 2-3
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 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 ▇▇▇▇, Los Angeles, San ▇▇▇▇▇▇▇,
Santa ▇▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino,
Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San ▇▇▇▇▇▇, Rolling
Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and ▇▇▇▇▇▇▇▇.
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, ▇▇▇▇▇▇▇▇▇ Service Corporation was merged into the
Company and subsequently ▇▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into
the Company (collectively, the "merger"). The Company acquired in the ▇▇▇▇▇▇▇▇▇
merger operations in the following cities, counties, townships or localities
that ▇▇▇▇▇▇▇▇▇ previously served:
▇▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County
Carson Kernville Lucerne
Compton Lake ▇▇▇▇▇▇ Mountain Shadows
Duncans ▇▇▇▇▇ Lakeland Onyx
Fremont Valley Lancaster Squirrel Valley
Guerneville ▇▇▇▇▇ Valley Torrance
Harbor City Long Beach ▇▇▇▇▇▇▇ Heights
E 2-4
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, ▇▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Redevelopment Project #2, as to which the franchises expired without renewal in,
respectively, 1994 and 1998. ▇▇▇▇▇▇▇▇▇ continued to provide water services to
Compton and the City of ▇▇▇▇▇▇ Redevelopment 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.
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 Fifth Supplement or the Series G 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
E 2-5
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 G 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 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 G Notes or the execution,
delivery or performance of the Fifth 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 G 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 Fifth Supplement, the consummation of the transactions therein
provided for and compliance with the provisions of the Fifth Supplement and the
Series G Notes by the Company will not violate or result in any breach of the
terms, conditions
E 2-6
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 G Notes under the Fifth Supplement to refinance
existing Indebtedness. None of the transactions contemplated in the Fifth
Supplement (including, without limitation thereof, the use of the proceeds from
the sale of the Series G 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 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 G 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, 2001, the last annual valuation date, the actuarial present value
of all benefits vested under the Plans by more than $10,898,000.
(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.
E 2-7
(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 Fifth
Supplement and compliance by the Company with the provisions thereof and the
Series G 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, 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. Except as disclosed in the "Environmental Matters"
section of Item 1 of the CWSG 10-K, the "Environmental Matters" section of
CWSG's 2001 Annual Report and the "Legal Proceedings" section of Item 3 of the
CWSG 10-K with respect to matters in Chico and Marysville, California, 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 Fifth
Supplement do not, nor does the Fifth Supplement, the Company Information or any
written statement (including without limitation the 2001 Company Report and the
2001 CWSG Report) furnished by the Company to you in connection with the
negotiation of the sale of the Series G 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
E 2-8
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 Fifth Supplement or the Series G Notes.
22. Private Offering. Neither the Company, directly or indirectly, nor
any agent on its behalf has offered or will offer the Series G Notes or any
similar Security or has solicited or will solicit an offer to acquire the Series
G Notes or any similar Security from or has otherwise approached or negotiated
or will approach or negotiate in respect of the Series G Notes or any similar
Security with any Person other than the Purchasers and not more than 5 other
institutional investors, each of whom was offered a portion of the Series G
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 G
Notes or any similar Security or has solicited or will solicit an offer to
acquire the Series G Notes or any similar Security from any Person so as to
cause the issuance and sale of the Series G Notes not to be exempt from the
provisions of Section 5 of the Securities Act of 1933, as amended.
E 2-9
CURRENT DEBT, FUNDED DEBT AND CAPITALIZED LEASES
AS OF SEPTEMBER 30, 2002
1. Current Debt
$11,000,000 borrowed under the Company's bank short-term line
of credit with Bank of America.
2. Funded Debt
$111,865,000 outstanding under the Company's various series of
First Mortgage Bonds with due dates ranging from 2002 to 2023.
$4,000,000 First Mortgage Bonds, Series J due 2023 (formerly
▇▇▇▇▇▇▇▇▇ Water Company)
$5,000,000 First Mortgage Bonds, Series K due 2012 (formerly
▇▇▇▇▇▇▇▇▇ Water Company)
$20,000,000 Series A Senior Notes due November 1, 2025.
$20,000,000 Series B Senior Notes due November 1, 2028.
$20,000,000 Series C Senior Notes due November 1, 2030.
$20,000,000 Series D Senior Notes due November 1, 2031.
$20,000,000 Series E Senior Notes due May 1, 2032.
$20,000,000 Series F Senior Notes due November 1, 2017.
$2,725,000 California Department of Water Resources Loans
maturing 2011 to 2032.
$459,000 obligations due on water system acquisitions.
3. Capitalized Leases
None.
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 ▇▇▇▇ 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. 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇ 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, ARCO Products Company and
West Basin Municipal Water District relating to recycled water.
ANNEX B
(to Exhibit 2)
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel for the Company,
which is called for by Section 5(a)(iii) of the Fifth 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 corporate good standing under the laws of California.
2. The execution and delivery by the Company of the Note
Agreement, the Fifth Supplement and the Notes, and the performance by
the Company of its obligations under the Note Agreement, the Fifth
Supplement and the Notes, are within the Company's corporate powers and
have been duly authorized by all requisite corporate action on the part
of the Company. The Company has duly executed and delivered the Note
Agreement, the Fifth Supplement and the Notes.
3. Each of the Note Agreement, the Fifth Supplement and the
Notes constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms. Based on
Section 1646.5 of the California Civil Code, a California state court
and a Federal court which applies the law of the State of California to
the Note Agreement, the Fifth Supplement and the Notes would recognize
and give effect to the choice of law provisions set forth in the Note
Agreement, the Fifth Supplement and the Notes.
4. The execution and delivery by the Company of the Note
Documents, and compliance by the Company with the provisions thereof
will not, to the best of our knowledge, result in a breach or default
(or give rise to any right of termination, cancellation or
acceleration) under the Articles of Incorporation or By-Laws of the
Company, or the Mortgage Indenture, the Credit Agreement dated as of
July 31, 2001, between the Company and Bank of America as
Administrative Agent, or any agreement or other instrument that is
listed as a material contract in CWSG's Annual Report on Form 10-K for
the year ended December 31, 2001. To the best of our knowledge, no
consent or approval by, or any notification of or filing with, any
court, public body or authority of the State of California is required
to be obtained or effected by the Company in connection with the
execution, delivery and performance by the Company of the Note
Documents or the issuance or sale of the Notes, except for the
authorization of the Commission, which authorization has been duly
obtained and is in full force and effect.
5. Based upon the representations set forth in Section 6 of
the Fifth Supplement, the accuracy of which we have not independently
verified or investigated, the issuance, sale and delivery of the Notes
under the circumstances contemplated by the Fifth
EXHIBIT 3
(to Supplement)
Supplement do not, under existing law, require the registration of the Notes
under the Securities Act of 1933, as amended, or the qualification of the Fifth
Supplement or an indenture under the Trust Indenture Act of 1939, as amended.
6. Based upon the assumption of the accuracy of information
obtained by the Company from sources believed by the Company to be
reliable (a) that the following cities served by the Company were all
incorporated prior to 1911:
Bakersfield Marysville South San ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Oroville Stockton
Dixon Redondo Beach Visalia
Hermosa Beach ▇▇▇▇▇▇▇ Willows
King City San Mateo
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) that water distribution systems were constructed and
service furnished to the inhabitants of each by various predecessors of the
Company prior to 1911; and
(c) that there were no public water works owned or controlled
by the municipality in any of them prior to 1911;
in our opinion,
(i) 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 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;
(ii) 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
(iii) the right probably also extends to territory
annexed into each respective city after such repeal, although this
latter question is not entirely free from doubt in the absence of a
final decision of the courts thereon.
7. ▇▇▇▇▇▇▇▇▇ Services Corporation (along with its
subsidiaries, "▇▇▇▇▇▇▇▇▇") was merged into the Company effective May
25, 2000 and ▇▇▇▇▇▇▇▇▇ Water Company was also merged into the Company
effective October 12, 2000. In the
E 3-2
▇▇▇▇▇▇▇▇▇ mergers, the Company acquired the operations of ▇▇▇▇▇▇▇▇▇,
which to our knowledge included service to the following cities,
counties, townships or localities:
Bodfish Kernville Mountain Shadows
Carson Lake ▇▇▇▇▇▇ Onyx
Compton Lakeland Torrance
Duncans ▇▇▇▇▇ Lancaster Squirrel Valley
Fremont Valley ▇▇▇▇▇ Valley ▇▇▇▇▇▇▇ Heights
Guerneville Long Beach Los Angeles County
Harbor City Lucerne ▇▇▇▇ County
8. We note that the Officers' Certificates state that: (a) to
the Company's knowledge, 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; (b) 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; (c) except as noted below, to the Company's
knowledge ▇▇▇▇▇▇▇▇▇ has no franchises from these cities and has made no
franchise payments to them; and (d) 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.
9. We note that the Officers' Certificates state that: (a) as
to the remaining localities listed in paragraph 7, to the Company's
knowledge, ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Redevelopment
Project #2, as to which the franchises expired without renewal in,
respectively, 1994 and 1998; (b) to the Company's knowledge, ▇▇▇▇▇▇▇▇▇
continued to provide water services to Compton and the City of ▇▇▇▇▇▇
Redevelopment Project #2 subsequent to the expiration of the respective
franchises, and to pay franchise fees; and (c) 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP shall cover such other matters
relating to the sale of the Series G Notes as the Purchasers may reasonably
request and shall provide that ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ in delivering its opinion
under the Note Agreement may rely on the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP as to
matters of California law. 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.
E 3-3
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel to the
Purchasers, called for by Section 5(a)(iii) of the Fifth 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
Fifth Supplement and to issue the Series G Notes.
2. The Note Agreement and the Fifth 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 G 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 G Notes under
the circumstances contemplated by the Fifth Supplement do not, under
existing law, require the registration of the Series G 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 ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ may rely upon the opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP as to matters of California law. The opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
shall also state that the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP is satisfactory in
scope and form to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and that, in their opinion, the Purchasers
are justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ may rely on appropriate certificates of public officials and officers of
the Company and upon
EXHIBIT 4
(to Supplement)
representations of the Company and the Purchasers delivered in connection with
the issuance and sale of the Series G Notes.
E 4-2
