AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is made as of March 6, 1997, by
and among CALIFORNIA WATER SERVICE COMPANY, a California corporation (the
"Company"), CWSG MERGER COMPANY, a California corporation ("Merger Co."), and
CALIFORNIA WATER SERVICE GROUP, a California corporation ("Holding Co."), with
reference to the following facts:
A. The Company has authorized capital consisting of (i) 8,000,000 shares of
Common Stock, with no par value ("Company Common Stock"), of which 6,309,570
shares are issued and outstanding; (ii) 380,000 shares of Preferred Stock,
with par value of $25.00 per share ("Company Preferred Stock"), of which
139,000 shares of "Series C" are issued and outstanding.
B. Merger Co. has authorized capital consisting of 1,000 shares of Common
Stock ("Merger Co. Common Stock") and 1,000 shares of Preferred Stock
("Merger Co. Preferred Stock"), of which 100 shares and 100 shares,
respectively, are issued and outstanding and owned beneficially and of record
by Holding Co.
C. Holding Co. has authorized capital consisting of 25,000,000 shares of
Common Stock ("Holding Co. Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by the Company, and 380,000
shares of Preferred Stock ("Holding Co. Preferred Stock"), of which no shares
are issued and outstanding and owned beneficially and of record by the Company.
D. The Boards of Directors of the respective parties hereto deem it advisable
to merge Merger Co. with and into the Company in accordance with the California
General Corporation Law ("California GCL") and this Agreement for the purpose
of establishing Holding Co. as the parent corporation for the Company in a
transaction intended to qualify for tax-free treatment.
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, the parties agree that (i) Merger Co. shall be merged with and into
the Company, (ii) the Company shall be the corporation surviving such merger,
and (iii) the terms and conditions of such merger, the mode of carrying it
into effect, and the manner of converting and exchanging shares of capital
stock shall be as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. At the Effective Time as defined in Section 1.2 below, Merger
Co. shall be merged with and into the Company (such merger shall be referred to
hereinafter as the "Merger"), which shall continue its corporate existence as
the surviving corporation (the Company and Merger Co. being sometimes referred
to herein as the "Constituent Corporations" and the Company, as the surviving
corporation, being sometimes referred to herein as the "Surviving Corporation").
The Merger shall have the effects set forth in Section 1107 of the California
GCL and such other effects, if any, as are prescribed by law.
1.2 Effective Time. The Merger shall become effective at 11:59 p.m. on
December 31, 1997, (the "Effective Time"). Following the satisfaction or
waiver of all conditions set forth herein and subject to the rights of
termination set forth herein, a copy of this Agreement, together with the
requisite officers' certificates, shall be delivered as soon as practicable by
the Company to the office of the Secretary of State of California for filing,
as provided in Section 1103 of the California GCL.
1.3 Appropriate Actions. Prior to and after the Effective Time, Holding Co.,
the Company and Merger Co., respectively, shall take all such actions as may
be necessary or appropriate in order to effectuate the Merger. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full title to all properties, assets, privileges, rights,
immunities and franchises of either of the Constituent Corporations, the
officers and directors of each of the Constituent Corporations as of the
Effective Time shall take all such further action.
ARTICLE 2
TERMS OF CONVERSION AND EXCHANGE OF SHARES
At the Effective Time:
2.1 Company Common Stock. Each share of Company Common Stock issued and
outstanding immediately prior to the Merger shall be automatically changed and
converted into two shares of Holding Co. Common Stock, which shall thereupon be
issued and fully-paid and non-assessable.
2.2 Company Preferred Stock. Each share of the Company Preferred Stock
("Series C") issued and outstanding immediately prior to the Merger shall be
automatically changed and converted into one share of Holding Co. Preferred
Stock ("Series C") which shall thereupon be issued and fully-paid and
non-assessable.
2.3 Merger Co. Shares. The shares of Merger Co. Common Stock and Merger Co.
Preferred Stock issued and outstanding immediately prior to the Merger shall
be automatically changed and converted, respectively, into all of the issued
and outstanding shares of Common Stock and Preferred Stock ("Series C") of
the Surviving Corporation, which shall thereupon be issued and fully-paid
and non-assessable, with the effect that the number of issued and outstanding
shares of Common Stock and Preferred Stock of the Surviving Corporation shall
be the same as the number of issued and outstanding shares of Company Common
Stock and Company Preferred Stock ("Series C"), respectively, immediately
prior to the Effective Time.
2.4 Holding Co. Shares. Each share of Holding Co. Common Stock issued and
outstanding immediately prior to the Merger shall be canceled.
ARTICLE 3
ARTICLES OF INCORPORATION AND BYLAWS
3.1 The Company's Restated Articles. From and after the Effective Time, and
until thereafter amended as provided by law, the Restated Articles of
Incorporation of the Company as in effect immediately prior to the Merger
shall be and continue to be the Restated Articles of Incorporation of the
Surviving Corporation.
3.2 The Company's Bylaws. From and after the Effective Time, and until
thereafter amended as provided by law, the Bylaws of the Company as in effect
immediately prior to the Merger shall be and continue to be the Bylaws of the
Surviving Corporation.
ARTICLE 4
DIRECTORS AND OFFICERS
The persons who are directors and officers of the Company immediately prior to
the Merger shall continue as directors and officers, respectively, of the
Surviving Corporation and shall continue to hold office as provided in the
Bylaws of the Surviving Corporation. If, at or following the Effective Time,
a vacancy shall exist in the Board of Directors or in the position of any
officer of the Surviving Corporation, such vacancy may be filled in the manner
provided in the Bylaws of the Surviving Corporation.
ARTICLE 5
STOCK CERTIFICATES
5.1 Pre-Merger Company Common Stock Certificates and Company Preferred Stock
Certificates. Following the Effective Time, each holder of an outstanding
certificate or certificates theretofore representing shares of Company Common
Stock or Company Preferred Stock, as the case may be, may, but shall not be
required to, surrender the same to Holding Co. for cancellation or transfer,
and thereupon each such holder or transferee will be entitled to receive a
certificate or certificates representing the same number of shares of Holding
Co. Common Stock or Holding Co. Preferred Stock, as the case may be, as the
shares of Company Common Stock or Company Preferred Stock previously
represented by the stock certificate(s) so surrendered.
5.2 Outstanding Certificates. Until surrendered or presented for transfer in
accordance with Section 5.1 above, each outstanding stock certificate which,
prior to the Effective Time, represented Company Common Stock or Company
Preferred Stock, as the case may be, shall be deemed and treated for all
corporate purposes to represent the ownership of the same number of shares of
Holding Co. Common Stock or Holding Co. Preferred Stock, as the case may be,
as though such surrender or transfer and exchange had taken place.
5.3 Company Stock Transfer Books. The stock transfer books for Company
Common Stock and Company Preferred Stock shall be deemed to be closed at the
Effective Time such that no transfer of shares of Company Common Stock and
Company Preferred Stock outstanding prior to the Effective Time shall
thereafter be made on such books.
5.4 Post-Merger Rights of Holders. Following the Effective Time, the holders
of certificates representing Company Common Stock and Company Preferred Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to stock of the Surviving Corporation and their sole rights
shall be with respect to the Holding Co. Common Stock or Holding Co. Preferred
Stock, respectively, into which their shares of Company Common Stock or Company
Preferred Stock shall have been converted in connection with the Merger.
5.5 Holding Co. Shares Issued in connection with the Merger. On or prior to
the Effective Time, Holding Co. shall deliver to First National Bank of Boston
as transfer agent (the "Transfer Agent") two or more certificates representing
a number of shares of Holding Co. Common Stock equal to the difference between
the number of shares of Holding Co. Common Stock outstanding pursuant to
Section 2.1 of this Agreement and the number of shares of Company Common
Stock outstanding immediately prior to the Effective Time. Promptly after
the Effective Time, the Transfer Agent shall deliver to each record holder,
as of the Effective Time, of Holding Co. Common Stock, a certificate or
certificates representing the number of additional shares of Holding Co.
Common Stock, to which such record holder is entitled to pursuant to Section
2.1 of this Agreement. Such new certificates shall bear such restrictive
legends, if any, as are required to assure compliance with all applicable
securities laws and the transfer of the shares represented thereby shall be
restricted accordingly.
ARTICLE 6
CONDITIONS OF THE MERGER
Completion of the Merger is subject to the satisfaction of the following
conditions:
6.1 Shareholder Approval. The principal terms of this Agreement shall have
been approved by the affirmative vote by the holders of a majority of the
shares of the Company Common Stock and the affirmative vote by the holders of
a majority of the shares of Company Preferred Stock.
6.2 Holding Co. Common Stock Listed. The Holding Co. Common Stock to be
issued and to be reserved for issuance pursuant to the Merger shall have been
approved for listing, upon official notice of issuance, by the New York Stock
Exchange.
6.3 CPUC Approval. The California Public Utilities Commission shall have
approved the formation of a holding company structure for the Company pursuant
to an agreement of merger in a form substantially similar to the Agreement.
ARTICLE 7
AMENDMENT AND TERMINATION
7.1 Amendment. Subject to applicable law, the parties to this Agreement, by
mutual consent of their respective boards of directors, may amend, modify or
supplement this Agreement in such manner as may be agreed upon by them in
writing at any time before or after approval of this Agreement by the
pre-Merger shareholders of the Company (as provided in Section 6.1 above).
7.2 Termination. This Agreement may be terminated and the Merger and other
transactions provided for by this Agreement may be abandoned at any time,
whether before or after approval of this Agreement by the pre-Merger
shareholders of the Company, by action of the board of directors of the
Company if such board of directors determines for any reason that the
completion of the transactions provided for herein would for any reason be
inadvisable or not in the best interests of the Company or its shareholders.
ARTICLE 8
MISCELLANEOUS
8.1 Approval of Holding Co. Shares. By its execution and delivery of this
Agreement, the Company, as the sole pre-Merger shareholder of Holding Co.,
consents to, approves and adopts this Agreement and approves the Merger,
subject to approval of this Agreement by the pre-Merger shareholders of the
Company (as provided in Section 6.1 above).
8.2 Approval of Merger Co. Shares. By its execution and delivery of this
Agreement, Holding Co., as the sole pre-Merger shareholder of Merger Co.,
consents to, approves and adopts this Agreement and approves the Merger,
subject to approval of this Agreement by the pre-Merger shareholders of the
Company (as provided in Section 6.1 above).
IN WITNESS WHEREOF, the Company, Holding Co. and Merger Co., pursuant to
approval and authorization duly given by resolutions adopted by their
respective boards of directors, have each caused this Agreement to be
executed by its chairman of the board or its president or one of its vice
presidents and by its secretary or one of its assistant secretaries.
CALIFORNIA WATER SERVICE COMPANY,
a California corporation
By: /s/ Xxxxx X. Xxxxxx
Its: President and Chief Executive Officer
By: /s/ Xxxx X. Xxxxxxx
Its: Corporate Secretary
CWSG MERGER COMPANY,
a California corporation
By: /s/ Xxxxx X. Xxxxxx
Its: President and Chief Executive Officer
By: /s/ Xxxx X. Xxxxxxx
Its: Corporate Secretary
CALIFORNIA WATER SERVICE GROUP,
a California corporation
By: /s/ Xxxxx X. Xxxxxx
Its: President and Chief Executive Officer
By: /s/ Xxxx X. Xxxxxxx
Its: Corporate Secretary
6
