<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 26, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CALIFORNIA WATER SERVICE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CALIFORNIA 94-0362795
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
HAROLD C. ULRICH
VICE PRESIDENT,
CHIEF FINANCIAL OFFICER & TREASURER
CALIFORNIA WATER SERVICE COMPANY
1720 NORTH FIRST STREET 1720 NORTH FIRST STREET
SAN JOSE, CALIFORNIA 95112 SAN JOSE, CALIFORNIA 95112
(408) 451-8200 (408) 451-8200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (NAME, ADDRESS, INCLUDING ZIP CODE, AND
NUMBER, TELEPHONE
INCLUDING AREA CODE, OF REGISTRANT'S NUMBER, INCLUDING AREA CODE, OF AGENT FOR
PRINCIPAL EXECUTIVE OFFICES) SERVICE)
</TABLE>
------------------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
WILLIAM J. NEWELL JONATHAN A. KOFF
THOMAS G. REDDY CHAPMAN AND CUTLER
MCCUTCHEN, DOYLE, BROWN & ENERSEN 111 W. MONROE STREET
2740 SAND HILL ROAD CHICAGO, ILLINOIS 60603
MENLO PARK, CALIFORNIA 94025 (312) 845-3000
(415) 233-4000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box. /
/
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
Common Stock, no par value..... 600,000 shares $35.00 $21,000,000 $7,242
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes 50,000 shares issuable upon exercise of the Underwriters'
over-allotment option.
(2) Estimated solely for purposes of calculating the registration fee and not as
a representation of the actual proposed offering price.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 26, 1994
PROSPECTUS
550,000 SHARES
[COMPANY LOGO]
CALIFORNIA WATER SERVICE COMPANY
COMMON STOCK
------------------
The Company's Common Stock ("Common Shares") is listed on the New York
Stock Exchange under the symbol "CWT." On August 25, 1994, the last reported
sales price of the Common Shares on the New York Stock Exchange was $35.50 per
share.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------
Per Share $ $ $
- -------------------------------------------------------------------------------------------------
Total(3) $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $175,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
50,000 additional Common Shares at the Price to Public, less the
Underwriting Discounts and Commissions, for the purpose of covering
over-allotments, if any. If all such additional shares are purchased by
the Underwriters, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ , and
$ , respectively. See "Underwriting."
------------------
The Common Shares offered by this Prospectus are being offered by the
Underwriters named herein, subject to prior sale, when, as and if accepted by
them and subject to certain conditions. It is expected that certificates for the
Common Shares offered hereby will be made available for delivery on or about
, 1994, at the offices of Smith Barney Inc., 388 Greenwich Street, New
York, New York 10013.
------------------
SMITH BARNEY INC. A.G. EDWARDS & SONS, INC.
, 1994
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON SHARES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
California Water Service Company (the "Company") has filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form S-3 (hereinafter, together with all amendments and exhibits, referred to
as the "Registration Statement") under the Securities Act of 1933 (the "1933
Act") with respect to the Common Shares offered hereby. Certain information
contained in this Prospectus summarizes, is based upon, or refers to,
information and financial statements contained in one or more documents
incorporated by reference in the Registration Statement. Accordingly, the
information contained herein is qualified in its entirety by reference to such
documents and should be read in conjunction therewith. Copies of the
Registration Statement may be inspected without charge at the offices of the
Commission, and copies of all or any portion thereof may be obtained from the
Commission upon payment of the prescribed fee.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the Public Reference Section of the Commission, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at 7 World Trade Center, 13th Floor, New York, New York 10048-1102, and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Common Shares are listed on the New York Stock Exchange ("NYSE"). Reports, proxy
statements and other information concerning the Company can be inspected and
copied at the office of the NYSE at Room 401, 20 Broad Street, New York, New
York.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company filed with the Commission are
incorporated herein by reference (file 0-464): (1) Annual Report on Form 10-K
for the fiscal year ended December 31, 1993; (2) Quarterly Reports on Form 10-Q
for the quarters ended March 31 and June 30, 1994; and (3) all documents filed
by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the termination of
the offering of the Common Shares made by this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which is incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the foregoing documents incorporated by
reference herein, including exhibits specifically incorporated by reference in
such documents but excluding all other exhibits to such documents. Requests
should be made to Harold C. Ulrich, Vice President, Chief Financial Officer and
Treasurer, California Water Service Company, 1720 North First Street, San Jose,
California 95112 (Telephone: (408) 451-8200).
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus and in the documents incorporated herein by
reference. Unless otherwise indicated, the information in this Prospectus
assumes that the Underwriters' over-allotment option will not be exercised.
THE COMPANY
<TABLE>
<S> <C>
Company.................................. California Water Service Company
Business................................. Public utility water company
Service area............................. Service is provided in 20 operating districts located
throughout California from Chico in Northern California to
the Palos Verdes Peninsula in Southern California
Estimated service area population........ 1,500,000
Active customers (June 30, 1994)......... Approximately 364,000
THE OFFERING
Securities offered....................... 550,000 shares of common stock, no par value
Common Shares to be outstanding after the
offering............................... 6,247,034(1)
New York Stock Exchange symbol........... CWT
Common Share price range: January 3,
1994-August 25, 1994................... $33.75 to $41.00
Closing price on August 25, 1994......... $35.50
Indicated annual dividend rate........... $1.98 per share
Use of proceeds.......................... To repay short-term bank borrowings incurred for the
purchase of property and utility plant construction, and for
additional purchases of property and utility plant
construction
</TABLE>
- ---------------
(1) Based upon the number of Common Shares outstanding on August 15, 1994.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED YEAR ENDED DECEMBER 31,
------------------- ----------------------------------
JUNE 30, 1994 1993 1992 1991
------------------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue................................. $ 154,106 $151,716 $139,805 $127,176
Operating expenses................................ 127,057 123,861 116,031 102,855
---------- -------- -------- --------
Net operating income.............................. 27,049 27,855 23,774 24,321
Other income and expenses, net.................... 327 273 169 384
---------- -------- -------- --------
Income before interest expense.................... 27,376 28,128 23,943 24,705
Interest expense.................................. 12,077 12,627 11,414 10,777
---------- -------- -------- --------
Net income...................................... $ 15,299 $ 15,501 $ 12,529 $ 13,928
================== ========= ========= =========
Net income available for common shareholders...... $ 15,146 $ 15,348 $ 12,376 $ 13,775
Earnings per Common Share......................... $ 2.66 $ 2.70 $ 2.18 $ 2.42
Average Common Shares outstanding................. 5,692 5,689 5,689 5,689
Dividends per Common Share........................ $ 1.95 $ 1.92 $ 1.86 $ 1.80
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1994 (UNAUDITED)
-----------------------------------------------
ACTUAL AS ADJUSTED(1)
-------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- -------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Common shareholders' equity.................................. $124,056 48.2% $142,554 51.7%
Preferred stock.............................................. 3,475 1.4 3,475 1.3
First mortgage bonds......................................... 129,608 50.4 129,608 47.0
-------- ------- -------- -------
Total capitalization................................ $257,139 100.0% $275,637 100.0%
========= ====== ========= ======
Short-term borrowings........................................ $ 18,800 --
</TABLE>
- ---------------
(1) Adjusted to reflect the sale of the 550,000 Common Shares offered hereby
and the application of net proceeds therefrom, assuming a public offering
price of $35.50 per share.
3
<PAGE> 5
CALIFORNIA WATER SERVICE COMPANY
LOCATION OF OPERATING DISTRICTS AND APPROXIMATE NUMBER OF ACTIVE CUSTOMERS PER
DISTRICT
(MAP)
<TABLE>
<CAPTION>
APPROXIMATE NO. OF
ACTIVE CUSTOMERS
OPERATING DISTRICTS (JUNE 30, 1994)
- --------------------------- -------------------
<S> <C>
APPROXIMATE NO. OF
OPERATING DISTRICTS ACTIVE CUSTOMERS
(CONTINUED) (CONTINUED)
- --------------------------- -------------------
SAN FRANCISCO BAY AREA
Mid-Peninsula 35,200
South San Francisco 15,300
Bear Gulch 17,100
Los Altos 17,700
Livermore 14,800
SACRAMENTO VALLEY
Chico 20,400
Oroville 3,500
Marysville 3,800
Dixon 2,700
Willows 2,200
SALINAS VALLEY
Salinas 22,800
King City 1,800
SAN JOAQUIN VALLEY
Bakersfield 54,400
Stockton 40,700
Visalia 25,900
Selma 4,600
LOS ANGELES AREA
East Los Angeles 26,400
Hermosa Beach/Redondo Beach 24,700
Palos Verdes 23,400
Westlake 6,600
-------
TOTAL CUSTOMERS 364,000
</TABLE>
4
<PAGE> 6
THE COMPANY
California Water Service Company (the "Company") is the largest
California-based investor-owned public utility water company. The Company owns
and operates 20 water systems serving customers in 38 cities and communities and
adjacent territories throughout California. With approximately 364,000 service
connections as of June 30, 1994, the Company provides water service to a
population estimated at approximately 1,500,000. The Company's rates and
operations are regulated by the California Public Utilities Commission (the
"CPUC") with the rates for each district determined separately. See "Recent
Developments -- Rates and Regulation."
Incorporated in California in 1926, the Company provides public utility
water service from Chico in Northern California to the Palos Verdes Peninsula in
Southern California. The Company's business consists of the production,
purchase, storage, purification, distribution and sale of water for domestic,
industrial, public, and irrigation uses, and for fire protection. The Company
also operates three municipal water systems on a contract basis.
The principal executive offices of the Company are located at 1720 North
First Street, San Jose, California. The Company's mailing address is Post Office
Box 1150, San Jose, California 95108, and its telephone number is (408)
451-8200.
USE OF PROCEEDS AND CONSTRUCTION PROGRAM
The net proceeds from the sale of the Common Shares offered hereby are
estimated to be $18.5 million ($20.2 million if the Underwriters' over-allotment
option is exercised in full), assuming a public offering price of $35.50 per
share and after deducting the estimated underwriting discounts and commissions
and offering expenses. Approximately $18.3 million of such proceeds will be used
to repay the Company's outstanding short-term debt incurred for the purchase of
property and the construction, completion, extension or improvement of the
Company's facilities. On August 15, 1994, the Company had outstanding short-term
borrowings of $18.3 million (out of a $30 million borrowing capacity) with a
weighted average interest cost of 6.43%. The amount of short-term debt
outstanding and the interest cost of that debt change from time to time. The
remaining proceeds will be used for the purchase of property and the
construction, completion, extension or improvement of the Company's facilities
during the remainder of 1994. Pending application of such proceeds, the Company
will invest the proceeds in short-term investments.
The Company's capital expenditures for construction and replacement of
utility plant (excluding developer advances and contributions) for 1991, 1992
and 1993 were $21.5 million, $24.1 million and $21.5 million, respectively.
Estimated capital expenditures for construction and replacement of utility plant
(excluding developer advances and contributions) for 1994 and 1995 are $21.6
million ($12.1 million of which had been incurred as of July 31, 1994) and $21.7
million, respectively. The Company's capital expenditures for 1994 and 1995 are
expected to be funded from the net proceeds from the sale of the Common Shares
offered hereby, internally generated funds and an offering of the Company's
first mortgage bonds. The Company has received CPUC authorization to issue an
additional $20 million in first mortgage bonds before December 31, 1994, and
intends to request that such authorization be extended by the CPUC through
December 31, 1995. The foregoing estimates of capital expenditures may be
revised to accommodate the results of the 1994 rate cases (see "Recent
Developments -- Rates and Regulation"), are reviewed periodically by the Company
and are subject to revision at any time.
5
<PAGE> 7
RECENT DEVELOPMENTS
RECENT FINANCIAL RESULTS
The Company's unaudited results of operations for the three months and the
six months ended June 30, 1994 and June 30, 1993 are summarized below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1994 1993 1994 1993
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating revenue................................. $40,147 $40,503 $70,726 $68,336
Net income........................................ 4,070 4,689 5,465 5,667
Net income available for common shareholders...... 4,032 4,651 5,389 5,591
Earnings per Common Share......................... $ 0.71 $ 0.82 $ 0.95 $ 0.98
</TABLE>
Operating revenue declined and certain operating expenses increased for the
three months ended June 30, 1994, as compared to the three months ended June 30,
1993, causing lower earnings. The second quarter of 1993 was a record second
quarter for the Company, in part because the CPUC authorized the Company to
transfer to revenue water conservation penalties previously collected and to
record revenue lost due to water conservation in 1993. Since this authority
expired in 1993, no similar revenues were recorded in the second quarter of
1994. The loss of this revenue was partially offset by rate relief from the CPUC
and the addition of new customers. Operating revenue for the first six months of
1994 was greater than the first six months of 1993 despite the second quarter
results, because the Company's first quarter 1994 operating revenues were
significantly ahead of last year's first quarter revenues. The increase was
primarily due to rate relief from the CPUC, the addition of new customers and
increased water consumption due to reduced rainfall during the 1993-1994 winter
season. Due to the seasonal nature of the water business, the results for
interim periods are not indicative of the results for a 12-month period.
WATER SUPPLY
The Company's water supply is obtained from wells, surface runoff or
diversion and by purchase from public agencies and other suppliers. During 1993,
the Company obtained approximately 50% of its delivered water from wells, and
50% from various suppliers. On January 1, 1994, water supplies in California's
major reservoirs were double the amount recorded one year earlier when the state
was in its sixth year of drought. The state's reservoir supply was replenished
during 1993 as a result of the abundant runoff which followed the above average
precipitation of the 1992-93 winter season. Although substantial reserves remain
in underground aquifers which serve 16 Company districts, many groundwater
tables have not fully recovered from the effects of the drought. Precipitation
in California for the 1993-1994 winter season averaged about 60% of normal. As a
result, the runoff into reservoirs and the recharge of the underground water
tables were significantly less than the prior winter's and were well below
normal. However, because of the carryover into 1994 of water stored in state
reservoirs and because water tables in the Company's well supply districts
remain at adequate levels, the Company expects to meet demand for the current
year. The Company does not anticipate that mandatory water rationing will be
required in any of its districts through the end of the 1994-1995 winter season,
although the Company will maintain its water conservation efforts through a
variety of customer programs.
RATES AND REGULATION
The CPUC regulates the service and operations of the Company as well as the
rates the Company charges for water service. Rates are set separately for each
of the Company's 20 districts based on the historical and projected expenses and
revenues in each district. As a general matter, each district is treated as a
separate entity for CPUC ratemaking purposes, with the exception that the
expenses of the Company's general office headquarters in San Jose are allocated
among all districts and the Company's cost of capital (i.e., authorized return
on debt and equity) is determined on a Company-wide basis.
6
<PAGE> 8
In 1993, the Company requested general rate increases in three of its
districts (Chico, Oroville and Salinas), which contain approximately 13% of the
Company's customers. In July 1994, the CPUC granted rate increases in these
districts and authorized a 10.2% return on common equity. As a result of these
rate case decisions, the Company's authorized rates for the three districts were
increased by an aggregate of approximately $850,000 or 5.5% on an annualized
basis. However, because of the timing of the decision, the Company expects that
its additional revenues during 1994 from these districts will be only $600,000.
In addition, the rate case decisions authorized additional annual step increases
for the three districts aggregating approximately $650,000 for each of 1995,
1996 and 1997. Finally, the CPUC decisions authorized offset rate increases
(rate increases related to increases in the Company's costs for purchased water,
power and pump tax costs) of approximately $300,000 to amortize the water
production balancing accounts for the Chico and Salinas districts.
In July 1994, the Company filed Notices of Intention to file general rate
cases with the CPUC, initiating the process by which the Company will seek
general rate increases in six districts (Dixon, Los Altos, Marysville, South San
Francisco, Westlake and Willows), which also contain approximately 13% of the
Company's customers. In these general rate cases the Company is requesting a
return on common equity of 12% and is seeking authority to increase rates in the
six districts by an aggregate of approximately $2,900,000 or 12.3% on an
annualized basis beginning in mid-1995, with additional annual step increases
for the six districts aggregating approximately $550,000 for each of 1996, 1997
and 1998. There can be no assurance that the CPUC will grant the requested
return on common equity or any portion of the requested rate increases.
The CPUC issued its final decision in the Order Instituting Investigation
proceeding regarding the risk of water utilities in June 1994. The CPUC
concluded that no fundamental change in ratemaking procedures was necessary at
this time. However, the CPUC authorized utilities to recover interest on water
utility expense balancing accounts and broadened the coverage of existing water
quality memorandum accounts (which track expenditures relating to water quality
for possible rate relief). In addition, the CPUC directed its staff to hold
workshops and formulate recommendations on conservation, water rate design,
performance-based ratemaking, water reclamation, assistance to low-income
families and related legislation.
7
<PAGE> 9
COMMON SHARE PRICE RANGE AND DIVIDENDS
The Common Shares have been listed on the New York Stock Exchange since
April 8, 1994 under the symbol "CWT." Prior to such date, the Common Shares were
traded in the Nasdaq National Market System under the symbol "CWTR."
The following table sets forth, for the periods indicated, the high and low
sale price and the quarterly cash dividend paid per Common Share. The following
prices are from the New York Stock Exchange Composite Tape for periods after
April 8, 1994 and supplied by Nasdaq for all earlier periods.
<TABLE>
<CAPTION>
DIVIDENDS
PRICE RANGE PAID PER
--------------------- COMMON
HIGH LOW SHARE
------ ------ ---------
<S> <C> <C> <C>
1992:
First Quarter......................... $31.00 $26.25 $.465
Second Quarter........................ 33.25 28.00 .465
Third Quarter......................... 34.25 29.50 .465
Fourth Quarter........................ 35.00 29.25 .465
1993:
First Quarter......................... $37.25 $32.50 $ .48
Second Quarter........................ 36.75 32.25 .48
Third Quarter......................... 40.50 33.50 .48
Fourth Quarter........................ 41.25 37.50 .48
1994:
First Quarter......................... $41.00 $34.25 $.495
Second Quarter........................ 36.75 33.75 .495
Third Quarter (through August 25,
1994).............................. 36.00 34.50 .495
</TABLE>
On August 15, 1994, the Company had approximately 4,300 common shareholders
of record. For a recent closing sale price of the Common Shares, as reported on
the New York Stock Exchange Composite Tape, see the cover page of this
Prospectus.
Cash dividends on the Common Shares of the Company have been paid each year
since 1944. The quarterly dividend rate has been increased each year since 1968.
On August 15, 1994, the Company paid a quarterly cash dividend of $.495 per
share to shareholders of record on August 1, 1994. The Board of Directors'
policy has been to pay cash dividends on the Common Shares on a quarterly basis.
Future cash dividends will necessarily be dependent upon the policies of the
Company's Board of Directors and upon the Company's earnings, financial
condition, capital demands and other factors. No assurance can be given that
cash dividends will continue to be paid in a manner consistent with historical
patterns.
The Company has a Dividend Reinvestment Plan pursuant to which shareholders
may automatically reinvest Common Share cash dividends in additional Common
Shares of the Company. No transaction fees are charged in connection with such
purchases. Such additional Common Shares may either be currently outstanding
shares purchased on the open market or be newly issued Common Shares.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue up to 8,000,000 shares of Common Stock,
no par value ("Common Shares"), of which 5,697,034 shares were outstanding on
August 15, 1994, and 380,000 shares, in one or more series, of Preferred Stock,
$25 par value ("Preferred Shares"), of which 139,000 shares of Preferred Stock,
4.4% Series C ("Series C Preferred Shares") were outstanding as of such date.
The following statements are brief summaries of certain provisions relating to
the Common Shares and Preferred Shares contained in the Company's Restated
Articles of Incorporation, as amended (the "Articles") and Bylaws. Such
summaries do
8
<PAGE> 10
not purport to be complete and for a full and complete statement of such
provisions reference is made to the Articles and Bylaws. Such summaries are
qualified in their entirety by such reference.
PREFERRED SHARES
The Board of Directors of the Company is authorized by the Articles to fix
the preferences, limitations, relative rights, qualifications and restrictions
of the Preferred Shares and may establish series of the Preferred Shares and
determine the variations between series. Dividends on Preferred Shares are
payable quarterly at a fixed rate before any dividends can be paid on Common
Shares. The Series C Preferred Share cumulative annual dividend rate is $1.10
per share. Preferred Shares are entitled to eight votes each with the right to
cumulative votes at any election of directors. Series C Preferred Shares are not
convertible to Common Shares. The Series C Preferred Shares are not subject to
any mandatory redemption right and there is no sinking fund for the Series C
Preferred Shares. A premium of $243,250 would be due to the holders of Series C
Preferred Shares upon the voluntary dissolution or liquidation of the Company.
No premium is payable in the event of an involuntary dissolution or liquidation
of the Company. If and when any additional Preferred Shares are issued, the
holders of Preferred Shares may have a preference over holders of the Common
Shares upon the payment of dividends, upon liquidation of the Company, in
respect of voting rights and in the redemption of the capital stock of the
Company.
COMMON SHARES
Holders of the Common Shares are entitled to one vote per share at all
meetings of shareholders. Shareholders are entitled to cumulate their votes for
the election of directors. Dividends that may be declared on the Common Shares
will be paid in an equal amount to the holder of each share. No pre-emptive
rights are conferred upon the holders of the Common Shares and there are no
liquidation or conversion rights. Common Shares have no redemption or sinking
fund provisions and are not subject to further calls or assessments by the
Company. In the event of a liquidation, holders of Common Shares are entitled to
share ratably in all assets remaining after payment of liabilities and the
liquidation preference on any Preferred Stock outstanding. The transfer agent
and registrar for the Common Shares is The First National Bank of Boston.
LIMITATIONS ON DIRECTORS' LIABILITIES AND INDEMNIFICATION
As authorized by California General Corporation Law ("GCL"), the Company's
Articles include provisions limiting the liability of directors of the Company
for monetary damages. The effect of these provisions is to eliminate the rights
of the Company and its shareholders (through shareholders' derivative suits on
behalf of the Company) to recover monetary damages against a director for breach
of the fiduciary duty of care as a director (including breaches resulting from
negligence) except in certain limited situations. This provision does not limit
or eliminate the rights of the Company or any shareholder to seek nonmonetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care. The Company's Articles require that the Company
indemnify its directors and officers to the fullest extent permitted under and
in accordance with the GCL. The Company's Board of Directors has adopted
resolutions specifying the procedures to be followed by an officer or director
who is seeking indemnification. Such procedures provide for, among other things,
the advancement of expenses by the Company to the officer or director upon
request and upon receipt by the Company of an undertaking to repay such advance
in certain circumstances. The Company believes that these provisions and
agreements will assist the Company in attracting and retaining qualified
individuals to serve as directors and officers.
9
<PAGE> 11
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell an aggregate of 550,000 Common Shares
to Smith Barney Inc. and A.G. Edwards & Sons, Inc. (the "Underwriters"), and
each Underwriter has severally agreed to purchase Common Shares from
the Company.
The Company has been advised by the Underwriters that they propose
initially to offer part of the shares to the public at the public offering price
set forth on the cover page hereof and part to certain dealers at a price which
represents a concession not in excess of $ per share below the public
offering price. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other brokers or dealers.
After the initial public offering, the public offering price and such
concessions may be changed. The nature of the Underwriters' obligations is such
that they are committed to purchase all of the Common Shares offered hereby
(other than the over-allotment option shares referred to below) if any such
shares are purchased.
The Company has granted an option to the Underwriters, exercisable within
30 days after the date of the Underwriting Agreement, to purchase up to a
maximum of 50,000 additional Common Shares at the same price per share that the
Company will receive for shares being purchased by the Underwriters as described
above. The Underwriters may purchase such shares only to cover over-allotments
made in connection with the sale of the 550,000 shares referred to above. If the
Underwriters purchase any of the additional Common Shares which are subject to
the over-allotment option, each of the Underwriters will be committed, subject
to certain conditions, to purchase shares.
The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the 1933 Act, or to
contribute to payments the other may be required to make in respect thereof.
The Company and certain of its officers and directors have agreed that, for
a period of 90 days after the date of this Prospectus, they will not, without
the prior written consent of Smith Barney Inc., sell, contract to sell or
otherwise dispose of any Common Shares or securities convertible into or
exercisable or exchangeable for Common Shares, or grant any options or warrants
to purchase Common Shares, other than, in the case of the Company, pursuant to
its dividend reinvestment plan.
LEGAL MATTERS
Certain legal matters with respect to the Company, including the validity
of the Common Shares to be issued in connection with this offering, will be
passed upon for the Company by McCutchen, Doyle, Brown & Enersen, Menlo Park,
California. Certain legal matters will be passed upon for the Underwriters by
Chapman and Cutler, Chicago, Illinois. Chapman and Cutler will rely upon the
opinion of McCutchen, Doyle, Brown & Enersen as to matters of California law.
EXPERTS
The financial statements and schedules of California Water Service Company
as of December 31, 1993 and 1992, and for each of the years in the three-year
period ended December 31, 1993, have been incorporated by reference herein and
in the Registration Statement in reliance upon the report of KPMG Peat Marwick,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick covering the December 31, 1993 financial statements
refers to changes in accounting for income taxes and postretirement benefits
other than pensions.
10
<PAGE> 12
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 13
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
The Company........................... 5
Use of Proceeds and Construction
Program............................. 5
Recent Developments................... 6
Common Share Price Range and Dividends... 8
Description of Capital Stock.......... 8
Underwriting.......................... 10
Legal Matters......................... 10
Experts............................... 10
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
550,000 SHARES
[INSERT LOGO]
CALIFORNIA WATER SERVICE COMPANY
COMMON STOCK
------------
PROSPECTUS
, 1994
------------
SMITH BARNEY INC.
A.G. EDWARDS & SONS, INC.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses in connection with the issuance
and distribution of the securities offered hereby. All the amounts shown are
estimates, except the SEC registration fee, the NASD filing fee, the NYSE
listing fee and the California Public Utilities Commission fee.
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 7,242
NASD filing fee................................................... 2,600
NYSE listing fee.................................................. 2,100
California Public Utilities Commission fee........................ 16,000
Blue Sky fees and expenses........................................ 15,000
Registrar and transfer agent fees................................. 2,500
Printing and distribution......................................... 30,000
Legal fees and expenses........................................... 60,000
Accounting fees and expenses...................................... 25,000
Miscellaneous..................................................... 14,558
--------
Total................................................... $175,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 317 of the California General Corporation Law permits
indemnification of directors, officers and employees of corporations under
certain conditions and subject to certain limitations. Article Ninth of the
Restated Articles of Incorporation, as amended, of the registrant contains
provisions limiting the monetary liability of directors for breaches of the duty
of care. Article Ninth of the Restated Articles of Incorporation, as amended, of
the registrant contains provisions for the indemnification of directors,
officers and employees to the fullest extent permitted under Section 317. The
Company's Board of Directors has also adopted resolutions specifying the
procedures to be followed by an officer or director who is seeking
indemnification. Such procedures provide for, among other things, the
advancement of expenses by the Company to the officer or director upon request
and upon receipt by the Company of an undertaking to repay such advance in
certain circumstances. In addition, the Company maintains officers and directors
liability insurance for an annual aggregate maximum coverage of $20,000,000.
In addition, in the Underwriting Agreement each of the Underwriters has
agreed to indemnify the Company, its directors, its officers who sign this
Registration Statement and any person who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the Exchange Act with
respect to information relating to such Underwriter furnished by such
Underwriter in writing and expressly for use in this Registration Statement, in
the prospectus contained herein, any prepricing prospectus, or any amendment or
supplement thereto.
II-1
<PAGE> 15
ITEM 16. EXHIBITS.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBITS
-------- --------------------------------------------------------------------------
<C> <S>
1 Form of Underwriting Agreement
5 Opinion of McCutchen, Doyle, Brown & Enersen
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of McCutchen, Doyle, Brown & Enersen (included in its opinion
filed as Exhibit 5)
24 Power of Attorney of directors of the Company (See page II-4)
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended (the "1933 Act"), each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(2) For purposes of determining any liability under the 1933 Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the 1933 Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the 1933 Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions of Item 15 above, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Jose, State of California, on August 25, 1994.
CALIFORNIA WATER SERVICE COMPANY
(Registrant)
By: DONALD L. HOUCK
(Donald L. Houck,
Its President and Chief Executive
Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ----------------------------
<C> <S> <C>
DONALD L. HOUCK President and Chief August 17, 1994
(Donald L. Houck) Executive Officer and
Director (Principal
Executive Officer)
HAROLD C. ULRICH Vice President, Chief August 25, 1994
(Harold C. Ulrich) Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer)
C.H. Chairman of the Board August 17, 1994
STUMP and Director
(C.H. Stump)
WILLIAM E. AYER Director August 17, 1994
(William E. Ayer)
ROBERT W. FOY Director August 17, 1994
(Robert W. Foy)
Director August , 1994
(Edward D. Harris, Jr., M.D.)
Director August , 1994
(Robert K. Jaedicke)
Director August , 1994
(L.W. Lane, Jr.)
EDWIN E. VAN BRONKHORST Director August 17, 1994
(Edwin E. Van Bronkhorst)
J. W. WEINHARDT Director August 17, 1994
(J. W. Weinhardt)
</TABLE>
II-3
<PAGE> 17
POWER OF ATTORNEY
Know all men by these presents that the undersigned does hereby make,
constitute and appoint Donald L. Houck and Harold C. Ulrich or either of them as
the true and lawful attorneys-in-fact of the undersigned, with full power of
substitution and revocation, for and in the name, place and stead of the
undersigned, to execute and deliver the Registration Statement of Form S-3, and
any and all amendments thereto, including without limitation pre-effective and
post-effective amendments thereto; such Form S-3 and each such amendment to be
in such form and to contain such terms and provisions as said attorney or
substitute shall deem necessary or desirable; giving and granting unto said
attorney, or to such person as in any case may be appointed pursuant to the
power of substitution herein given, full power and authority to do and perform
any and every act and thing whatsoever requisite, necessary or, in the opinion
of said attorney or substitute, able to be done in such matter as the
undersigned might or could do if personally present, hereby ratifying and
confirming all that said attorney or such substitute shall lawfully do or cause
to be done by virtue hereof.
In witness whereof, the undersigned has duly executed this Power of
Attorney.
<TABLE>
<C> <S> <C>
STUMP C.H. Dated: August 17, 1994
(C.H. Stump)
WILLIAM E. AYER Dated: August 17, 1994
(William E. Ayer)
ROBERT W. FOY Dated: August 17, 1994
(Robert W. Foy)
Dated: August , 1994
(Edward D. Harris, Jr., M.D.)
Dated: August , 1994
(Robert K. Jaedicke)
Dated: August , 1994
(L.W. Lane, Jr.)
EDWIN E. VAN BRONKHORST Dated: August 17, 1994
(Edwin E. Van Bronkhorst)
J. W. WEINHARDT Dated: August 17, 1994
(J. W. Weinhardt)
</TABLE>
II-4
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------- -----------------------------------------------------------------------
<C> <S> <C>
1 Form of Underwriting Agreement.........................................
5 Opinion of McCutchen, Doyle, Brown & Enersen...........................
23.1 Consent of KPMG Peat Marwick LLP.......................................
23.2 Consent of McCutchen, Doyle, Brown & Enersen (included in its opinion
filed as Exhibit 5)....................................................
24 Power of Attorney of directors of the Company (See page II-4)..........
</TABLE>
<PAGE> 1
EXHIBIT 1
550,000 SHARES
CALIFORNIA WATER SERVICE COMPANY
COMMON STOCK
UNDERWRITING AGREEMENT
_______________, 1994
SMITH BARNEY INC.
A.G. EDWARDS & SONS, INC.
As Underwriters
c/o Smith Barney Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
California Water Service Company, a California corporation (the
"Company"), proposes to issue and sell an aggregate of 550,000 shares (the
"Firm Shares") of its common stock, no par value per share (the "Common
Stock"), to you (the "Underwriters"). The Company also proposes to sell to the
Underwriters, upon the terms and conditions set forth in Section 2 hereof, up
to an additional 50,000 shares (the "Additional Shares") of Common Stock. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "Shares".
The Company wishes to confirm as follows its agreement with you in
connection with the several purchases of the Shares by the Underwriters.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 under the Act
(the "registration statement"), including a prospectus subject to completion
relating to the Shares. The term "Registration Statement" as used in this
Agreement means the registration statement (including all financial schedules
and exhibits), as amended at the time it becomes effective, or, if the
registration statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this Agreement.
If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed and must
be declared effective before the offering of the Shares may commence, the term
"Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. The term "Prospectus"
as used in this Agreement means the prospectus in the form included in the
Registration Statement, or, if the prospectus included in the Registration
Statement omits
<PAGE> 2
information in reliance on Rule 430A under the Act and such information is
included in a prospectus filed with the Commission pursuant to Rule 424(b)
under the Act, the term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement as supplemented
by the addition of the Rule 430A information contained in the prospectus filed
with the Commission pursuant to Rule 424(b). The term "Prepricing Prospectus"
as used in this Agreement means the prospectus subject to completion in the
form included in the registration statement at the time of the initial filing
of the registration statement with the Commission, and as such prospectus shall
have been amended from time to time prior to the date of the Prospectus. Any
reference in this Agreement to the registration statement, the Registration
Statement, any Prepricing Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 under the Act, as of the date of the registration statement, the
Registration Statement, such Prepricing Prospectus or the Prospectus, as the
case may be, and any reference to any amendment or supplement to the
registration statement, the Registration Statement, any Prepricing Prospectus
or the Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the registration statement, the Registration Statement, any
Prepricing Prospectus, the Prospectus, or any amendment or supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $________ per
Share (the "purchase price per share"), the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number of
Firm Shares increased as set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters
shall have the right to purchase from the Company, at the purchase price per
share, pursuant to an option (the "over-allotment option") which may be
exercised at any time and from time to time prior to 9:00 P.M., New York City
time, on the 30th day after the date of the Prospectus (or, if such 30th day
shall be a Saturday or Sunday or a holiday, on the next business day thereafter
when the New York Stock Exchange is open for trading), up to an aggregate of
50,000 Additional Shares. Additional Shares may be purchased only for the
purpose of covering over-allotments made in connection with the offering of the
Firm Shares. Upon any exercise of the over-allotment option, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number of
Additional Shares (subject to such adjustments as you may determine in order to
avoid fractional shares) which bears the same proportion to the number of
Additional Shares to be purchased by the Underwriters as the number of Firm
Shares set forth opposite the name of
-2-
<PAGE> 3
such Underwriter in Schedule I hereto (or such number of Firm Shares increased
as set forth in Section 10 hereof) bears to the aggregate number of Firm
Shares.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New
York City time, on ____________, 1994 (the "Closing Date"). The place of
closing for the Firm Shares and the Closing Date may be varied by agreement
between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of Smith Barney Inc. at such time on such date (the "Option Closing Date"),
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than three nor later than ten business days after
the giving of the notice hereinafter referred to, as shall be specified in a
written notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Shares. The place of closing for any Additional Shares and the
Option Closing Date for such Shares may be varied by agreement between you and
the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 1:00 P.M., New York City time, on the third
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by certified or official bank check or checks payable in New
York Clearing House (next day) funds to the order of the Company.
5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto to be declared effective before the
offering of the Shares may commence, the Company will endeavor to cause
the Registration Statement or such post-effective amendment to become
effective as soon as possible and will advise you promptly and, if
requested by
-3-
<PAGE> 4
you, will confirm such advice in writing, when the Registration
Statement or such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if requested
by you, will confirm such advice in writing: (i) of any request by the
Commission for amendment of or a supplement to the Registration
Statement, any Prepricing Prospectus or the Prospectus or for
additional information; (ii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or of the suspension of qualification of the Shares for offering or
sale in any jurisdiction or the initiation of any proceeding for such
purpose; and (iii) within the period of time referred to in the first
sentence in subsection (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net
worth or results of operations, or of the happening of any event, which
makes any statement of a material fact made in the Registration
Statement or the Prospectus (as then amended or supplemented) untrue or
which requires the making of any additions to or changes in the
Registration Statement or the Prospectus (as then amended or
supplemented) in order to state a material fact required by the Act or
the regulations thereunder to be stated therein or necessary in order
to make the statements therein not misleading, or of the necessity to
amend or supplement the Prospectus (as then amended or supplemented) to
comply with the Act or any other law. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort
to obtain the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i)
three signed copies of the registration statement as originally filed
with the Commission and of each amendment thereto, including financial
statements and all exhibits to the registration statement, (ii) such
number of conformed copies of the registration statement as originally
filed and of each amendment thereto, but without exhibits, as you may
reasonably request, (iii) such number of copies of the Incorporated
Documents, without exhibits, as you may reasonably request, and (iv)
three copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the
Prospectus or, prior to the end of the period of time referred to in
the first sentence in subsection (f) below, file any document which,
upon filing becomes an Incorporated Document, of which you shall not
previously have been advised or to which, after you shall have received
a copy of the document proposed to be filed, you shall reasonably
object.
(e) Prior to the execution and delivery of this Agreement,
the Company has delivered to you, without charge, in such quantities as
you have reasonably requested, copies of each form of the Prepricing
Prospectus. The Company consents to the use, in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several
Underwriters and
-4-
<PAGE> 5
by dealers, prior to the date of the Prospectus, of each
Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period
as in the opinion of counsel for the Underwriters a prospectus is
required by the Act to be delivered in connection with sales by any
Underwriter or dealer, the Company will expeditiously deliver to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as you may
reasonably request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several
Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period
of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If
during such period of time any event shall occur that in the judgment
of the Company or in the opinion of counsel for the Underwriters is
required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary to supplement or amend
the Prospectus (or to file under the Exchange Act any document which,
upon filing, becomes an Incorporated Document) in order to comply with
the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the
Commission an appropriate supplement or amendment thereto (or to such
document), and will expeditiously furnish to the Underwriters and
dealers a reasonable number of copies thereof. In the event that the
Company and you agree that the Prospectus should be amended or
supplemented, the Company, if requested by you, will promptly issue a
press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel
for the Underwriters in connection with the registration or
qualification of the Shares for offering and sale by the several
Underwriters and by dealers under the securities or Blue Sky laws of
such jurisdictions as you may designate and will file such consents to
service of process or other documents necessary or appropriate in order
to effect such registration or qualification; provided that in no event
shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction
where it is not now so subject.
(h) The Company will make generally available to its
security holders an earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of
the Registration Statement and ending not later
-5-
<PAGE> 6
than 15 months thereafter, as soon as practicable after the end
of such period, which earnings statement shall satisfy the provisions
of Section 11(a) of the Act.
(i) During the period of five years hereafter, the Company
will furnish to you (i) as soon as available, a copy of each report of
the Company mailed to shareholders or filed with the Commission, and
(ii) from time to time such other information concerning the Company as
you may reasonably request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise
than pursuant to the second paragraph of Section 10 hereof or by notice
given by you terminating this Agreement pursuant to Section 10 or
Section 11 hereof) or if this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part of the
Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse you for all
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale
of the Shares substantially in accordance with the description set
forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectus pursuant to Rule 424(b) under the Act and
will advise you of the time and manner of such filing.
(m) Except for shares issued pursuant to the Company's
Dividend Reinvestment Plan and as provided in this Agreement, the
Company will not sell, contract to sell or otherwise dispose of any
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or grant any options or warrants to
purchase Common Stock, for a period of 90 days after the date of the
Prospectus, without the prior written consent of Smith Barney Inc.
(n) The Company has furnished or will furnish to you
"lock-up" letters, addressed to you and in form and substance
satisfactory to you, signed by each of its current officers and
directors.
(o) Except as stated in this Agreement and in the
Prepricing Prospectus and Prospectus, the Company has not taken, nor
will it take, directly or indirectly, any action designed to or that
might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Shares.
(p) The Company will use its best efforts to have the
shares of Common Stock which it agrees to sell under this Agreement
listed, subject to notice of issuance, on the New York Stock Exchange
on or before the Closing Date.
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<PAGE> 7
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment
or supplement thereto, or filed pursuant to Rule 424 under the Act,
complied when so filed in all material respects with the provisions of
the Act. The Commission has not issued any order preventing or
suspending the use of any Prepricing Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
registration statement in the form in which it became or becomes
effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the prospectus and any
supplement or amendment thereto when filed with the Commission under
Rule 424(b) under the Act, complied or will comply in all material
respects with the provisions of the Act and will not at any such times
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the
registration statement or the prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by or on behalf of any Underwriter through you
expressly for use therein.
(c) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder, any further Incorporated Documents so filed
will, when they are filed, conform in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder; no such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and no such
further document, when it is filed, will contain an untrue statement
of a material fact or will omit to state a material fact required to
be stated therein or necessary in order to make the statements therein
not misleading.
(d) All the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued, are fully paid
and nonassessable and are free of any preemptive or similar rights;
the Shares have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable and free
of any preemptive or similar rights; and the capital stock of the
Company conforms to the description thereof in the registration
statement and the prospectus.
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<PAGE> 8
(e) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of California
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or qualify does not have a
material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the
Company.
(f) The Company does not have, and at the Closing Date will
not have, any subsidiary. The Company does not own, and at the Closing
Date will not own, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other
entity.
(g) There are no legal or governmental proceedings pending
or, to the knowledge of the Company, threatened, against the Company,
or to which the Company, or to which any of its properties is subject,
that are required to be described in the Registration Statement or
the Prospectus but are not described as required, and there are no
agreements, contracts, indentures, leases or other instruments that
are required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
or any Incorporated Document that are not described or filed as
required by the Act or the Exchange Act.
(h) The Company is not in violation of its articles of
incorporation or by-laws, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or of any
decree of any court or governmental agency or body having jurisdiction
over the Company (except for noncompliance with certain environmental
laws, which noncompliance does not and will not have a material
adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company), or in
default in any material respect in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument to which the Company is a party
or by which it or any of its properties are bound.
(i) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated
hereby (i) requires any consent, approval, authorization or other
order of or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official
(except (a) the authorizations and orders of the Public Utilities
Commission of the State of California, which have been obtained, are
in full force and effect and are sufficient to authorize the
transactions contemplated by this Agreement and (b) such as may be
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<PAGE> 9
required for the registration of the Shares under the Act and the
Exchange Act and compliance with the securities or Blue Sky laws
of various jurisdictions, all of which have been or will be effected
in accordance with this Agreement) or conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, the
articles of incorporation or bylaws of the Company or (ii) conflicts
or will conflict with or constitutes or will constitute a breach of,
or a default under, any material agreement, indenture, lease or other
instrument to which the Company is a party or by which it or any of
its properties are bound, or violates or will violate any statute,
law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of its properties, or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to the terms of any
material agreement or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject.
(j) The accountants, KPMG Peat Marwick LLP, who have
certified or shall certify the financial statements included or
incorporated by reference in the Registration Statement and the
Prospectus (or any amendment or supplement thereto) are independent
certified public accountants as required by the Act.
(k) The financial statements, together with related
schedules and notes, included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), present fairly the financial position, results of
operations and cash flows of the Company on the basis stated in the
Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and
statistical information and data included or incorporated by reference
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) are accurately presented and prepared on a basis
consistent with such financial statements and the books and records of
the Company.
(l) The execution and delivery of, and the performance by
the Company of its obligations under, this Agreement have been duly
and validly authorized by the Company, and this Agreement has been
duly executed and delivered by the Company and constitutes the valid
and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as rights to indemnity
and contribution hereunder may be limited by federal or state
securities laws and subject to the qualification that the
enforceability of the Company's obligations hereunder may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights
generally, and by general equitable principles.
(m) Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to
the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any
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<PAGE> 10
amendment or supplement thereto), the Company has not incurred any
liability or obligation, direct or contingent, or entered into any
transaction, in each case other than in the ordinary course of
business, that is material to the Company, and there has not been any
change in the capital stock (other than pursuant to the Company's
employee savings plans and Dividend Reinvestment Plan), or material
increase in the short-term debt or long-term debt, of the Company, or
any material adverse change, or any development involving or which may
reasonably be expected to involve, a prospective material adverse
change, in the condition (financial or other), business, net worth or
results of operations of the Company.
(n) The Company has good and marketable title to all
property (real and personal) described in the Prospectus as being
owned by it, free and clear of all liens, claims, security interests
or other encumbrances except such as are described in the Registration
Statement and the Prospectus or in a document filed as an exhibit to
the Registration Statement and all the property described in the
Prospectus as being held under lease by the Company is held by it
under valid, subsisting and enforceable leases.
(o) The Company has not distributed and, prior to the later
to occur of (i) the Closing Date and (ii) completion of the
distribution of the Shares, will not distribute any offering material
in connection with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectus, the Prospectus or
other materials, if any, permitted by the Act.
(p) The Company has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits")
as are necessary to own its properties and to conduct its business in
the manner described in the Prospectus, subject to such qualifications
as may be set forth in the Prospectus; the Company has fulfilled and
performed all its material obligations with respect to such permits
and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be set forth
in the Prospectus; and, except as described in the Prospectus, none of
such permits contains any restriction that is materially burdensome to
the Company.
(q) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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<PAGE> 11
(r) To the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the
Company or received or retained any funds in violation of any law,
rule or regulation, which payment, receipt or retention of funds is of
a character required to be disclosed in the Prospectus.
(s) The Company has filed all tax returns required to be
filed, which returns are complete and correct, and the Company is not
in default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto.
(t) No holder of any security of the Company has any right
to require registration of shares of Common Stock or any other
security of the Company because of the filing of the registration
statement or consummation of the transactions contemplated by this
Agreement.
(u) The Company owns or possesses all patents, trademarks,
trademark registrations, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Prospectus as being owned by it or necessary
for the conduct of its business, and the Company is not aware of any
claim to the contrary or any challenge by any other person to the
rights of the Company with respect to the foregoing.
(v) A registration statement relating to the Common Stock
has been declared effective by the Commission pursuant to the Exchange
Act and the Common Stock is duly registered thereunder.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or
in the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to such Underwriter furnished in writing to the
Company by or on behalf of any Underwriter through you expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any Prepricing Prospectus shall not inure to
the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter) on account of any such loss, claim, damage, liability or
expense arising from the sale of the Shares by such Underwriter to any person
if a copy of the Prospectus shall not have been delivered or sent to such
person within the time required by the Act and the regulations thereunder, and
the untrue statement or alleged
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<PAGE> 12
untrue statement or omission or alleged omission of a material fact contained
in such Prepricing Prospectus was corrected in the Prospectus, provided that
the Company has delivered the Prospectus to the several Underwriters in
requisite quantity on a timely basis to permit such delivery or sending. The
foregoing indemnity agreement shall be in addition to any liability which the
Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or such controlling
person unless (i) the Company has agreed in writing to pay such fees and
expenses, (ii) the Company has failed to assume the defense and employ counsel,
or (iii) the named parties to any such action, suit or proceeding (including
any impleaded parties) include both such Underwriter or such controlling person
and the Company and such Underwriter or such controlling person shall have been
advised by its counsel that representation of such indemnified party and the
Company by the same counsel would be inappropriate under applicable standards
of professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the Company shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Company shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by Smith Barney Inc., and that all such fees and expenses shall be
reimbursed as they are incurred. The Company shall not be liable for any
settlement of any such action, suit or proceeding effected without its written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the Company
agrees to indemnify and hold harmless any Underwriter, to the extent provided
in the preceding paragraph, and any such controlling person from and against
any loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but
only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought
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<PAGE> 13
against the Company, any of its directors, any such officer, or any such
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to the
Company by paragraph (b) above (except that if the Company shall have assumed
the defense thereof such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at such Underwriter's expense), and
the Company, its directors, any such officer, and any such controlling person
shall have the rights and duties given to the Underwriters by paragraph (b)
above. The foregoing indemnity agreement shall be in addition to any liability
which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other hand from the
offering of the Shares, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined
by a pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which
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<PAGE> 14
the total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to the respective numbers of Firm
Shares set forth opposite their names in Schedule I hereto (or such numbers of
Firm Shares increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the registration statement or a
post-effective amendment thereto to be declared effective before the
offering of the Shares may commence, the registration statement or
such post-effective amendment shall have become effective not later
than 5:30 P.M., New York City time, on the date hereof, or at such
later date and time as shall be consented to in writing by you, and
all filings, if any, required by Rules 424 and 430A under the Act
shall have been timely made; no stop order suspending the
effectiveness of the registration statement shall have been issued and
no proceeding for that purpose shall have been instituted or, to the
knowledge of the Company or any Underwriter, threatened by the
Commission, and any request of the Commission for additional
information (to be included in the registration statement or the
prospectus or otherwise) shall have been complied with to your
satisfaction.
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<PAGE> 15
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition
(financial or other), business, properties, net worth, or results of
operations of the Company not contemplated by the Prospectus, which in
your opinion, would materially, adversely affect the market for the
Shares, or (ii) any event or development relating to or involving the
Company or any officer or director of the Company which makes any
statement made in the Prospectus untrue or which, in the opinion of
the Company and its counsel or the Underwriters and their counsel,
requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to
be stated therein or necessary in order to make the statements therein
not misleading, if amending or supplementing the Prospectus to reflect
such event or development would, in your opinion, adversely affect the
market for the Shares.
(c) You shall have received on the Closing Date, an opinion
of McCutchen, Doyle, Brown & Enersen, counsel for the Company, dated
the Closing Date and addressed to you, as Underwriters, to the effect
that:
(i) The Company is a corporation duly incorporated
and validly existing in good standing under the laws of the
State of California with full corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), and is
duly registered and qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of
its properties or the conduct of its business requires such
registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net
worth or results of operations of the Company;
(ii) The authorized and outstanding capital stock of
the Company is as set forth under the caption "Description of
Capital Stock" in the Prospectus; and the authorized capital
stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock";
(iii) All the shares of capital stock of the Company
outstanding prior to the issuance of the Shares have been duly
authorized and validly issued, and are fully paid and
nonassessable;
(iv) The Shares have been duly authorized and, when
issued and delivered to the Underwriters against payment
therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any
preemptive, or to the best knowledge of such counsel after
reasonable inquiry, similar rights that entitle or will entitle
any person to acquire any Shares upon the issuance thereof by
the Company;
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<PAGE> 16
(v) The form of certificates for the Shares
conforms to the requirements of the California Corporations
Code;
(vi) The Registration Statement and all
post-effective amendments, if any, have become effective under
the Act and, to the best knowledge of such counsel after
reasonable inquiry, no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceedings for that purpose are pending before or contemplated
by the Commission; and any required filing of the Prospectus
pursuant to Rule 424(b) has been made in accordance with Rule
424(b);
(vii) The Company has corporate power and authority
to enter into this Agreement and to issue, sell and deliver the
Shares to the Underwriters as provided herein, and this
Agreement has been duly authorized, executed and delivered by
the Company;
(viii) The Company is not in violation of its articles
of incorporation or bylaws, or to the best knowledge of such
counsel after reasonable inquiry, is not in default in the
performance of any material obligation, agreement or condition
contained in any bond, debenture, note or other evidence of
indebtedness, except as may be disclosed in the Prospectus;
(ix) Neither the offer, sale or delivery of the
Shares, the execution, delivery or performance of this
Agreement, compliance by the Company with the provisions hereof
nor consummation by the Company of the transactions
contemplated hereby conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under,
the articles of incorporation or bylaws of the Company or any
material agreement, indenture, lease or other instrument to
which the Company is a party or by it or any of its properties
is bound that is an exhibit to the Registration Statement or to
any Incorporated Document, or is known to such counsel after
reasonable inquiry, or (to the best knowledge of such counsel
after reasonable inquiry) will result in the creation or
imposition of any lien, charge or encumbrance upon any property
or assets of the Company, nor will any such action result in
any violation of any existing law, regulation, ruling (assuming
compliance with all applicable state securities and Blue Sky
laws), judgment, injunction, order or decree known to such
counsel after reasonable inquiry, applicable to the Company or
any of its properties;
(x) The California Public Utilities Commission has
duly authorized the issuance and sale of the Shares; such
authorization is in full force and effect and is sufficient
pursuant to the California Public Utilities Code for the
issuance and sale of the Shares as contemplated hereby; the
issuance and sale of the Shares is, in all material respects,
in conformity with the terms of such authorization. No other
consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body,
administrative agency or other
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<PAGE> 17
governmental body, agency, or official is required on
the part of the Company (except as have been obtained under the
Act and the Exchange Act or such as may be required under state
securities or Blue Sky laws governing the purchase and
distribution of the Shares) for the valid issuance and sale of
the Shares to the Underwriters as contemplated by this
Agreement;
(xi) The Registration Statement and the Prospectus
and any supplements or amendments thereto (except for the
financial statements and the notes thereto and the schedules
and other financial and statistical data included therein, as
to which such counsel need not express any opinion) comply as
to form in all material respects with the requirements of the
Act; and each of the Incorporated Documents (except for the
financial statements and the notes thereto and the schedules
and other financial and statistical data included therein, as
to which counsel need not express any opinion) complies as to
form in all material respects with the Exchange Act and the
rules and regulations of the Commission thereunder;
(xii) To the best knowledge of such counsel after
reasonable inquiry, (A) other than as described or contemplated
in the Prospectus (or any supplement thereto), there are no
legal or governmental proceedings pending or threatened against
the Company, or to which the Company or any of its property, is
subject, which are required to be described in the Registration
Statement or Prospectus (or any amendment or supplement
thereto) and (B) there are no agreements, contracts,
indentures, leases or other instruments, that are required to
be described in the Registration Statement or the Prospectus
(or any amendment or supplement thereto) or to be filed as an
exhibit to the Registration Statement or any Incorporated
Document that are not described or filed as required, as the
case may be;
(xiii) To the best knowledge of such counsel after
reasonable inquiry, the Company is not in violation of any law,
ordinance, administrative or governmental rule or regulation
applicable to the Company or of any decree of any court or
governmental agency or body having jurisdiction over the
Company, except for any such violation which would have a
material adverse effect on the condition (financial or other),
business, net worth or results of operations of the Company;
(xiv) The statements in the Registration Statement
and Prospectus, insofar as they are descriptions of contracts,
agreements or other legal documents, or refer to statements of
law or legal conclusions, are accurate and present fairly the
information required to be shown; and
(xv) Except as described in the Prospectus, there
are no outstanding options, warrants or other rights calling
for the issuance of, and such counsel does not know of any
commitment, plan or arrangement to issue, any shares of capital
stock of the Company or any security convertible into or
exchangeable or exercisable for capital stock of the Company.
In addition, such counsel shall state that, although such
counsel has not undertaken, except as otherwise indicated in their
opinion, to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in
the Registration Statement, such counsel has
-17-
<PAGE> 18
participated in the preparation of the Registration Statement
and the Prospectus, including review and discussion of the contents
thereof (including review and discussion of the contents of all
Incorporated Documents), and nothing has come to the attention of such
counsel that has caused them to believe that the Registration Statement
(including the Incorporated Documents) at the time the Registration
Statement became effective, or the Prospectus, as of its date and as of
the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that any amendment or supplement
to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to
the financial statements and the notes thereto and the schedules and
other financial and statistical data included in the Registration
Statement or the Prospectus or any Incorporated Document).
In rendering their opinion as aforesaid, counsel may rely upon
an opinion or opinions, each dated the Closing Date, of other counsel
retained by them or the Company as to laws of any jurisdiction other
than the United States, provided that (1) each such local counsel is
acceptable to you (2) such reliance is expressly authorized by each
opinion so relied upon and a copy of each such opinion is delivered to
you and is, in form and substance satisfactory to them and their
counsel, and (3) counsel shall state in their opinion that they believe
that they and the Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date, an opinion
of Helen Mary Kasley, Esq., legal counsel at the Company, dated the
Closing Date and addressed to you, as Underwriters, to the effect that:
(i) The Company has full corporate power and
authority, and all necessary governmental authorizations,
approvals, orders, licenses, certificates, franchises and
permits of and from all governmental regulatory officials and
bodies (except where the failure so to have any such
authorizations, approvals, orders, licenses, certificates,
franchises or permits, individually or in the aggregate, would
not have a material adverse effect on the business, properties,
operations or financial condition of the Company), to own its
properties and to conduct its business as now being conducted,
as described in the Prospectus;
(ii) Other than as described or contemplated in the
Prospectus (or any supplement thereto), there are no legal or
governmental proceedings pending or threatened against the
Company, or to which the Company, or any of its property, is
subject, which if determined adversely to the Company would
have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of
operations of the Company;
-18-
<PAGE> 19
(iii) There are no agreements, contracts, indentures,
leases or other instruments, that are required to be described
in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) or to be filed as an exhibit
to the Registration Statement or any Incorporated Document that
are not described or filed as required, as the case may be;
(iv) To the best knowledge of such counsel after
reasonable inquiry, the Company is not in violation of any law,
ordinance, administrative or governmental rule or regulation
applicable to the Company or of any decree of any court or
governmental agency or body having jurisdiction over the
Company, except for any such violation which would have a
material adverse effect on the condition (financial or other),
business, net worth or results of operations of the Company;
and
(v) Except as described in the Prospectus, there is
no holder of any security of the Company or any other person
who has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them
to underwrite the sale of, the Shares or the right to have any
Common Stock or other securities of the Company included in the
registration statement or the right, as a result of the filing
of the registration statement, to require registration under
the Act of any shares of Common Stock or other securities of
the Company.
In addition, such counsel shall state that, although such counsel has
not undertaken, except as otherwise indicated in her opinion, to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement and the Prospectus
(including the Incorporated Documents), such counsel has reviewed and discussed
the contents thereof and nothing has come to the attention of such counsel that
has caused her to believe that the Registration Statement (including the
Incorporated Documents) at the time the Registration Statement became
effective, or the Prospectus, as of its date and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement of a
material fact or
-19-
<PAGE> 20
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that any amendment
or supplement to the Prospectus, as of its respective date, and as of the
Closing Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included in the Registration Statement or the Prospectus or
any Incorporated Document).
(e) You shall have received on the Closing Date an opinion
of Chapman and Cutler, counsel for the Underwriters, dated the Closing
Date and addressed to you, as Underwriters, with respect to the matters
referred to in clauses (iv), (vi), (vii) and (xi) and the penultimate
paragraph of the foregoing paragraph (c) and such other related matters
as you may request.
(f) You shall have received letters addressed to you, as
Underwriters, and dated the date hereof and the Closing Date from KPMG
Peat Marwick LLP, independent certified public accountants,
substantially in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been taken or, to the knowledge of the Company,
shall be contemplated by the Commission at or prior to the Closing
Date; (ii) there shall not have been any change in the capital stock of
the Company nor any material increase in the short-term or long-term
debt of the Company (other than in the ordinary course of business)
from that set forth or contemplated in the Registration Statement or
the Prospectus (or any amendment or Supplement thereto); (iii) there
shall not have been, since the respective dates as of which information
is given in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), except as may otherwise be stated in
the Registration Statement and Prospectus (or any amendment or
supplement thereto), any material adverse change in the condition
(financial or other), business, prospects, properties, net worth or
results of operations of the Company; (iv) the Company shall not have
any liabilities or obligations, direct or contingent (whether or not in
the ordinary course of business), that are material to the Company,
other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on
and as of the Closing Date as if made on and as of the Closing Date,
and you shall have received a certificate, dated the Closing Date and
signed by the president and chief executive officer and the chief
financial officer and treasurer of the Company (or such other officers
as are acceptable to you), to the effect set forth in this Section 8(g)
and in Section 8(h) hereof.
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<PAGE> 21
(h) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(i) Prior to the Closing Date the Shares shall have been
listed, subject to notice of issuance, on the New York Stock Exchange.
(j) You shall have received, on or prior to the Closing
Date, the "lock-up" letters contemplated by Section 5(n) hereof.
(k) The Company shall have furnished or caused to be
furnished to you such further certificates and documents as you shall
have reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 8, except that, if any
Option Closing Date is other than the Closing Date, the certificates, opinions
and letters referred to in paragraphs (c) through (g) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c), (d) and
(e) shall be revised to reflect the sale of Additional Shares.
9. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission by the Company of the registration statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as
may be reasonably requested for use in connection with the offering and sale of
the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in
connection with the original issuance and sale of the Shares; (iv) the printing
(or reproduction) and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Shares;
(v) the listing of the Shares on the New York Stock Exchange; (vi) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including the reasonable fees, expenses and disbursements of counsel
for the Underwriters relating to the preparation,
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<PAGE> 22
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such registration and qualification); (vii) the filing fees
and the fees and expenses of counsel for the Underwriters in connection with
any filings, if any, required to be made with the National Association of
Securities Dealers, Inc.; (viii) the transportation and other expenses incurred
by or on behalf of Company representatives in connection with presentations to
prospective purchasers of the Shares; and (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such post-
effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the
Company, by notifying you, or by you, as Underwriters, by notifying the
Company.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing
Date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm
Shares set forth opposite its name in Schedule I hereto bears to the aggregate
number of Firm Shares set forth opposite the names of all non-defaulting
Underwriters or in such other proportion as you may specify in accordance with
Section 20 of the Master Agreement Among Underwriters of Smith Barney Inc., to
purchase the Shares which such defaulting Underwriter or Underwriters are
obligated, but fail or refuse, to purchase. If any one or more of the
Underwriters shall fail or refuse to purchase Shares which it or they are
obligated to purchase on the Closing Date and the aggregate number of Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase on
the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more non- defaulting Underwriters or other
party or parties approved by you and the Company are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such case which does
not result in termination of this Agreement, either you or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any
such Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Company,
purchases Shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.
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<PAGE> 23
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking activities in New York
or California shall have been declared by either federal or state authorities,
or (iii) there shall have occurred any outbreak or escalation of hostilities or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is such as to make it, in your reasonable judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside front cover, and the statements in the first and third paragraphs under
the caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of
the Company at 1720 North First Street, San Jose, California, Attention:
Harold C. Ulrich, Vice President, Chief Financial Officer & Treasurer; or (ii)
if to you, care of Smith Barney Inc., 1345 Avenue of the Americas, New York,
New York 10105, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from any Underwriter of any of the Shares
in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
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<PAGE> 24
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
CALIFORNIA WATER SERVICE COMPANY
By _____________________________________
President and Chief Executive Officer
Confirmed as of the date first above
mentioned.
SMITH BARNEY INC.
A.G. EDWARDS & SONS, INC.
As Underwriters
By SMITH BARNEY INC.
By _____________________________
Managing Director
<PAGE> 25
SCHEDULE I
CALIFORNIA WATER SERVICE COMPANY
<TABLE>
<CAPTION>
Underwriter Number of Firm Shares
----------- ---------------------
<S> <C>
Smith Barney Inc.
A.G. Edwards & Sons, Inc.
-------
TOTAL 550,000
=======
</TABLE>
<PAGE> 1
EXHIBIT 5
August 25, 1994
California Water Service Company
1720 North First Street
San Jose, CA 95112
CALIFORNIA WATER SERVICE COMPANY REGISTRATION STATEMENT
Ladies and Gentlemen:
We have acted as counsel for California Water Service Company, a California
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 filed by the Company under the Securities Act of 1933, as amended,
relating to the registration of 600,000 shares of the Company's Common Stock, no
par value (the "Shares") which are expected to be issued in accordance with the
terms of the Prospectus included in the Registration Statement.
We are of the opinion that the Shares have been duly authorized and, when
sold pursuant to the terms described in the Registration Statement and in
conformity with applicable state securities laws, will be duly and validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
McCutchen, Doyle, Brown & Enersen
By THOMAS G. REDDY
A Member of the Firm
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
California Water Service Company:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus. Our report
refers to changes in accounting for income taxes and postretirement benefits
other than pensions.
KPMG Peat Marwick LLP
San Jose, California
August 24, 1994
