S-3: Registration statement for specified transactions by certain issuers
Published on March 11, 2003
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 11, 2003
REGISTRATION NO. 333-____
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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California Water Service Group
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
77-0448994
(I.R.S. Employer Identification Number)
1720 North First Street
San Jose, CA 95112
408-367-8200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Richard D. Nye
Vice President, Chief Financial Officer
and Treasurer
California Water Service Group
1720 North First Street
San Jose, CA 95112
(408) 367-8200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
Thomas G. Reddy, Esq. Jonathan A. Koff, Esq.
Venrice R. Palmer, Esq. Chapman and Cutler
Bingham McCutchen LLP 111 West Monroe Street
Three Embarcadero Center, 18th Floor Chicago, Illinois 60603-4080
San Francisco, California 94111 (312) 845-3000
(415) 393-2000 Fax (312) 701-2361
Fax (415) 393-2286
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Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this registration statement.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please 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. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [X]
CALCULATION OF REGISTRATION FEE
(1) Registered hereunder is an indeterminate principal amount and number of
securities of California Water Service Group as may from time to time
be issued at indeterminate prices, not to exceed in the aggregate
$120,000,000 (in United States dollars or the equivalent thereof in any
other currency). The securities registered hereunder may be sold
separately, together or as units with other securities registered
hereunder and may include hybrid securities involving a combination of
features of certain of the securities listed above.
(2) The proposed maximum aggregate offering price of the securities being
registered has been estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(o) under the Securities Act of
1933.
(3) Includes associated preferred stock purchase rights which, prior to the
occurrence of certain events, will not be exercisable or evidenced
separately from the common stock.
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.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED _____________, 2003
CALIFORNIA WATER SERVICE GROUP
1720 North First Street
San Jose, CA 95112
408-367-8200
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DEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK
-----------------------
California Water Service Group plans to offer to the public from time
to time:
o our unsecured debt securities consisting of debentures, notes or other
evidences of indebtedness;
o our preferred stock; and
o our common stock.
Our common stock trades on the New York Stock Exchange under the symbol
"CWT."
This prospectus provides you with a general description of the
securities we may offer. We may offer the securities as separate series, in
amounts, prices and on terms determined at the time of the sale. When we offer
securities, we will provide a prospectus supplement or a term sheet describing
the terms of the specific securities offered, including the offering price. You
should read both this prospectus and any prospectus supplement or term sheet,
together with the additional information described under the heading "Where You
Can Find More Information" beginning on page 21 of this prospectus, before you
make your investment decision.
We will sell the securities to underwriters or dealers, through agents,
or directly to investors.
----------------------
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
This prospectus may not be used to sell securities unless accompanied
by a prospectus supplement or term sheet.
--------------------------
The date of this prospectus is ______, 2003
TABLE OF CONTENTS
About This Prospectus 2
Forward-Looking Statements 3
California Water Service Group 4
Ratios of Earnings To Fixed Charges 5
Ratios of Earnings To Fixed Charges and Preferred Stock Dividends 5
Use of Proceeds 6
Description of Debt Securities 6
Description of Preferred Stock 12
Description of Common Stock 15
Rights Agreement 16
Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws
and Delaware Law 18
Plan of Distribution 18
Legal Matters 20
Experts 20
Where You Can Find More Information 21
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC using a "shelf" registration process. Under the shelf process, we may,
from time to time, issue and sell to the public any combination of the
securities described in the registration statement, and in any prospectus
supplement or term sheet, in one or more offerings up to a total dollar amount
of $120,000,000.
2
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement or term sheet, and the
documents we have incorporated by reference may contain forward-looking
statements. The forward-looking statements are intended to qualify for the "safe
harbor" treatment established by the Securities Act of 1933, as amended by the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
based on currently available information, expectations, estimates, assumptions
and projections, and management's judgment about the Company, the water utility
industry and general economic conditions. Words like "expects," "intends,"
"plans," "believes," "estimates," "assumes," "anticipates," "projects,"
"predicts," "forecasts" or variations of these words or similar expressions are
intended to identify forward-looking statements. The forward-looking statements
are not guarantees of future performance. They are based on numerous assumptions
that we believe are reasonable, but they are open to a wide range of
uncertainties and business risks. Consequently, actual results may vary
materially from what is contained in a forward-looking statement. Factors which
may cause actual results to be different than expected or anticipated include:
o governmental and regulatory commissions' decisions;
o changes in regulatory commissions' policies or procedures;
o the timeliness of regulatory commissions' actions concerning rate
relief;
o new legislation;
o electric power interruptions;
o increases in suppliers' prices and the availability of supplies
including water and power;
o fluctuations in interest rates;
o changes in environmental compliance and water quality requirements;
o acquisitions and our ability to successfully integrate acquired
companies;
o the ability to successfully implement business plans;
o changes in customer water use patterns;
o the impact of weather on water sales and operating results;
o access to sufficient capital on satisfactory terms;
o civil disturbances or terrorist threats or acts, or apprehension about
the possible future occurrences of acts of this type;
o restrictive covenants in or changes to the credit ratings on our
current or future debt that could increase our financing costs or
affect our ability to borrow, make payments on debt or pay dividends;
and
o other risks and unforeseen events.
When considering forward-looking statements, you should keep in mind
the cautionary statements in this prospectus, any prospectus supplement or term
sheet and the documents incorporated by reference. We assume no obligation to
provide public updates of forward-looking statements.
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CALIFORNIA WATER SERVICE GROUP
The Company is a holding company whose business is carried on through
its four wholly-owned operating subsidiaries: California Water Service Company,
CWS Utility Services, New Mexico Water Service Company and Washington Water
Service Company. We were formed on December 31, 1997. (In this document, "we,"
"our" or "us" refers to the Company).
California Water Service Company, Washington Water Service Company and
New Mexico Water Service Company are regulated public utilities. Their assets
and operating revenues currently comprise substantially all of our assets and
all of our utility revenues. Their primary business is the production, purchase,
storage, purification, distribution and sale of water for domestic, industrial,
public and irrigation uses, and for fire protection. Their assets consist of
land, buildings, wells, tanks, pipes and equipment necessary for water
operations.
We also provide non-regulated water-related services under agreements
with municipalities and other private companies. The non-regulated services
include full water system operations, and billing and meter-reading services.
Many non-regulated operations are conducted by CWS Utility Services under
contracts with other private companies and municipalities. The regulated
companies also carry on some non-regulated operations. CWS Utility Services
operates water systems, leases communication antenna sites, operates recycled
water systems, provides meter reading and customer services, and conducts real
estate sales of surplus properties. Income and expenses from non-regulated
operations are reported under "Other income and expenses, net" on our income
statement.
California Water Service Company is the largest of the operating
companies, representing 96% of our regulated customers and 98% of our operating
revenue. It began operations in 1926 and supplies water service to 440,500
customers in 75 California communities through 25 separate water systems or
districts. California Water Service Company's 24 regulated systems, which are
subject to regulation by the California Public Utilities Commission, serve
434,400 customers. An additional 6,100 customers receive service through a
long-term lease of the City of Hawthorne's water system, which is not subject to
regulation by the Utilities Commission. The Utilities Commission requires that
water rates for each regulated district be independently determined. Rates for
the City of Hawthorne system are established in accordance with an operating
agreement and are subject to ratification by the City of Hawthorne City Council.
Fees for other operating agreements are based on contracts negotiated among the
parties.
Washington Water Service Company was formed in 1999. Its regulated
water utility operations are subject to the jurisdiction of the Washington
Utilities and Transportation Commission. Washington Water provides domestic
water service to 14,400 customers in the Tacoma and Olympia areas. An additional
3,900 customers are served under operating agreements with private owners.
Operations under these agreements are not subject to regulation by the
Washington Utilities and Transportation Commission.
New Mexico Water Service Company was formed in 2000. It acquired the
assets of Rio Grande Utilities Corporation in July 2002. New Mexico Water
provides service to 2,400 water and 1,700 wastewater customers south of
Albuquerque. It also provides non-regulated meter reading services under
contract to a county in New Mexico.
In August 2002, we signed an agreement to acquire the Kaanapali Water
Corporation, which provides water service to 500 customers including 10 resorts
and eight condominium projects on the Island of Maui in Hawaii. It posted 2001
revenue of $3.3 million and has net plant of approximately $7.3 million. We
expect to complete the acquisition in the first half of 2003.
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Map showing:
State of Washington Added in 1999, with map points for Olympia, Harbor and South
Sound
State of California, with map points for Chico, Willows, Oroville, Marysville,
Redwood Valley, (Sacramento), Dixon, Stockton, (San Francisco), Bayshore, Bear
Gulch, Los Altos, Salinas, King City, Livermore, General Office (San Jose), Kern
River Valley, Selma, Visalia, Westlake, Rancho Dominguez, (Los Angeles), East
Los Angeles, Antelope Valley, Bakersfield
State of New Mexico Added in 2002, with map points for Los Alamos, Santa Fe,
Belen, Alberqueque
State of Hawaii: Operational in 2003, with map points for (Honolulu), Kaanapali
* California Water Service Company
* Washington Water Service Company
* New Mexico Water Service Company
* Hawaii Water Service Company
The purchase of the Kaanapali Water Corporation is subject to the regulatory
approval of the Hawaii Public Utilities Commission. Regulatory approval is
expected in mid-2003 and the transaction will be completed shortly thereafter.
[GRAPHIC OMITTED]
RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our consolidated ratios of earnings to
fixed charges and earnings to fixed charges and preferred stock dividends for
the periods shown. For the purposes of calculating these ratios, earnings
consist of income from continuing operations before income taxes and fixed
charges. Fixed charges consist of interest on indebtedness, amortization of debt
premium, the interest component of rentals and, with respect to the ratio of
earnings to fixed charges and preferred stock dividends, preferred stock
dividend requirements.
Year Ended December 31,
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges 2.41 3.00 3.42 3.24
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends 2.37 2.95 3.36 3.19
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USE OF PROCEEDS
We intend to add the net proceeds from the sale of the securities to
our general funds to be used for general corporate purposes, which may include
investment in subsidiaries, working capital, capital expenditures, repayment of
short-term borrowings, refinancing of existing long-term debt, acquisitions and
other business opportunities.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be unsecured and will rank on parity with all
our other unsecured and unsubordinated indebtedness. We expect to issue debt
securities in one or more series under an indenture between us and U.S. Bank
National Association, as trustee. The form of indenture has been filed as an
exhibit to the registration statement of which this prospectus is a part. The
following description summarizes only the material terms of the debt securities.
The description is not complete and we refer you to the indenture which we
incorporate by reference. The indenture will be subject to and governed by the
Trust Indenture Act of 1939.
General
The indenture does not limit the aggregate principal amount of the debt
securities or of any particular series of debt securities that we may issue
under it. We are not required to issue debt securities of any series at the same
time nor must the debt securities within any series bear interest at the same
rate or mature on the same date.
The debt securities are obligations exclusively of the Company. As a
holding company, we have no material assets other than our ownership of the
common stock of our subsidiaries. Unless we say otherwise in a prospectus
supplement or term sheet, we will rely entirely upon distributions and other
amounts received from our subsidiaries to meet the payment obligations under the
debt securities.
Our subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay amounts due under the debt
securities or otherwise to make any funds available to us. This includes the
payment of dividends or other distributions or the extension of loans or
advances, unless we say otherwise in a prospectus supplement or term sheet.
Public utility commissions that regulate most of our subsidiaries may
effectively restrict the payment of dividends to us by our subsidiaries.
Furthermore, the ability of our subsidiaries to make any payments to us
would be dependent upon the terms of any credit facilities of the subsidiaries
and upon the subsidiaries' earnings, which are subject to various business
risks. In a bankruptcy or insolvency proceeding, claims of holders of the debt
securities would be satisfied solely from our equity interests in our
subsidiaries remaining after the satisfaction of claims of creditors of the
subsidiaries. Accordingly, the debt securities are effectively subordinated to
existing and future liabilities of our subsidiaries to their respective
creditors.
Each time we issue a new series of debt securities, the prospectus
supplement or term sheet relating to that new series will describe the amount,
price and other terms of those debt securities. Terms may include:
o the title of the debt securities;
o any limit on the total principal amount of the debt securities;
o the date or dates on which the principal of the debt securities will be
payable or the method by which the date or dates will be determined;
o the rate or rates (which may be fixed or variable) at which the debt
securities will bear interest, if any, or the method by which the rate
or rates will be determined;
o any listing of the debt securities on any securities exchange or
market;
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o the date or dates from which any interest will accrue;
o the date or dates on which any interest will be payable and the record
dates, if any, for any interest payments and the basis upon which
interest will be calculated if other than that of a 360-day year of
twelve 30-day months;
o if applicable, whether we may extend the interest payment periods and,
if so, the permitted duration of any extensions;
o the place or places where the principal of, premium, if any, and
interest on the debt securities will be payable;
o any obligation we may have to redeem or purchase the debt securities
pursuant to any sinking fund, purchase fund or similar provision, or at
the option of the holder, and the terms and conditions on which the
debt securities may be redeemed or purchased because of that
obligation;
o the terms and conditions, if any, on which we may choose to redeem the
debt securities, including the amount of any premium we must pay;
o the denominations in which we will issue the debt securities, if other
than denominations of $1,000;
o the currency, currencies or currency units in which we will pay the
principal of and any premium and interest on the debt securities, if
other than U.S. dollars, and the manner of determining the equivalent
in U.S. dollars;
o the percentage of the principal amount at which the debt securities
will be issued;
o the portion of the principal amount of the debt securities which will
be payable if the maturity date is accelerated (if the amount will be
different from the principal amount);
o whether we will issue any debt securities in whole or in part in the
form of one or more global securities;
o and if we do issue global securities, the identity of the depositary
for the global securities and any provisions regarding the transfer,
exchange or legending of any global security (if they are different
from those described below under the caption "Global Securities");
o any addition to, change in or deletion from the events of default or
covenants described in this prospectus with respect to the debt
securities and any change in the right of the trustee or the holders to
declare the principal amount of the debt securities due and payable;
o any index or formula used to determine the amount of principal of or
any premium or interest on the debt securities and the manner of
determining any of these amounts;
o any terms relating to the conversion of the debt security into our
common stock, preferred stock or other security; and
o other material terms of the debt securities.
Unless the prospectus supplement or term sheet relating to the issuance
of a series of debt securities indicates otherwise, the debt securities will
have the following characteristics:
We will issue debt securities only in fully registered form, without
coupons and, generally, in denominations of $1,000 or multiples of $1,000. We
will not charge a service fee for the registration, transfer or
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exchange of Debt Securities, but we may require a payment sufficient to cover
any tax or other governmental charge payable in connection with registration,
transfer or exchange.
The principal of, and any premium and interest on, any debt securities
will be payable at the corporate trust office of U.S. Bank National Association
in San Francisco, California. You may exchange debt securities or register
transfers of debt securities at this office. We will pay any interest due on any
debt security to the person in whose name the debt security is registered at the
close of business on the regular record date for interest.
If we fail to pay interest on the relevant due date we will make
payment to anyone who holds the debt security at a future date which the trustee
will choose. The trustee will send notice of the payment to all those who hold
the debt security on a date which the trustee will determine. That date will be
at least 10 days before the payment date.
If the applicable prospectus supplement or term sheet states that the
debt securities are redeemable at our option, we will have the right to redeem
the debt securities only upon written notice mailed between 30 and 60 days prior
to the redemption date.
If we plan to redeem the debt securities, before the redemption occurs,
we are not required to:
o issue, register the transfer of, or exchange any debt security of that
series during the period beginning 15 days before we mail the notice of
redemption and ending on the day we mail the notice; or
o after we mail the notice of redemption, register the transfer of or
exchange any debt security selected for redemption, except, if we are
only redeeming a part of a debt security, we are required to register
the transfer of or exchange the unredeemed portion of the debt security
if the holder requests.
We may offer and sell debt securities at a substantial discount below
their principal amount. If so, we will describe any applicable special federal
income tax and other considerations, if any, in the relevant prospectus
supplement or term sheet. We may also describe certain special federal income
tax or other considerations, if any, applicable to any debt securities that are
denominated in a currency or currency unit other than U.S. dollars in the
relevant prospectus supplement or term sheet. We will also describe the amount
payable on these securities if our obligation to repay the securities is
accelerated for any reason.
Unless a prospectus supplement or term sheet provides differently,
there are no provisions which limit our ability to incur debts or which protect
holders of debt securities if we were to engage in a highly leveraged or similar
transaction or in the event of a change in control of the Company.
Global Securities
If we decide to issue debt securities in the form of one or more global
securities, then we will register the global securities in the name of the
depositary for the global securities or the nominee of the depositary, and the
trustee will deliver the global securities to the depositary for credit to the
accounts of the holders of beneficial interests in the debt securities. The
prospectus supplement or term sheet will describe the specific terms of the
depositary arrangement for debt securities of a series that are issued in global
form. Neither the Company, nor the trustee, any payment agent or the security
registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a global debt security. They will also not be responsible for
maintaining, supervising or reviewing any records relating to these beneficial
ownership interests.
Consolidation, Merger, etc.
We will not consolidate with or merge into any other corporation, or
convey, transfer or lease all or substantially all of our properties and assets
to any individual or organization, unless:
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o the successor is organized and existing under the laws of the United
States of America or any state or the District of Columbia;
o the successor agrees in writing to timely make all required payments of
principal, any premium and interest on the debt securities and to
perform every covenant of the indenture that the Company was required
to perform;
o the successor expressly assumes our obligations under the indenture;
and
o the consolidation, merger, sale or transfer does not cause the
occurrence of a default under the indenture.
When our successor assumes our obligations under the indenture and the
debt securities, and when any other conditions required by the indenture are
satisfied, the successor will succeed to and be substituted for us under the
indenture.
Certain Covenants
Existence. Except as described above under "Consolidation, Merger,
etc." we are required to remain in existence. We must also keep all of our
rights and franchises. However, we will not be required to preserve any right or
franchise if we determine that:
o the preservation of that right or franchise is no longer desirable in
the conduct of our business; or
o the loss of that right or franchise does not materially disadvantage
the holders of the debt securities.
Maintenance of Properties. We are required to keep in good condition,
repair and working order all of the properties of the Company and its
subsidiaries. We must make all necessary improvements and replacements. We are
required to make sure our properties are supplied with all necessary equipment.
We will decide what needs to be done so that our business and that of our
subsidiaries is appropriately conducted. These obligations do not prevent us or
our subsidiaries from selling or disposing of properties for value and in the
ordinary course of business.
Payment of Taxes and Other Claims. We must file and cause our
subsidiaries to file all required tax returns. In addition, we are required to
make sure that the following obligations are paid or discharged:
o all taxes, assessments and governmental charges levied or imposed upon
us or any subsidiary or upon our or any of our subsidiary's income,
profits or property; or
o all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon our property or of any of our
subsidiaries;
However, this requirement does not apply to any tax, assessment, charge
or claim:
o which we are challenging in good faith through appropriate proceedings
and for which we have adequate reserves; or
o where failure to pay would not have a material adverse effect on us,
our ability to perform our obligations under the indenture or the
validity or enforceability of the indenture.
Modification of the Indenture
The indenture provides that we and the trustee may modify or amend its
terms with the consent of the holders of not less than a majority in aggregate
principal amount of the outstanding debt securities of each affected
9
series and a majority in aggregate principal amount of the outstanding debt
securities of all affected series. However, without the consent of each holder
of all of the outstanding debt securities affected by that modification, we may
not:
o change the date stated on the debt security on which any payment of
principal or interest is stated to be due;
o reduce the principal amount or any premium or interest on, any debt
security, including in the case of a discounted debt security, the
amount payable upon acceleration of the maturity thereof;
o change the place of payment or currency of payment of principal of, or
premium, if any, or interest on, any debt security;
o impair the right to bring suit to enforce any payment on or with
respect to any debt security after the stated maturity (or, in the case
of redemption, on or after the redemption date); or
o reduce the percentage in principal amount of outstanding debt
securities of any series which must consent in order to effect any
modification or amendment of the indenture, any waiver of compliance
with some provisions of the indenture or for some defaults may be
waived.
Under limited circumstances and only upon the fulfillment of conditions
stated in the indenture, we and the trustee may make modifications and
amendments of the indenture without the consent of any holders of the debt
securities.
The holders of not less than a majority in aggregate principal amount
of the outstanding debt securities of any series may waive any past default
under the indenture with respect to that series except:
o a default in the payment of principal of, or any premium or interest
on, any debt security of that series; and
o in respect of a covenant or provision under the indenture which cannot
be modified or amended without the consent of the holder of each
outstanding debt security of the affected series.
Events Of Default
An event of default with respect to debt securities of any series
issued under the indenture is any one of the following events (unless
inapplicable to the particular series, specifically modified or deleted as a
term of that series or otherwise modified or deleted in a supplemental
indenture):
o we fail to pay any interest on any debt security of that series when
due, and the failure has continued for 30 days;
o we fail to pay principal of or premium, if any, on any debt security of
that series when due;
o we fail to perform any other covenant in the indenture (other than a
covenant included in the indenture solely for the benefit of a series
of debt securities other than that series), and the failure has
continued for 60 days after we receive written notice as provided in
the indenture;
o events of bankruptcy, insolvency or reorganization; and
o any other event defined as an event of default with respect to debt
securities of a particular series.
If an event of default with respect to any series of debt securities
occurs and is continuing, the trustee or the holders of not less than 25% in
principal amount of the outstanding debt securities of that series may declare
the principal amount (or, if any debt securities of that series are discounted
debt securities, a portion of the principal
10
amount that the terms of the series may specify) of all debt securities of that
series to be immediately due and payable. Under some circumstances, the holders
of a majority in principal amount of the outstanding debt securities of that
series may rescind and annul that declaration and its consequences. The
prospectus supplement or term sheet relating to any series of debt securities
which are discounted debt securities will specify the particular provisions
relating to acceleration of a portion of the principal amount of the discounted
debt securities upon the occurrence of an event of default and the continuation
of the event of default.
Subject to the provisions of the indenture relating to the duties of
the trustee in case an event of default occurs and is continuing, the trustee is
not obligated to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders unless the holders have offered to
the trustee reasonable security or indemnity. Subject to any provisions for
security and indemnification of the trustee and other rights of the trustee, the
holders of a majority in principal amount of the outstanding debt securities of
any series have the right to direct the time, method and place of conducting any
proceedings for any remedy available to the trustee or exercising any trust or
power conferred on the trustee with respect to the debt securities of that
series.
The holder of any debt security will have an absolute and unconditional
right to receive payment of the principal of and any premium and, subject to
limitations specified in the indenture, interest on a debt security on its
stated maturity date (or, in the case of redemption, on the redemption date) and
to sue to enforce any of these payments.
We must furnish to the trustee an annual statement that to the best of
our knowledge we are not in default in the performance and observance of any
terms, provisions or conditions of the indenture or, if there has been a
default, specifying each default and its status.
Satisfaction and Discharge Of The Indenture
We will have satisfied and discharged the indenture and it will cease
to be in effect (except as to our obligations to compensate, reimburse and
indemnify the trustee pursuant to the indenture and some other obligations) when
we deposit or cause to be deposited with the trustee, in trust, an amount
sufficient to pay and discharge the entire indebtedness on the debt securities
not previously delivered to the trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit (or to the stated
maturity date or earlier redemption date for debt securities that have been
called for redemption).
Defeasance Of Debt Securities
Unless otherwise provided in the prospectus supplement or term sheet
for a series of debt securities, we may cause the Company (subject to the terms
of the indenture) to be discharged from any and all obligations with respect to
any debt securities or series of debt securities (except for certain obligations
to register the transfer or exchange of debt securities, to replace debt
securities if stolen, lost or mutilated, to maintain paying agencies and to hold
money for payment in trust) on and after the date the conditions set forth in
the indenture are satisfied. These conditions include the deposit with the
trustee, in trust for this purpose, of money and/or U.S. government obligations,
which through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide money in an amount sufficient to pay
the principal of and any premium and interest on the debt securities on the
stated maturity date of these payments or upon redemption, as the case may be,
in accordance with the terms of the indenture and the debt securities.
The Company must deliver to the trustee an opinion of counsel that
either the proposed defeasance qualifies as a reorganization under federal tax
law and the debt securities defeased qualify as securities for the purposes of
Section 354 of the Internal Revenue Code, as amended, or the defeasance will not
result in income tax liability to the trustee or the holders of the debt
securities defeased as a result of a deemed exchange under Treasury Regulations
Section 1.1001-3 or any successor regulation.
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The Trustee
The Company has appointed U.S. Bank National Association, a national
banking association organized under the laws of the United States, to serve as
trustee. The Trustee may be replaced by the Company or a majority of the holders
of the debt securities for certain reasons provided in the indenture. The
trustee is to carry out those duties assignable to it under the indenture. The
trustee assumes no responsibility for the nature, contents, accuracy or
completeness of the information set forth in this prospectus or any relevant
prospectus supplement or for the recitals contained in the indenture or the debt
securities issued thereunder, or for the validity, sufficiency, or legal effect
of any of these documents.
Furthermore, the trustee has no oversight responsibility and is not
accountable for our use or application of any of the debt securities the trustee
authenticates or delivers, or for our use or application of the proceeds of the
debt securities. The trustee has not evaluated the risks, benefits, or propriety
of any investment in the debt securities.
The trustee currently provides trustee services to our subsidiaries in
the ordinary course of business under other indentures. The trustee does not
provide commercial banking services to us or our subsidiaries.
Governing Law
The indenture and the debt securities will be governed by and construed
in accordance with the laws of the State of California.
DESCRIPTION OF PREFERRED STOCK
The following is a summary of the terms of the shares of preferred
stock. This summary does not purport to be complete and is subject to and
qualified in its entirety by reference to our charter and by-laws. You should
read these documents carefully to fully understand the terms of the shares of
preferred stock.
Shares Authorized and Shares Outstanding
As of the date of this prospectus, we had 380,000 shares of authorized
preferred stock, of which 139,000 shares designated as 4.4% Series C Preferred
Stock, $25 par value, were issued and outstanding. The remaining 241,000 shares
of our preferred stock are not issued and outstanding as of the date of this
prospectus. However, certain shares have been designated for possible issuance
as Series D as explained below (see "Series D Participating Preferred Stock").
Under Delaware law, we may issue the undesignated shares of preferred
stock from time to time in up to eight series without stockholder approval.
Subject to limitations prescribed by Delaware law and our charter and by-laws,
our board of directors can determine the number of shares constituting each
series of preferred stock and the designation, preferences, voting powers,
qualifications, and special or relative rights or privileges of that series.
These may include provisions as may be desired concerning voting, redemption,
dividends, dissolution, or the distribution of assets, conversion or exchange,
and other subjects or matters as may be fixed by resolution of the board or an
authorized committee of the board. The preferred stock that may be offered by
this prospectus will, when issued, be fully paid and nonassessable and will not
have, or be subject to, any preemptive or similar rights.
If we offer a specific series of preferred stock under this prospectus,
we will describe the terms of the preferred stock in the prospectus supplement
or term sheet for that offering and will file a copy of the document
establishing the terms of the preferred stock with the SEC. The description will
include:
o the title, series designation and stated value;
o the number of shares offered, the liquidation preference per share and
the purchase price;
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o the dividend rate(s), period(s) and/or payment date(s), or method(s) of
calculation for dividends;
o whether dividends will be cumulative, partially cumulative or
non-cumulative and, if cumulative or partially cumulative, the date
from which the dividends will accumulate;
o the procedures for any auction or remarketing, if any;
o the provisions for a sinking fund, if any;
o the provisions for redemption, if applicable;
o any listing of the preferred stock on any securities exchange or
market;
o whether the preferred stock will be convertible into any series of our
common stock, and, if applicable, the conversion price (or how it will
be calculated);
o voting rights, if any, of the preferred stock;
o whether interests in the preferred stock will be represented by
depositary shares;
o a discussion of any material and/or special U.S. federal income tax
considerations applicable to the preferred stock;
o the relative ranking and preferences of the preferred stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of our affairs;
o any limitations on issuance of any class or series of preferred stock
ranking senior to or on parity with the series of preferred stock as to
dividend rights and rights upon our liquidation, dissolution or winding
up;
o any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock; and
o any transfer agent for the preferred stock.
Unless we specify otherwise in the applicable prospectus supplement or
term sheet, any future issuance of preferred stock, with respect to dividend
rights and rights upon our liquidation, dissolution or winding up, will rank as
follows:
o senior to all classes or series of our common stock, and to all equity
securities issued by us the terms of which specifically provide that
they rank junior to the preferred stock with respect to those rights;
and
o on a parity with all equity securities we issue that do not rank senior
or junior to the preferred stock with respect to those rights.
As used for these purposes, the term "equity securities" does not
include convertible debt securities.
Global Securities
If we decide to issue preferred stock in the form of one or more global
securities, then we will register the global securities in the name of the
depositary for the global securities or the nominee of the depositary, and the
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global securities will be delivered by the trustee to the depositary for credit
to the accounts of the holders of beneficial interests in the global preferred
stock. The prospectus supplement or term sheet will describe the specific terms
of the depositary arrangement for preferred stock of a series that is issued in
global form. The Company, the trustee, any payment agent and the security
registrar will have no responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
global preferred stock or for maintaining, supervising or reviewing any records
relating to these beneficial ownership interests.
Series C Preferred Stock
Dividends on the outstanding Series C Preferred Stock are payable
quarterly before any dividends can be paid on common stock. Each share is
entitled to 16 votes and is voted along with the common shares, with the right
to cumulate votes at any election of directors (see "Description of Common
Stock" below). At our option, these shares may be wholly or partly redeemed at a
redemption price of $26.75 per share together with accrued dividends. Upon any
voluntary dissolution or liquidation of the Company, holders of these shares
will be entitled to receive a liquidation amount of $26.75 per share together
with accrued dividends. Upon any involuntary dissolution or liquidation of the
Company the holders of the Series C Preferred Stock will be entitled to receive
$25.00 per share together with accrued dividends. After these payments to the
holders of Series C Preferred Stock and after any payments to holders of any
other series of preferred stock which we may issue in the future, we will
distribute our remaining net assets to holders of the common shares. The number
of shares of the Series C Preferred Stock may be increased or decreased by the
board.
Series D Participating Preferred Stock
In January 1998, the Company's board adopted a resolution designating
221,000 shares of preferred stock as Series D Participating Preferred Stock. The
number of shares may be increased or decreased by the board prior to the
issuance of any shares of this series. The description of the Series D Preferred
Stock is qualified in its entirety by reference to the terms of these shares
which are on file with the SEC and incorporated by reference into the
registration statement of which this prospectus is a part.
No Series D shares have been issued. These shares are related to a
Stockholder Rights Plan and would be issued if the rights were triggered. If
triggered, each right would be converted into the right to purchase one
one-hundredth of a share of the Series D Preferred Stock. Until the rights are
triggered each common share outstanding on and after January 28, 1998 includes
one right, which is evidenced solely by the common stock certificate. For a
description of the rights and the rights agreement, see "Rights Agreement"
below.
Subject to the rights and the holders of any shares of any series of
preferred stock (or any similar stock) ranking prior and superior to the Series
D Preferred Stock with respect to dividends, the holders of shares of Series D
Preferred Stock, in preference to the holders of common stock and of any other
junior stock, will be entitled to receive, as and when declared by the board,
dividends payable in cash on the same date as dividends on the Company's Series
C Preferred Stock. Each share of Series D Preferred Stock will receive dividends
(subject to certain adjustments) equal to 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in the Company's common stock, declared on the common
stock. We will be required to pay any of these dividends that are accrued and
unpaid, without interest, before we may pay any dividends on common shares.
If we declare or pay any dividend on common stock payable in common
stock, or split, combine or consolidate outstanding common stock (by means other
than by payment of a dividend in common stock) into a greater or lesser number
of shares, then the amount to which Series D Preferred stockholders were
entitled immediately prior to that event will be adjusted. The adjustment would
be determined by multiplying that amount by a fraction, of which the numerator
is the number of common shares outstanding after the event and the denominator
is the number of common shares outstanding prior to the event.
We will then declare a dividend or distribution on the Series D
Preferred Stock immediately after we declare the dividend or distribution on the
common stock (other than a dividend payable in common stock). A similar
adjustment in the voting power of each share of Series D Preferred Stock will be
made, which normally carry
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100 votes per share on all matters submitted to a vote of stockholders, voting
along with the common stock unless otherwise provided in our charter or by law.
If the Company is liquidated, dissolved or wound up, no distribution
shall be made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series D
Preferred Stock until the holders of shares of Series D Preferred Stock have
received a minimum of $100.00 per share, plus all accrued and unpaid dividends
and distributions on the Series D Preferred Stock. In any event, the holders of
Series D Preferred Stock will be entitled to receive an amount per share
(subject to adjustment as discussed below) equal to 100 times the amount to be
distributed per share to holders of common stock. Distributions to the holders
of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series D Preferred Stock will be made on a
pro rata basis with the Series D Preferred Stock.
If we declare or pay any dividend on the common stock payable in common
stock, subdivide, combine or consolidate common stock (by reclassification or
otherwise than by payment of a dividend in common stock) into a greater or
lesser number of shares, then the aggregate amount to which holders of shares of
Series D Preferred Stock were entitled immediately prior to any of those events
upon liquidation, dissolution or winding up will be adjusted so that the ratio
of liquidation preference due per share of Series D Preferred Stock will be the
same both before and after the event and that these payments will be made prior
to any payments to securities which rank junior to the Series D Preferred Stock.
If we enter into any consolidation, merger, combination or other
transaction in which our common stock is exchanged for or changed into other
stock or securities, cash and/or any other property, each share of Series D
Preferred Stock will have a right to receive 100 times the aggregate
consideration to which each common share is entitled.
Adjustments will be made to the consideration which the Series D
Preferred Stock is entitled to receive in the event we declare or pay any
dividend on the common stock payable in our common stock, or subdivide, combine
or consolidate our common stock (by reclassification or otherwise than by
payment of a dividend in our common stock into a greater or lesser number) so as
to prevent dilution.
Some or all of the Series D Preferred Stock may be redeemed at our
option on any dividend payment date at a redemption price per share equal to 100
times the fair market value of a common share on that date, together with all
accrued and unpaid dividends on the Series D Preferred Stock.
The Series D Preferred Stock ranks on a parity with the Series C
Preferred Stock with respect to dividends, and junior to all other series of
preferred stock with respect to the distribution of assets.
Our certificate of incorporation may not be amended in any manner which
would materially alter or change the powers, preferences or special rights of
the Series D Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least a majority of the outstanding shares
of Series D Preferred Stock, voting together as a single class, in addition to
any other vote of stockholders required by law.
DESCRIPTION OF COMMON STOCK
Our certificate of incorporation authorizes the issuance of up to
25,000,000 common shares, par value $0.01 per share. There were 15,182,046
shares of the Company's common stock issued and outstanding as of March 3, 2003.
As of December 31, 2002, our officers held options covering 154,500 common
shares which they had not yet exercised. The approximate number of stockholders
of record of our common stock as of March 3, 2003 was 4,500. The Company's
common stock is listed on the New York Stock Exchange. We will apply to the
Exchange to list any common stock issued under this prospectus and any
supplement or term sheet.
Holders of our common stock are entitled to vote at all elections of
directors and to vote or consent on all questions at the rate of one vote for
each share. The holders of the Series C Preferred Stock vote along with holders
of the common stock. Shareholders may vote cumulatively in the election of
directors. Under cumulative voting,
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every stockholder entitled to vote may give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
shares held. Or, the stockholder may distribute these votes on the same
principle among as many candidates as the stockholder desires. Because each
share of Series C Preferred Stock is entitled to 16 votes, preferred
stockholders may cumulate 16 votes for each share owned times the number of
directors to be elected.
Subject to the rights, privileges, preferences, restrictions and
conditions attaching to any other class or series of shares of the Company,
holders of common stock have the right to receive any dividends we declare and
pay on our common stock. They also have the right to receive our remaining
assets and funds upon liquidation, dissolution or winding-up, if any, after we
pay to the holders of the Series C Preferred Stock and the holders of any other
series of preferred stock the amounts they are entitled to, and after we pay all
our debts and liabilities.
Our common stock is subject and subordinate to any rights and
preferences granted under our Certificate of Incorporation and any rights and
preferences which may be granted to any series of preferred stock by our board
pursuant to the authority conferred upon our board under the Certificate of
Incorporation.
After all cumulative dividends are declared and paid or set apart on
the Series C Preferred Stock and on any other series of preferred stock which
may be outstanding, the board may declare any additional dividends on our common
stock out of the surplus or net profits as in their discretion may seem proper.
During 2002, we paid dividends on the Series C Preferred Stock totaling
$153,000.
The common stock issued by this prospectus and any related prospectus
supplement or term sheet will, when issued, be fully paid and nonassessable and
will not have, or be subject to, any preemptive or similar rights.
EquiServe, L.P. is the transfer agent, registrar and dividend paying
agent for our common stock. Its phone number is (800) 736-3001.
RIGHTS AGREEMENT
Simultaneously with the resolution approving the Series D Preferred
Stock, our board of directors declared a dividend of one preferred share
purchase right for each outstanding share of our common stock. Each right
entitles the registered holder to purchase from us one one-hundredth of a share
of the Series D Preferred Stock at a price of $120.00 per one one-hundredth of a
preferred share, subject to certain adjustments. The description and terms of
the rights are set forth in a Rights Agreement between us and Bank Boston, N.A.,
as rights agent, dated as of February 12, 1998 which is incorporated by
reference into the registration statement of which this prospectus is a part.
Initially, the rights will be attached to all certificates representing
our common stock then outstanding, regardless of whether any of these
certificates has a copy of a Summary of Rights attached thereto, and no separate
right certificates will be distributed. The rights will separate from the common
stock and a "Distribution Date" will occur upon the acquisition of 15% or more
of our common stock by a third party or a third party's announcement of a tender
or exchange offer for 15% or more of our common stock. At present we have no 15%
holders of our common stock to our knowledge.
The Rights Agreement provides that, until the Distribution Date, the
rights will be transferred with and only with the Company's common stock. Until
the Distribution Date (or earlier redemption or expiration of the rights), new
common share certificates issued after the Record Date upon transfer or new
issuance of common stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the rights), the surrender for transfer of any certificates for
common stock outstanding as of the Record Date will also constitute the transfer
of the rights associated with the common stock represented by that certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the rights will be mailed to holders of record of the common stock as
of the close of business on the Distribution Date and these separate rights
certificates alone will evidence the rights.
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The rights are not exercisable until the Distribution Date. The rights
will expire on February 11, 2008, unless earlier redeemed or exchanged by us in
each case as described below. Until a right is exercised, the holder will have
no rights as a stockholder, including, without limitation, the right to vote or
to receive dividends.
The purchase price payable and the number of Preferred Shares or other
securities or property issuable upon exercise of the rights are subject to
adjustment from time to time to prevent dilution from any of the following
events:
(i) a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Shares,
(ii) the grant to holders of the Preferred Shares of certain rights or
warrants to subscribe for Preferred Shares or convertible securities at
less than the current market price of the Preferred Shares, or
(iii) the distribution to holders of the Preferred Shares of evidences
of indebtedness or assets (excluding regular periodic cash dividends
out of earnings or retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding rights associated with each share of our
common stock is also subject to adjustment in the event of a stock split of the
common stock or a stock dividend on the common stock payable in common stock or
any subdivisions, consolidations or combinations of the common stock if any of
these events occur prior to the Distribution Date.
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least 1% in
the purchase price. No fractional preferred or common stock will be issued
(other than fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at our election, be evidenced by
depositary receipts) and in lieu thereof, a payment in cash will be made based
on the market price of the Preferred or common stock on the last trading date
prior to the date of exercise.
In the event that any person or group becomes an Acquiring Person (a
"Trigger Event"), each holder of a right, other than the Acquiring Person (whose
rights will thereafter be void), will thereafter have the right to receive upon
exercise at its then current exercise price that number of shares of common
stock (or, in the event there are insufficient shares authorized, substitute
consideration such as cash, property or other securities of the Company, such as
Preferred Shares) having a market value of two times the purchase price of the
right.
In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
each holder of a right (other than an Acquiring Person, whose rights will become
void) will thereafter have the right to receive, upon the exercise of the right
at its then current exercise price, that number of shares of common stock of the
acquiring person having a market value of two times the exercise price of the
right.
At any time until ten days following a Trigger Event, we may redeem the
rights in whole, but not in part, at a price of $.001 per right. Immediately
upon the action of the board of directors ordering redemption of the rights, the
right to exercise the rights will terminate and the only right of the holders of
rights will be to receive the redemption price.
After the rights are triggered, our board may exchange some or all of
the rights for common or preferred stock at a one-for-one exchange ratio. The
board will not exchange the rights after any Acquiring Person becomes the
Beneficial Owner of 50% or more of our outstanding common stock.
As long as the rights are redeemable, we may amend the rights in any
manner. After the rights are no longer redeemable, we may amend the rights in
any manner that does not adversely affect the interests of holders of the
rights.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth of a Preferred Share
purchasable upon exercise of each right should approximate the value of one
share of our common stock.
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The Rights Agreement between the Company and the rights agent
specifying the terms of the rights and includes as Exhibit B the form of rights
certificate is incorporated into the registration statement of which this
prospectus is a part. The foregoing description of the rights and the Rights
Agreement is qualified in its entirety by reference to the Rights Agreement.
ANTI-TAKEOVER EFFECTS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS
AND DELAWARE LAW
Our bylaws contain provisions requiring advance written notice of
director nominations or other proposals by stockholders and requiring directors
to be free of certain affiliations with certain of our competitors. Also, we
have adopted severance arrangements with executive officers as part of their
compensation packages. We believe that severance arrangements do not discourage
a takeover attempt, since they merely provide benefits to executives as a result
of a change in control. Also, under our certificate of incorporation,
stockholders may not act by written consent, and all stockholder action must be
taken at a properly called and noticed meeting of stockholders.
The Company is subject to Section 203 of the Delaware General
Corporation Law, which provides, with certain exceptions, that a Delaware
corporation may not engage in certain business combinations with a person or
affiliate or associate of such person who is an "interested stockholder" for a
period of three years from the date such person became an interested stockholder
unless:
o the transaction resulting in the acquiring person's becoming
an interested stockholder, or the business combination, is
approved by the board of directors of the corporation before
the person becomes an interested stockholder;
o the interested stockholder owned at least 85% of the voting
stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining
the voting stock outstanding (but not the outstanding voting
stock owned by the interested stockholder) those share owned
o by persons who are directors and also officers, and
o employee stock plans in which employee participants
do not have the right to determine confidentially
whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
o on or after the date the person becomes an interested
stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at
least 66 2/3% of the corporation's outstanding voting stock at
an annual or special meeting, excluding shares owned by the
interested stockholder.
An "interested stockholder" is defined as any person that is (x) the owner of
15% or more of the outstanding voting stock of the corporation or (y) an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock at any time within the three year period
immediately prior to the date on which it sought to be determined whether such
person is an interested stockholder.
PLAN OF DISTRIBUTION
We may sell the securities through one or more of the following ways:
o directly to purchasers;
o to or through one or more underwriters or dealers; or
o through agents.
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A prospectus supplement or term sheet with respect to a particular
issuance of securities will set forth the terms of the offering of those
securities, including the following:
o name or names of any underwriters, dealers or agents;
o the purchase price of the securities and the estimate amount we will
receive;
o underwriting discounts and commissions; and
o any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
If we use underwriters in the sale, the underwriters will acquire the
securities for their own account and they may resell them from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Underwriting
syndicates represented by one or more managing underwriters or one or more
independent firms acting as underwriters may offer the securities to the public.
In connection with the sale of securities, we may compensate the underwriters in
the form of underwriting discounts or commissions. The purchasers of the
securities for whom the underwriters may act as agent may also pay them
commissions. Underwriters may sell the securities to or through dealers, and
these dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Unless otherwise set forth in the applicable
prospectus supplement or term sheet, the obligations of any underwriters to
purchase the securities will be subject to conditions precedent, and the
underwriters will be obligated to purchase all of the securities if any are
purchased.
If we use dealers in the sale of the securities, we will sell the
securities to the dealers as principals. The dealers may then resell the
securities to the public at varying prices to be determined by the dealer at the
time of resale. The applicable prospectus supplement or term sheet will name any
dealer, who may be deemed to be an underwriter, as that term is defined in the
Securities Act, involved in the offer or sale of securities, and set forth any
commissions or discounts we grant to the dealer.
If we use agents in the sales of the securities, the agents may solicit
offers to purchase the securities from time to time. Any of these agents, who
may be deemed to be an underwriter, as that term is defined in the Securities
Act, involved in the offer or sale of the securities will be named, and any
commissions payable by us to such agent set forth, in the applicable prospectus
supplement or term sheet. Any agent will be acting on a reasonable efforts basis
for the period of its appointment or, if indicated in the applicable prospectus
supplement or term sheet, on a firm commitment basis.
We may also sell securities directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act with respect to resales. The terms of those sales would be described in the
prospectus supplement or term sheet.
If the prospectus supplement or term sheet so indicates, we will
authorize agents, underwriters or dealers to solicit offers to purchase
securities from us at the public offering price set forth in the prospectus
supplement or term sheet pursuant to stock purchase or delayed delivery
contracts providing for payment and delivery on a specified date in the future.
The contracts will be subject only to those conditions set forth in the
prospectus supplement or term sheet, and the prospectus supplement or term sheet
will set forth the commission payable for solicitation of the contracts.
We may engage in at-the-market offerings of our common stock. An "at
the market" offering is an offering of our common stock at other than a fixed
price on or through the facilities of the New York Stock Exchange. Under Rule
415(a)(4) under the Securities Act, the total value of at the market offerings
made under this prospectus may not exceed 10% of the aggregate market value of
our common stock held by persons who are not our affiliates on a date within 60
days prior to filing the registration statement containing this prospectus.
Accordingly, as of the date of this prospectus, we may not sell under this
prospectus more than approximately $36,000,000 of our common stock in
at-the-market offerings. Any underwriter that we engage for an at-the-market
offering will be named in the
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prospectus supplement. Additional details of our arrangement with the
underwriter, including commissions or fees paid by us and whether the
underwriter is acting as principal or agent, will be described in the related
prospectus supplement or term sheet.
Agents, dealers and underwriters may be entitled under agreements with
us to indemnification against some civil liabilities, including liabilities
under the Securities Act, or to contribution with respect to payments which the
agents, dealers or underwriters may be required to make. Agents, dealers and
underwriters or their affiliates may engage in transactions with, or perform
services for, us or our subsidiaries for customary compensation.
If indicated in the applicable prospectus supplement or term sheet, one
or more firms may offer and sell securities in connection with a remarketing
upon their purchase, in accordance with their terms, acting as principals for
their own accounts or as our agents. Any remarketing firm will be identified and
the terms of its agreement, if any, with us will be described in the applicable
prospectus supplement or term sheet. We may be obligated to indemnify the
remarketing firm against some liabilities, including liabilities under the
Securities Act, and the remarketing firm may engage in transactions with or
perform services for us or our subsidiaries for customary compensation.
Any underwriter may engage in over-allotment, stabilizing and syndicate
short covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934, as amended. Over-allotment involves
sales in excess of the offering size, which creates a short position.
Stabilizing transactions involve bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum. Syndicate short
covering transactions involve purchases of securities in the open market after
the distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim selling concessions from dealers
when the securities originally sold by the dealers are purchased in covering
transactions to cover syndicate short positions. These transactions may cause
the price of the securities sold in an offering to be higher than it would
otherwise be. These transactions, if commenced, may be discontinued by the
underwriters at any time.
Any securities, other than our common stock, will be a new issue of
securities with no established trading market. We cannot assure you that there
will be a market for the securities of any particular security, or that if a
market does develop, that it will continue to provide holders of those
securities with liquidity for their investment or will continue for the duration
the securities are outstanding.
The prospectus supplement or term sheet relating to each offering will
set forth the anticipated date of delivery of the securities.
LEGAL MATTERS
Bingham McCutchen LLP, San Francisco, California will issue a legal
opinion for us with respect to the validity of the securities. Certain legal
matters will be passed upon for the underwriters by Chapman and Cutler, Chicago,
Illinois.
EXPERTS
The consolidated financial statements and schedule of California Water
Service Group as of December 31, 2001 and 2000 and for each of the years in the
three-year period ended December 31, 2001, have been incorporated by reference
herein and in the registration statement in reliance upon the reports of KPMG
LLP and Arthur Andersen LLP, independent accountants, incorporated by reference
herein, and upon the authority of said firms as experts in accounting and
auditing.
The consolidated financial statements of Dominguez Services Corporation
as of December 31, 1999 included in the consolidated financial statements of the
Company, have been audited by Arthur Andersen LLP independent auditors, as
stated in their report which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of that firm given upon their
authority as experts in accounting and auditing.
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The consent of Arthur Andersen LLP to the inclusion of its report
regarding the financial statements of Dominguez Services Corporation is omitted
pursuant to Securities Act Rule 437(a). We attempted to obtain the appropriate
consent from Arthur Andersen LLP, but our request was returned undelivered.
Therefore, we have not obtained a consent from Arthur Andersen LLP with respect
to those financial statements. Because Arthur Andersen LLP has not consented to
the inclusion of their report in this prospectus, you will not be able to
recover against Arthur Andersen LLP under Section 11 of the Securities Act for
any untrue statement of a material fact contained in the financial statements
audited by Arthur Andersen LLP or any omissions to state a material fact
required to be stated therein.
WHERE YOU CAN FIND MORE INFORMATION
The Company has filed with the SEC a registration statement on Form S-3
with respect to the securities to be offered by this prospectus and any
prospectus supplement or term sheet. This prospectus omits certain of the
information contained in the registration statement and its exhibits. This
prospectus discusses material provisions of the form of indenture we propose to
enter into with U.S Bank National Association as trustee for debt securities to
be sold under this prospectus and any prospectus supplement or term sheet.
Because the prospectus may not contain all the information that you may find
important, you should review the full text of the indenture and other documents
we have incorporated by reference into the registration statement.
The registration statement, including exhibits thereto, may be
inspected at the Public Reference facility maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The registration statement and other information filed with the
Commission are available at the web site maintained by the Commission on the
world wide web at http://www.sec.gov. Investors may access our SEC filings
through the Company's website at http://www.calwater.com.
The SEC allows us to "incorporate by reference" information that we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below:
1) Our Annual Report on Form 10-K for the fiscal year ended December
31, 2001;
2) Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30 (as amended by Amendment No. 1), 2002;
3) The description of our common stock set forth in the registration
statement on Form 8-A under Section 12(b) of the Exchange Act filed
March 18, 1994 and any future amendment or report filed for the purpose
of updating that description; and
4) The description of our Preferred Stock Purchase Rights in the
registration statement on Form 8-A under Section 12(b) of the Exchange
Act filed February 13, 1998 and any future amendment or report filed
for the purpose of updating that description.
All documents we file with the Commission after the date of this
prospectus under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, and
before we file a post-effective amendment which reports that all securities
offered in this prospectus have been sold, or to deregister all unsold
securities, are also incorporated by reference and will be part of this
prospectus from the dates we file each of those documents.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
California Water Service Group
Attn: Investor Relations
1720 North First Street
21
San Jose, CA 95112-4598
Phone: (408) 367-8200
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or term sheet. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any supplement or
term sheet is accurate as of any date other than the date on the front of these
documents.
We maintain a website on the World Wide Web at http://www.calwater.com
where certain additional information about us may be found. We undertake no
obligation to update the information found on our website. The information on
the website is not a part of this prospectus of any prospectus supplement or
term sheet, or of the registration statement, but is referenced and maintained
as a convenience to investors.
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[CALIFORNIA WATER SERVICE GROUP LOGO]
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the offering of the entire $120,000,000 of
securities will be borne by the registrant and are estimated as
follows:
SEC registration fee ..................................... $ 9,708
Rating agency fees ....................................... $ 60,000
Trustee's fees and expenses .............................. $ 40,000
Accountant's fees and expenses ........................... $ 650,000
Legal fees and expenses .................................. $ 940,000
Printing costs ........................................... $ 90,000
Blue Sky fees and expenses ............................... $ 5,000
Miscellaneous expenses ................................... $ 205,292
Total ................................................... $2,000,000
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company 's Certificate of Incorporation provides that the liability of our
directors, both to the Company and to its stockholders, for monetary damages,
including liability for breach of fiduciary duty, shall be eliminated to the
fullest extent permissible under Delaware law. The Certificate also provides
that the Company shall indemnify any person who is or was a party or is
threatened to be made a party to any proceeding by reason of the fact that that
person is or was an agent of the Company, to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law. The Company also maintains
officers and director's liability insurance.
ITEM 16. EXHIBITS
See Exhibit Index immediately following the signature page hereof.
ITEM 17. UNDERTAKINGS
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
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(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by us pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) We hereby undertake that, for purposes of determining any liability
under the Securities Act, each filing of our annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in
this registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) We hereby undertake to provide to the underwriter at the closing
specified in the underwriting agreements, certificates in such denominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
(d) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the provisions referred to in Item 15 hereof, or otherwise,
we have been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us 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, we
will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(e) We hereby undertake that:
(1) For purposes of determining any liability under the
Securities 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 us pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities 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.
(f) The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
Subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that 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 March 4, 2003.
CALIFORNIA WATER SERVICE GROUP
By: /s/Peter C. Nelson
----------------------------------------------
Peter C. Nelson
President and Chief Executive Officer
(Principal Executive Officer)
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POWER OF ATTORNEY
The officers and directors of California Water Service Group whose signatures
appear below hereby constitute and appoint Peter C. Nelson and Richard D. Nye,
and each of them, their true and lawful attorneys and agents, with full power of
substitution, each with power to act alone, to sign and execute on behalf of the
undersigned any amendment or amendments (including post-effective amendments) to
this Universal Shelf registration statement on Form S-3 and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including registration statements filed in connection with this offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended
("Securities Act") with the Securities and Exchange Commission, granting unto
each of said attorneys-in-fact and agents full power and authority to do
everything necessary to accomplish the foregoing, as fully to all intents and
purposes as he or she might or could do in person, and each of the undersigned
does hereby ratify and confirm all that each of said attorneys and agents, or
their substitutes, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
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EXHIBIT INDEX
1 Underwriting Agreement between California Water Service Group and
Edward D. Jones & Co., L.P.*
3.1 Certificate of Incorporation of California Water Service Group
(incorporated by reference to Exhibit A of the Registrant's Proxy
Statement dated March 18, 1999**)
3.2 Restated By-laws of California Water Service Group as amended on
January 26, 2000 (incorporated by reference to Exhibit 3-2 to Form 8-K
dated January 26, 2000**)
4. Form of Indenture for Debt Securities between California Water Service
Group and U.S. Bank National Association as Trustee
5 Opinion of Bingham McCutchen LLP
12.1 Computation of Ratios of Earnings to Fixed Charges for each of the five
years ended December 31, 2002
12.2 Computation of Ratios of Earnings to Fixed Charges and Preferred Stock
Dividends for each of the five years ended December 31, 2002
23.1 Consent of Bingham McCutchen LLP (included in their opinion in Exhibit
5)
23.2 Consent of KPMG LLP as independent auditors
23.3 Consent of Arthur Andersen LLP as independent auditors (NOT
AVAILABLE)***
24 Power of attorney of certain officers and directors of California Water
Service Group (included in signature page of this registration
statement)
25 Statement of Eligibility of Trustee on Form T-1
- ----------------
* To be filed as an exhibit to a Current Report on Form 8-K.
** File No. 1-13883.
*** Arthur Andersen LLP has not consented to the incorporation by reference
of its report on the financial statements of Dominguez Services
Corporation included in this registration statement, and we have
dispensed with the requirement to file its consent in reliance upon
Rule 437(a) of the Securities Act of 1933.
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