As filed with the Securities and Exchange Commission on December 21, 1994
Registration No. __________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
----------
SDO PARENT CO., INC.
(Exact name of registrant as specified in its charter)
California 6719 33-0643023
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
101 Ash Street
San Diego, California 92101
(619) 696-2000
(Address, including ZIP Code, and telephone number,
including area code, of registrant's principal executive offices)
----------
Nad A. Peterson
101 Ash Street
San Diego, California 92101
(619) 696-2000
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
----------
It is requested that copies of communications be sent to:
David R. Snyder
Pillsbury Madison & Sutro
101 W. Broadway, Suite 1800
San Diego, California 92101
(619) 544-3369
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 securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
Proposed Maximum
Title of Each Class of Securities to Amount to be Proposed Maximum Aggregate Offering Amount of
be Registered registered/(1)/ Offering Price Per Unit/(2)/ Price/(2)/ Registration Fee/(2)/
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock (without par value)...... 116,541,000 $19.8125 $2,308,968,562.50 $796,201.63
==================================================================================================================================
(1) Includes: approximately 116,536,535 shares to be issued upon conversion of
shares of San Diego Gas & Electric Company ("SDG&E") Common Stock which are
expected to be issued and outstanding as of the effective date of this
registration statement; and approximately 4,465 shares to be issued upon
conversion of shares of SDG&E Common Stock which may be issued after the
effective date and prior to consummation of the proposed restructuring
described herein pursuant to a common stock investment plan and certain
employee benefit plans of SDG&E (the registrant intends to file post-
effective amendments with respect to presently effective registration
statements in respect of securities issuable under such plans pursuant to
Rule 414(d) promptly upon the effectiveness of such restructuring).
(2) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee on the basis of the average of the high and low prices of
the Common Stock of SDG&E as reported on the New York Stock Exchange on
December 14, 1994.
-------------------
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.
SDO PARENT CO., INC.
__________
CROSS-REFERENCE SHEET
(Pursuant to Item 501(b) of Regulation S-K)
Form S-4 Location in Proxy
Item No. Caption Statement Prospectus
- -------- ----------------------------------- --------------------------------
A. Information About the
Transaction
1. Forepart of Registration Outside Front Cover Page
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Available Information;
Cover Pages of Prospectus Incorporation of Certain
Documents by Reference; Table
of Contents
3. Risk Factors, Ratio of Earnings Summary of Proxy Statement;
to Fixed Charges and Other Formation of a Holding Company
Information
4. Terms of the Transaction Summary of Proxy Statement;
Formation of a Holding Company
5. Pro Forma Financial Information Formation of a Holding Company
6. Material Contacts with the *
Company Being Acquired
7. Additional Information Required *
for Reoffering by Persons and
Parties Deemed to be
Underwriters
8. Interests of Named Experts and *
Counsel
9. Disclosure of Commission *
Position on Indemnification for
Securities Act Liabilities
B. Information About the Registrant
10. Information With Respect to S-3 Incorporation of Certain
Registrants Documents by Reference; Summary
of Proxy Statement
11. Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference
12. Information With Respect to S-2 *
or S-3 Registrants
13. Incorporation of Certain *
Information by Reference
14. Information With Respect to *
Registrants Other Than S-2 or S-
3 Registrants
C. Information About the Company
Being Acquired
15. Information With Respect to S-3 Incorporation of Certain
Companies Documents by Reference; Summary
of Proxy Statement
16. Information With Respect to S-2 *
or S-3 Companies
17. Information With Respect to *
Companies Other Than S-3 or S-2
Companies
D. Voting and Management
Information
18. Information if Proxies, Notice to Shareholders;
Consents Summary
or Authorizations are to be Information; General
Solicited Information; Proxy
Solicitations; Formation of a
Holding Company - Rights of
Dissenting Shareholders, and -
Required Vote; Incorporation
of
Certain Documents by Reference
19 Information if Proxies, *
Consents or Authorizations
are not to be Solicited or
in an Exchange Offer
- ----------------------------
* Not Applicable.
SAN DIEGO GAS & ELECTRIC COMPANY
Notice of Special Meeting of Shareholders
and
Proxy Statement and Prospectus
Special Meeting
[_______, _______ __], 1995
San Diego Gas & Electric Company
Dear Shareholder:
You are invited to attend a Special Meeting of San Diego Gas &
Electric Company Shareholders, to be held at [__ _].m. on [_________,
_______ __], 1995, at the California Center for the Arts, Escondido, 340
North Escondido Boulevard, Escondido, California (a map is included with
the enclosed Notice of Meeting and Proxy Statement and Prospectus).
At the Special Meeting, an important decision regarding the structure
of the Company will be made. The Shareholders will be asked to consider
and vote upon a proposal to implement a holding company structure for
SDG&E. This matter is described in the enclosed Proxy Statement and
Prospectus.
Whether or not you plan to attend the Special Meeting, please fill
out, sign and return your proxy card right away. Your vote is very
important.
Sincerely yours,
Thomas A. Page
Chairman of the Board, President
and Chief Executive Officer
[MAP TO CALIFORNIA CENTER FOR THE ARTS, ESCONDIDO]
Notice of Special Meeting of Shareholders of SDG&E
Office of the Secretary
San Diego Gas & Electric Company
P.O. Box 1831, 101 Ash Street
San Diego, California 92112-4150
[________, ______ __], 1995
A Special Meeting of Shareholders of San Diego Gas & Electric Company
will be held on [_______, _____ __], 1995, at [__ _].m. at the California
Center for the Arts, Escondido, 340 North Escondido Boulevard, Escondido,
California, to consider and take action on the approval of a Merger
Agreement which, if approved, will cause (i) the formation of a holding
company, SDO Parent Co., Inc. (whose name is subject to change prior to
consummation of the transactions contemplated by the Merger Agreement),
(ii) the current holders of SDG&E Common Stock to have their shares
converted into shares of common stock of the holding company, (iii) SDG&E
to become a subsidiary of the holding company, and (iv) the consummation
of related activities to complete the transition into a holding company
structure.
The SDG&E Board of Directors has fixed the close of business on
[_______ __], 1995 as the record date for the determination of
shareholders entitled to notice of and to vote at the Special Meeting or
any adjournment thereof. It is anticipated that the proxy material will
be mailed to shareholders on or about the date of this notice.
San Diego, California
[_____ __], 1995
By order of the Board of Directors
N. A. Peterson
Senior Vice President,
General Counsel and Secretary
YOUR VOTE IS IMPORTANT! Please sign and return your enclosed proxy
promptly, even if you expect to attend the Special Meeting. A business
reply envelope is enclosed for your convenience in returning the proxy.
It requires no postage if mailed within the United States. Ample free
parking will be available at the California Center for the Arts,
Escondido.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+ 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 December 21, 1994]
------------------------------------------------
SAN DIEGO GAS & ELECTRIC COMPANY
SDO Parent Co., Inc.
P.O. Box 1831, 101 Ash Street
San Diego, California 92112-4150
SPECIAL MEETING OF SHAREHOLDERS
-------------------------------
PROXY STATEMENT AND PROSPECTUS
This Proxy Statement and Prospectus is being furnished to shareholders
(the "Shareholders") of San Diego Gas & Electric Company, a California
corporation ("SDG&E" or the "Company"), in connection with the
solicitation of proxies by the SDG&E Board of Directors (the "Board of
Directors"). The proxies will be voted at the Special Meeting of
Shareholders to be held at [__ _.m.] on [_______, _________ __], 1995, at
the California Center for the Arts, Escondido, 340 North Escondido
Boulevard, Escondido, California, and at any adjournment or postponement
thereof (the "Special Meeting"), for the purposes listed in the preceding
Notice of Special Meeting.
At the Special Meeting, the Shareholders will be asked to approve the
terms of an agreement of merger (the "Merger Agreement"), among SDG&E, SDO
Parent Co., Inc., a California corporation that is a wholly-owned
subsidiary of SDG&E ("ParentCo"), and San Diego Merger Company, a
California corporation that is a wholly-owned subsidiary of ParentCo
("MergeCo"). If the Merger Agreement is approved and implemented, MergeCo
will merge with and into SDG&E (the "Merger") and each outstanding share
of the common stock of SDG&E, without par value ("SDG&E Common Stock"),
will be automatically converted into one share of the common stock of
ParentCo, without par value ("ParentCo Common Stock"). As a result, SDG&E
will become a subsidiary of ParentCo and the holders of SDG&E Common Stock
will become holders of ParentCo Common Stock. The outstanding shares of
SDG&E's cumulative preferred stock, $20 par value per share ("SDG&E
Cumulative Preferred Stock"), and SDG&E's preference stock (cumulative),
without par value ("SDG&E Preference Stock (Cumulative)"), will be
unchanged and will continue to be outstanding shares of SDG&E. See
"Formation of a Holding Company" under the heading "Plan of
Implementation."
This Proxy Statement and Prospectus also serves as the Prospectus for
ParentCo under the Securities Act of 1933 with respect to the issuance of
up to 116,541,000 shares of ParentCo Common Stock in connection with the
Merger. Further information concerning the stock offered hereby is
contained in "Formation of a Holding Company" under the heading "Articles
of Incorporation and Bylaws of ParentCo."
The approximate date of mailing of this Proxy Statement and Prospectus
is [______ __], 1995.
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.
The date of this Proxy Statement and Prospectus is [_____ __], 1995.
Available Information
This Proxy Statement is also a Prospectus delivered in compliance with
the Securities Act of 1933, as amended (the "Securities Act"). A
registration statement under the Securities Act has been filed with the
Securities and Exchange Commission (the "SEC"), Washington, D.C., with
respect to the securities offered in the Prospectus (the "Registration
Statement"). As permitted by the rules and regulations of the SEC, this
Proxy Statement and Prospectus omits certain information contained in the
Registration Statement. For further information pertaining to the
securities being offered, reference is made to the Registration Statement,
including exhibits filed as a part thereof.
SDG&E is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
with the Exchange Act, files reports, proxy statements and other
information with the SEC. These reports, proxy statements and other
information, as well as the Registration Statement, can be inspected and
copied at the public reference facilities maintained by the SEC at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
regional offices in Chicago (Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511) and in New York (Seven
World Trade Center, 13th Floor, New York, New York 10048), and copies of
such material can be obtained from the public reference section of the SEC
at prescribed rates by writing to the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. SDG&E Common Stock is listed on the New York
Stock Exchange (the "NYSE") and on the Pacific Stock Exchange (the "PSE").
Reports, proxy material and other information concerning SDG&E may also be
inspected at the offices of the NYSE and the PSE.
ParentCo was formed to effectuate the transactions described under
"Formation of a Holding Company" and has not previously been subject to
the requirements of the Exchange Act, and there is currently no public
market for its stock. However, if the transactions described herein are
approved and consummated, ParentCo will become subject to the same
information, reporting and proxy statement requirements under the Exchange
Act as currently apply to SDG&E, and such information will be available
for inspection and copying at the offices of the SEC set forth above.
ParentCo will also apply to have ParentCo Common Stock listed on the NYSE
and the PSE as of (or promptly following) the effective date of the Merger
described under "Formation of a Holding Company," and if such applications
are accepted Exchange Act reports, proxy statements and other information
concerning ParentCo will be available for inspection and copying at such
exchanges.
No person is authorized to give any information or to make any
representations with respect to the matters described in this Proxy
Statement and Prospectus other than those contained herein or in the
documents incorporated herein by reference. Any information or
representations with respect to such matters not contained herein or
therein must not be relied upon as having been authorized by SDG&E or
ParentCo.
This Proxy Statement and Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities (i) other than
the registered securities to which it relates or (ii) in any jurisdiction
to any person to whom it is unlawful to make such offer or solicitation in
such jurisdiction. Neither the delivery of this Proxy Statement and
Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of
SDG&E or ParentCo since the date hereof or that the information in this
Proxy Statement and Prospectus or in the documents incorporated by
reference herein is correct as of any time subsequent to the dates hereof
and thereof, respectively.
Incorporation of Certain Documents by Reference
This Proxy Statement and Prospectus incorporates documents by
reference which are not presented herein or delivered herewith. These
documents are available upon request from N. A. Peterson, Senior Vice
President, General Counsel and Secretary, San Diego Gas & Electric
Company, P.O. Box 1831, San Diego, California 92112-4150 (telephone: in
California, (800) 826-5942; and from elsewhere, (800) 243-5454). In order
to ensure timely delivery of the documents, any request should be made by
[________ __], 1995.
ii
The following documents filed by SDG&E with the SEC are incorporated
in this Proxy Statement and Prospectus by reference:
1. SDG&E's Annual Report on Form 10-K for the year ended December
31, 1993;
2. SDG&E's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994, June 30, 1994 and September 30, 1994; and
3. SDG&E's Current Report on Form 8-K dated November 7, 1994.
All documents filed by SDG&E pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Proxy Statement
and Prospectus and prior to the Special Meeting shall be deemed to be
incorporated by reference in this Proxy Statement and Prospectus and to be
a part of this Proxy Statement and Prospectus from the date of filing of
such documents. Any statement contained herein or in a document all or a
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Proxy Statement and Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is
deemed to be 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
Proxy Statement and Prospectus.
Upon written or oral request, a copy of any and all of the information
that has been incorporated by reference in this Proxy Statement and
Prospectus will be provided without charge to each person, including any
beneficial owner, to whom this Proxy Statement and Prospectus is
delivered. This will not include exhibits to the information unless the
exhibits are specifically incorporated by reference in the information.
Requests for copies should be made to the Senior Vice President, General
Counsel and Secretary of SDG&E at the address and telephone numbers set
forth above.
iii
TABLE OF CONTENTS
-----------------
Page
----
SUMMARY OF PROXY STATEMENT........................................ v
--------------------------
FORMATION OF A HOLDING COMPANY.................................... v
SDG&E........................................................... v
ParentCo........................................................ v
Reasons for the Restructuring................................... v
Accomplishing the Restructuring................................. vi
Regulatory Approvals............................................ vii
Dividend Policy................................................. vii
Federal Income Tax Consequences................................. vii
Vote Required to Approve the Restructuring...................... vii
Rights of Dissenting Shareholders............................... vii
Selected Financial Information.................................. viii
Additional Financial Information................................ x
General Information............................................... 1
Meeting Date; Voting; Proxies................................... 1
FORMATION OF A HOLDING COMPANY.................................... 2
------------------------------
General......................................................... 2
Plan of Implementation.......................................... 2
Reasons for the Restructuring................................... 3
Merger Agreement................................................ 5
Amendment or Termination........................................ 6
Treatment of Preferred Stock.................................... 6
Pro Forma Financial Effects..................................... 8
Dividend Policy................................................. 10
Directors and Management of ParentCo and SDG&E.................. 10
Articles of Incorporation and Bylaws of ParentCo................ 11
Listing of ParentCo Common Stock................................ 15
Transfer Agent and Registrar.................................... 15
Common Stock Investment and Employee Benefit Plans.............. 16
Regulation...................................................... 16
Conditions Precedent to the Merger.............................. 17
Effective Date of the Merger.................................... 17
Required Vote................................................... 17
Rights of Dissenting Shareholders............................... 18
Market Values of Stock.......................................... 22
Exchange of Stock Certificates Not Required..................... 22
Federal Income Tax Consequences of the Merger................... 23
Legal Opinion................................................... 23
Experts........................................................... 24
Proxy Solicitations............................................... 24
Exhibit A - Agreement of Merger................................... A-1
Exhibit B - Articles of Incorporation for ParentCo................ B-1
Exhibit C - Chapter 13 of the California General Corporation Law.. C-1
iv
SUMMARY OF PROXY STATEMENT
--------------------------
The following summary of the matter to be voted on at the Special
Meeting of Shareholders is qualified in its entirety by reference to the
more detailed information set forth elsewhere herein, including the
exhibits hereto and the documents incorporated herein by reference.
FORMATION OF A HOLDING COMPANY
------------------------------
SDG&E
SDG&E is a public energy management company primarily engaged in the
businesses of providing (i) electric service to customers in San Diego
County and the southern portion of Orange County and (ii) gas to customers
in San Diego County. SDG&E's principal executive offices are located at
101 Ash Street, San Diego, California 92101 (telephone number: (619) 696-
2000) (mailing address: P.O. Box 1831, San Diego, California 92112-4150).
ParentCo
ParentCo, the proposed holding company for SDG&E, is at present a
wholly-owned subsidiary of SDG&E and was organized for the purpose of
becoming the new parent holding company. Its principal executive offices
are at the same location as SDG&E's offices referred to above (it also
shares the same telephone number and mailing address).
Reasons for the Restructuring
The SDG&E Board of Directors considers it to be in the best interests of
SDG&E and its Shareholders to change the corporate structure of SDG&E and
its subsidiaries. The objective of such a restructuring is to have SDG&E
and its direct subsidiaries become separate, directly-owned subsidiaries
of a new parent company (ParentCo), with the present holders of SDG&E
Common Stock becoming holders of ParentCo Common Stock. The Board of
Directors believes the proposed restructuring will provide the means for a
more clearly defined separation of utility and non-utility operations and
permit greater financial and organizational flexibility to meet the
changing operational, regulatory and economic environment for utilities.
The proposed restructuring will lead to a change for holders of SDG&E
Common Stock in the nature of their investment: from shares of stock in a
regulated utility with some diversified operations in separate
subsidiaries to shares of stock in a holding company which is not directly
regulated in the same manner as a utility. SDG&E will constitute the
predominant part of ParentCo's earning power and assets for the
foreseeable future. However, both regulation of utilities and the markets
which SDG&E has traditionally served are changing. As facets of the
traditional utility business which were once regulated, such as electric
generation, have become unregulated and competitive, the energy options
for customers, particularly large industrial users of energy, are
expanding.
v
Management believes that the corporate separation afforded by a holding
company structure will permit the holding company, ParentCo, effectively
to respond to increasing competition in the energy business. Where a
facet of the business becomes unregulated, that facet can be separated
from the core utility business of SDG&E, although remaining under the
common ownership of ParentCo. Separation of such facets of the energy
business, as well as the diversified operations of SDG&E's present non-
utility subsidiaries, from the core utility business of SDG&E will help to
protect SDG&E's stability as viewed by sources of financing. Such
stability is vital to avoid increased capital costs for SDG&E, and thus
higher utility rates. Accordingly, the holding company structure will
support SDG&E's ability to continue efficiently meeting its customers
needs while permitting ParentCo to respond to a changing business
environment. See "Formation of a Holding Company--Reasons for the
Restructuring."
Accomplishing the Restructuring
Pursuant to the Merger Agreement in the form attached to this Proxy
Statement and Prospectus as Exhibit A, a subsidiary of ParentCo (MergeCo)
will be merged with and into SDG&E. In the Merger, the outstanding shares
of SDG&E Common Stock will be converted into new shares of ParentCo Common
Stock on a share-for-share basis, and SDG&E will become a subsidiary of
ParentCo. SDG&E Cumulative Preferred Stock and SDG&E Preference Stock
(Cumulative) will remain outstanding, and be unaffected by the Merger.
If the actions contemplated by the Merger Agreement are approved by the
Shareholders, it is contemplated that the Merger will become effective as
soon as practicable following receipt of all required regulatory approvals
in respect of the Merger and related restructuring, including approval by
the California Public Utilities Commission (the "CPUC"). An application
for such approval by the CPUC was filed by SDG&E, ParentCo and MergeCo on
November 7, 1994.
Promptly following the Merger, SDG&E's interest in its direct
subsidiaries will be transferred to ParentCo (the transfer and the Merger
are sometimes referred to as the "restructuring"). The restructuring will
be accounted for in a manner similar to a pooling of interests.
If the restructuring is completed, it will not be necessary to exchange
certificates representing SDG&E Common Stock for certificates representing
ParentCo Common Stock. Rather, certificates for SDG&E Common Stock will
automatically be deemed to represent certificates for a like number of
shares of ParentCo Common Stock.
Application has been made to list ParentCo Common Stock on the New York
Stock Exchange (the "NYSE") and on the Pacific Stock Exchange. In the
absence of such listing on the NYSE, the Board of Directors may elect not
to consummate the transactions contemplated by the Merger Agreement
(including the Merger).
vi
Regulatory Approvals
SDG&E must obtain authorization from the CPUC to implement the
restructuring. In addition, certain aspects of the restructuring require
SDG&E to seek approvals from the Federal Energy Regulatory Commission and
the Nuclear Regulatory Commission. See "Formation of a Holding Company--
Regulation."
Dividend Policy
It is expected that ParentCo initially will make quarterly dividend
payments on ParentCo Common Stock equal to the rate currently paid by
SDG&E on SDG&E Common Stock and on approximately the same schedule of
dates as that now followed by SDG&E. Future dividend payments initially
will depend primarily on the earnings, financial condition and capital
requirements of SDG&E. See "Formation of a Holding Company--Dividend
Policy."
Federal Income Tax Consequences
The proposed restructuring should not affect the position of present
SDG&E shareholders for federal income tax purposes. See "Formation of a
Holding Company--Federal Income Tax Consequences of the Merger."
Vote Required to Approve the Restructuring
Shareholder approval of the restructuring will require the favorable
vote of:
1. A majority of the outstanding shares of SDG&E Common Stock;
2. A majority of the outstanding shares of SDG&E Common Stock and SDG&E
Cumulative Preferred Stock, voting together, with each share of SDG&E
Common Stock having one vote and each share of SDG&E Cumulative
Preferred Stock having two votes; and
3. Two-thirds of the outstanding shares of SDG&E Cumulative Preferred
Stock and SDG&E Preference Stock (Cumulative), voting together, with
each share having one vote. See "Formation of a Holding Company--
Required Vote."
SDG&E's Directors and executive officers and their affiliates own less
than one percent (1%) of the voting securities of SDG&E. After the
restructuring, they will continue to own less than one percent (1%) of the
voting securities of ParentCo.
Rights of Dissenting Shareholders
Holders of SDG&E Cumulative Preferred Stock, 4.60% Series, upon
compliance with certain statutory requirements, will be entitled to
receive payment of the fair market value of their shares if the Merger is
completed. Holders of SDG&E Common Stock and holders of
vii
SDG&E Cumulative Preferred Stock other than the 4.60% Series who comply
with the statutory requirements also may be entitled to receive payment of
the fair market value of their shares if the Merger is completed; however,
they will not be so entitled unless (i) five percent (5%) or more of the
shares of their class (with SDG&E Common Stock, as one class, and SDG&E
Cumulative Preferred Stock other than the 4.60% Series, as another class)
demand payment or (ii) their shares are restricted as to transfer.
Holders of SDG&E Preference Stock (Cumulative) have no statutory right to
dissent and receive payment for their shares in connection with the
Merger. See "Formation of a Holding Company--Rights of Dissenting
Shareholders."
Selected Financial Information
The following table sets forth selected financial information with
respect to the Company. Such financial information is derived from, and
qualified by reference to, the financial statements contained in certain
documents incorporated herein by reference.
viii
Results of Operations/(1)/
For the Nine Months
Ended September 30, For the Year Ended December 31,
-------------------- ------------------------------------------------
(Millions of dollars, except per share amounts)
1994/(2)/ 1993 1993 1992 1991 1990 1989
---------- -------- -------- -------- -------- -------- --------
Operating revenues
Electric............................ $ 1,115.1 $1,111.2 $1,514.6 $1,447.1 $1,357.5 $1,356.4 $1,324.9
Gas................................. 252.4 257.2 346.7 337.0 338.2 355.1 300.4
Diversified
operations......................... 91.4 86.2 118.8 86.8 93.3 60.4 44.2
Total.............................. $ 1,458.9 $1,454.6 $1,980.1 $1,870.9 $1,789.0 $1,771.9 $1,669.5
Operating income..................... 223.0 223.0 293.7 296.3 315.5 314.0 284.8
Net income (before
preferred dividend
requirements)...................... 86.4 161.9 218.7 210.7 208.1 207.8 179.4
Earnings applicable to
common shares....................... 80.6 155.3 210.2 201.1 197.5 197.0 168.2
Earnings per common
share............................... 0.69 1.34 1.81 1.77 1.76 1.76 1.50
Dividends declared
per common share.................... 1.14 1.11 1.48 1.44 1.3875 1.35 1.35
Other Financial Information/(1)/
As of September 30, As of December 31,
-------------------- ------------------------------------------------
(Millions of dollars, except per share amounts)
1994 1993 1993 1992 1991 1990 1989
---------- -------- -------- -------- -------- -------- --------
Total assets......................... $ 4,579.8 $4,683.3 $4,702.2 $4,494.6 $4,046.7 $3,945.2 $3,860.3
Long-term debt and
preferred stock
subject to mandatory
redemption (excludes
current portion)/(3)/............... 1,478.0 1,580.5 1,525.0 1,651.9 1,331.2 1,337.1 1,287.2
Common shareholders'
equity.............................. 1,463.1 1,504.2 1,516.2 1,441.4 1,350.0 1,295.6 1,248.4
Book value per
common share........................ 12.56 12.91 13.01 12.53 12.00 11.58 11.16
(1) Information presented reflects consolidated information for SDG&E.
Please refer to "Formation of a Holding Company--Pro Forma Financial
Effects" for a discussion of certain pro forma effects of the proposed
restructuring on results of operations and other financial information
for SDG&E.
(2) Includes charges of approximately $80 million after-tax, or $0.68 per
common share, for writedowns related to non-earning assets of SDG&E
(approximately $13 million) and its non-utility subsidiaries
(approximately $67 million).
(3) Includes long-term debt redeemable within one year.
ix
Additional Financial Information
SDG&E's Annual Report on Form 10-K for the year ended December 31,
1993, which is incorporated by reference in this Proxy Statement and
Prospectus, contains audited financial statements of SDG&E as of December
31, 1993 and for the year ended on that date. SDG&E's Quarterly Report
for the quarter ended September 30, 1994, which also is incorporated by
reference in this Proxy Statement and Prospectus, contains unaudited
financial statements of SDG&E as of September 30, 1994 and for the nine-
month period ending on that date. Copies of these documents may be
obtained without charge upon request as provided under "Incorporation of
Certain Documents by Reference" above.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE MERGER AGREEMENT AND THE PROPOSED FORMATION OF A HOLDING COMPANY.
x
SAN DIEGO GAS & ELECTRIC COMPANY
SDO PARENT CO., INC.
101 Ash Street
San Diego, California 92101
-------------------------------------------
Proxy Statement and Prospectus
-------------------------------------------
General Information
-------------------
Meeting Date; Voting; Proxies
The enclosed proxy is solicited by the Board of Directors (the "Board of
Directors") of San Diego Gas & Electric Company ("SDG&E" or the "Company") from
the shareholders of SDG&E (the "Shareholders") for use at the Special Meeting of
Shareholders, together with any adjournment thereof (the "Special Meeting"), to
be held at [_:__].m. on [_____, _____ __], 1995, at the California Center for
the Arts, Escondido, 340 North Escondido Boulevard, Escondido, California. Mail
to SDG&E should be addressed to the Office of the Senior Vice President, General
Counsel and Secretary, P.O. Box 1831, San Diego, California 92112-4150.
The enclosed proxy may be revoked at any time before it is voted by filing a
written notice of revocation with SDG&E or by presenting an executed proxy
bearing a later date at or prior to the Special Meeting. A Shareholder also may
revoke a proxy by attending the Special Meeting and voting in person; however,
attendance at the Special Meeting will not in and of itself constitute
revocation of a proxy.
The Board of Directors has fixed the close of business on [_____ __], 1995 as
the record date (the "Record Date") for the determination of Shareholders
entitled to notice of and to vote at the Special Meeting.
SDG&E has three classes of stock, of which there were issued and outstanding
at the close of business on the Record Date the following:
(a) 116,536,535 shares of common stock, without par value ("SDG&E
Common Stock");
(b) 1,374,650 shares of cumulative preferred stock, $20 par value per
share ("SDG&E Cumulative Preferred Stock"); and
(c) 3,190,000 shares of preference stock (cumulative), without par
value ("SDG&E Preference Stock (Cumulative)").
A Shareholder of record as of the close of business on the Record Date is
entitled to one vote per share for each share of SDG&E Common Stock held
and two votes per share for each share
1
of SDG&E Cumulative Preferred Stock held. Holders of SDG&E Preference
Stock (Cumulative) have voting rights only in limited circumstances
described in the SDG&E Restated Articles of Incorporation, as amended (the
"SDG&E Restated Articles"), and as allowed by California law.
Shares represented by properly executed proxies received by SDG&E
prior to or at the Special Meeting will be voted at the Special Meeting in
accordance with the instructions specified in each proxy. If no
instructions are specified in a particular proxy, subject shares will be
voted "FOR" approval of the Merger Agreement (defined below) and the
proposed formation of a holding company.
This Proxy Statement and Prospectus and the enclosed proxy were first
mailed on or about [_____ __], 1995 to Shareholders entitled to vote at
the Special Meeting.
FORMATION OF A HOLDING COMPANY
------------------------------
General
The Board of Directors has authorized, subject to Shareholder
approval, a plan to change the corporate structure of SDG&E and its
subsidiaries. The result of the restructuring will be to have SDG&E and
all of its direct subsidiaries become separate subsidiaries of a parent
holding company, SDO Parent Co., Inc. (herein referred to as "ParentCo"),
with the present holders of SDG&E Common Stock becoming holders of the
common stock of ParentCo, without par value ("ParentCo Common Stock").
The direct subsidiaries of SDG&E that, in addition to SDG&E, would become
direct subsidiaries of ParentCo are Pacific Diversified Capital Company,
Enova Corporation, Califia Company and Enova Energy Management, Inc.
Management and the Board of Directors consider the proposed change in
corporate structure to be in the best interests of SDG&E and its
Shareholders, believing that a parent holding company, with SDG&E as its
principal subsidiary, will result in benefits for SDG&E, its Shareholders
and other constituents.
THE BOARD OF DIRECTORS OF SDG&E RECOMMENDS APPROVAL OF THE MERGER
AGREEMENT AND THE PROPOSED FORMATION OF A HOLDING COMPANY AND URGES EACH
SHAREHOLDER TO VOTE "FOR" THE PROPOSED RESTRUCTURING.
Plan of Implementation
To carry out the restructuring, SDG&E has formed a new California
corporation, SDO Parent Co., Inc. (which name is subject to change at the
discretion of the Board of Directors and without further action by the
Shareholders prior to consummation of the restructuring). ParentCo has,
in turn, formed a new California corporation, San Diego Merger Company
("MergeCo"). Prior to the Merger, (i) MergeCo will have a nominal amount
of stock outstanding, all of which will be held by ParentCo, and no
business or properties of its own,
2
and (ii) ParentCo will have no business or properties of its own, and its
outstanding stock will be held by SDG&E.
SDG&E, ParentCo and MergeCo have approved an agreement of merger (the
"Merger Agreement"). The Merger Agreement is subject to certain
conditions, including shareholder approval as required by California law.
If the transactions contemplated by the Merger Agreement occur, SDG&E will
become a subsidiary of ParentCo through the merger of MergeCo into SDG&E
(the "Merger"). A copy of the Merger Agreement is attached to this Proxy
Statement as Exhibit A, and is incorporated herein by reference.
In the Merger, each share of SDG&E Common Stock will be converted into
one share of ParentCo Common Stock. Promptly following the Merger, SDG&E
will transfer to ParentCo the capital stock of SDG&E's present direct
subsidiaries so that these companies also will become direct subsidiaries
of ParentCo (the transfer, the Merger and related activity are sometimes
referred to in this Proxy Statement and Prospectus as the
"restructuring").
It is anticipated that the restructuring will not affect the position
of present Shareholders of SDG&E for federal income tax purposes. [See
"Federal Income Tax Consequences of the Merger" below.]
Except for SDG&E Common Stock, none of the securities of SDG&E,
including SDG&E Cumulative Preferred Stock, SDG&E Preference Stock
(Cumulative) and SDG&E's debt securities, will be changed by the Merger.
The outstanding shares of SDG&E Cumulative Preferred Stock and SDG&E
Preference Stock (Cumulative) will continue to be outstanding shares of
SDG&E. [See "Treatment of Preferred Stock" below.]
Reasons for the Restructuring
The principal reason for the proposed restructuring, including the
formation of ParentCo, is to respond to the changing business environment
in the electric and gas utility industries in a manner which management
believes is in the best interests of the Shareholders and customers. The
proposed restructuring will allow SDG&E to operate its regulated utility
business efficiently while providing, through the structure of a holding
company with other direct subsidiaries, an organization which permits
separation of the other facets of the Company, as a diversified energy
management company, from such regulated utility business.
For over a century, SDG&E has operated predominantly as a traditional
utility, responsible for constructing and operating the generation,
transmission and distribution facilities needed to serve its customers.
However, both regulation of utilities and the markets which SDG&E has
traditionally served are changing. As facets of the traditional utility
business which were once regulated, such as electric generation, have
become unregulated and competitive, the energy options for customers,
particularly large industrial users of energy, are expanding.
Management believes that the corporate separation afforded by a
holding company structure will permit the holding company, ParentCo,
effectively to respond to increasing
3
competition in the energy business. Where a facet of the business, such
as electric generation, becomes unregulated, that business can be
separated from the core utility business of SDG&E, although remaining
under the common ownership of ParentCo. Separation will facilitate the
development of such unregulated businesses while insulating SDG&E from the
risks associated with their activities. Following the Merger, any
liabilities of the direct subsidiaries of ParentCo other than SDG&E will
not constitute liabilities of SDG&E. Accordingly, any benefits or
detriments of these subsidiaries will flow to the security holders of
ParentCo and not to the security holders of SDG&E (i.e., holders of SDG&E
----
Cumulative Preferred Stock, SDG&E Preference Stock (Cumulative) and
SDG&E's debt securities).
In 1994, the California Public Utilities Commission (the "CPUC")
issued a proposal to restructure the California utility industry to allow
for increased competition in certain facets of the utility business. In
response to such proposal, SDG&E suggested consideration of the separation
of its electric generation assets. SDG&E is currently evaluating such a
separation and making preparations should the CPUC order it. Absent CPUC
direction, a separation may nevertheless become expedient in view of
evolving regulatory and market circumstances. Other facets of SDG&E's
present business also may become future candidates for separation. Any
separation of SDG&E assets and resources will be effected in compliance
with applicable regulatory and security holder approval requirements, and
the terms of any such separation will depend upon future conditions and
the scope of involved assets and resources.
Separation of the competitive, unregulated facets of the energy
business, as well as the diversified operations of SDG&E's present
subsidiaries (Pacific Diversified Capital Company, Enova Corporation,
Califia Company and Enova Energy Management, Inc.), from the core utility
business of SDG&E will help to protect SDG&E's stability as viewed by
sources of financing. Such stability is vital to avoid increased capital
costs for SDG&E which would lead to higher utility rates. Accordingly,
the holding company structure will support SDG&E's ability to continue
efficiently meeting its customers needs while permitting the Company to
respond to a changing business environment.
Management also believes that the holding company structure will
permit the use of financing techniques that are more directly suited to
the particular requirements, characteristics and risks of non-utility
operations without any impact on the capital structure or credit of SDG&E.
Management anticipates that (i) ParentCo, in addition to receiving
dividends from SDG&E (and other direct subsidiaries of ParentCo), may
obtain funds through debt or equity financings, (ii) SDG&E may obtain
funds through its own financings (which may include the issuance of first
mortgage bonds or preferred stock, as well as the issuance of additional
shares of SDG&E Common Stock to ParentCo), and (iii) the non-utility
businesses may obtain funds from ParentCo, from other non-utility
affiliates or from their own outside financings. Any financings will
depend upon the financial and other conditions of the entities involved
and on market conditions.
The proposed restructuring provides for a holding company that will
not be an operating utility. Neither ParentCo nor any securities it
issues will be subject to the jurisdiction of the CPUC, the Federal Energy
Regulatory Commission (the "FERC") or the Nuclear Regulatory Commission
(the "NRC"), although, as the sole owner of SDG&E Common Stock, ParentCo
4
will be indirectly subject to such jurisdiction and, as a result of the
process of obtaining approvals required to implement the restructuring,
ParentCo likely will be subject to certain conditions imposed on its
relationship with SDG&E. [See "Regulation" below.] The utility business
of SDG&E will constitute the predominant part of ParentCo's earning power
for the foreseeable future after the restructuring.
Following the restructuring, SDG&E will continue to operate as a
public utility subject to the jurisdiction of the CPUC, the FERC and the
NRC. The operations of SDG&E will continue to be conducted as they are at
the present time, with the same assets and management. Management and the
SDG&E Board of Directors believe that the restructuring will have no
adverse effect on SDG&E, its continuing security holders or its customers.
Merger Agreement
The Merger Agreement has been approved by the Boards of Directors of
SDG&E, ParentCo and MergeCo. Pursuant to the Merger Agreement, the
following events will occur upon the effectiveness of the Merger:
. Each outstanding share of SDG&E Common Stock will be
automatically converted into one share of ParentCo Common Stock.
. Each outstanding share of SDG&E Cumulative Preferred Stock and
SDG&E Preference Stock (Cumulative) will continue as one such
issued and outstanding share, with the same voting powers,
designations, preferences, rights, qualifications, limitations
and restrictions, just as prior to the Merger.
. The outstanding shares of the common stock of MergeCo will be
automatically converted into all of the issued and outstanding
shares of SDG&E Common Stock, all of which will then be owned by
ParentCo (with the effect that the number of issued and
outstanding shares of SDG&E Common Stock immediately after the
Merger will be the same as the number of issued and outstanding
shares of SDG&E Common Stock immediately prior to the Merger).
. The shares of ParentCo Common Stock presently held by SDG&E will
be canceled.
As a result, SDG&E, which will be the surviving corporation in the Merger,
will become a subsidiary of ParentCo, and all of the ParentCo Common Stock
outstanding immediately after the Merger will be owned by the holders of
SDG&E Common Stock outstanding immediately prior to the Merger.
Promptly following the Merger, SDG&E will complete the restructuring
by transferring the capital stock of SDG&E's present direct subsidiaries
(Pacific Diversified Capital Company, Enova Corporation, Califia Company
and Enova Energy Management, Inc.) to ParentCo.
5
Amendment or Termination
By mutual consent of their respective boards of directors, SDG&E,
ParentCo and MergeCo may abandon the Merger or amend, modify or supplement
the terms of the Merger Agreement in such manner as may be agreed upon by
them in writing at any time before or after approval of the restructuring
by the Shareholders. However, no such amendment, modification or
supplement shall, if agreed to after such approval by the Shareholders,
change any of the principal terms of the Merger Agreement. SDG&E will
notify the Shareholders in the event of any material amendment,
modification or supplement.
The Merger Agreement provides that it may be terminated, and the
Merger abandoned, at any time, whether before or after approval of the
restructuring by the Shareholders, by action of the SDG&E Board of
Directors if such Board determines that the completion of the
restructuring would for any reason be inadvisable or not in the best
interests of SDG&E or its Shareholders. In making such determination, the
SDG&E Board of Directors would consider, among other things, demands for
cash payments, if any, made by holders of SDG&E Common Stock or SDG&E
Cumulative Preferred Stock seeking to exercise statutory dissenters'
rights under applicable California law (described below under "Rights of
Dissenting Shareholders" below).
The SDG&E Board of Directors would be expected to terminate and
abandon the restructuring, for example, if SDG&E has not received, within
a reasonable period after Shareholder approval, the approval of the CPUC
on terms which are satisfactory to the SDG&E Board of Directors. SDG&E is
unable to predict under what other circumstances the restructuring might
be terminated and abandoned.
Treatment of Preferred Stock
The proposed Merger and restructuring will not result in any change in
SDG&E's two outstanding classes of preferred stock (SDG&E Cumulative
Preferred Stock and SDG&E Preference Stock (Cumulative)). The decision of
the SDG&E Board of Directors to have SDG&E Cumulative Preferred Stock and
SDG&E Preference Stock (Cumulative) continue as securities of SDG&E is
based upon, among other things, a desire to avoid changing the nature of
the investment represented by such stock, as well as the desire of SDG&E
not to foreclose future issuances of preferred stock to help meet its
capital requirements. SDG&E's debt securities also will not be altered in
the Merger; rather, these securities will remain outstanding and will
continue as obligations of SDG&E as the survivor of the Merger (in the
case of SDG&E's first mortgage bonds, continuing to be secured by a first
mortgage lien on the properties of SDG&E that are subject to such lien).
The utility operations of SDG&E presently constitute, and are expected
to continue to constitute for the foreseeable future, the substantial
majority of the affiliated group's consolidated assets and earning power.
Accordingly, it is believed that SDG&E Cumulative Preferred Stock and
SDG&E Preference Stock (Cumulative) will retain their investment rating,
as well as their qualification for legal investment, by remaining
outstanding securities of SDG&E.
6
SDG&E Cumulative Preferred Stock and SDG&E Preference Stock
(Cumulative) will continue to rank senior to SDG&E Common Stock (all of
which, after the Merger, will be held by ParentCo) as to dividends and as
to the distribution of assets of SDG&E in the event of any liquidation of
SDG&E. SDG&E Cumulative Preferred Stock and SDG&E Preference Stock
(Cumulative) are and will be unrelated in rank to ParentCo Common Stock or
the common stock of other direct subsidiaries to be held by ParentCo
(initially, Pacific Diversified Capital Company, Enova Corporation,
Califia Company and Enova Energy Management, Inc.). Payment of dividends
on ParentCo Common Stock will in large part depend on the earnings of
SDG&E and payment of dividends on SDG&E Common Stock. SDG&E's Restated
Articles will continue to provide that no dividends may be paid on SDG&E
Common Stock unless dividends are current on SDG&E Cumulative Preferred
Stock and SDG&E Preference Stock (Cumulative). Payment of any dividends
on the common stock of any other direct subsidiaries held by ParentCo will
be unaffected by any dividend payment or nonpayment on either SDG&E
Cumulative Preferred Stock, SDG&E Preference Stock (Cumulative) or SDG&E
Common Stock.
Separation from SDG&E of the assets and earnings of its non-utility
subsidiaries will decrease the assets and may decrease the earnings of
SDG&E, and will result in SDG&E's investment in these subsidiaries being
no longer of potential benefit to holders of SDG&E Cumulative Preferred
Stock, SDG&E Preference Stock (Cumulative) or SDG&E's debt securities
(i.e., any earnings of these subsidiaries will not be available to pay
-----
dividends, interest or principal with respect to such securities).
However, the SDG&E Board of Directors believes that such holders will not
be materially affected by the separation. SDG&E's net investment in its
non-utility subsidiaries was approximately $106 million at September 30,
1994, representing approximately 7.2% of the SDG&E Common Stock
shareholders' equity as of that date. If the separation of the non-
utility subsidiaries had occurred on January 1, 1994, the net income
(before SDG&E Cumulative Preferred Stock and SDG&E Preference Stock
(Cumulative) dividend requirements) of SDG&E for the nine months ended
September 30, 1994 would have increased by approximately $62.3 million, or
approximately 72.2%, and total assets would have decreased by
approximately $454.1 million, or approximately 9.9%. However, such
increase in net income reflected for SDG&E for the nine months ended
September 30, 1994 had such separation occurred on January 1, 1994 is
affected by a significant charge during such period for writedowns at the
non-utility subsidiaries of approximately $67 million (related to non-
earning assets - see "Pro Forma Financial Effects" below). In the absence
of such writedowns, such net income would have decreased upon a separation
by approximately $4.7 million, or approximately 3.1%.
The SDG&E Board of Directors believes that the separation will have no
material adverse effect on SDG&E's utility operations or on its financial
position or results of operations. Following the Merger, SDG&E will
continue to be a reporting company under the Securities Exchange Act of
1934, as amended. While annual meetings of SDG&E shareholders are
expected to continue to be held after the Merger, SDG&E may decide not to
solicit proxies from holders of SDG&E Cumulative Preferred Stock or SDG&E
Preference Stock (Cumulative) in connection with the election of directors
and in connection with other matters requiring the approval of
shareholders but not requiring a class vote of holders of SDG&E Cumulative
Preferred Stock or SDG&E Preference Stock (Cumulative), since the shares
of SDG&E
7
Common Stock owned by ParentCo will have sufficient voting power to take
action without the vote of SDG&E Cumulative Preferred Stock or SDG&E
Preference Stock (Cumulative).
Pro Forma Financial Effects
The following table summarizes certain pro forma financial effects of
the restructuring as of September 30, 1994, for the nine months ended
September 30, 1994, and for the year ended December 31, 1993, which, in
the opinion of management, reflect all adjustments necessary for a fair
presentation.
SDG&E Adjustments ParentCo
As SDG&E and Reclass- Consolidated
Reported Pro Forma ifications/(1)/ Pro Forma
- -----------------------------------------------------------------------------------------------------------
(In Thousands of Dollars)
Balance Sheets - as of September 30, 1994
Assets
Utility Plant - net............................. $3,134,811 $3,134,811 $ 0 $3,134,811
Investments and other property.................. 460,473 232,103 228,370 460,473
Current assets.................................. 421,877 307,051 114,826 421,877
Construction funds, deferred charges and other
assets....................................... 562,672 451,769 110,903 562,672
- -----------------------------------------------------------------------------------------------------------
Total Assets...................................... $4,579,833 $4,125,734 $ 454,099 $4,579,833
===========================================================================================================
Capitalization and Liabilities
Capitalization
Common equity................................. $1,463,124 $1,357,148 $ 105,976 $1,463,124
Preferred stock............................... 118,493 118,493 (118,493) /(2)/ 0
Preferred stock of SDG&E...................... 118,493 /(2)/ 118,493
Long-term debt................................ 1,337,996 1,220,448 117,548 1,337,996
- -----------------------------------------------------------------------------------------------------------
Total Capitalization............................ 2,919,613 2,696,089 223,524 2,919,613
- -----------------------------------------------------------------------------------------------------------
Current liabilities........................... 746,049 634,961 111,088 746,049
Deferred taxes and other liabilities.......... 914,171 794,684 119,487 914,171
- -----------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities.............. $4,579,833 $4,125,734 $ 454,099 $4,579,833
===========================================================================================================
8
Statements of Income - Nine Months ended
September 30, 1994/(3)/
Operating Revenues........................ $1,458,884 $1,367,432 $ 91,452 $1,458,884
Operating Expenses........................ 1,235,901 1,155,049 80,623 1,235,672
- -----------------------------------------------------------------------------------------------------
Operating Income.......................... 222,983 212,383 10,829 223,212
- -----------------------------------------------------------------------------------------------------
Other Income (Deductions)................. (59,733) 3,889 (63,851) (59,962)
Interest Charges.......................... 76,884 67,580 9,304 76,884
Preferred Dividend Requirements of SDG&E.. 5,747/(2)/ 5,747
- -----------------------------------------------------------------------------------------------------
Net Income................................ 86,366 148,692 (68,073) 80,619
- -----------------------------------------------------------------------------------------------------
Preferred Dividend Requirements........... 5,747 5,747 (5,747)/(2)/ 0
- -----------------------------------------------------------------------------------------------------
Earnings Applicable to Common Shares...... $ 80,619 $ 142,945 $(62,326) $ 80,619
=====================================================================================================
Statements of Income - Year ended
December 31, 1993
Operating Revenues........................ $1,980,115 $1,861,266 $118,849 $1,980,115
Operating Expenses........................ 1,686,441 1,573,052 113,389 1,686,441
- -----------------------------------------------------------------------------------------------------
Operating Income.......................... 293,674 288,214 5,460 293,674
- -----------------------------------------------------------------------------------------------------
Other Income.............................. 26,340 19,081 7,259 26,340
Interest Charges.......................... 101,299 91,423 9,876 101,299
Preferred Dividend Requirements of SDG&E.. 8,565 /(2)/ 8,565
- -----------------------------------------------------------------------------------------------------
Net Income................................ 218,715 215,872 (5,722) 210,150
- -----------------------------------------------------------------------------------------------------
Preferred Dividend Requirements........... 8,565 8,565 (8,565)/(2)/ 0
- -----------------------------------------------------------------------------------------------------
Earnings Applicable to Common Shares...... $ 210,150 $ 207,307 $ 2,843 $ 210,150
=====================================================================================================
(1) Pro forma SDG&E amounts have been adjusted to eliminate subsidiaries
to be transferred to ParentCo.
(2) Pro forma amounts assume no exercise of preferred stockholders'
dissenters' rights. Preferred stock of SDG&E and related dividends
have been reclassified.
(3) Includes charges of approximately $80 million for SDG&E (as reported,
or ParentCo on a consolidated pro forma basis), or $0.68 per common
share, for writedowns related to non-earning assets of SDG&E (on a pro
forma basis -- approximately $13 million) and non-SDG&E subsidiaries
of ParentCo (approximately $67 million).
9
Dividend Policy
It is anticipated that quarterly dividends on ParentCo Common Stock
will commence at a rate equal to that currently being paid on SDG&E Common
Stock, and will be paid on approximately the same dates in each year as
dividends on SDG&E Common Stock have been paid. The quarterly dividend
most recently declared by the SDG&E Board of Directors was $0.38 per share
of SDG&E Common Stock payable on January 15, 1995 to holders of record on
December 10, 1994. The rate and timing of dividends of ParentCo will
depend upon the earnings, financial condition and dividend restrictions of
ParentCo and its subsidiaries, including SDG&E, and upon other factors
affecting dividend policy which are not presently determinable.
Initially, the funds required by ParentCo to enable it to pay
dividends on ParentCo Common Stock are expected to be derived primarily
from dividends paid by SDG&E on SDG&E Common Stock. It is anticipated
that such cash dividends paid by SDG&E to ParentCo will be sufficient,
together with any amounts provided by other subsidiaries of ParentCo, to
enable ParentCo to pay cash dividends on ParentCo Common Stock and to meet
operating and other expenses. However, the dividend policy of SDG&E will
be established by SDG&E's Board of Directors as though SDG&E were a stand-
alone utility, and the amounts of dividends declared and paid by SDG&E
will be subject to the availability of earnings and the needs of the
utility business, as well as CPUC requirements. In addition, the ability
of SDG&E to pay dividends on SDG&E Common Stock to ParentCo will be
subject to the prior dividend rights of SDG&E Cumulative Preferred Stock
and SDG&E Preference Stock (Cumulative), to restrictions contained in the
indenture supporting SDG&E's first mortgage bonds and other agreements to
which SDG&E is or may become a party, and to requirements of California
law.
Payment of dividends on SDG&E Cumulative Preferred Stock and SDG&E
Preference Stock (Cumulative) is anticipated to continue at the specified
rates without interruption or change; however, the payment of these
dividends is also dependent upon the earnings and financial condition of,
and other factors affecting, SDG&E.
Directors and Management of ParentCo and SDG&E
The Directors of SDG&E will also be the Directors of ParentCo after
the completion of the restructuring. In approving the Merger Agreement and
the proposed formation of a holding company, Shareholders will be
considered also to have ratified the election of these persons as
Directors of ParentCo (as well as ratifying the establishment of a
classified Board for ParentCo and the inclusion of certain Directors
within the various classes as set forth below (see "Articles of
Incorporation and Bylaws of ParentCo--Elections: Classified Board of
Directors"). At annual meetings of ParentCo subsequent to the Merger,
persons may be nominated for election as Directors of ParentCo who will
not be members of the SDG&E Board of Directors.
The following persons, each of whom is currently an executive officer
of SDG&E, will hold, at least initially, in addition to the office or
offices held with SDG&E, the offices of ParentCo indicated below:
10
Name Office
---- ------
Thomas A. Page Chairman of the Board, President and Chief
Executive Officer
Stephen L. Baum Executive Vice President
Donald E. Felsinger Executive Vice President and Chief
Financial Officer
Nad A. Peterson Senior Vice President, General Counsel and
Secretary
Frank H. Ault Vice President, Controller
Initially, ParentCo will not have full-time officers and employees of
its own. To the extent, however, that the activities of ParentCo expand,
ParentCo may employ full-time salaried officers and employees. ParentCo
and SDG&E each expect, from time to time, to render to the other certain
services and to make available the use of certain facilities and
equipment. The corporation receiving such services or using such
facilities and equipment will reimburse the other corporation for the cost
or fair market value thereof, as appropriate.
Articles of Incorporation and Bylaws of ParentCo
The articles of incorporation of ParentCo, as they shall be amended
and restated prior to the effectiveness of the Merger (the "ParentCo
Articles"), have been prepared in accordance with the California General
Corporation Law (the "California GCL") and give ParentCo broad corporate
powers to engage in any lawful activity for which a corporation may be
formed under the laws of the State of California. The following statements
summarize certain relevant provisions of the ParentCo Articles. This
summary should be read in the context of, and is qualified by reference
to, (i) the full ParentCo Articles, a copy of which is attached to this
Proxy Statement and Prospectus as Exhibit B, and (ii) the laws of the
State of California.
The ParentCo Articles contain certain provisions which are similar to
the SDG&E Restated Articles; however, aside from the deletion of certain
provisions which are obsolete or unnecessary or which specifically concern
SDG&E Cumulative Preferred Stock and SDG&E Preference Stock (Cumulative),
there are certain distinctions which are noted below. Shareholders should
be aware that one effect of these distinct provisions of the ParentCo
Articles may be to delay and thus make more difficult a change in the
composition of the ParentCo Board of Directors as compared with the SDG&E
Board of Directors, or the removal of existing management, even in
circumstances where a majority of the shareholders of ParentCo may be
dissatisfied with the performance of the incumbent Directors or otherwise
desire to make changes.
Analysis of distinctions in the ParentCo Articles should be tempered,
however, by reference to SDG&E's status as a substantially regulated
entity (see "Regulation" below). For example,
11
changes in control of SDG&E typically would be subject to CPUC review and
approval. Accordingly, while certain provisions of the ParentCo Articles
may have the effect of making changes in Board composition and management
subject to delay and thus more difficult, the transition from holding
stock in a regulated utility to holding stock in ParentCo may have the
effect of lessening other restrictions (e.g., certain regulatory reviews
----
of a change in control) affecting a shareholder's ability to influence
corporate policy and control.
Capital Stock
-------------
The ParentCo Articles authorize the issuance of 300 million shares of
ParentCo Common Stock and 30 million shares of preferred stock of ParentCo
(the "ParentCo Preferred Stock"). Immediately after the Merger, ParentCo
will have approximately 116,541,000 shares of ParentCo Common Stock and no
shares of ParentCo Preferred Stock outstanding. Under California law,
shares of ParentCo Common Stock and ParentCo Preferred Stock may be issued
by ParentCo from time to time upon such terms and for such consideration
(and, as to Preferred Stock, having such rights, preferences, privileges
and restrictions) as may be determined by the ParentCo Board of Directors.
Such further issuances, up to the aggregate amounts authorized by the
ParentCo Articles, will not require authorization from the CPUC or
approval by the shareholders. ParentCo may issue ParentCo Common Stock
from time to time pursuant to common stock investment and employee benefit
plans (see "Common Stock Investment and Employee Benefit Plans" below).
Aside from these plans, there presently are no intentions to offer or sell
shares of ParentCo Preferred Stock or additional shares of ParentCo Common
Stock. Under current provisions of the Public Utility Holding Company Act
of 1935, as amended (the "Holding Company Act"), and the rules and
regulations thereunder, issuance of ParentCo Preferred Stock may be
restricted.
Holders of ParentCo Common Stock, subject to any prior rights or
preferences of ParentCo Preferred Stock outstanding, (i) have equal rights
to receive dividends if and when declared by the ParentCo Board of
Directors out of funds legally available therefor and (ii) will receive
any distribution made to shareholders upon liquidation. ParentCo Common
Stock has no preemptive rights to subscribe for additional shares of
ParentCo Common Stock or other securities of ParentCo, nor does it have
any redemption or conversion rights. ParentCo Common Stock has voting
rights on the basis of one vote per share. Any series of ParentCo
Preferred Stock issued by ParentCo will have such voting rights as may be
determined by the ParentCo Board of Directors at the time of issuance;
however, the present policies of the national stock exchanges against
issuances of stock with disparate voting rights may serve to limit
ParentCo's issuances of any ParentCo Preferred Stock with enhanced voting
rights.
Number of Directors
-------------------
The California GCL allows the number of persons constituting the board
of directors of a corporation to be fixed by the bylaws or the articles of
incorporation, or permits the bylaws to provide that the number of
directors may vary within a specified range, the exact number to be
determined by the board of directors. The California GCL further provides
that, in the case of a variable board, the maximum number of directors may
not exceed two times the minimum number minus one. The bylaws of SDG&E
(the "SDG&E Bylaws") provide for a Board of
12
Directors that may vary between seven (7) and thirteen (13) members,
inclusive, and the SDG&E Board of Directors has presently fixed the exact
number of directors at ten (10). The SDG&E Bylaws permit the range of
directors, and the precise number within such range, to be modified by a
majority of the outstanding SDG&E shares entitled to vote.
The ParentCo Articles provide that the number of directors of ParentCo
shall not be fewer than nine (9) nor more than thirteen (13), with the
exact number to be determined by the ParentCo Board of Directors or by a
bylaw or an amendment thereof adopted by a vote of the holders of shares
representing at least 66-2/3% of the outstanding shares of ParentCo
entitled to vote. The ParentCo Board is presently fixed at ten (10), and
its membership is identical to the SDG&E Board of Directors. The ParentCo
Articles also provide that the range of directors, and the precise number
within such range, may be modified by a vote of the holders of at least
66-2/3% of the outstanding ParentCo shares. ParentCo has no current
intention of changing the number of directors of ParentCo if the Merger is
consummated.
Cumulative Voting
-----------------
Under cumulative voting, each share of stock entitled to vote in an
election of directors has such number of votes as is equal to the number
of directors to be elected. A shareholder may then cast all of his or her
votes for a single candidate or may allocate them among as many candidates
as the shareholder may choose. As a result, shareholders holding a
significant minority percentage of the outstanding shares entitled to vote
in an election of directors may be able to effect the election of one or
more directors. If cumulative voting is available, then it is mandatory
upon timely notice given by any shareholder at a meeting at which
directors are to be elected.
The SDG&E Bylaws provide for the elimination of cumulative voting, as
do the ParentCo Articles. Thus, the holder or holders of shares
representing a majority of the votes entitled to be cast in an election of
directors for ParentCo will be able to elect all directors then being
elected. The absence of cumulative voting could have the effect of
preventing representation of minority shareholders on the ParentCo Board
of Directors.
Elections: Classified Board of Directors
----------------------------------------
The California GCL generally requires that directors be elected
annually but does permit a "classified" board of directors if a
corporation either (i) has outstanding securities listed on the New York
Stock Exchange (the "NYSE") or the American Stock Exchange (the "AMEX") or
(ii) has securities designated for trading as a National Market System
security on the National Association of Security Dealers Automatic
Quotation ("Nasdaq") and at least 800 shareholders (including record and
beneficial owners) (collectively, "Listed Corporations"). SDG&E is a
Listed Corporation and ParentCo will, upon the effectiveness of the Merger
or promptly thereafter, be a Listed Corporation. SDG&E's Restated
Articles currently do not provide for a classified board.
The ParentCo Articles provide that, upon ParentCo's attainment of
status as a Listed Corporation (i.e., upon the effectiveness of the Merger
----
or promptly thereafter), the ParentCo
13
Board of Directors will become a classified board with three classes of
directors, with members of one class to be elected each year for a maximum
term of three years. By approving the Merger Agreement and the proposed
formation of a holding company, Shareholders will be ratifying the
election of the Directors to the following classes of the ParentCo Board
in the event the Merger is consummated:
(1) Class I (with terms expiring at the next annual meeting):
[_______, _______ and _______];
(2) Class II (with terms expiring at the annual meeting following the
next annual meeting): [_______, _______ and _______]; and
(3) Class III (with terms expiring at the annual meeting following
the two next annual meetings): [_______, ______, ________ and
_______].
With a classified board, unless adequate cause for removal of directors
exists, at least two annual meetings of shareholders would be required for
a majority of the shareholders comprising less than a 66-2/3% majority to
make a change in control of the ParentCo Board of Directors, since only a
minority of the directors will be elected at each meeting.
Actions by Written Consent
--------------------------
The California GCL permits shareholders, unless specifically prohibited
by the articles of incorporation, to take action without a meeting by the
written consent of the holders of at least the number of shares necessary
to authorize or take such action at a meeting at which all shares entitled
to vote thereon were present and voted. SDG&E's Restated Articles do not
restrict shareholder action by written consent. Action by written consent
may, in some circumstances, permit the taking of shareholder action
opposed by the Board of Directors more rapidly than would be possible if a
meeting of shareholders were required.
In connection with its evaluation of the restructuring, the Board has
determined that it is important that it be able to give advance notice of
and consideration to any action to be voted on by shareholders, and that
all shareholders be able to discuss at a meeting matters which may affect
their rights. Accordingly, the ParentCo Articles eliminate actions by
written consent of shareholders unless either (i) the Board waives the
prohibition in a particular circumstance or (ii) the action is by the
unanimous written consent of all shareholders.
Fair Price Provisions
---------------------
The ParentCo Articles contain "fair price" provisions which are
substantially similar to those contained in SDG&E's Restated Articles.
These provisions are intended to reduce the possibility of unfair
treatment of shareholders in takeover situations.
14
Indemnification Provisions
--------------------------
The ParentCo Articles contain provisions regarding the indemnification
of directors, officers and other agents of ParentCo which are
substantially similar to provisions contained in SDG&E's Restated
Articles.
Amendment of Articles
---------------------
Except for the fair price provisions contained in SDG&E's Restated
Articles (for which amendment requires a 66-2/3% shareholder vote), the
SDG&E Restated Articles may be amended by the approval of the holders of
shares having a majority of the votes entitled to be cast for such
amendment. The ParentCo Articles provide that the provisions relating to
(i) indemnification of officers and directors, (ii) the number of
directors, classification of the board and the election of directors
(including the limitation on cumulative voting), (iii) the limitation on
action of shareholders by written consent, (iv) the fair price provisions
and (v) amendment of the bylaws of ParentCo (the "ParentCo Bylaws") can
only be amended by a vote of the holders of shares representing at least
66-2/3% of the outstanding shares of ParentCo entitled to vote.
Amendment of Bylaws
-------------------
The SDG&E Bylaws may be amended or repealed either by the SDG&E Board
of Directors or by the holders of shares having a majority of the votes
entitled to be cast for such amendment. The ParentCo Articles provide
that (1) upon a vote of at least 66-2/3% of the authorized number of
directors, the ParentCo Board of Directors will be able to adopt, amend or
repeal any of the ParentCo Bylaws, and (2) the ParentCo Bylaws may also be
adopted, amended or repealed by a vote of the holders of shares
representing at least 66-2/3% of the outstanding shares of ParentCo
entitled to vote.
The ParentCo Bylaws initially will be substantially similar to the
SDG&E Bylaws.
Listing of ParentCo Common Stock
ParentCo has applied to list ParentCo Common Stock on the NYSE and on
the Pacific Stock Exchange (the "PSE"). It is expected that such listings
will occur on, or soon after, the effective date of the Merger. At the
time of the listing of ParentCo Common Stock, SDG&E Common Stock will then
be delisted from trading on these stock exchanges (all outstanding shares
will then be held by ParentCo). Shares of SDG&E Cumulative Preferred
Stock and SDG&E Preference Stock (Cumulative) that are listed on the AMEX
and the PSE will continue to be so listed.
Transfer Agent and Registrar
It is expected that the transfer agent for and the registrar of
ParentCo Common Stock will be the same as is presently serving in such
capacities for SDG&E Common Stock: First Interstate Bank of California.
15
Common Stock Investment and Employee Benefit Plans
If the Merger is completed, SDG&E's Common Stock Investment Plan will
be assumed and continued by ParentCo on and after the effective date of
the Merger, so that shares of ParentCo Common Stock thereafter will be
available to the holders of ParentCo Common Stock and the customers of
SDG&E on the same terms as provided in SDG&E's Common Stock Investment
Plan.
If the Merger is completed, SDG&E's Savings Plan and 1986 Long-Term
Incentive Plan will be amended, as and when appropriate, to provide for
the acquisition of ParentCo Common Stock rather than SDG&E Common Stock.
Such plans, as well as the Pension Plan and other employee benefit plans
of SDG&E (collectively, the "Employee Benefit Plans"), also will be
amended, as and when appropriate, to include eligible employees of
ParentCo and the subsidiaries of ParentCo other than SDG&E and to make any
other changes necessary or appropriate as a result of the formation of a
holding company and the related restructuring.
By approving the Merger Agreement and the proposed formation of a
holding company, the Shareholders will be deemed to have approved the
actions to be taken in connection therewith and with the Employee Benefit
Plans, including any amendments to the Employee Benefit Plans necessary to
accomplish those actions.
Regulation
As a utility, SDG&E is subject to the jurisdiction of the CPUC with
respect to rates for retail sales, standards of service, issuances of
securities and certain other matters. SDG&E is also subject to the
jurisdiction of (i) the FERC, with respect to certain phases of its
electric business, including rates for sales at wholesale, rates for
transmission, interconnections with other electric utilities and
accounting, and (ii) the NRC, with respect to SDG&E's partial ownership of
and co-licensee status as to the San Onofre nuclear generating facilities.
The formation of a holding company, the Merger and the related
restructuring will not change the applicability of such regulatory
jurisdiction to SDG&E. Moreover, SDG&E must obtain authorization from the
CPUC, the FERC and the NRC to implement the restructuring. An application
for authorization from the CPUC was filed on November 7, 1994, and SDG&E
subsequently filed for approvals from the FERC and the NRC.
So long as ParentCo is not a public utility or the owner or licensee of
nuclear generating facilities, it will not be subject to regulation by the
CPUC, the FERC or the NRC, except to the extent of the conditions imposed
by the orders of those bodies authorizing the formation of a holding
company structure or approving aspects of the related restructuring. It
is anticipated that CPUC authorization may include conditions, among
others, which will be designed to (i) ensure that all costs incurred by
SDG&E which result from the activities undertaken by SDG&E's affiliates
will be fully recovered from such affiliates, (ii) provide the CPUC with
access to all information necessary to analyze SDG&E's costs and monitor
the relationships between SDG&E and its non-utility affiliates, (iii)
ensure that SDG&E's customers will be insulated from effects of non-
utility activities, and (iv) protect the financial health of SDG&E's
16
utility operations. SDG&E will continue to be subject to CPUC regulation
of its operations, including its dealings with ParentCo.
ParentCo believes that it will be entitled to an exemption from all
provisions, except Section 9(a)(2), of the Holding Company Act. This will
occur upon completion of the Merger and related restructuring and the
filing of an appropriate exemption statement pursuant to the provision of
the Holding Company Act. It will be necessary to file an annual exemption
statement each year after that. The basis of this exemption is that
ParentCo and SDG&E are incorporated in the same state and their business
is predominately intrastate in character and carried on substantially in
the state of incorporation. This exemption is available only so long as
the utility business of SDG&E is primarily intrastate in nature and may be
revoked on a finding by the Securities and Exchange Commission (the "SEC")
that such exemption may be detrimental to the public interest or the
interest of investors or consumers. The prior approval of the SEC under
Section 9(a)(2) of the Holding Company Act would be required, however, if
ParentCo proposed the acquisition, directly or indirectly, of additional
utility subsidiaries. ParentCo has no present intention of becoming a
registered holding company subject to regulation by the SEC under the
Holding Company Act.
Conditions Precedent to the Merger
The Merger Agreement provides that consummation of the Merger is
subject to approval of the principal terms of the Merger Agreement by the
shareholders of SDG&E, ParentCo and MergeCo, as more fully set forth below
under "Required Vote" below. If the required votes of the Shareholders of
SDG&E are obtained, SDG&E will then cause the shares of ParentCo and
MergeCo to be voted in favor of the Merger.
In addition, the Merger is also subject to (i) approval of the
principal terms of the Merger by the CPUC upon terms and conditions which
are satisfactory to the SDG&E Board of Directors and (ii) approval by the
NYSE of ParentCo Common Stock for listing upon official notice of
issuance.
Effective Date of the Merger
The Merger Agreement provides that the Merger will be effective at the
end of the last day of the calendar month during which the Merger
Agreement and related officers' certificates are filed with the California
Secretary of State as provided in Section 1103 of the California GCL.
Management anticipates that the effective date will occur prior to or on
September 30, 1995, although there can be no assurance (e.g., due to
----
delays which may occur in seeking approval from the CPUC or acceleration
of that process) that the effective date will not occur prior to or
subsequent to that date. All other steps in the restructuring plan will
be completed upon such effectiveness or promptly thereafter.
Required Vote
Under California law and SDG&E's Restated Articles, approval of the
Merger Agreement and the proposed formation of a holding company will
require the favorable vote of (1) a majority of the outstanding shares of
SDG&E Common
17
Stock and (2) a majority of the outstanding shares of the combined classes
of SDG&E Common Stock and SDG&E Cumulative Preferred Stock, with each
share of SDG&E Common Stock being entitled to one vote and each share of
SDG&E Cumulative Preferred Stock being entitled to two votes. In
addition, the Merger Agreement provides that consummation of the Merger is
conditioned upon approval by a two-thirds majority of the outstanding
shares of the combined classes of SDG&E Cumulative Preferred Stock and
SDG&E Preference Stock (Cumulative), with each share being entitled to one
vote.
An abstention, or shares represented by proxies which are marked
"ABSTAIN," as well as the failure of a broker or other nominee to vote
shares for a beneficial owner will have the same effect as a vote against
the Merger Agreement and the proposed formation of a holding company.
Rights of Dissenting Shareholders
The rights of Shareholders who dissent with respect to the Merger are
governed by Chapter 13, Sections 1300-1312 ("Chapter 13"), of the
California GCL, the text of which is set forth as Exhibit C to this Proxy
Statement. The description of dissenters' rights in this Proxy Statement
is qualified in its entirety by reference to Chapter 13 of the California
GCL.
If the Merger is completed, certain of the Shareholders who object to
the Merger and who have fully complied with all applicable provisions of
Chapter 13 of the California GCL will have the right to require SDG&E to
purchase their shares for cash at the fair market value of such shares as
of the close of business on November 4, 1994, the business day before the
terms of the Merger were first announced, excluding any appreciation or
depreciation because of the proposed Merger. [See "Market Values of
Stock" below.] Persons who are beneficial owners of shares of SDG&E but
whose shares are held by another person, such as a broker or nominee,
should instruct the record holder to follow the procedures outlined below
if such persons wish to dissent with respect to any or all of their
shares.
The procedural requirements to be complied with differ in some respects
depending upon whether or not the shares at issue are listed on either (i)
a national securities exchange certified by the California Commissioner of
Corporations or (ii) the list of OTC margin stocks issued by the Board of
Governors of the Federal Reserve System. The only class of shares
eligible to be dissenting shares which is not so listed (the "Unlisted
Shares") is the SDG&E Cumulative Preferred Stock, 4.60% Series. The
classes of shares eligible to be dissenting shares which are so listed
(the "Listed Shares") are (1) all series of SDG&E Cumulative Preferred
Stock other than the Unlisted Shares and (2) SDG&E Common Stock. Holders
of shares of SDG&E Preference Stock (Cumulative) are not entitled to have
SDG&E purchase their shares.
Unlisted Shares must be purchased by SDG&E upon compliance by any
holder with all applicable requirements. Listed Shares must also be
purchased by SDG&E if all applicable requirements are complied with, but
only if (a) demands for payment are filed with respect to five percent
(5%) or more of the outstanding shares of such class (with shares of SDG&E
Common Stock treated as one single class for such purposes and all shares
of SDG&E Cumulative Preferred Stock, other than the Unlisted Shares,
treated as another single class), or (b) the shares are subject to a
restriction on transfer imposed by SDG&E or by any law or
18
regulation. In this regard, SDG&E is not aware of any restriction on
transfer except restrictions that may be imposed upon Shareholders who are
deemed to be "affiliates" of SDG&E (as that term is defined in Rule 144
adopted by the SEC under the Securities Act of 1933, as amended (the
"Securities Act")) and/or those who received shares in private
transactions exempt from the registration requirements of the Securities
Act. SDG&E urges any Shareholder believing there is any such restriction
affecting his or her shares to consult with his or her own legal counsel
as to the nature and extent of any dissenters' rights he or she may have.
The different procedures for security holders wishing to dissent under
Chapter 13 of the California GCL with respect to Listed Shares and
Unlisted Shares are summarized below.
Unlisted Shares
---------------
Assuming SDG&E elects to proceed with the Merger (see "Amendment or
Termination" above), within ten days after approval of the Merger by the
Shareholders SDG&E will notify all holders of Unlisted Shares who did not
vote in favor of the Merger of the approval. SDG&E will offer all such
holders a cash price for their shares that SDG&E considers to be the fair
market value (as described above) of the shares. The notification will
also contain a brief description of the procedures to be followed under
Chapter 13 of the California GCL (and a copy of it) in order for a holder
of Unlisted Shares to exercise his or her rights to have SDG&E purchase
such shares. These procedures include the following requirements:
(1) The holder of record must not have voted the shares in favor of
the Merger. The holder may, however, have abstained from voting
without losing the right to have SDG&E purchase his or her
shares. The holder may also have voted some of his or her
shares in favor of the Merger without losing rights as to shares
not voted in favor of the Merger.
(2) Any such holder who wishes to have SDG&E purchase his or her
shares that were not voted in favor of the Merger must make a
written demand to have SDG&E purchase the shares for their fair
market value. The demand must include the information specified
below and must be received by SDG&E or its transfer agent within
30 days after the date on which notice of approval of the Merger
is mailed by SDG&E to the holder. [See "Demand for Purchase"
below.]
Listed Shares
-------------
For a holder of Listed Shares to exercise the right to have SDG&E
purchase his or her shares, the procedures to be followed under Chapter 13
of the California GCL include the following requirements:
(1) The holder of record must have voted the shares against the
Merger. It is not sufficient to abstain from voting. However,
the holder may vote part of his or her shares in favor of the
Merger or abstain from voting part of his or her shares
19
without losing the right to have SDG&E purchase those shares
which were voted against the Merger.
(2) Any such holder who voted against the Merger, and who wishes to
have SDG&E purchase his or her shares that were voted against
the Merger, must make a written demand to have SDG&E purchase
the dissenting shares for their fair market value. The demand
must include the information specified below and must be
received by SDG&E or its transfer agent not later than the date
of the Special Meeting at which the Merger is approved. [See
"Demand for Purchase" below.]
Assuming SDG&E elects to proceed with the Merger (see "Amendment or
Termination" above), within ten days after approval of the Merger by
SDG&E's shareholders, SDG&E will notify any holders of Listed Shares who
voted against the Merger and made a timely demand for purchase (and who
are entitled to require SDG&E to purchase their shares because either (1)
holders of five percent (5%) or more of the outstanding shares of the
relevant class filed notices by the date of the Special Meeting or (2) the
shares are restricted as to transfer) of the approval and will offer all
of these holders a cash price for their shares which SDG&E considers to be
the fair market value (as described above) of the shares. The
notification will also contain a brief description of the procedures to be
followed under Chapter 13 of the California GCL (and a copy of it) in
order for a holder of Listed Shares to exercise his or her right to have
SDG&E purchase such shares.
Demand for Purchase
-------------------
Merely voting or delivering a proxy directing a vote against approval
of the Merger does not constitute a demand for purchase. A written demand
is required. In all cases, the written demand must:
(1) Be made by the person who was the holder of record on the Record
Date (or his or her duly authorized representative) and not by
someone who is merely a beneficial owner of the shares or a
holder who acquired the shares subsequent to the Record Date;
(2) State the number and class of dissenting shares;
(3) Include an offer to sell the shares to SDG&E at what the holder
believes to be the fair market value of the shares on November
4, 1994, the business day before the terms of the Merger were
first announced, excluding any appreciation or depreciation
because of the proposed Merger.
In addition, the following conditions apply:
(a) The demand should be sent by registered or certified mail,
return receipt requested.
20
(b) The demand must be signed by the holder of record (or his or her
duly authorized representative) exactly as his or her name
appears on the form of proxy accompanying his or her copy of
this Proxy Statement and Prospectus.
(c) A demand regarding shares owned jointly by more than one person
must identify and be signed by all such holders.
(d) Any person signing a demand in any representative capacity (such
as attorney-in-fact, executor, administrator, trustee or
guardian) must indicate his or her title and, if SDG&E so
requests, must furnish written proof of his or her capacity and
authority to sign the demand.
A demand for payment may not be withdrawn without the consent of SDG&E.
Other Requirements
------------------
Within 30 days after the date on which notice of approval of the Merger
is mailed by SDG&E to appropriate Shareholders, a holder's certificates,
representing any shares which the holder demands that SDG&E purchase, must
be submitted to SDG&E at its principal offices or to SDG&E's transfer
agent to be endorsed with a statement that the shares are dissenting
shares. Upon subsequent transfer of these endorsed shares, the new
certificates will be similarly endorsed.
If SDG&E and a Shareholder fail to agree on either the fair market
value of the shares or on the eligibility of the shares to be purchased by
SDG&E, then either the Shareholder or SDG&E may file a complaint for
judicial resolution of the dispute. The complaint must be filed within
six months after the date on which the notice of approval is mailed to
Shareholders. If a complaint is not filed within such six-month period,
the shares will lose their eligibility for status as dissenting shares.
Two or more dissenting Shareholders may join as plaintiffs or be joined as
defendants in such an action. If the fair market value of the shares is
in dispute, the court shall determine, or shall appoint one or more
impartial appraisers to assist in its determination of, the fair market
value. The costs of the action will be assessed or apportioned as the
court considers equitable, but if the fair market value is determined to
exceed the price offered by SDG&E, then SDG&E will be required to pay such
costs. Under certain circumstances, SDG&E may also be required to pay
attorneys' fees and certain other costs.
Any demands, notices or other documents required to be sent to SDG&E
may be sent to it at 101 Ash Street, P.O. Box 1831, San Diego, California
92112-4150. Any demands, notices or other documents required to be sent
to a transfer agent may be sent to First Interstate Bank of California at
either (i) Stock Transfer Department, P.O. Box 54261, Los Angeles,
California 90054 or (ii) 120 Broadway, 13th Floor, New York, New York
10271.
As mentioned above, under the Merger Agreement the SDG&E Board of
Directors has the right to abandon the Merger for any reason (even after
Shareholder approval), and that right may be exercised if the aggregate
cost of purchasing dissenting shares is not acceptable. In such case,
SDG&E will not be obligated to purchase any dissenting shares but may be
required
21
to pay necessary expenses and reasonable legal fees of Shareholders who
have in good faith commenced proceedings to enforce their dissenters'
rights.
Market Values of Stock
The market values of the various classes and series of capital stock of
SDG&E on November 4, 1994 (the business day immediately preceding public
announcement of the terms of the proposed Merger) were:
Market Value
Title of Class/Series Per Share
--------------------- ------------
Common Stock................................... $19.625
Cumulative Preferred Stock:
5% Series................................. 11.25
4 1/2% Series............................. 10.25
4.40% Series.............................. 10.125
4.60% Series/(1)/......................... --
Preference Stock (Cumulative):
$7.20 Series.............................. 85.00
$1.70 Series/(1)/......................... --
$1.82 Series.............................. 22.50
$1.7625 Series/(1)/....................... --
(1) Not listed or publicly traded. No market value is available.
There is no public market as yet for ParentCo Common Stock.
Exchange of Stock Certificates Not Required
If the proposed restructuring is carried out, it will not be
necessary for holders of SDG&E Common Stock to exchange their existing
stock certificates for stock certificates of ParentCo. Holders of SDG&E
Common Stock will automatically become holders of ParentCo Common Stock on
a share-for-share basis, and the present stock certificates for SDG&E
Common Stock will automatically represent shares of ParentCo Common Stock.
After the restructuring, as presently outstanding certificates are
presented for transfer, new certificates bearing the name of SDO Parent
Co., Inc. (or a name which may be substituted for SDO Parent Co., Inc.
prior to consummation of the Merger) will be issued. New certificates of
ParentCo will also be issued in exchange for old certificates of SDG&E
upon the request of any Shareholder. Certificates presented for transfer
to a name other than that in which the surrendered certificate is
registered must be properly endorsed, with the signature guaranteed, and
accompanied by evidence of payment of any applicable stock transfer taxes.
22
Federal Income Tax Consequences of the Merger
SDG&E and ParentCo have been advised by their counsel, Pillsbury
Madison & Sutro, that:
(1) No gain or loss will be recognized by the holders of shares of
SDG&E Common Stock on the receipt of shares of ParentCo Common
Stock solely in exchange for shares of SDG&E Common Stock.
(2) The basis of shares of ParentCo Common Stock received by the
holders of shares of SDG&E Common Stock will be the same as
the basis of the shares of SDG&E Common Stock exchanged for
them.
(3) As to each holder of shares of SDG&E Common Stock who held his
or her shares as a capital asset, the holding period of shares
of ParentCo Common Stock will include the holding period of
the shares of SDG&E Common Stock exchanged for them.
(4) No gain or loss will be recognized by ParentCo upon the
issuance of shares of ParentCo Common Stock in exchange for
shares of SDG&E Common Stock.
The advice of Pillsbury Madison & Sutro summarized above is
conditioned on the receipt by SDG&E of a private letter ruling from the
Internal Revenue Service to the effect that (i) the formation of MergeCo
and the Merger will be disregarded for federal income tax purposes, and
(ii) the transaction will be treated as a transfer by the holders of SDG&E
Common Stock of such SDG&E Common Stock to ParentCo solely in exchange for
an equal number of shares of ParentCo Common Stock. SDG&E has applied for,
but not yet received, such a ruling. SDG&E reserves the right to proceed
with the Merger and related restructuring in the absence of such a ruling
if, in the opinion of SDG&E's management, all necessary approvals in
connection with the Merger have been obtained and SDG&E's counsel removes
receipt of such a ruling as a condition to its opinion.
Holders of SDG&E Common Stock or SDG&E Cumulative Preferred Stock who
contemplate dissenting from the Merger should consult with their tax
advisors concerning the tax consequences of that action.
The foregoing discussion does not cover the tax consequences of the
Merger for Shareholders under state income or other tax laws. Each
Shareholder is urged to consult with his or her own tax advisor with
respect to the effects of such laws.
Legal Opinion
Pillsbury Madison & Sutro, as counsel for SDG&E and ParentCo, has
rendered an opinion (filed as an exhibit to the registration statement of
which this Proxy Statement and Prospectus is a part) to the effect that
the ParentCo Common Stock offered in this Proxy Statement and Prospectus
will be validly issued, fully paid and nonassessable.
23
Experts
The consolidated financial statements and the related financial
statement schedules as of December 31, 1993 and 1992 and for each of the
three years in the period ended December 31, 1993, incorporated in this
Proxy Statement and Prospectus by reference from the Company's Annual
Report on Form 10-K, as amended, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is
incorporated herein by reference (which report expresses an unqualified
opinion and contains an explanatory paragraph referring to the Company's
consideration of alternative strategies for its 80 percent owned
subsidiary, Wahlco Environmental Systems, Inc.), and has been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
Proxy Solicitations
In addition to the original solicitation by mail, some of the officers
and regular employees of SDG&E may solicit proxies by personal calls,
telephone or mail without receiving compensation in addition to their
regular salaries. SDG&E anticipates that the expense associated with
these solicitation efforts will be nominal. SDG&E will reimburse
brokerage firms and other securities' custodians for reasonable expenses
incurred by them in forwarding proxy material to beneficial owners of
stock.
SDG&E has also retained Georgeson & Co., Inc., a proxy solicitation
firm, to assist in the solicitation of proxies at an estimated cost of
$12,000 plus disbursements. All costs associated with this solicitation
will be borne by SDG&E.
By order of the Board of Directors
N. A. Peterson
Senior Vice President,
General Counsel and Secretary
San Diego, California
[_____ __], 1995
24
Exhibit A
AGREEMENT OF MERGER
-------------------
THIS AGREEMENT OF MERGER ("Agreement") is made as of [________ __],
1995, by and among SAN DIEGO GAS & ELECTRIC COMPANY, a California
corporation ("SDG&E"), SAN DIEGO MERGER COMPANY, a California corporation
("MergeCo"), and SDO PARENT CO., INC., a California corporation
("ParentCo"), with reference to the following facts:
A. SDG&E has authorized capital consisting of (i) 255 million shares
of Common Stock, without par value ("SDG&E Common Stock"), of which
approximately 116,541,000 shares are issued and outstanding; (ii)
1,375,000 shares of Cumulative Preferred Stock, $20 par value ("Cumulative
Preferred Stock"), of which 1,374,650 shares (consisting of four
separate series) are issued and outstanding; and (iii) 10 million shares
of Preference Stock (Cumulative), without par value ("Preference Stock"),
of which 3,190,000 shares (consisting of four separate series) are
issued and outstanding.
B. MergeCo has authorized capital consisting of 1000 shares of Common
Stock ("MergeCo Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by ParentCo.
C. ParentCo has authorized capital consisting of 300 million shares of
Common Stock ("ParentCo Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by SDG&E, and 30 million
shares of Preferred Stock, none of which have been issued.
D. The Boards of Directors of the respective parties hereto deem it
advisable to merge MergeCo with and into SDG&E (the "Merger") in
accordance with the California General Corporation Law ("California GCL")
and this Agreement for the purpose of establishing ParentCo as the parent
corporation for SDG&E in a transaction intended to qualify for tax-free
treatment.
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties agree that (i) MergeCo shall be merged with
and into SDG&E (the "Merger"), (ii) SDG&E shall be the corporation
surviving the Merger, and (iii) the terms and conditions of the Merger,
the mode of carrying it into effect, and the manner of converting and
exchanging shares of capital stock shall be as follows:
ARTICLE 1
The Merger
----------
1.1 Officers' Certificates. Subject to and in accordance with the
----------------------
provisions of this Agreement, officers' certificates of SDG&E, MergeCo and
ParentCo (the "Officers'
A - 1
Certificates") shall be signed and verified and thereafter delivered,
together with a copy of this Agreement, to the office of the Secretary of
State of California for filing, all as provided in Section 1103 of the
California GCL.
1.2 Effective Time. The Merger shall become effective at 11:59 p.m.
--------------
on the last day of the calendar month during which the Officers'
Certificates and this Agreement are filed with the Secretary of State of
California as contemplated by Section 1.1 above (the "Effective Time").
At the Effective Time, the separate existence of MergeCo shall cease and
MergeCo shall be merged with and into SDG&E, which shall continue its
corporate existence as the surviving corporation (SDG&E and MergeCo being
sometimes referred to herein as the "Constituent Corporations" and SDG&E,
as the surviving corporation, being sometimes referred to herein as the
"Surviving Corporation"). SDG&E shall succeed, without other transfer, to
all the rights and property of MergeCo and shall be subject to all the
debts and liabilities of MergeCo in the same manner as if SDG&E had itself
incurred them. All rights of creditors and all liens upon the property of
each of SDG&E and MergeCo shall be preserved unimpaired.
1.3 Appropriate Actions. Prior to and after the Effective Time,
-------------------
ParentCo, SDG&E and MergeCo, respectively, shall take all such actions as
may be necessary or appropriate in order to effectuate the Merger. In
this connection, ParentCo shall issue the shares of ParentCo Common Stock
into which outstanding shares of SDG&E Common Stock will be converted on a
share-for-share basis to the extent provided in Article 2 of this
Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full title to all
properties, assets, privileges, rights, immunities and franchises of
either of the Constituent Corporations, the officers and directors of each
of the Constituent Corporations as of the Effective Time shall take all
such further action.
ARTICLE 2
Terms of Conversion and Exchange of Shares
------------------------------------------
At the Effective Time:
2.1 SDG&E Common Stock. Each share of SDG&E Common Stock issued and
------------------
outstanding immediately prior to the Merger shall be automatically changed
and converted into one share of ParentCo Common Stock, which shall
thereupon be issued and fully-paid and non-assessable; provided, however,
-------- -------
that such conversion shall not affect shares of holders, if any, who
perfect their rights as dissenting shareholders under Chapter 13 of the
California GCL.
2.2 SDG&E Preferred Stock. Shares of the Cumulative Preferred Stock
---------------------
and Preference Stock of SDG&E issued and outstanding immediately prior to
the Merger shall not be converted or otherwise affected by the Merger.
Each such share shall continue to be (i) issued and outstanding and (ii) a
fully-paid and nonassessable share (of Cumulative Preferred Stock or
Preference Stock, as the case may be) of the Surviving Corporation.
A - 2
2.3 MergeCo Shares. The shares of MergeCo Common Stock issued and
--------------
outstanding immediately prior to the Merger shall be automatically changed
and converted into all of the issued and outstanding shares of Common
Stock of the Surviving Corporation, which shall thereupon be issued and
fully-paid and nonassessable, with the effect that the number of issued
and outstanding shares of Common Stock of the Surviving Corporation shall
be the same as the number of issued and outstanding shares of SDG&E Common
Stock immediately prior to the Effective Time.
2.4 ParentCo Shares. Each share of ParentCo Common Stock issued and
---------------
outstanding immediately prior to the Merger shall be canceled.
ARTICLE 3
Articles of Incorporation and Bylaws
------------------------------------
3.1 SDG&E's Restated Articles. From and after the Effective Time, and
-------------------------
until thereafter amended as provided by law, the Restated Articles of
Incorporation, as amended, of SDG&E as in effect immediately prior to the
Merger shall be and continue to be the Restated Articles of Incorporation,
as amended, of the Surviving Corporation.
3.2 SDG&E's Bylaws. From and after the Effective Time, and until
--------------
thereafter amended as provided by law, the Bylaws of SDG&E as in effect
immediately prior to the Merger shall be and continue to be the Bylaws of
the Surviving Corporation.
ARTICLE 4
Directors and Officers
----------------------
The persons who are directors and officers of SDG&E immediately prior
to the Merger shall continue as directors and officers, respectively, of
the Surviving Corporation and shall continue to hold office as provided in
the Bylaws of the Surviving Corporation. If, at or following the
Effective Time, a vacancy shall exist in the Board of Directors or in the
position of any officer of the Surviving Corporation, such vacancy may be
filled in the manner provided in the Bylaws of the Surviving Corporation.
ARTICLE 5
Stock Certificates
------------------
5.1 Pre-Merger SDG&E Common. Following the Effective Time, each
-----------------------
holder of an outstanding certificate or certificates theretofore
representing shares of SDG&E Common Stock may, but shall not be required
to, surrender the same to ParentCo for cancellation or transfer, and each
such holder or transferee will be entitled to receive a certificate or
certificates
A - 3
representing the same number of shares of ParentCo Common Stock as the
shares of SDG&E Common Stock previously represented by the stock
certificate(s) surrendered.
5.2 Outstanding Certificates. Until surrendered or presented for
------------------------
transfer in accordance with Section 5.1 above, each outstanding
certificate which, prior to the Effective Time, represented SDG&E Common
Stock shall be deemed and treated for all corporate purposes to represent
the ownership of the same number of shares of ParentCo Common Stock as
though such surrender or transfer and exchange had taken place.
5.3 SDG&E Stock Transfer Books. The stock transfer books for SDG&E
--------------------------
Common Stock shall be deemed to be closed at the Effective Time and no
transfer of shares of SDG&E Common Stock outstanding prior to the
Effective Time shall thereafter be made on such books.
5.4 Post-Merger Rights of Holders. Following the Effective Time, the
-----------------------------
holders of certificates representing SDG&E Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights
with respect to stock of the Surviving Corporation and their sole rights
shall be with respect to the ParentCo Common Stock into which their shares
of SDG&E Common Stock shall have been converted by the Merger.
ARTICLE 6
Conditions of the Merger
------------------------
Completion of the Merger is subject to the satisfaction of the
following conditions:
6.1 Shareholder Approval. The principal terms of this Agreement shall
--------------------
have been approved by such holders of capital stock of each of the
Constituent Corporations as is required by the California GCL.
6.2 SDG&E Preferred Vote. The principal terms of this Agreement shall
--------------------
have been approved by the holders of at least two-thirds of the combined
outstanding shares of Cumulative Preferred Stock and Preference Stock.
6.3 ParentCo Common Stock Listed. The ParentCo Common Stock to be
----------------------------
issued and to be reserved for issuance pursuant to the Merger shall have
been approved for listing, upon official notice of issuance, by the New
York Stock Exchange.
ARTICLE 7
Amendment and Termination
-------------------------
7.1 Amendment. The parties to this Agreement, by mutual consent of
---------
their respective boards of directors, may amend, modify or supplement this
Agreement in such manner as may be agreed upon by them in writing at any
time before or after approval of this
A - 4
Agreement by the pre-Merger shareholders of SDG&E (as provided in Sections
6.1 and 6.2 above); provided, however, that no such amendment,
-------- -------
modification or supplement shall, if agreed to after such approval by the
pre-Merger shareholders of SDG&E, change any of the principal terms of
this Agreement.
7.2 Termination. This Agreement may be terminated and the Merger and
-----------
other transactions provided for by this Agreement may be abandoned at any
time, whether before or after approval of this Agreement by the pre-Merger
shareholders of SDG&E, by action of the board of directors of SDG&E if
such board of directors determines for any reason that the completion of
the transactions provided for herein would for any reason be inadvisable
or not in the best interests of SDG&E or its shareholders.
ARTICLE 8
Miscellaneous
-------------
8.1 Approval of ParentCo Shares. By its execution and delivery of
---------------------------
this Agreement, SDG&E, as the sole pre-Merger shareholder of ParentCo,
consents to, approves and adopts this Agreement and approves the Merger,
subject to approval of this Agreement by the pre-Merger shareholders of
SDG&E (as provided in Sections 6.1 and 6.2 above).
8.2 Approval of MergeCo Shares. By its execution and delivery of this
--------------------------
Agreement, ParentCo, as the sole pre-Merger shareholder of MergeCo,
consents to, approves and adopts this Agreement and approves the Merger,
subject to approval of this Agreement by the pre-Merger shareholders of
SDG&E (as provided in Sections 6.1 and 6.2 above).
A - 5
8.3 No Counterparts. This agreement may not be executed in
--------------- ---
counterparts.
IN WITNESS WHEREOF, SDG&E, ParentCo and MergeCo, pursuant to approval
and authorization duly given by resolutions adopted by their respective
boards of directors, have each caused this Agreement to be executed by its
chairman of the board or its president or one of its vice presidents and
by its secretary or one of its assistant secretaries.
SDG&E:
San Diego Gas & Electric Company,
a California corporation
By:_______________________________
Its:______________________________
By:_______________________________
Its:______________________________
ParentCo:
SDO Parent Co., Inc.,
a California corporation
By:_______________________________
Its:______________________________
By:_______________________________
Its:______________________________
MergeCo:
San Diego Merger Company,
a California corporation
By:_______________________________
Its:______________________________
By:_______________________________
Its:______________________________
A - 6
Exhibit B
RESTATED ARTICLES OF INCORPORATION
OF
SDO PARENT CO., INC.
FIRST: The name of the Corporation is SDO Parent Co., Inc.
-----
SECOND: The purpose of the Corporation is to engage in any lawful act or
------
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be
incorporated by the California Corporations Code.
THIRD: Stock.
------
A. The Corporation is authorized to issue two classes of shares, to be
designated respectively Preferred Stock ("Preferred Stock") and Common
Stock ("Common Stock"). The total number of shares of capital stock that
the Corporation is authorized to issue is 330,000,000, of which 30,000,000
shall be Preferred Stock and 300,000,000 shall be Common Stock.
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors of the Corporation (the "Board of
Directors") is expressly authorized to provide for the issue of all or any
of the shares of the Preferred Stock in one or more series, and to fix the
designation and number of shares and to determine or alter for each such
series, such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other
rights and such qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions adopted by
the Board of Directors providing for the issue of such shares and as may
be permitted by the General Corporation Law of California. The Board of
Directors is also expressly authorized to increase or decrease (but not
below the number of shares of such series then outstanding) the number of
shares of any series subsequent to the issue of shares of that series. If
the number of shares
B - 1
of any such series shall be so decreased, the shares constituting such
decrease shall resume the status that they had prior to the adoption of
the resolution originally fixing the number of shares of such series.
FOURTH: Directors.
-----
A. The authorized number of directors of the Corporation shall not be
fewer than nine (9) nor more than thirteen (13). The exact authorized
number of directors shall be fixed from time to time, within the limits
specified in this Article FOURTH, by resolution of the Board of Directors,
or by a bylaw or amendment thereof duly adopted by the Board of Directors
or the affirmative vote of the holders of shares representing at least 66-
2/3% of the outstanding shares of the Corporation entitled to vote.
B. The Board of Directors shall be divided into three classes,
designated Class I, Class II and Class III, as nearly equal in number as
possible, and the term of office of directors of one class shall expire at
each annual meeting of shareholders, but in all cases continue as to each
director until his or her successor shall be elected and shall qualify or
until his or her earlier resignation, removal from office, death or
incapacity. Additional directorships resulting from an increase in number
of directors shall be apportioned among the classes as equally as
possible. The initial terms of office shall be determined by resolution
duly adopted by the Board of Directors. At each annual meeting of
shareholders the number of directors equal to the number of directors of
the class whose term expires at the time of such meeting (or, if fewer,
the number of directors properly nominated and qualified for election)
shall be elected to hold office until the third succeeding annual meeting
of shareholders after their election. This Paragraph B of this Article
FOURTH shall become effective only when the Corporation shall have become
a "listed corporation" within the meaning of section 301.5 of the
California Corporations Code.
C. Vacancies in the Board of Directors, including, without limitation,
vacancies created by the removal of any director, may be filled by a
majority of the directors then in office, whether or not less than a
quorum, or by a sole remaining director.
FIFTH: No shareholder may cumulate votes in the election of directors.
-----
This Article FIFTH shall become effective only when the Corporation shall
have become a "listed corporation" within the meaning of section 301.5 of
the California Corporations Code.
SIXTH: Unless the Board of Directors, by a resolution adopted by 66-
-------
2/3% of the authorized number of directors, waives the provisions of this
Article SIXTH in any particular circumstance, any action required or
permitted to be taken by shareholders of the Corporation must be taken
either (i) at a duly called annual or special meeting of shareholders of
the Corporation or (ii) by the unanimous written consent of all of the
shareholders.
B - 2
SEVENTH: Fair Price.
------
A. REQUIRED SHAREHOLDER VOTE FOR CERTAIN TRANSACTIONS.
Unless all of the conditions set forth in either Subsection 1 or 2 of
Section B of this Article SEVENTH have been fulfilled, any agreement,
contract, transaction or other arrangement providing for or resulting in a
Business Combination must be approved by the affirmative vote of 66-2/3%
of the number of shares of Common Stock outstanding at the time voting as
a separate class. Such affirmative vote shall be required notwithstanding
the fact that no vote may be required by law or these Articles or that a
lesser percentage, different or additional vote may be specified by law,
these Articles, or in any agreement with any national securities exchange
or otherwise, in which case each vote requirement shall be satisfied
individually.
B. EXCEPTIONS.
Section A of this Article SEVENTH shall not apply to any Business
Combination if the conditions specified in either Subsection 1 or 2 below
are met.
1. The Business Combination shall have been approved by a
resolution adopted by 66-2/3% of the authorized number of directors of the
Corporation, or
2. All of the following conditions have been met:
a. Any consideration to be received for any stock as a result of
the Business Combination shall be in cash or in the same form as
a Dominant Shareholder has previously paid for shares of that
class. If varying forms of consideration have been used, the
form of consideration shall be the form used to acquire the
largest number of shares of the class receiving consideration.
b. The aggregate amount of cash and the fair market value of any
other form of consideration shall, on a per share basis, be at
least equal to the Highest Purchase Price paid by a Dominant
Shareholder for shares of the same class.
c. After such Dominant Shareholder has become a Dominant
Shareholder and prior to the consummation of such Business
Combination:
(1) There shall have been no failure to declare and pay in
full at the regular rate any periodic dividends on any
outstanding preferred stock unless such failure is approved
by 66-2/3% of the authorized number of directors of the
Corporation;
(2) There shall have been no reduction in the quarterly
rate of dividends, if any, paid on common shares (such rate
to be appropriately adjusted to reflect the occurrence of
any reclassification, reverse stock split,
recapitalization, reorganization or other similar
transaction having the effect of changing the number of
outstanding common shares) unless
B - 3
such reduction is approved by 66-2/3% of the authorized
number of directors of the Corporation; and
(3) Neither a Dominant Shareholder nor an Affiliate thereof
shall have acquired Beneficial Ownership of any additional
shares of voting stock of the Corporation except as part of
a transaction which has been approved by a resolution
adopted by 66-2/3% of the authorized number of directors.
3. Definitions.
a. "Affiliate" means: a Person that directly, or indirectly
---------
through one or more intermediaries, controls or is controlled
by, or is under common control with, a specified Person.
b. "Beneficial Ownership" means: ownership; holding the right to
--------------------
vote pursuant to any agreement, arrangement or understanding;
having the right to acquire pursuant to any agreement,
arrangement, understanding, option, right, warrant or right of
conversion; having the right to dispose of pursuant to any
agreement, arrangement or understanding; having the right to
receive money (e.g., dividends, redemption proceeds or proceeds
----
from any sale) with respect to pursuant to any agreement,
arrangement or understanding; and Beneficial Ownership (pursuant
to the foregoing provisions of this definition) by an Affiliate
or by an officer, director or employee of a Dominant Shareholder
or any Affiliate of such an officer, director or employee.
c. "Business Combination" means: (1) a merger or consolidation
--------------------
of the Corporation or any Subsidiary with a Dominant Shareholder
or with any other corporation or entity which is, or after such
merger or consolidation would be, an Affiliate of a Dominant
Shareholder; (2) the sale, lease, exchange, pledge, transfer or
other disposition by the Corporation, or a Subsidiary, of assets
exceeding ten percent (10%) of the total assets of the
Corporation in a transaction or series of transactions in which
a Dominant Shareholder is either a party or has an interest; (3)
the issuance, sale, exchange, disposition or other transfer by
the Corporation or any Subsidiary, in one transaction or a
series of transactions, of any securities of the Corporation, or
any Subsidiary, to any Dominant Shareholder or any Affiliate of
any Dominant Shareholder in exchange for cash, securities or
other property having an aggregate fair market value in excess
of ten percent (10%) of the fair market value of the issued and
outstanding capital stock of the Corporation prior to such
transaction; (4) any reclassification of securities, any reverse
stock split, or any recapitalization of the Corporation or any
other transaction which has the effect, directly or indirectly,
of increasing the Beneficial Ownership of the Corporation or any
Subsidiary by the Dominant Shareholder or any Affiliate thereof.
B - 4
d. "Dominant Shareholder" means: any Person (except this
--------------------
Corporation, any Subsidiary of this Corporation, and any
Savings, Pension, TRESOP or other benefit plan of this
Corporation or any fiduciary, trustee or custodian thereof
acting in such a capacity) who is the Beneficial Owner, directly
or indirectly, of more than ten percent (10%) but less than 99
percent (99%) of the shares of the Corporation having the power
to vote for the Board of Directors. The relevant time for
calculating this percentage shall be each date on which any
approval (board, shareholder, governmental or any other)
necessary to complete any agreement, contract, transaction or
other arrangement providing for or resulting in a Business
Combination is obtained.
e. "Highest Purchase Price" shall mean the highest amount of
----------------------
consideration paid by a Dominant Shareholder at any time within
two years prior to the date of becoming a Dominant Shareholder
and during any time while having the status of Dominant
Shareholder; provided, however, that the Highest Purchase Price
shall be appropriately adjusted to reflect the occurrence of any
reclassification, recapitalization, stock split, reverse stock
split or other readjustment to the number of outstanding shares
of stock in a class, or the payment of a stock dividend thereon
occurring between the last date upon which such Dominant
Shareholder paid the Highest Purchase Price and the effective
date of the Business Combination.
f. "Person" means: any individual, group, partnership,
------
association, firm, corporation or other entity.
g. "Subsidiary" means: any corporation in which this Corporation
----------
has Beneficial Ownership of at least a majority of any class of
stock having the right to vote for directors.
4. The Board of Directors by a vote of 66-2/3% of the authorized
number of directors shall have the right to make any determinations
required under this Article SEVENTH.
EIGHTH: Indemnity.
-----
A. LIMITATION OF DIRECTORS' LIABILITY.
The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under
California law.
B. INDEMNIFICATION OF CORPORATE AGENTS.
The Corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the California Corporations Code) through
bylaw provisions, agreements with agents, vote of shareholders or
disinterested directors, or otherwise, in excess of the indemnification
B - 5
otherwise permitted by Section 317 of the California Corporations Code,
subject only to the applicable limits set forth in Section 204 of the
California Corporations Code.
NINTH: The Board of Directors is expressly authorized to make, amend or
-----
repeal the bylaws of the Corporation, without any action on the part of
the shareholders, solely by the affirmative vote of at least 66-2/3% of
the authorized number of directors. The bylaws may also be amended or
repealed by the shareholders, but only by the affirmative vote of the
holders of shares representing at least 66-2/3% of the outstanding shares
of the Corporation entitled to vote.
TENTH: The amendment or repeal of Articles FOURTH, FIFTH, SIXTH, SEVENTH,
------
EIGHTH, NINTH and TENTH shall require the approval of the holders of
shares representing at least 66-2/3% of the outstanding shares of the
Corporation entitled to vote.
B - 6
Exhibit C - Chapter 13 of the California General Corporation Law
DISSENTERS' RIGHTS
(S) 1300. Reorganization or short-form merger; dissenting shares;
corporate purchase at fair market value; definitions
(a) If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions (a) and
(b) or subdivision (e) or (f) of Section 1201, each shareholder of the
corporation entitled to vote on the transaction and each shareholder of a
subsidiary corporation in a short-form merger may, by complying with this
chapter, require the corporation in which the shareholder holds shares to
purchase for cash at their fair market value the shares owned by the
shareholder which are dissenting shares as defined in subdivision (b).
The fair market value shall be determined as of the day before the first
announcement of the terms of the proposed reorganization or short-form
merger, excluding any appreciation or depreciation in consequence of the
proposed action, but adjusted for any stock split, reverse stock split, or
share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which
come within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or short-
form merger either (A) listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of
Section 25100 or (B) listed on the list of OTC margin stocks issued by the
Board of Governors of the Federal Reserve System, and the notice of
meeting of shareholders to act upon the reorganization summarizes this
section and Sections 1301, 1302, 1303 and 1304; provided, however, that
this provision does not apply to any shares with respect to which there
exists any restriction on transfer imposed by the corporation or by any
law or regulation; and provided, further, that this provision does not
apply to any class of shares described in subparagraph (A) or (B) if
demands for payment are filed with respect to 5 percent or more of the
outstanding shares of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in subparagraph (A) or
(B) of paragraph (1) (without regard to the provisos in that paragraph),
were voted against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that
subparagraph (A) rather than subparagraph (B) of this paragraph applies in
any case where the approval required by Section 1201 is sought by written
consent rather than at a meeting.
(3) Which the dissenting shareholder has demanded that the
corporation purchase at their fair market value, in accordance with
Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement,
in accordance with Section 1302.
C - 1
(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.
(S) 1301. Notice to holders of dissenting shares in reorganizations;
demand for purchase; time; contents
(a) If, in the case of a reorganization, any shareholders of a
corporation have a right under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, to require the
corporation to purchase their shares for cash, such corporation shall mail
to each such shareholder a notice of the approval of the reorganization by
its outstanding shares (Section 152) within 10 days after the date of such
approval, accompanied by a copy of Sections 1300, 1302, 1303, 1304 and
this section, a statement of the price determined by the corporation to
represent the fair market value of the dissenting shares, and a brief
description of the procedure to be followed if the shareholder desires to
exercise the shareholder's right under such sections. The statement of
price constitutes an offer by the corporation to purchase at the price
stated any dissenting shares as defined in subdivision (b) of Section
1300, unless they lose their status as dissenting shares under Section
1309.
(b) Any shareholder who has a right to require the corporation to
purchase the shareholder's shares for cash under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, and who
desires the corporation to purchase such shares shall make written demand
upon the corporation for the purchase of such shares and payment to the
shareholder in cash of their fair market value. The demand is not
effective for any purpose unless it is received by the corporation or any
transfer agent thereof (1) in the case of shares described in clause (i)
or (ii) of paragraph (1) of subdivision (b) of Section 1300 (without
regard to the provisos in that paragraph), not later than the date of the
shareholders' meeting to vote upon the reorganization, or (2) in any other
case within 30 days after the date on which the notice of the approval by
the outstanding shares pursuant to subdivision (a) or the notice pursuant
to subdivision (i) of Section 1110 was mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the
corporation purchase and shall contain a statement of what such
shareholder claims to be the fair market value of those shares as of the
day before the announcement of the proposed reorganization or short-form
merger. The statement of fair market value constitutes an offer by the
shareholder to sell the shares at such price.
(S) 1302. Submission of share certificates for endorsement;
uncertificated securities
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section
1110 was mailed to the shareholder, the shareholder shall submit to the
corporation at its principal office or at the office of any transfer agent
thereof, (a) if the shares are certificated securities, the shareholder's
certificates representing any shares which the shareholder demands that
the corporation purchase, to be stamped or endorsed with a statement that
the shares are dissenting shares to be exchanged for certificates of
appropriate denomination so stamped or endorsed or (b) if the shares are
C - 2
uncertificated securities, written notice of the number of shares which
the shareholder demands that the corporation purchase. Upon subsequent
transfers of the dissenting shares on the books of the corporation, the
new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the
name of the original dissenting holder of the shares.
(S) 1303. Payment of agreed price with interest; agreement fixing fair
market value; filing; time of payment
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the
legal rate on judgments from the date of the agreement. Any agreements
fixing the fair market value of any dissenting shares as between the
corporation and the holders thereof shall be filed with the secretary of
the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair
market value of dissenting shares shall be made within 30 days after the
amount thereof has been agreed or within 30 days after any statutory or
contractual conditions to the reorganization are satisfied, whichever is
later, and in the case of certificated securities, subject to surrender of
the certificates therefor, unless provided otherwise by agreement.
(S) 1304. Action to determine whether shares are dissenting shares or
fair market value; limitation; joinder; consolidation;
determination of issues; appointment of appraisers
(a) If the corporation denies that the shares are dissenting shares, or
the corporation and the shareholder fail to agree upon the fair market
value of the shares, then the shareholder demanding purchase of such
shares as dissenting shares or any interested corporation, within six
months after the date on which notice of the approval by the outstanding
shares (Section 152) or notice pursuant to subdivision (i) of Section 1110
was mailed to the shareholder, but not thereafter, may file a complaint in
the superior court of the proper county praying the court to determine
whether the shares are dissenting shares or the fair market value of the
dissenting shares or both or may intervene in any action pending on such a
complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be
joined as defendants in any such action and two or more such actions may
be consolidated.
(c) On the trial of the action, the court shall determine the issues.
If the status of the shares as dissenting shares is in issue, the court
shall first determine that issue. If the fair market value of the
dissenting shares is in issue, the court shall determine, or shall appoint
one or more impartial appraisers to determine, the fair market value of
the shares.
(S) 1305. Report of appraisers; confirmation; determination by court;
judgment; payment; appeal; costs
(a) If the court appoints an appraiser or appraisers, they shall
proceed forthwith to determine the fair market value per share. Within
the time fixed by the court, the appraisers,
C - 3
or a majority of them, shall make and file a report in the office of the
clerk of the court. Thereupon, on the motion of any party, the report
shall be submitted to the court and considered on such evidence as the
court considers relevant. If the court finds the report reasonable, the
court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such
further time as may be allowed by the court or the report is not confirmed
by the court, the court shall determine the fair market value of the
dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be
rendered against the corporation for payment of an amount equal to the
fair market value of each dissenting share multiplied by the number of
dissenting shares which any dissenting shareholder who is a party, or who
has intervened, is entitled to require the corporation to purchase, with
interest thereon at the legal rate from the date on which judgment was
entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities,
only upon the endorsement and delivery to the corporation of the
certificates for the shares described in the judgment. Any party may
appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as
the court considers equitable, but, if the appraisal exceeds the price
offered by the corporation, the corporation shall pay the costs (including
in the discretion of the court attorneys' fees, fees of expert witnesses
and interest at the legal rate on judgments from the date of compliance
with Sections 1300, 1301 and 1302 if the value awarded by the court for
the shares is more than 125 percent of the price offered by the
corporation under subdivision (a) of Section 1301).
(S) 1306. Prevention of immediate payment; status as creditors; interest
To the extent that the provisions of Chapter 5 prevent the payment to
any holders of dissenting shares of their fair market value, they shall
become creditors of the corporation for the amount thereof together with
interest at the legal rate on judgments until the date of payment, but
subordinate to all other creditors in any liquidation proceeding, such
debt to be payable when permissible under the provisions of Chapter 5.
(S) 1307. Dividends on dissenting shares
Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the
corporation shall be credited against the total amount to be paid by the
corporation therefor.
C - 4
(S) 1308. Rights of dissenting shareholders pending valuation; withdrawal
of demand for payment
Except as expressly limited in this chapter, holders of dissenting
shares continue to have all the rights and privileges incident to their
shares, until the fair market value of their shares is agreed upon or
determined. A dissenting shareholder may not withdraw a demand for
payment unless the corporation consents thereto.
(S) 1309. Termination of dissenting share and shareholder status
Dissenting shares lose their status as dissenting shares and the
holders thereof cease to be dissenting shareholders and cease to be
entitled to require the corporation to purchase their shares upon the
happening of any of the following:
(a) The corporation abandons the reorganization. Upon abandonment of
the reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter
all necessary expenses incurred in such proceedings and reasonable
attorneys' fees.
(b) The shares are transferred prior to their submission for
endorsement in accordance with Section 1302 or are surrendered for
conversion into shares of another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon
the status of the shares as dissenting shares or upon the purchase price
of the shares, and neither files a complaint or intervenes in a pending
action as provided in Section 1304, within six months after the date on
which notice of the approval by the outstanding shares or notice pursuant
to subdivision (i) of Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
(S) 1310. Suspension of right to compensation or valuation proceedings;
litigation of shareholders' approval
If litigation is instituted to test the sufficiency or regularity of
the votes of the shareholders in authorizing a reorganization, any
proceedings under Sections 1304 and 1305 shall be suspended until final
determination of such litigation.
(S) 1311. Exempt shares
This chapter, except Section 1312, does not apply to classes of shares
whose terms and provisions specifically set forth the amount to be paid in
respect to such shares in the event of a reorganization or merger.
C - 5
(S) 1312. Right of dissenting shareholder to attack, set aside or rescind
merger or reorganization; restraining order or injunction;
conditions
(a) No shareholder of a corporation who has a right under this chapter
to demand payment of cash for the shares held by the shareholder shall
have any right at law or in equity to attack the validity of the
reorganization or short-form merger, or to have the reorganization or
short-form merger set aside or rescinded, except in an action to test
whether the number of shares required to authorize or approve the
reorganization have been legally voted in favor thereof; but any holder of
shares of a class whose terms and provisions specifically set forth the
amount to be paid in respect to them in the event of a reorganization or
short-form merger is entitled to payment in accordance with those terms
and provisions or, if the principal terms of the reorganization are
approved pursuant to subdivision (b) of Section 1202, is entitled to
payment in accordance with the terms and provisions of the approved
reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with,
another party to the reorganization or short-form merger, subdivision (a)
shall not apply to any shareholder of such party who has not demanded
payment of cash for such shareholder's shares pursuant to this chapter;
but if the shareholder institutes any action to attack the validity of the
reorganization or short-form merger or to have the reorganization or
short-form merger set aside or rescinded, the shareholder shall not
thereafter have any right to demand payment of cash for the shareholder's
shares pursuant to this chapter. The court in any action attacking the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10
days' prior notice to the corporation and upon a determination by the
court that clearly no other remedy will adequately protect the complaining
shareholder or the class of shareholders of which such shareholder is a
member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with,
another party to the reorganization or short-form merger, in any action to
attack the validity of the reorganization or short-form merger or to have
the reorganization or short-form merger set aside or rescinded, (1) a
party to a reorganization or short-form merger which controls another
party to the reorganization or short-form merger shall have the burden of
proving that the transaction is just and reasonable as to the shareholders
of the controlled party, and (2) a person who controls two or more parties
to a reorganization shall have the burden of proving that the transaction
is just and reasonable as to the shareholders of any party so controlled.
C - 6
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Pursuant to the California Corporations Code, Article NINTH of the
Registrant's Articles of Incorporation and provisions of the Registrant's
Bylaws, directors, officers, employees and agents of the Registrant may be
indemnified by the Registrant in certain circumstances against liabilities
they incur while acting in such capacities. Upon the effectiveness of
the Merger (as contemplated in Part I of this Registration Statement),
the Registrant will have directors' and officers' liability insurance
policies in force insuring directors and officers of the Registrant and
its subsidiaries.
Item 21. Exhibits and Financial Statement Schedules.
See Exhibit Index.
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(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 of 1933;
(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;
(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;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
an annual report of the Registrant or San Diego Gas & Electric Company
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the 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.
The undersigned Registrant hereby undertakes as follows:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other items of the applicable form.
II - 1
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 20
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 Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the 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 its 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 Securities Act of 1933 and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy Statement and
Prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of
responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II - 2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Diego, State of California, on December 21, 1994.
SDO PARENT CO., INC.
By: /s/ Thomas A. Page
--------------------------------------
Thomas A. Page
Chairman of the Board, Chief Executive
Officer and President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Henry P. Morse, Jr., David R. Clark and David R. Snyder, and any one of
them, his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any or all
amendments to this Registration Statement (including post-effective
amendments thereto), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Principal Executive Officer:
/s/ Thomas A. Page Chairman of the Board, December 21, 1994
- ---------------------------------- Chief Executive Officer,
Thomas A. Page President and Director
Principal Financial Officer:
/s/ Donald E. Felsinger Executive Vice President December 21, 1994
- ---------------------------------- and Chief Financial
Donald E. Felsinger Officer
II - 3
Principal Accounting Officer:
/s/ Frank H. Ault Vice President, December 21, 1994
- ---------------------------------- Controller
Frank H. Ault
Directors (other than Mr. Page):
December 21, 1994
/s/ Richard C. Atkinson Director
- ----------------------------------
Richard C. Atkinson
/s/ Ann Burr Director December 21, 1994
- ----------------------------------
Ann Burr
/s/ Richard A. Collato Director December 21, 1994
- ----------------------------------
Richard A. Collato
/s/ Daniel W. Derbes Director December 21, 1994
- ----------------------------------
Daniel W. Derbes
/s/ Robert H. Goldsmith Director December 21, 1994
- ----------------------------------
Robert H. Goldsmith
/s/ William D. Jones Director December 21, 1994
- ----------------------------------
William D. Jones
/s/ Ralph R. Ocampo Director December 21, 1994
- ----------------------------------
Ralph R. Ocampo
/s/ Thomas C. Stickel Director December 21, 1994
- ----------------------------------
Thomas C. Stickel
/s/ Catherine Fitzgerald Wiggs Director December 21, 1994
- ----------------------------------
Catherine Fitzgerald Wiggs
II - 4
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of
Regulation S-K.
Sequential Page
No. in manually
Exhibit No. Description Signed Original
----------- ----------- ---------------
2 Merger Agreement (Exhibit A to Proxy Statement -
and Prospectus).
3.1 Articles of Incorporation of Registrant (Exhibit -
B to Proxy Statement and Prospectus).
* 3.2 Bylaws of Registrant.
* 4.1 Restated Articles of Incorporation of SDG&E.
4.2 Mortgage and Deed of Trust dated July 1, 1940. -
(Incorporated by reference from Registration No.
2-49810 - Exhibit 2A.)
4.3 Second Supplemental Indenture dated as of March -
1, 1948. (Incorporated by reference from
Registration No. 2-49810 -Exhibit 2C.)
4.4 Ninth Supplemental Indenture dated as of August -
1, 1968. (Incorporated by reference from
Registration No. 2-68420 -Exhibit 2D.)
4.5 Tenth Supplemental Indenture dated as of December -
1, 1968. (Incorporated by reference from
Registration No. 2-36042 -Exhibit 2K.)
4.6 Sixteenth Supplemental Indenture dated August 28, -
1975. (Incorporated by reference from
Registration No. 2-68420 -Exhibit 2E.)
4.7 Thirtieth Supplemental Indenture dated September -
28, 1983. (Incorporated by reference from
Registration No. 33-34017 -Exhibit 4.3.)
* 5 Opinion of Pillsbury Madison & Sutro
* 8 Tax Opinion of Pillsbury Madison & Sutro
10.1 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Officers #3 (1994
compensation). (Incorporated by reference from
SDG&E's 1993 Form 10-K -Exhibit 10.1.)
- 1 -
Sequential Page
No. in manually
Exhibit No. Description Signed Original
----------- ----------- ---------------
10.2 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Officers #1 (1994
compensation, 1995 incentive). (Incorporated by
reference from SDG&E's 1993 Form 10-K - Exhibit
10.2.)
10.3 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Nonemployee Directors
(1994 compensation). (Incorporated by reference
from SDG&E's 1993 Form 10-K - Exhibit 10.3.)
10.4 Form of San Diego Gas & Electric Company 1986 -
Long-Term Incentive Plan 1993 restricted stock
award agreement. (Incorporated by reference from
SDG&E's 1993 Form 10-K -Exhibit 10.4.)
10.5 Supplemental Executive Retirement Plan adopted on -
July 15, 1981 and amended on April 24, 1985,
October 20, 1986, April 28, 1987, October 24,
1988, November 21, 1988, October 28, 1991, May
28, 1992, May 24, 1993 and November 22, 1993.
(Incorporated by reference from SDG&E's 1993 Form
10-K -Exhibit 10.5.)
10.6 Amended 1986 Long-Term Incentive Plan, -
Restatement as of October 25, 1993.
(Incorporated by reference from SDG&E's 1993 Form
10-K - Exhibit 10.6.)
10.7 Loan agreement with CIBC Inc. dated as of -
December 1, 1993. (Incorporated by reference
from SDG&E's 1993 Form 10-K -Exhibit 10.7.)
10.8 Amendment to San Diego Gas & Electric Company and -
Southern California Gas Company Restated
Long-Term Wholesale Natural Gas Service Contract
(see Exhibit 10.53) dated March 26, 1993.
(Incorporated by reference from SDG&E's 1993 Form
10-K - Exhibit 10.8.)
10.9 Loan agreement with the California Pollution -
Control Financing Authority in connection with
the issuance of $80 million of Pollution Control
Bonds dated as of June 1, 1993. (Incorporated by
reference from SDG&E's June 30, 1993 Form 10-Q -
Exhibit 10.1.)
- 2 -
Sequential Page
No. in manually
Exhibit No. Description Signed Original
----------- ----------- ---------------
10.10 Loan agreement with the City of San Diego in -
connection with the issuance of $92.7 million of
Industrial Development Bonds 1993 Series C dated
as of July 1, 1993. (Incorporated by reference
from SDG&E's June 30, 1993 Form 10-Q - Exhibit
10.2.)
10.11 Loan agreement with Mellon Bank, N.A dated as of -
April 15, 1993. (Incorporated by reference from
SDG&E's March 31, 1993 Form 10-Q - Exhibit 10.1.)
10.12 Loan agreement with First Interstate Bank dated -
as of April 15, 1993. (Incorporated by reference
from SDG&E's March 31, 1993 Form 10-Q - Exhibit
10.2.)
10.13 Loan agreement with the City of San Diego in -
connection with the issuance of Industrial
Development Bonds 1993 Series A dated as of April
1, 1993. (Incorporated by reference from SDG&E's
March 31, 1993 Form 10-Q - Exhibit 10.3.)
10.14 Loan agreement with the City of San Diego in -
connection with the issuance of Industrial
Development Bonds 1993 Series B dated as of April
1, 1993. (Incorporated by reference from SDG&E's
March 31, 1993 Form 10-Q - Exhibit 10.4.)
10.15 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Officers #3 (1993
compensation). (Incorporated by reference from
SDG&E's 1992 Form 10-K -Exhibit 10.1.)
10.16 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Officers #1 (1993
compensation, 1994 incentive). (Incorporated by
reference from SDG&E's 1992 Form 10-K - Exhibit
10.2.)
10.17 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Nonemployee Directors
(1993 compensation). (Incorporated by reference
from SDG&E's 1992 Form 10-K - Exhibit 10.3.)
10.18 Form of San Diego Gas & Electric Company 1986 -
Long-Term Incentive Plan 1992 restricted stock
award agreement. (Incorporated by reference from
SDG&E's 1992 Form 10-K -Exhibit 10.4.)
- 3 -
Sequential Page
No. in manually
Exhibit No. Description Signed Original
----------- ----------- ---------------
10.19 Loan agreement with the City of Chula Vista in -
connection with the issuance of $250 million of
Industrial Development Revenue Bonds, dated as of
December 1, 1992. (Incorporated by reference
from SDG&E's 1992 Form 10-K - Exhibit 10.5.)
10.20 Loan agreement with the City of San Diego in -
connection with the issuance of $25 million of
Industrial Development Revenue Bonds, dated as of
September 1, 1987. (Incorporated by reference
from SDG&E's 1992 Form 10-K - Exhibit 10.6.)
10.21 Nuclear Facilities Qualified CPUC Decommissioning -
Master Trust Agreement for San Onofre Nuclear
Generating Station, approved November 25, 1987.
(Incorporated by reference from SDG&E's 1992 Form
10-K - Exhibit 10.7.)
10.22 Nuclear Facilities Non-Qualified CPUC -
Decommissioning Master Trust Agreement for San
Onofre Nuclear Generating Station, approved
November 25, 1987. (Incorporated by reference
from SDG&E's 1992 Form 10-K - Exhibit 10.8.)
10.23 Amended 1986 Long-Term Incentive Plan. -
(Incorporated by reference from SDG&E's 1992 Form
10-K - Exhibit 10.9.)
10.24 Loan agreement between Mellon Bank, N.A. and San -
Diego Gas & Electric Company dated December 15,
1992, as amended. (Incorporated by reference
from SDG&E's 1992 Form 10-K - Exhibit 10.10.)
10.25 Fuel Lease dated as of September 8, 1983 between -
SONGS Fuel Company, as Lessor and San Diego Gas &
Electric Company, as Lessee, and Amendment No. 1
to Fuel Lease, dated September 14, 1984 and
Amendment No. 2 to Fuel Lease, dated March 2,
1987. (Incorporated by reference from SDG&E's
1992 Form 10-K - Exhibit 10.11.)
10.26 Loan Agreement with the City of San Diego in -
connection with the issuance of $118.6 million of
Industrial Development Revenue Bonds dated as of
September 1, 1992. (Incorporated by reference
from SDG&E's September 30, 1992 Form 10-Q
-Exhibit 10.1.)
10.27 Gas Purchase Agreement, dated March 12, 1991 -
between Husky Oil Operations Limited and San
Diego Gas & Electric Company. (Incorporated by
reference from SDG&E's 1991 Form 10-K - Exhibit
10.1.)
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10.28 Gas Purchase Agreement, dated March 12, 1991 -
between Canadian Hunter Marketing Limited and San
Diego Gas & Electric Company. (Incorporated by
reference from SDG&E's 1991 Form 10-K - Exhibit
10.2.)
10.29 Gas Purchase Agreement, dated March 12, 1991 -
between Bow Valley Industries Limited and San
Diego Gas & Electric Company. (Incorporated by
reference from SDG&E's 1991 Form 10-K - Exhibit
10.3.)
10.30 Gas Purchase Agreement, dated March 12, 1991 -
between Summit Resources Limited and San Diego
Gas & Electric Company. (Incorporated by
reference from SDG&E's 1991 Form 10-K - Exhibit
10.4.)
10.31 Service Agreement Applicable to Firm -
Transportation Service under Rate Schedule FS-1,
dated May 31, 1991 between Alberta Natural Gas
Company Ltd. and San Diego Gas & Electric
Company. (Incorporated by reference from SDG&E's
1991 Form 10-K - Exhibit 10.5.)
10.32 Firm Transportation Service Agreement, dated -
December 31, 1991 between Pacific Gas and
Electric Company and San Diego Gas & Electric
Company. (Incorporated by reference from SDG&E's
1991 Form 10-K - Exhibit 10.7.)
10.33 Supplemental Executive Retirement Plan adopted on -
July 15, 1981 and amended on April 24, 1985,
October 20, 1986, April 28, 1987, October 24,
1988, November 21, 1988 and October 28, 1991.
(Incorporated by reference from SDG&E's 1991 Form
10-K - Exhibit 10.8.)
10.34 Uranium enrichment services contract between the -
U. S. Department of Energy and Southern
California Edison Company, as agent for SDG&E and
others; Contract DE-SC05-84UEO7541, dated
November 5, 1984, effective June 1, 1984, as
amended by modifications dated September 13,
1985, January 8, April 10, June 17 and August 8,
1986, March 26, 1987, February 20 and July 25,
1990, and October 7, 1991. (Incorporated by
reference from SDG&E's 1991 Form 10-K -Exhibit
10.9.)
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10.35 Loan agreement with California Pollution Control -
Financing Authority, dated as of December 1,
1985, in connection with the issuance of $35
million of pollution control bonds.
(Incorporated by reference from SDG&E's 1991 Form
10-K -Exhibit 10.10.)
10.36 Loan agreement with California Pollution Control -
Financing Authority, dated as of December 1,
1991, in connection with the issuance of $14.4
million of pollution control bonds.
(Incorporated by reference from SDG&E's 1991 Form
10-K -Exhibit 10.11.)
10.37 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Officers #3 (1992
compensation). (Incorporated by reference from
SDG&E's 1991 Form 10-K -Exhibit 10.16.)
10.38 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Officers #1 (1992
compensation, 1993 incentive). (Incorporated by
reference from SDG&E's 1991 Form 10-K - Exhibit
10.17.)
10.39 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Nonemployee Directors
(1992 compensation). (Incorporated by reference
from SDG&E's 1991 Form 10-K - Exhibit 10.18.)
10.40 Form of San Diego Gas & Electric Company Deferred -
Compensation Agreement for Officers #1 (1991
compensation, 1992 incentive). (Incorporated by
reference from SDG&E's 1991 Form 10-K - Exhibit
10.20.)
10.41 Loan agreement with the City of San Diego in -
connection with the issuance of $44.25 million of
Industrial Development Revenue Bonds, dated as of
July 1, 1986. (Incorporated by reference from
SDG&E's 1991 Form 10-K - Exhibit 10.36.)
10.42 Loan agreement with the City of San Diego in -
connection with the issuance of $81.35 million of
Industrial Development Revenue Bonds, dated as of
December 1, 1986. (Incorporated by reference
from SDG&E's 1991 Form 10-K - Exhibit 10.37.)
10.43 Loan agreement with the City of San Diego in -
connection with the issuance of $100 million of
Industrial Development Revenue Bonds, dated as of
September 1, 1985. (Incorporated by reference
from SDG&E's 1991 Form 10-K - Exhibit 10.38.)
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10.44 Executive Incentive Plan dated April 23, 1985. -
(Incorporated by reference from SDG&E's 1991 Form
10-K - Exhibit 10.39.)
10.45 Loan agreement with California Pollution Control -
Financing Authority dated as of December 1, 1984,
in connection with the issuance of $27 million of
pollution control bonds. (Incorporated by
reference from SDG&E's 1991 Form 10-K -Exhibit
10.40.)
10.46 Loan agreement with California Pollution Control -
Financing Authority dated as of May 1, 1984, in
connection with the issuance of $53 million of
pollution control bonds. (Incorporated by
reference from SDG&E's 1991 Form 10-K -Exhibit
10.41.)
10.47 Lease agreement dated as of July 14, 1975 with -
New England Mutual Life Insurance Company, as
lessor. (Incorporated by reference from SDG&E's
1991 Form 10-K - Exhibit 10.42.)
10.48 Firm Transportation Service Agreement, dated -
April 25, 1991 between Pacific Gas Transmission
Company and San Diego Gas & Electric Company.
(Incorporated by reference from SDG&E's March 31,
1991 Form 10-Q - Exhibit 28.2.)
10.49 Agreement dated March 19, 1987, for the Purchase -
and Sale of Uranium Concentrates between SDG&E
and Saarberg-Interplan Uran GmbH (assigned to
Pathfinder Mines Corporation in June 1993).
(Incorporated by reference from SDG&E's 1990 Form
10-K - Exhibit 10.5.)
10.50 Second Amended San Onofre Agreement among -
Southern California Edison Company, SDG&E, the
City of Anaheim and the City of Riverside, dated
February 26, 1987. (Incorporated by reference
from SDG&E's 1990 Form 10-K - Exhibit 10.6.)
10.51 San Diego Gas & Electric Company Retirement Plan -
for Directors, adopted December 17, 1990.
(Incorporated by reference from SDG&E's 1990 Form
10-K - Exhibit 10.7.)
10.52 San Diego Gas & Electric Company Executive -
Severance Allowance Plan, as Amended and
Restated, December 17, 1990. (Incorporated by
reference from SDG&E's 1990 Form 10-K - Exhibit
10.8.)
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10.53 San Diego Gas & Electric Company and Southern -
California Gas Company Restated Long-Term
Wholesale Natural Gas Service Contract, dated
September 1, 1990. (Incorporated by reference
from SDG&E's 1990 Form 10-K - Exhibit 10.9.)
10.54 Amendment to the San Diego Gas & Electric Company -
1986 Long-Term Incentive Plan adopted January 23,
1989. (Incorporated by reference from SDG&E's
1989 Form 10-K -Exhibit 10B.)
10.55 Loan agreement between San Diego Trust & Savings -
Bank and SDG&E dated January 1, 1989 as amended.
(Incorporated by reference from SDG&E's 1989 Form
10-K - Exhibit 10H.)
10.56 Loan agreement between Union Bank and SDG&E dated -
November 1, 1988 as amended. (Incorporated by
reference from SDG&E's 1989 Form 10-K - Exhibit
10I.)
10.57 Loan agreement between Bank of America National -
Trust & Savings Association and SDG&E dated
November 1, 1988 as amended. (Incorporated by
reference from SDG&E's 1989 Form 10-K - Exhibit
10J.)
10.58 Loan agreement between First Interstate Bank of -
California and SDG&E dated November 1, 1988 as
amended. (Incorporated by reference from SDG&E's
1989 Form 10-K -Exhibit 10K.)
10.59 Severance Plan as amended August 22, 1988. -
(Incorporated by reference from SDG&E's 1988 Form
10-K - Exhibit 10A.)
10.60 U. S. Navy contract for electric service, -
Contract N62474-70-C-1200-P00414, dated September
29, 1988. (Incorporated by reference from
SDG&E's 1988 Form 10-K -Exhibit 10C.)
10.61 Employment agreement between San Diego Gas & -
Electric Company and Thomas A. Page, dated June
15, 1988. (Incorporated by reference from
SDG&E's 1988 Form 10-K -Exhibit 10E.)
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10.62 Public Service Company of New Mexico and San -
Diego Gas & Electric Company 1988-2001 100 MW
System Power Agreement dated November 4, 1985 and
Letter of Agreement dated April 28, 1986, June 4,
1986 and June 18, 1986. (Incorporated by
reference from SDG&E's 1988 Form 10-K -Exhibit
10H.)
10.63 San Diego Gas & Electric Company and Portland -
General Electric Company Long-Term Power Sale and
Transmission Service agreements dated November 5,
1985. (Incorporated by reference from SDG&E's
1988 Form 10-K - Exhibit 10I.)
10.64 Comision Federal de Electricidad and San Diego -
Gas & Electric Company Contract for the Purchase
and Sale of Electric Capacity and Energy dated
November 20, 1980 and additional Agreement to the
contract dated March 22, 1985. (Incorporated by
reference from SDG&E's 1988 Form 10-K -Exhibit
10J.)
10.65 U. S. Department of Energy contract for disposal -
of spent nuclear fuel and/or high-level
radioactive waste, entered into between the DOE
and Southern California Edison Company, as agent
for SDG&E and others; Contract DE-CR01-83NE44418,
dated June 10, 1983. (Incorporated by reference
from SDG&E's 1988 Form 10-K - Exhibit 10N.)
10.66 Agreement with Arizona Public Service Company for -
Arizona transmission system participation
agreement - contract 790116. (Incorporated by
reference from SDG&E's 1988 Form 10-K -Exhibit
10P.)
10.67 City of San Diego Electric Franchise (Ordinance -
No.10466). (Incorporated by reference from
SDG&E's 1988 Form 10-K -Exhibit 10Q.)
10.68 City of San Diego Gas Franchise (Ordinance -
No.10465). (Incorporated by reference from
SDG&E's 1988 Form 10-K -Exhibit 10R.)
10.69 County of San Diego Electric Franchise (Ordinance -
No.3207). (Incorporated by reference from
SDG&E's 1988 Form 10-K -Exhibit 10S.)
10.70 County of San Diego Gas Franchise (Ordinance -
No.5669). (Incorporated by reference from
SDG&E's 1988 Form 10-K -Exhibit 10T.)
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10.71 Supplemental Pension Agreement with Thomas A. -
Page, dated as of April 3, 1978. (Incorporated
by reference from SDG&E's 1988 Form 10-K -
Exhibit 10V.)
10.72 Lease agreement dated as of June 15, 1978 with -
Lloyds Bank California, as owner-trustee and
lessor - Exhibit B to financing agreement of
SDG&E's Encina Unit 5 equipment trust.
(Incorporated by reference from SDG&E's 1988 Form
10-K -Exhibit 10W.)
* 21 Subsidiaries of Registrant.
23.1 Consent of Pillsbury Madison & Sutro (included as -
part of Exhibit 5).
23.2 Consent of Deloitte & Touche LLP.
24 Power of Attorney (included in Part II of -
Registration Statement).
* 99.1 Form of Proxy for SDG&E Common Stock and SDG&E
Cumulative Preferred Stock.
* 99.2 Form of Proxy for SDG&E Preference Stock
(Cumulative).
* To be filed by amendment.
The Forms 10-K and 10-Q referred to above were filed under Commission File
Number 1-3779.
- 10 -
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
SDO Parent Co., Inc. on Form S-4 of the report of Deloitte & Touche dated
February 25, 1994 (which report expresses an unqualified opinion and contains an
explanatory paragraph referring to the Company's consideration of alternative
strategies for its 80 percent owned subsidiary, Wahlco Environmental Systems,
Inc.), incorporated by reference in the Annual Report on Form 10-K, as amended,
of San Diego Gas & Electric Company for the year ended December 31, 1993 and to
the reference to Deloitte & Touche LLP under the heading "Experts" in the Proxy
Statement and Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
San Diego, California
December 21, 1994
