Agenda packet — Lindsay City Council, June 9, 2026 (part 4 of 5)

Interest Rate Risk
We are subject to interest rate risk, although this risk is lessened because we operate in a regulated industry. If interest rates were to increase, management believes customer rates would increase accordingly, subject to Commission approval in future GRC filings. The majority of our debt is long-term at a fixed rate. Interest rate risk does exist on short-term borrowings within our credit facilities, as these interest rates are variable. We also have interest rate risk on new financing, as higher interest cost may occur on new debt if interest rates increase.

Over the next 12 months, none of the $1,052.8 million of existing long-term debt instruments are expected to mature.

Applying a hypothetical 10 percent increase in the rate of interest charged on those borrowings would not have a material effect on our earnings.

Table of Contents
53 Item 8. Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of California Water Service Group Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of California Water Service Group and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company has maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Table of Contents
54 Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Assets and Liabilities - Regulated Utility Accounting— Refer to Notes 2 and 4 to the financial statements Critical Audit Matter Description
The Company provides regulated utility services under the rules and regulations of the California Public Utilities Commission (the "Commission") in California. The Commission establishes rates that are designed to permit the recovery of the cost of service and a return on investment. The Company’s rates are subject to regulatory rate-setting processes including a General Rate Case proceeding. Because the Company operates almost exclusively in a regulated business, the Company is subject to the accounting standards for regulated entities.

The Company capitalizes and records regulatory assets for costs that would otherwise be charged to expense if it is probable that the incurred costs will be recovered in future rates. If costs expected to be incurred in the future are currently being recovered through rates, the Company records those expected future costs as regulatory liabilities. In addition, the Company records regulatory liabilities when it is probable the Commission will require a refund to be made to the Company’s customers over future periods. Determining probability requires significant judgment by management and includes, but is not limited to, consideration of testimony presented in regulatory hearings, proposed regulatory decisions, final regulatory orders, and the strength or status of applications for rehearing or state court appeals. If the Company determines that a portion of the Company’s assets used in utility operations is not recoverable in customer rates, the Company would be required to recognize the loss of the disallowed assets.

We identified regulated utility accounting as a critical audit matter due to the significant judgments made by management in (1) determining the probability that incurred costs will be recovered in future rates and (2) determining the probability the Commission will require a refund to be made to the Company’s customers over future periods. Given that management considers regulatory hearings, proposed decisions, and final orders in making significant regulatory utility accounting judgments, auditing these judgments required specialized knowledge of regulatory utility accounting.

Table of Contents
55 How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the significant regulatory utility accounting judgments in determining the probability that incurred cost will be recovered in future rates and in determining the probability the Commission will require a refund to be made to the Company’s customers over future periods included the following, among others:
• We tested the effectiveness of management’s controls over the determination of regulatory assets or liabilities and the evaluation of (1) the probability determination of recovery in future rates of costs incurred as regulatory assets, and (2) the probability of a refund over future periods that should be reported as regulatory liabilities. • We read relevant regulatory orders issued by the Commission for the Company, procedural filings, and other publicly available information, if applicable, to evaluate management’s judgments in determining the probability that incurred cost will be recovered in future rates and in determining the probability the Commission will require a refund to be made to the Company’s customers over future periods in accounting for regulatory assets and liabilities. • For regulatory matters in process, we inspected the Company’s filings with the Commission, if applicable, that may impact the Company’s future rates, to evaluate whether information in such filings was consistent with the significant judgments made by management.
• We evaluated the Company’s disclosures related to regulated utility accounting, including the balances recorded and regulatory developments.
/s/ DELOITTE & TOUCHE LLP )
San Francisco, California
February 29, 2024
We have served as the Company's auditor since 2008.

Table of Contents
56 CALIFORNIA WATER SERVICE GROUP
Consolidated Balance Sheets
December 31,
2023 2022
(In thousands, except per share
data)
ASSETS
Utility plant:

Land $ 47,002 $ 45,861
Depreciable plant and equipment 4,557,964 4,215,619
Construction work in progress 287,596 247,013
Intangible assets 32,921 27,779
Total utility plant 4,925,483 4,536,272
Less accumulated depreciation and amortization (1,152,228) (1,063,341) Net utility plant 3,773,255 3,472,931
Current assets:

Cash and cash equivalents 39,591 62,100
Restricted cash 45,375 22,925
Receivables:

Customers, net 59,349 55,079
Regulatory balancing accounts 64,240 66,826
Other, net 16,431 20,932
Unbilled revenue, net 36,999 33,140
Materials and supplies at weighted average cost 16,170 12,564 Taxes, prepaid expenses, and other assets 18,130 21,969 Total current assets 296,285 295,535
Other assets:

Regulatory assets 257,621 283,620
Goodwill 37,039 36,814
Other 231,333 175,913
Total other assets 525,993 496,347
TOTAL ASSETS $ 4,595,533 $ 4,264,813

CAPITALIZATION AND LIABILITIES
Capitalization:

Common stock, $0.01 par value; 136,000 shares authorized, 57,724 and 55,598 outstanding in 2023 and 2022, respectively $ 577 $ 556
Additional paid-in capital 876,583 760,336
Retained earnings 549,573 556,698
Noncontrolling interests 3,579 4,804
Total equity 1,430,312 1,322,394
Long-term debt, net 1,052,768 1,052,487
Total capitalization 2,483,080 2,374,881
Current liabilities:

Current maturities of long-term debt, net 672 3,310
Short-term borrowings 180,000 70,000
Accounts payable 157,305 140,986
Regulatory balancing accounts 21,540 12,240
Accrued other taxes 4,591 8,607
Accrued interest 6,625 6,490
Other accrued liabilities 59,606 53,017
Total current liabilities 430,339 294,650
Deferred income taxes 352,762 330,251
Regulatory liabilities 683,717 627,740
Pension 82,920 78,443
Advances for construction 199,448 199,832
Contributions in aid of construction 286,491 285,401
Other long-term liabilities 76,776 73,615
Commitments and contingencies (Note 14)
TOTAL CAPITALIZATION AND LIABILITIES $ 4,595,533 $ 4,264,813 See accompanying Notes to Consolidated Financial Statements.

Table of Contents
57 CALIFORNIA WATER SERVICE GROUP
Consolidated Statements of Operations
For the Years Ended December 31,
2023 2022 2021
(In thousands, except per share data)
Operating revenue $ 794,632 $ 846,431 $ 790,909
Operating expenses:

Operations:

Purchased water 223,833 224,529 225,020
Purchased power 45,656 44,566 37,112
Pump taxes 19,023 16,169 15,342
Administrative and general 142,235 132,718 126,686
Other operations 112,481 116,172 86,392
Maintenance 31,975 31,715 29,592
Depreciation and amortization 121,212 114,575 108,715
Income tax (benefit) expense (15,189) 3,262 2,805
Property and other taxes 36,271 35,065 32,475
Total operating expenses 717,497 718,771 664,139
Net operating income 77,135 127,660 126,770
Other income and expenses:

Non-regulated revenue 18,509 21,276 22,761
Non-regulated expenses (11,807) (24,821) (17,234)
Other components of net periodic benefit credit 20,215 14,476 9,903 Allowance for equity funds used during construction 5,551 4,127 3,186 Gain on sale of non-utility property — — 94
Income tax expense on other income and expenses (8,408) (3,113) (1,287) Net other income 24,060 11,945 17,423
Interest expense:

Interest expense 52,809 46,686 44,980
Allowance for borrowed funds used during construction (2,990) (2,344) (1,766) Net interest expense 49,819 44,342 43,214
Net income 51,376 95,263 100,979
Net loss attributable to noncontrolling interests (535) (748) (146) Net income attributable to California Water Service Group $ 51,911 $ 96,011 $ 101,125 Earnings per share:

Basic $ 0.91 $ 1.77 $ 1.96
Diluted $ 0.91 $ 1.77 $ 1.96
Weighted average number of common shares outstanding:

Basic 56,952 54,320 51,633
Diluted 56,983 54,363 51,633
See accompanying Notes to Consolidated Financial Statements.

Table of Contents
58 CALIFORNIA WATER SERVICE GROUP
Consolidated Statements of Equity
For the Years Ended December 31, 2023, 2022 and 2021
Common Stock Additional
Paid-in
Capital
Retained
Earnings
Noncontrolling
Interests
Total Equity
Shares Amount
(In thousands)
Balance at December 31, 2020 50,334 $ 503 $ 448,632 $ 461,146 $ — $ 910,281 Net income (loss) — — — 101,125 (146) 100,979
Issuance of common stock 3,415 34 204,494 — — 204,528
Repurchase of common stock (33) — (1,767) — — (1,767)
Dividends paid on common stock ($0.9200
per share) — — — (47,398) — (47,398)
Acquisition of business with noncontrolling
interest — — — — 5,294 5,294
Investment in business with noncontrolling
interest — — (238) — 238 —
Balance at December 31, 2021 53,716 537 651,121 514,873 5,386 1,171,917 Net income (loss) — — — 96,011 (748) 95,263
Issuance of common stock 1,916 19 111,742 — — 111,761
Repurchase of common stock (34) — (2,013) — — (2,013)
Dividends paid on common stock ($1.0000
per share) — — — (54,186) — (54,186)
Investment in business with noncontrolling
interest — — (514) — 514 —
Distribution to noncontrolling interest — — — — (348) (348) Balance at December 31, 2022 55,598 556 760,336 556,698 4,804 1,322,394 Net income (loss) — — — 51,911 (535) 51,376
Issuance of common stock 2,159 21 117,866 — — 117,887
Repurchase of common stock (33) — (1,844) — — (1,844)
Dividends paid on common stock ($1.0400
per share) — — — (59,036) — (59,036)
Investment in business with noncontrolling
interest — — 225 — (225) —
Distribution to noncontrolling interest — — — — (465) (465) Balance at December 31, 2023 57,724 $ 577 $ 876,583 $ 549,573 $ 3,579 $ 1,430,312 See accompanying Notes to Consolidated Financial Statements.

Table of Contents
59 CALIFORNIA WATER SERVICE GROUP
Consolidated Statements of Cash Flows
For the Years Ended December 31,
2023 2022 2021
(In thousands)
Operating activities:

Net income $ 51,376 $ 95,263 $ 100,979
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 123,124 117,364 111,581
Amortization of debt premium and expenses 262 369 366
Changes in normalized deferred income taxes 35,627 26,880 25,200 Change in value of life insurance contracts (4,919) 7,161 (3,800) Allowance for equity funds used during construction (5,551) (4,127) (3,186) Stock-based compensation 2,993 5,161 6,805
Gain on sale of non-utility properties — — (94)
(Recovery) write-off of capital costs (536) 702 524
Changes in operating assets and liabilities:

Receivables 42,711 (40,687) (12,833)
Water Arrearages Payment Program cash received — 20,836 — Water Arrearages Payment Program cash returned — (3,609) — Unbilled revenue (3,859) (381) 1,309
Taxes, prepaid expenses, and other assets 654 (5,104) (2,745) Accounts payable 9,896 (7,626) (2,938)
Other current liabilities (346) 7,941 1,141
Other changes in noncurrent assets and liabilities (33,615) 23,629 9,409 Net cash provided by operating activities 217,817 243,772 231,718 Investing activities:

Utility plant expenditures (383,747) (327,757) (293,194) Proceeds from sale of non-utility properties — — 108
Business acquisitions, net of cash acquired (175) — (6,451) Asset acquisitions (2,816) (7,766) —
Return of investment — — 1,000
Purchase of life insurance (2,681) (6,688) (2,335)
Life insurance proceeds — 6,688 —
Net cash used in investing activities (389,419) (335,523) (300,872) Financing activities:

Short-term borrowings 227,792 150,000 200,000
Repayment of short-term borrowings (120,000) (115,000) (535,000) Issuance of long-term debt, net of debt issuance costs of $0 for 2023, $0 for 2022, and $1,064 for 2021 — — 278,936
Advances and contributions in aid of construction 21,156 25,822 28,171 Refunds of advances for construction (9,355) (9,468) (10,634) Retirement of long-term debt (1,811) (5,423) (5,353)
Repurchase of common stock (1,844) (2,013) (1,767)
Issuance of common stock 115,106 106,739 197,723
Dividends paid (59,036) (54,186) (47,398)
Distribution to noncontrolling interest (465) (348) —
Net cash provided by financing activities 171,543 96,123 104,678 Change in cash, cash equivalents, and restricted cash (59) 4,372 35,524 Cash, cash equivalents, and restricted cash at beginning of year 85,025 80,653 45,129 Cash, cash equivalents, and restricted cash at end of year $ 84,966 $ 85,025 $ 80,653 Supplemental disclosures of cash flow information:

Cash paid during the year for:

Interest (net of amounts capitalized) $ 49,145 $ 43,768 $ 41,621 Income taxes (net of refunds) (3,532) — 3,661
Supplemental disclosure of investing and financing non-cash activities:

Accrued payables for investments in utility plant 54,382 51,511 57,768 Utility plant contributed by developers 24,203 20,379 19,531 Litigation proceeds for TCP contamination reclassified from liability to depreciable plant and equipment — — 9,302
See accompanying Notes to Consolidated Financial Statements.

Table of Contents
60 CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 1. ORGANIZATION AND OPERATIONS
California Water Service Group (Company) is a holding company that provides water utility and other related services in California, Washington, New Mexico, Hawaii and Texas through its wholly-owned and non-wholly owned subsidiaries.

California Water Service Company (Cal Water), Washington Water Service Company (Washington Water), New Mexico Water Service Company (New Mexico Water), and Hawaii Water Service Company, Inc. (Hawaii Water) provide regulated utility services under the rules and regulations of their respective state's regulatory commissions (jointly referred to as the Commissions). CWS Utility Services and HWS Utility Services LLC provide non-regulated water utility and utility-related services. TWSC, Inc. (Texas Water) holds regulated and contracted wastewater utilities.

The Company operates in one reportable segment, providing water and water-related utility services.

Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and include the Company's accounts and those of its wholly and non-wholly owned subsidiaries. The non-wholly owned subsidiary refers to a 92.0% owned subsidiary of Texas Water and is consolidated using the voting interest model as the Company owns a majority of the voting interests in the non-wholly owned subsidiary. All intercompany transactions and balances have been eliminated from the consolidated financial statements. In the opinion of management, the consolidated financial statements reflect all adjustments that are necessary to provide a fair presentation of the results for the periods covered.

The preparation of the Company's consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the consolidated balance sheet dates and the reported amounts of revenues and expenses for the periods presented.

These include, but are not limited to, estimates and assumptions used in determining the Company's regulatory asset and liability balances based upon probability assessments of regulatory recovery, utility plant useful lives, revenues earned but not yet billed, asset retirement obligations, allowance for credit losses, pension and other employee benefit plan liabilities, and income tax-related assets and liabilities. Actual results could differ from these estimates.

Noncontrolling Interests
Noncontrolling interests in the Company’s consolidated financial statements represents the 8.0% interest not owned by Texas Water in a consolidated subsidiary. Texas Water obtained control over the subsidiary on May 1, 2021. Since the Company controls this subsidiary, its financial statements are consolidated with those of the Company, and the noncontrolling owner’s 8.0% share of the subsidiary’s net assets and results of operations is deducted and reported as noncontrolling interests on the consolidated balance sheets and as net loss attributable to noncontrolling interests in the consolidated statements of operations. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. The Company’s net income attributable to California Water Service Group excludes the net loss attributable to the noncontrolling interests.

Table of Contents
61 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating Revenue
The following table disaggregates the Company’s operating revenue by source for the years ended December 31, 2023, 2022, and 2021:
2023 2022 2021
Revenue from contracts with customers $ 790,334 $ 772,616 $ 765,704 Regulatory balancing account revenue 4,298 73,815 25,205 Total operating revenue $ 794,632 $ 846,431 $ 790,909
Revenue from contracts with customers
The Company principally generates operating revenue from contracts with customers by providing regulated water and wastewater services at tariff-rates authorized by the Commissions in the states in which they operate and non-regulated water and wastewater services at rates authorized by contracts with government agencies. Revenue from contracts with customers reflects amounts billed for the volume of consumption at authorized per unit rates, for a service charge, and for other authorized charges.

The Company satisfies its performance obligation to provide water and wastewater services over time as services are rendered. The Company applies the invoice practical expedient and recognizes revenue from contracts with customers in the amount for which the Company has a right to invoice. The Company has a right to invoice for the volume of consumption, for the service charge, and for other authorized charges.

The measurement of sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, the Company estimates consumption since the date of the last meter reading and a corresponding unbilled revenue is recognized. The estimate is based upon the number of unbilled days that month and the average daily customer billing rate from the previous month (which fluctuates based upon customer usage).

Contract terms are generally short-term and at will by customers and, as a result, no separate financing component is recognized for the Company's collections from customers, which generally require payment within 30 days of billing. The Company applies judgment, based principally on historical payment experience, in estimating its customers’ ability to pay.

Certain customers are not billed for volumetric consumption, but are instead billed a flat rate at the beginning of each monthly service period. The amount billed is initially deferred and subsequently recognized over the monthly service period, as the performance obligation is satisfied. The deferred revenue balance or contract liability, which is included in "other accrued liabilities" on the consolidated balance sheets, is inconsequential.

In the following table, revenue from contracts with customers is disaggregated by class of customers for the years ended December 31, 2023, 2022, and 2021:
2023 2022 2021
Residential $ 463,417 $ 458,448 $ 467,365
Business 159,050 153,570 144,565
Multiple residential 67,703 64,481 61,478
Industrial 28,055 26,622 26,569
Public authorities 40,811 41,150 40,501
Other* 31,298 28,345 25,226
Total revenue from contracts with customers $ 790,334 $ 772,616 $ 765,704 _______________________________________________________________________________ * Other includes accrued unbilled revenue
Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
62 Regulatory balancing account revenue
Regulatory balancing account revenue is revenue related to revenue mechanisms authorized in California by the California Public Utilities Commission (CPUC), which the Company recognizes as revenue when it is objectively determinable, probable of recovery and expected to be collected within 24 months following the end of the accounting period. Regulatory balancing account revenues are not considered contracts with customers. To the extent that revenue is estimated to be collectible beyond 24 months, recognition is deferred. Due to a delay in resolution of Cal Water's most recent general rate case filing in July of 2021 (2021 GRC), the Company did not recognize a benefit from regulatory revenue mechanisms in 2023. For 2022, the Company's authorized regulatory revenue mechanisms included the Water Revenue Adjustment Mechanism (WRAM).

The WRAM decoupled revenue from the volume of the sales and allowed the Company to recognize the adopted level of volumetric revenues. The variance between adopted volumetric revenues and actual billed volumetric revenues for metered accounts was recorded as regulatory balancing account revenue. The WRAM concluded on December 31, 2022.

Regulatory balancing accounts also includes revenue that is recognized for balancing accounts when it is probable that future recovery of previously incurred costs or future refunds that are to be credited to customers will occur through the ratemaking process. These mechanisms, such as the Modified Cost Balancing Account (MCBA), Conservation Expense Balancing Account (CEBA), Pension Cost Balancing Account (PCBA), and Health Cost Balancing Account (HCBA), generally provide for recovery of the adopted levels of expenses for purchased water, purchased power, pump taxes, water conservation program costs, pensions, and health care. Variances between adopted and actual costs were recorded as regulatory balancing account revenue in 2022. In 2023, in connection with the CPUC's decision to discontinue the use of the WRAM, the variances for CEBA, HCBA, and PCBA are recorded against the originating expense. The MCBA concluded on December 31, 2022.

The CPUC issued a decision effective August 27, 2020 requiring that Class A companies submitting GRC filings after the effective date be (i) precluded from proposing the use of a full decoupling WRAM in their next GRCs and (ii) allowed the use of a Monterey-Style Water Revenue Adjustment Mechanism (MWRAM). In addition, the CPUC's decision allowed for Incremental Cost Balancing Accounts (ICBAs) to replace the MCBA. The MWRAM tracks the difference between the revenue received for actual metered sales through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate had been in effect. The ICBA tracks differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs. Cal Water complied with this decision in its 2021 GRC and the MWRAM and ICBAs will be effective retroactive to January 1, 2023 once approved. The Company did not record a regulatory asset or regulatory liability for the MWRAM or ICBAs for 2023.

In September 2020, Cal Water filed an Application for Rehearing at the CPUC seeking to reverse the August 27, 2020 CPUC decision. In September 2021, the CPUC denied the Application for Rehearing. On or about October 27, 2021, Cal Water along with four other Class A California water utilities filed Petitions for a Writ of Review with the California Supreme Court (Court). On May 18, 2022, the Court issued writs granting review and ordered the CPUC and other filing parties to submit additional pleadings to the Court. The final pleadings were submitted on January 13, 2023. Cal Water anticipates that the Court will schedule an oral argument before it begins deliberations and issues its decision.

Non-Regulated Revenue
The following tables disaggregate the Company’s non-regulated revenue by source for the years ended December 31, 2023, 2022, and 2021:
2023 2022 2021
Operating and maintenance revenue $ 12,499 $ 12,860 $ 16,276 Other non-regulated revenue 3,506 5,774 3,741
Non-regulated revenue from contracts with customers 16,005 18,634 20,017 Lease revenue 2,504 2,642 2,744
Total non-regulated revenue $ 18,509 $ 21,276 $ 22,761
Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 63 Operating and maintenance services are provided for non-regulated water and wastewater systems owned by private companies and municipalities. The Company negotiates formal agreements with the customers under which they provide operating, maintenance and customer billing services related to the customers’ water system. The formal agreements outline the fee schedule for the services provided. The agreements typically call for a fee-per-service or a flat-rate amount per month. The Company satisfies its performance obligation of providing operating and maintenance services over time as services are rendered; as a result, the Company employs the invoice practical expedient and recognizes revenue in the amount that it has the right to invoice. Contract terms are generally short-term and, as a result, no separate financing component is recognized for its collections from customers, which generally require payment within 30 days of billing.

Other non-regulated revenue primarily relates to services for the design and installation of water mains and other water infrastructure for customers outside the regulated service areas and insurance program administration. In 2022, the Company recorded a gain of $2.7 million related to Company-owned life insurance as part of "other non-regulated revenue" in the table above.

Lease revenue is not considered revenue from contracts with customers and is recognized following operating lease standards. The Company is the lessor in operating lease agreements with telecommunications companies under which cellular phone antennas are placed on the Company's property. The Company provides the lessee the right to ingress and egress across lessor property to access the antennas. The minimum rents are recognized on a straight-line basis over the terms of the leases, which may span multiple years. The excess rents are recognized over amounts contractually due pursuant to the underlying leases and is included in a deferred receivable account in the accompanying balance sheet. The leases generally have terms of 5 to 10 years, with lessee options to extend the lease for up to 15 years. The exercise of lease renewal options is at the lessee’s sole discretion. Most of the Company’s lease agreements contain mutual termination options that require prior written notice by either lessee or lessor. A subset of the Company’s leases contains variable lease payments that depend on changes in the consumer price index (CPI).

The Company determines if an arrangement is a lease at inception. Generally, a lease agreement exists if the Company determines that the arrangement gives the lessee control over the use of an identified asset and obtains substantially all of the benefits from the identified asset.

Maturities of lease payments to be received are as follows:

Year Ending December 31, Operating Leases
2024 $ 3,120
2025 2,210
2026 1,485
2027 575
2028 179
Allowance for Credit Losses
The Company measures expected credit losses for Customer Receivables, Other Receivables, and Unbilled Revenue on an aggregated level. These receivables are generally trade receivables due in one year or less or expected to be billed and collected in one year or less. The expected credit losses for Other Receivables and Unbilled Revenue are inconsequential.

Customer receivables include receivables for water and wastewater services provided to residential customers, business, industrial, public authorities, and other customers. The expected credit losses for business, industrial, public authorities, and other customers are inconsequential. The overall risks related to the Company’s receivables are low as water and wastewater services are seen as essential services. The estimate for the allowance for credit losses is based on a historical loss ratio, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if the allowance for credit losses should be further adjusted in accordance with the accounting guidance for credit losses. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, payment options and programs available to customers, and methods that the Company is able to use to ensure payment.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 64 The Company reviews its allowance for credit losses using a quantitative assessment, which includes a trend analysis of customer billings and collections, agings by customer class, and unemployment rates. The Company also uses a qualitative assessment, which considers the future collectability on customer outstanding balances, management's estimate of the cash recovery, and a general assessment of the economic conditions in the locations the Company serves. Based on these assessments, the Company adjusts its allowance for credit losses. The Company has also contemplated funds that the Company expects to receive from the California Extended Water and Wastewater Arrearages Payment Program (Program). The Program was created by the California Legislature, is administered by the State Water Resources Control Board and will provide relief to community water and wastewater systems for unpaid bills – arrearages – related to the COVID-19 pandemic. Based on the above assessments, the Company adjusted its allowance for credit losses accordingly.

The following table presents the activity in the allowance for credit losses for the periods ended December 31, 2023, 2022, and 2021:
2023 2022 2021
Beginning Balance $ 5,629 $ 3,743 5,246
Provision for credit loss expense 2,480 5,887 $ 1,088
Write-offs (5,795) (4,380) $ (3,113)
Recoveries 540 379 $ 522
Total ending allowance balance $ 2,854 $ 5,629 $ 3,743
Other Receivables
As of December 31, 2023 and 2022, other receivables were:
2023 2022
Accounts receivables from developers $ 6,391 $ 7,419
Income tax receivables 1,378 5,496
Other 8,662 8,017
Total other receivables $ 16,431 $ 20,932
Utility Plant
Utility plant is carried at original cost when first constructed or purchased, or at fair value when acquired through acquisition. When depreciable plant is retired, the cost is eliminated from utility plant accounts and such costs are charged against accumulated depreciation. Maintenance of utility plant is charged to operating expenses as incurred. Maintenance projects are not accrued for in advance.

Intangible assets acquired as part of water systems purchased are recorded at fair value. All other intangibles have been recorded at cost and are amortized over their useful life.

The following table represents depreciable plant and equipment as of December 31:
2023 2022
Equipment $ 976,704 $ 915,322
Office buildings and other structures 354,628 339,682
Transmission and distribution plant 3,226,632 2,960,615 Total $ 4,557,964 $ 4,215,619
Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 65 Depreciation of utility plant is computed on a straight-line basis over the assets' estimated useful lives including cost of removal of certain assets as follows:

Useful Lives
Equipment 5 to 50 years
Transmission and distribution plant 40 to 65 years
Office Buildings and other structures 50 years
The provision for depreciation expressed as a percentage of the aggregate depreciable asset balances was 2.81% in 2023,

2.90% in 2022, and 2.96% in 2021.

Allowance for funds used during construction (AFUDC)
The AFUDC represents the capitalized cost of funds used to finance the construction of the utility plant. In general, AFUDC is applied to Cal Water construction projects requiring more than one month to complete. No AFUDC is applied to projects funded by customer advances for construction, contributions in aid of construction, or state-revolving fund loans.

AFUDC includes the net cost of borrowed funds and a rate of return on other funds when used, and is recovered through water rates as the utility plant is depreciated.

The amount of AFUDC related to equity funds and to borrowed funds for 2023, 2022, and 2021 are shown in the table below:
2023 2022 2021
Allowance for equity funds used during construction $ 5,551 $ 4,127 $ 3,186 Allowance for borrowed funds used during construction 2,990 2,344 1,766 Total $ 8,541 $ 6,471 $ 4,952
Asset Retirement Obligation
The Company has a legal obligation to retire wells in accordance with State Water Resources Control Board regulations.

In addition, upon decommission of a wastewater plant or lift station, certain wastewater infrastructure would need to be retired in accordance with State Water Resources Control Board regulations. An asset retirement cost and corresponding retirement obligation is recorded when a well or waste water infrastructure is placed into service. As of December 31, 2023 and 2022, the retirement obligation is estimated to be $39.0 million and $36.7 million, respectively. The retirement obligation is recorded as part of "Other long-term liabilities" within the Consolidated Balance Sheet. Changes in the retirement obligation only impact the consolidated balance sheets as the Company recognizes a regulatory asset or liability for the timing differences between the recognition of expenses and costs recovered through the ratemaking process.

The following is a reconciliation of the beginning and ending aggregate carrying amount of asset retirement obligations, which are included in “Other long-term liabilities” on the consolidated balance sheets as of December 31, 2023 and 2022:
2023 2022
Obligation at beginning of the year $ 36,692 $ 29,459
Additional liabilities incurred 262 5,444
Liabilities settled (128) —
Accretion 2,209 1,789
Obligation at the end of the year $ 39,035 $ 36,692
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents include highly liquid investments with remaining maturities of three months or less at the time of acquisition. In 2023 and 2022, restricted cash included $0.4 million of proceeds collected through a surcharge on certain customers' bills plus interest earned on the proceeds and is used to service California Safe Drinking Water Bond obligations. In 2023, restricted cash also included $43.8 million of committed cash in Texas Water for a pipeline project (see Note 14).

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 66 The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets that total to the amounts shown on the Consolidated Statements of Cash Flows as of December 31:
2023 2022
Cash and cash equivalents $ 39,591 $ 62,100
Restricted cash 45,375 22,925
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows $ 84,966 $ 85,025 Regulatory Assets and Liabilities
Because the Company operates almost exclusively in a regulated business, the Company is subject to the accounting standards for regulated utilities. The Commissions in the states in which the Company operates establish rates that are designed to permit the recovery of the cost of service and a return on investment. The Company capitalizes and records regulatory assets for costs that would otherwise be charged to expense if it is probable that the incurred costs will be recovered in future rates.

Regulatory assets are amortized over the future periods that the costs are expected to be recovered. If costs expected to be incurred in the future are currently being recovered through rates, the Company records those expected future costs as regulatory liabilities. In general, the Company does not earn a return on regulatory assets if the related costs do not accrue interest. Accordingly, the Company earns a return only on its regulatory assets for net WRAM and MCBA, PCBA, HCBA, and IRMA receivables. In addition, the Company records regulatory liabilities when it is probable the Commissions will require a refund to be made to the Company's customers over future periods. As of the December, 31, 2022, the WRAM and MCBA mechanisms concluded.

Determining probability requires significant judgment by management and includes, but is not limited to, consideration of testimony presented in regulatory hearings, proposed regulatory decisions, final regulatory orders, and the strength or status of applications for rehearing or state court appeals.

If the Company determines that a portion of the Company's assets used in utility operations is not recoverable in customer rates, the Company would be required to recognize the loss of the assets disallowed.

See Note 4 - Regulatory Assets and Liabilities for details of the Company's regulatory assets and liabilities.

Impairment of Long-Lived Assets, Intangibles and Goodwill The Company's long-lived assets include transmission and distribution plant, equipment, land, buildings, and intangible assets. Long-lived assets, other than land, are depreciated or amortized over their estimated useful lives, and are reviewed for impairment whenever changes in circumstances indicate the carrying value of the assets may not be recoverable. Such circumstances would include items such as a significant decrease in the market value of a long-lived asset, a significant adverse change in the manner in which the asset is being used or planned to be used or in its physical condition, or a history of operating or cash flow losses associated with the uses of the asset. In addition, changes in the expected useful life of these long-lived assets may also be an impairment indicator. When such events or changes occur, the Company estimates the fair value of the asset from future cash flows expected to result from the use and, if applicable, the eventual disposition of the assets, and compare that to the carrying value of the asset. If the carrying value is greater than the fair value, then an impairment loss is recognized equal to the amount by which the asset's carrying value exceeds its fair value. The key variables that must be estimated include assumptions regarding sales volume, rates, operating costs, labor and other benefit costs, capital additions, assumed discount rates and other economic factors. These variables require significant management judgment and include inherent uncertainties since they are forecasting future events. A variation in the assumptions used could lead to a different conclusion regarding the realizability of an asset and, thus could have a significant effect on the consolidated financial statements.

Goodwill is measured as the excess of the cost of an acquisition over the sum of the amounts assigned to identifiable assets acquired less liabilities assumed. Goodwill is not amortized but instead is reviewed annually in the fourth quarter for impairment or more frequently if impairment indicators arise. The impairment test is performed at the reporting unit level using fair-value based approach in which the fair value of the reporting unit is compared to the reporting unit's carrying value. If the fair value of the reporting unit is less than its carrying amount, then an impairment loss is recognized equal to the difference.

The Company recorded no goodwill impairments in 2023, 2022, and 2021.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 67 Long-Term Debt Premium, Discount and Expense
The premiums, discounts, and issuance expenses on long-term debt are amortized over the original lives of the related debt on a straight-line basis which approximates the effective interest method. Premiums paid on the early redemption of certain debt and the unamortized original issuance discount and expense are amortized over the life of new debt issued in conjunction with the early redemption. Amortization expense included in interest expense for 2023 was $0.3 million and for each of 2022 and 2021 was $0.4 million.

Advances for Construction
Advances for construction consist of payments received from developers for installation of water production and distribution facilities to serve new developments. Advances are excluded from rate base for rate setting purposes. Annual refunds are made to developers without interest. Advances of $199.4 million and $199.8 million, at December 31, 2023 and 2022, respectively, will be refunded primarily over a 40-year period from the date the advance was received in equal annual amounts.

Estimated refunds of advances are shown in the table below.

Year Ending December 31,
Refunds of
Advances
2024 $ 10,800
2025 10,011
2026 9,651
2027 9,381
2028 9,001
Thereafter 150,604
Total refunds $ 199,448
Contributions in Aid of Construction
Contributions in aid of construction represent payments received from developers, primarily for fire protection purposes, which are not subject to refunds. Facilities funded by contributions are included in utility plant, but excluded from rate base.

Depreciation related to assets acquired from contributions is charged to the Contributions in Aid of Construction liability account.

Income Taxes
The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Measurement of the deferred tax assets and liabilities is at enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The Company evaluates the need for a valuation allowance on deferred tax assets based on historical taxable income and projected taxable income for future tax years.

Historically the Commissions have reduced revenue requirements for the tax effects of certain originating temporary differences and have allowed recovery of these tax costs as the related temporary differences reverse. The Commissions have granted the Company rate increases to reflect the normalization of the tax benefits of the federal accelerated methods and available Investment Tax Credits (ITC) for all assets placed in service after 1980. ITCs are deferred and amortized over the lives of the related properties for book purposes. The CPUC sets rates utilizing the flow through method of accounting for state income taxes.

With the enactment of the Tax Cuts Jobs Act (TCJA), Contributions in Aid of Construction (CIAC) received from developers after December 22, 2017 became fully taxable for federal income tax purposes. On November 15, 2021, the Infrastructure Investment and Jobs Act was signed into law, which reverses the TCJA treatment of CIAC. Effective January 1, 2021, only the service portion of CIAC is taxable for federal income tax purpose.

Table of Contents

Workers' Compensation
For workers' compensation, the Company estimates the liability associated with claims submitted and claims not yet submitted based on historical data. Expenses for workers compensation insurance are included in rates on a pay-as-you-go basis. Therefore, a corresponding regulatory asset has been recorded.

Earnings per Share
The computations of basic and diluted earnings per share are noted below. Basic earnings per share are computed by dividing net income attributable to California Water Service Group by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts were exercised or converted into common stock. Restricted Stock Awards (RSAs) are included in the common shares outstanding because the shares have all the same voting and dividend rights as issued and unrestricted common stock. 2023 2022 2021
(In thousands,
except per share data)
Net income $ 51,376 $ 95,263 $ 100,979
Net loss attributable to noncontrolling interests (535) (748) (146) Net income attributable to California Water Service Group $ 51,911 $ 96,011 $ 101,125 Weighted average common shares, basic 56,952 54,320 51,633 Weighted average common shares, dilutive 56,983 54,363 51,633 Earnings per share—basic $ 0.91 $ 1.77 $ 1.96
Earnings per share—diluted $ 0.91 $ 1.77 $ 1.96
Stock-based Compensation
Stock-based compensation cost is measured at the grant date based on the fair value of the award. The Company recognizes compensation expense on a straight-line basis over the requisite service period, which is the vesting period.

Comprehensive Income or Loss
Comprehensive income for all periods presented was the same as net income attributable to California Water Service Group.

Accumulated Other Comprehensive Income
The Company did not have any accumulated other comprehensive income or loss transactions as of December 31, 2023 and 2022.

New Accounting Standards
In November 2023, the Financial Standards Accounting Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for the Company's annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. The guidance requires retrospective presentation of all prior periods presented in the financial statements. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 69 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company's annual periods beginning January 1, 2025, with early adoption permitted. The guidance is applied prospectively with the option of retrospective application for each period presented. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

NOTE 3. OTHER INCOME AND EXPENSES
The Company conducts various non-regulated activities as reflected in the table below:
2023 2022 2021
Revenue Expense Revenue Expense Revenue Expense
Operating and maintenance $ 12,499 $ 10,786 $ 12,860 $ 11,959 $ 16,276 $ 16,344 Leases 2,504 26 2,642 46 2,744 230
Design and construction 652 536 416 328 619 611
Meter reading and billing 198 2 534 123 495 79
Interest income 303 — 177 — 171 —
Loss (gain) from non-qualified
benefit plan investments — (4,919) — 7,161 — (3,800)
Other non-regulated income
and expenses 2,353 5,376 4,647 5,204 2,456 3,770
Total $ 18,509 $ 11,807 $ 21,276 $ 24,821 $ 22,761 $ 17,234 Operating and maintenance services and meter reading and billing services are provided for water and wastewater systems owned by private companies and municipalities. The agreements typically call for a fee-per-service or a flat-rate amount per month. Leases have been entered into with telecommunications companies for cellular phone antennas placed on the Company's property. Design and construction services are for the design and installation of water mains and other water infrastructure for others outside the Company's regulated service areas. Third-party insurance program gains and losses are included in other non-regulated income and expenses. In 2022, the Company recorded a gain of $2.7 million related to Company-owned life insurance as part of "revenue" in "other non-regulated income and expenses" in the table above.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 70 NOTE 4. REGULATORY ASSETS AND LIABILITIES
Regulatory assets and liabilities were comprised of the following as of December 31:

Recovery Period 2023 2022
Regulatory Assets
Property-related temporary differences (tax benefits flowed through to customers) Indefinite 158,486 143,546
Other accrued benefits Indefinite 25,363 24,946
Net WRAM and MCBA long-term accounts receivable Various 10,738 41,558 Asset retirement obligations, net Indefinite 26,686 24,548 Tank coating Various 19,602 16,395
IRMA long-term accounts receivable 1-2 years 3,430 3,682 Recoverable property losses Various 3,121 3,144
PCBA Various 4,182 19,091
General district balancing account receivable Various 390 377 Customer assistance program (CAP) and Rate support fund (RSF) accounts receivable 1 year 2,459 2,965
Other regulatory assets Various 3,164 3,368
Total Regulatory Assets $ 257,621 $ 283,620
Regulatory Liabilities
Cost of removal $ 447,356 $ 414,061
Future tax benefits due to customers 118,051 131,155
Pension and retiree group health 88,728 58,678
HCBA 3,242 14,318
PCBA 8,972 —
CEBA 1,200 6,036
Net WRAM and MCBA long-term payable 2,071 172
Other components of net periodic benefit cost 10,348 2,475 RSF regulatory liability 2,116 —
Other regulatory liabilities 1,633 845
Total Regulatory Liabilities $ 683,717 $ 627,740
The property-related temporary differences are primarily due to: (i) the difference between book and federal income tax depreciation on utility plant that was placed in service before the regulatory Commissions adopted normalization for rate making purposes; and (ii) certain (state) deferred taxes for which flow through accounting continues to be applied to originating deferred taxes. The regulatory asset will be recovered in rates in future periods as the tax effects of the temporary differences previously flowed-through to customers reverse.

Other accrued benefits are accrued benefits for vacation, self-insured workers' compensation, and directors' retirement benefits.

The net WRAM and MCBA long-term accounts receivable is the under-collected portion of recorded revenues that are not expected to be collected from customers within 12 months.

The asset retirement obligation regulatory asset represents the difference between costs associated with asset retirement obligations and amounts collected in rates. Tank coating represents the maintenance costs for tank coating projects that are recoverable from customers.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
71 The IRMA long-term accounts receivables is the additional amount the Company would have billed customers in 2020 and 2021 had the 2018 GRC been approved on time.

The CAP and RSF are two programs offered by Cal Water that assist qualifying customers with their monthly water bill.

The programs are funded by the customers who do not qualify for the assistance. The CAP and RSF regulatory assets represent the amounts due from customers to fund the CAP and RSF credits that were provided to assist qualifying customers. The RSF regulatory liability represents RSF credits that will be provided to assist qualifying customers. The liability was funded by customers.

Cost of removal represents the cumulative differences between the recorded costs to remove assets and amounts collected in rates for expected costs to remove assets at the end of their estimated useful life. Subsequent to the issuance of the 2022 financial statements, the Company determined the cost of removal obligations previously presented in accumulated depreciation and amortization should have been presented as a regulatory liability. As a result, the consolidated balance sheet as of December 31, 2022, has been adjusted to increase regulatory liabilities and decrease accumulated depreciation and amortization by $414.1 million. The adjustment does not affect consolidated net income, earnings per share, total equity or cash flows.

Management has concluded that the adjustment is immaterial to the previously issued consolidated financial statements.

The future tax benefits due to customers primarily resulted from federal tax law changes enacted by the TCJA on December 22, 2017. The TCJA reduced the federal corporate income tax rate from 35 percent to 21 percent beginning on January 1, 2018, and GAAP requires the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate on the enactment date.

The pension and retiree group health regulatory liability represents the over funded obligation of the Company’s postretirement benefit plans which the Company expects to refund to customers in the future. These plans are discussed in further detail in Note 11.

The PCBA regulatory asset/liability and the HCBA regulatory liability represent incurred pension and healthcare costs that exceeded/were below the cost recovery in rates and is recoverable/refundable from/to customers. The other components of net periodic benefit cost regulatory liabilities are authorized by the Commissions and are probable for customer refund through the capital program.

The conservation program regulatory liability is for incurred conservation costs that were below the cost recovery in rates and is refundable to customers.

Short-term regulatory assets and liabilities are excluded from the above table. The short-term regulatory assets as of December 31, 2023 and 2022 were $64.2 million and $66.8 million, respectively. The short-term regulatory assets, as of December 31, 2023 primarily consisted of net WRAM and MCBA, and PCBA receivables. As of December 31, 2022, the short-term regulatory assets primarily consisted of net WRAM and MCBA, IRMA, and PCBA receivables.

The short-term portion of regulatory liabilities as of December 31, 2023 and 2022 were $21.5 million and $12.2 million, respectively. The short-term regulatory liabilities as of December 31, 2023 primarily consisted of TCJA liabilities and HCBA liabilities. As of December 31, 2022, the short-term regulatory liabilities primarily consisted of TCJA liabilities.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 4. REGULATORY ASSETS AND LIABILITIES (Continued)
72 NOTE 5. INTANGIBLE ASSETS AND GOODWILL
Intangible assets
As of December 31, 2023 and 2022, intangible assets that will continue to be amortized and those not amortized were:

Weighted
Average
Amortization
Period
(years)
2023 2022
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Amortized intangible
assets:

Water pumping rights usage $ 1,084 $ 137 $ 947 $ 1,084 $ 132 $ 952 Water planning studies 13 19,470 10,214 9,256 16,354 9,222 7,132 Leasehold
improvements and
other 18 5,128 1,837 3,291 3,192 1,614 1,578
Total $ 25,682 $ 12,188 $ 13,494 $ 20,630 $ 10,968 $ 9,662 Unamortized intangible
assets:

Perpetual water rights
and other $ 7,239 $ — $ 7,239 $ 7,149 $ — $ 7,149
Water pumping rights usage is the amount of water pumped from aquifers to be treated and distributed to customers.

For the year ended December 31, 2023, 2022, and 2021 amortization of intangible assets was $1.5 million, $1.5 million, and $1.4 million, respectively.

Estimated future amortization expense related to intangible assets are shown in the table below:

Year Ending December 31,
Estimated
Future
Amortization
Expense Related
to Intangible
Assets
2024 $ 1,839
2025 1,720
2026 1,392
2027 1,144
2028 1,038
Thereafter 6,361
Total $ 13,494
Goodwill
Changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 were as follows:
2023 2022
Beginning balance $ 36,814 $ 36,814
Acquisitions 225 —
Total ending goodwill balance $ 37,039 $ 36,814
Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
73 NOTE 6. EQUITY
As of December 31, 2023 and 2022, 57,723,738, and 55,597,855 shares, respectively, of common stock were issued and outstanding.

Effective January 1, 2019, the Company implemented an Employee Stock Purchase Plan (ESPP). Under the ESPP, qualified employees are permitted to purchase the Company’s common stock at 90% of the market value of the common stock on the specified stock purchase date. The ESPP is deemed compensatory and compensation costs will be accounted for under ASC 718, Stock Compensation. Employees’ payroll deductions for common stock purchases may not exceed 10% of their salaries. Employees may purchase up to 2,000 shares per period provided that the value of the shares purchased in any calendar year may not exceed $25,000, as calculated pursuant to the ESPP. The Company recorded expense of $0.3 million for 2023, and $0.2 million for 2022, and 2021. The Company issued 50,319, 40,095 and 37,460 shares of common stock related to the ESPP in 2023, 2022, and 2021, respectively.

On April 29, 2022, the Company entered into an equity distribution agreement to sell shares of its common stock having an aggregate gross sales price of up to $350.0 million from time to time depending on market conditions through an at-themarket equity program over the next three years. The Company intends to use the net proceeds from these sales, after deducting commissions on such sales and offering expenses, for general corporate purposes, which may include working capital, construction and acquisition expenditures, investments and repurchases, and redemptions of securities. The Company sold 2,025,891 shares of common stock through its at-the-market equity program and raised proceeds of $112.7 million, net of $1.1 million in sales commissions paid in 2023. The Company sold 1,802,063 shares of common stock through its at-the-market equity program and raised proceeds of $104.6 million net of $1.1 million in commissions paid under the equity distribution agreement in 2022. The Company also incurred $0.2 million and $0.1 million of equity issuance costs in 2023 and 2022, respectively.

As approved by the Company's stockholders at the 2022 Annual Meeting, effective July 26, 2022, the aggregate number of shares of common stock which the Company shall have authority to issue was increased from 68.0 million shares to 136.0 million shares. All of these shares are of one and the same series, namely shares of common stock with par value of $0.01 per share.

Dividend Reinvestment and Stock Repurchase Plan
The Company has a Dividend Reinvestment and Stock Purchase Plan (DRIP Plan). Under the DRIP Plan, stockholders may reinvest dividends to purchase additional Company common stock without commission fees. The DRIP Plan also allows existing stockholders and other interested investors to purchase Company common stock through the transfer agent up to certain limits. The Company's transfer agent operates the DRIP Plan and purchases shares on the open market to provide shares for the DRIP Plan.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
74 NOTE 7. SHORT-TERM BORROWINGS
On March 31, 2023, the Company and Cal Water entered into syndicated credit agreements, which provide for unsecured revolving credit facilities of up to an initial aggregate amount of $600.0 million for a term of five years. The Company and subsidiaries that it designates may borrow up to $200.0 million under the Company's revolving credit facility (the Company facility). Cal Water may borrow up to $400.0 million under its revolving credit facility (the Cal Water facility). Additionally, the credit facilities may be increased by up to an incremental $150.0 million under the Cal Water facility and $50.0 million under the Company facility, subject in each case to certain conditions. At the Company’s or Cal Water's option, as applicable, borrowings under the Company and Cal Water facilities, as applicable, will bear interest annually at a rate equal to (i) the base rate, plus an applicable margin of 0.00% to 0.250%, depending on the Company and its subsidiaries' consolidated total capitalization ratio, or (ii) Term SOFR, plus an applicable margin of 0.800% to 1.250%, depending on the Company and its subsidiaries' consolidated total capitalization ratio.

The Company and Cal Water facilities contain affirmative and negative covenants and events of default customary for credit facilities of this type including, among other things, limitations and prohibitions relating to additional indebtedness, liens, mergers, and asset sales. Also, the Company and Cal Water facilities contain financial covenants governing the Company and its subsidiaries' consolidated total capitalization ratio and interest coverage ratio. As of December 31, 2023, the Company and Cal Water are in compliance with all of the covenant requirements and are eligible to use the full amount of the undrawn portion of the Company and Cal Water facilities, as applicable.

As of December 31, 2023 and 2022, the outstanding borrowings on the Company lines of credit were $50.0 million and $35.0 million, respectively. Outstanding borrowings on the Cal Water lines of credit as of December 31, 2023 were $130.0 million and $35.0 million as of December 31, 2022. The average borrowing rate for borrowings on the Company and Cal Water lines of credit during 2023 was 6.09% compared to 2.74% for the same period during the prior year.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023 and 2022
Dollar amounts in thousands unless otherwise stated
75 NOTE 8. LONG-TERM DEBT
As of December 31, 2023 and 2022, long-term debt outstanding was:

Series Interest Rate Maturity Date 2023 2022
First Mortgage Bonds ZZZ 2.870 % 2051 $ 130,000 $ 130,000 1 3.020 % 2061 150,000 150,000
YYY 4.170 % 2059 200,000 200,000
WWW 4.070 % 2049 100,000 100,000
VVV 3.400 % 2029 100,000 100,000
TTT 4.610 % 2056 10,000 10,000
SSS 4.410 % 2046 40,000 40,000
QQQ 3.330 % 2025 50,000 50,000
RRR 4.310 % 2045 50,000 50,000
PPP 5.500 % 2040 100,000 100,000
AAA 7.280 % 2025 20,000 20,000
BBB 6.770 % 2028 20,000 20,000
CCC 8.150 % 2030 20,000 20,000
DDD 7.130 % 2031 20,000 20,000
EEE 7.110 % 2032 20,000 20,000
III 5.540 % 2023 — 909
OOO 6.020 % 2031 20,000 20,000
Total First Mortgage Bonds 1,050,000 1,050,909
California Department of Water Resources
Loans 1.30% - 1.69% 2027 - 2039 4,195 4,515
Other long-term debt 4,102 5,485
Unamortized debt issuance costs (4,857) (5,112)
Total long-term debt, net of unamortized debt
issuance costs 1,053,440 1,055,797
Less current maturities of long-term debt, net 672 3,310 Long-term debt, net $ 1,052,768 $ 1,052,487
Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023 and 2022
Dollar amounts in thousands unless otherwise stated
76 Maturities of long-term debt as of December 31, 2023 are as follows:

Year Ending December 31, Long-term debt*
2024 $ 377
2025 70,354
2026 357
2027 334
2028 20,318
Thereafter 962,656
_______________________________________________________________________________ * Excludes maturities for finance lease obligations. See note 14 for maturities for finance lease obligations.

On October 4, 2011, Cal Water entered into a finance lease arrangement with the City of Hawthorne to operate the City's water system for a 15-year period. The $2.4 million and $3.2 million finance lease liability as of December 31, 2023 and 2022, respectively, is included in other long-term debt and current maturities set forth above.

NOTE 9. OTHER ACCRUED LIABILITIES
As of December 31, 2023 and 2022, other accrued liabilities were:
2023 2022
Accrued and deferred compensation $ 22,512 $ 23,188
Accrued benefits and workers' compensation claims 8,276 6,953 Unearned revenue and customer deposits 13,488 8,138
Uninsured loss reserve 5,954 5,320
Due to contracts and agencies 2,992 3,101
Current portion of operating lease 962 1,065
Other 5,422 5,252
Total other accrued liabilities $ 59,606 $ 53,017
Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023 and 2022
Dollar amounts in thousands unless otherwise stated
NOTE 8. LONG-TERM DEBT (Continued)
77 NOTE 10. INCOME TAXES
Income tax expense (benefit) consisted of the following:

Federal State Total
2023
Current $ — $ 3 $ 3
Deferred 508 (7,292) (6,784)
Total income tax $ 508 $ (7,289) $ (6,781)
2022
Current $ 1,857 $ 3 $ 1,860
Deferred 4,726 (211) 4,515
Total income tax $ 6,583 $ (208) $ 6,375
2021
Current $ — $ 3,446 $ 3,446
Deferred 3,322 (2,676) 646
Total income tax $ 3,322 $ 770 $ 4,092
The Company's December 31, 2023, 2022, and 2021 qualified tax repairs and maintenance deductions totaled $169.7 million, $128.0 million, and $125.5 million, respectively.

At December 31, 2023, the Company had U.S. federal and U.S. state tax net operating loss carry-forwards of approximately $93.3 million and $184.0 million respectively. The U.S. federal and U.S. state net operating loss carry-forwards will both expire at various dates beginning in tax year 2028.

The difference between the recorded and the statutory income tax expense is reconciled in the table below:
2023 2022 2021
Statutory income tax $ 9,365 $ 21,344 $ 22,065
Increase (reduction) in taxes due to:

State income taxes net of federal tax benefit 3,718 7,383 7,334 Effect of regulatory treatment of fixed asset differences (9,478) (6,274) (6,327) Investment tax credits (74) (74) (74)
AFUDC equity (1,553) (1,155) (891)
Stock based stock compensation 677 455 791
TCJA refund (11,618) (13,919) (19,417)
Other 2,182 (1,385) 611
Total income tax $ (6,781) $ 6,375 $ 4,092
The effect of regulatory treatment of fixed asset differences includes estimated repair and maintenance deductions and asset related flow through items.

On December 22, 2017, the U.S. government enacted expansive tax legislation commonly referred to as the TCJA.

Among other provisions, the TCJA reduces the federal income tax rate from 35 percent to 21 percent beginning on January 1, 2018 and eliminated bonus depreciation for utilities. The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate.

As of December 31, 2023, the TCJA refund liability was $92.5 million. The Company continues working with other state regulators to finalize the refund to confirm compliance with federal normalization rules.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
78 The deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022, are presented in the following table:
2023 2022
Deferred tax assets:

Developer deposits for contributions in aid of construction $ 33,244 $ 31,589 Net operating loss carry-forward and tax credits 29,406 18,329 Pension liability 16,896 13,860
Income tax regulatory liability 18,364 22,838
Operating leases liabilities 3,796 4,170
Other 3,614 4,264
Total deferred tax assets 105,320 95,050
Deferred tax liabilities:

Property related basis and depreciation differences 437,224 393,007 WRAM/MCBA and interim rates balancing accounts 4,875 14,192 Operating lease-right to use asset 3,746 4,130
Other 12,237 13,972
Total deferred tax liabilities 458,082 425,301
Net deferred tax liabilities $ 352,762 $ 330,251
Based on historical taxable income and future taxable income projections over the period in which the deferred assets are deductible, management believes it is more likely than not that the Company will realize the benefits of the deductible differences.

The following table reconciles the changes in unrecognized tax benefits for the periods ended December 31, 2023, 2022, and 2021:
2023 2022 2021
Balance at beginning of year $ 13,606 $ 15,850 $ 13,960 Additions for tax positions taken during current year 2,685 1,955 1,890 Lapse of statute of limitations — (4,199) —
Balance at end of year $ 16,291 $ 13,606 $ 15,850
The Company does not expect a material change in its unrecognized tax benefits within the next 12 months. The component of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2023, was $5.0 million, with the remaining balance representing the potential deferral of taxes to later years.

The Company's federal income tax years subject to an examination are from 2017 to 2023 and the state income tax years subject to an examination are from 2013 to 2023.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 10. INCOME TAXES (Continued)
79 NOTE 11. EMPLOYEE BENEFIT PLANS
Savings Plan
The Company sponsors a 401(k) qualified defined contribution savings plan that allows participants to contribute up to 50% of pre-tax compensation. Effective January 1, 2010, the Company matches 75 cents for each dollar contributed by the employee up to a maximum Company match of 6.0% of eligible earnings. Company contributions were $8.2 million, $7.1 million, and $7.4 million for the years 2023, 2022, and 2021, respectively.

Pension Plans
The Company provides a qualified, defined-benefit, non-contributory pension plan for substantially all employees. The accumulated benefit obligations of the pension plan are $534.7 million and $505.9 million as of December 31, 2023 and 2022, respectively. The fair value of pension plan assets was $716.3 million and $637.3 million as of December 31, 2023 and 2022, respectively.

Prior to 2010, pension payment obligations were generally funded by the purchase of an annuity from a life insurance company. Beginning in 2010, the pension plan trust pays monthly benefits to retirees, rather than the purchase of an annuity.

The Company also maintains an unfunded, non-qualified, supplemental executive retirement plan (SERP). The unfunded SERP accumulated benefit obligations were $74.1 million and $69.3 million as of December 31, 2023 and 2022, respectively.

Benefit payments under the SERP are paid currently. As a non-qualified plan, the SERP has no plan assets, however, the Company has a Rabbi trust designated to provide funding for SERP obligations. The Rabbi trust holds investments in marketable securities and corporate-owned life insurance. The recorded value of these investments was approximately $66.7 million and $59.0 million at December 31, 2023 and 2022, respectively, and is part of "Other" noncurrent assets on the Consolidated Balance Sheets.

Expected payments to be made for the pension and SERP plans are shown in the table below:

Year Ending December 31, Pension SERP Total
2024 $ 20,301 $ 2,834 $ 23,135
2025 21,959 3,104 25,063
2026 23,695 3,381 27,076
2027 25,487 3,712 29,199
2028 27,340 4,024 31,364
2029-2033 165,184 24,590 189,774
Total payments $ 283,966 $ 41,645 $ 325,611
The expected benefit payments are based upon the same assumptions used to measure the Company's benefit obligation at December 31, 2023, and include estimated future employee service.

The costs of the pension and retirement plans are charged to expense and utility plant. The Company makes annual contributions to fund the amounts accrued for pension cost.

Other Postretirement Plan
The Company provides substantially all active, permanent employees with medical, dental, and vision benefits through a self-insured plan. Employees retiring at or after age 58, along with their spouses and dependents, continue participation in the plan by payment of a premium. Plan assets are invested in mutual funds, short-term money market instruments and commercial paper based upon a similar asset mix to the pension plan. Retired employees are also provided with a $10,000 dollar life insurance benefit.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
80 The Company records the costs of postretirement benefits other than pensions (PBOP) during the employees' years of active service. In 2023, the Company recorded postretirement benefit income of $2.9 million. In 2022 and 2021, postretirement benefit expense was recorded for $0.1 million and $0.2 million, respectively.

The expected benefit payments, net of retiree premiums and Medicare Part D subsidies, are shown in the table below.

Year Ending December 31,
Expected Benefit
Payments Before
Medicare Part D
Subsidy
Effect of Medicare
Part D Subsidy on
Expected Benefit
Payments
Expected Benefit
Payments Net of
Medicare Part D
Subsidy
2024 $ 4,712 $ (248) $ 4,464
2025 5,011 (275) 4,736
2026 5,353 (302) 5,051
2027 5,782 (329) 5,453
2028 6,234 (358) 5,876
2029-2033 38,176 (2,209) 35,967
Total payments $ 65,268 $ (3,721) $ 61,547
Benefit Plan Assets
The Company actively manages pension and PBOP trust (Plan) assets. The Company's investment objectives are:
• Maximize the return on the assets, commensurate with the risk that the Company deems appropriate to meet the obligations of the Plans, minimize the volatility of the pension expense, and account for contingencies; • Generate a rate of return for the total portfolio that equals or exceeds the actuarial investment rate assumption; Additionally, the rate of return of the total fund is measured periodically against an index comprised of 35% of the Standard & Poor's Index, 15% of the Russell 2000 Index, 10% of the MSCI EAFE Index, and 40% of the Bloomberg Barclays U.S. Aggregate Bond Index. The index is consistent with the Company's rate of return objective and indicates the Company's long-term asset allocation objective.

The Company applies a risk management framework for managing the risks associated with employee benefit plan trust assets. The guiding principles of this risk management framework are the clear articulation of roles and responsibilities, appropriate delegation of authority, and proper accountability and documentation. Trust investment policies and investment manager guidelines include provisions to ensure prudent diversification, manage risk through appropriate use of physical direct asset holdings and derivative securities, and identify permitted and prohibited investments. The Company retains an investment manager to be the Company's Outsourced Chief Investment Officer (OCIO) and the OCIO was required to make investment decisions for Plan assets within the parameters of the Company's investment policies and guidelines.

The Company's target asset allocation percentages for major categories of the plan assets are reflected in the table below:

Minimum
Exposure Target
Maximum
Exposure
Fixed Income 35 % 40 % 45 %
Total Domestic Equity: 35 % 40 % 45 %
Small/Mid Cap Stocks 5 % 12 % 25 %
Large Cap Stocks 25 % 28 % 45 %
Emerging markets 3 % 6 % 9 %
Non-U.S. Equities 11 % 14 % 17 %
The fixed income category includes money market funds, short-term bond funds, and cash. The majority of fixed income investments range in maturities from less than 1 to 5 years.

Table of Contents

The Company uses the following criteria to select investment funds:
• Fund past performance;
• Fund meets criteria of Employee Retirements Income Security Act (ERISA); • Timeliness and completeness of fund communications and reporting to investors; • Stability of fund management company;
• Fund management fees; and
• Administrative costs incurred by the Plan.

Plan Fair Value Measurements
The fair value measurements standard establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the standard are described below:

Level 1—Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.

Level 2—Inputs to the valuation methodology include:
• Quoted market prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in inactive markets; • Inputs other than quoted prices that are observable for the asset or liability; and • Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following tables present the fair value of plan assets by major asset category at December 31, 2023 and 2022:

December 31, 2023
Pension Benefits Other Benefits
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Fixed Income $ 407 $ — $ — $ 407 $ 21,891 $ — $ — $ 21,891 Domestic Equity: Small/
Mid Cap Stocks — — — — 6,437 — — 6,437
Domestic Equity: Large
Cap Stocks — — — — — — — —
Non U.S. Equities — — — — 7,268 — — 7,268
Emerging markets — — — — 3,090 — — 3,090
Assets measured at net
asset value (NAV) — — — 715,866 — — — 124,681
Total Plan Assets $ 407 $ — $ — $ 716,273 $ 38,686 $ — $ — $ 163,367 Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 11. EMPLOYEE BENEFIT PLANS (Continued)
82 December 31, 2022
Pension Benefits Other Benefits
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Fixed Income $ 588 $ — $ — $ 588 $ 18,060 $ — $ — $ 18,060 Domestic Equity: Small/
Mid Cap Stocks — — — — 5,654 — — 5,654
Domestic Equity: Large
Cap Stocks — — — — — — — —
Non U.S. Equities — — — — 6,928 — — 6,928
Emerging markets — — — — 3,027 — — 3,027
Assets measured at NAV — — — 636,742 — — — 111,017
Total Plan Assets $ 588 $ — $ — $ 637,330 $ 33,669 $ — $ — $ 144,686 The pension benefits fixed income category includes $0.4 million and $0.6 million of money market fund investments as of December 31, 2023 and 2022, respectively. The other benefits fixed income category includes $0.3 million of money market fund investments as of December 31, 2023 and no money market fund investments as of December 31, 2022.

Assets measured at NAV include investments in commingled funds that are comprised of fixed income and equity securities. These commingled funds are not publicly traded, and therefore no publicly quoted market price is readily available.

The values of the commingled funds are measured at estimated fair value, which is determined based on the unit value of the funds and have not been classified in the fair value hierarchy tables above. There are no restrictions on the terms and conditions upon which the investments may be redeemed.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 11. EMPLOYEE BENEFIT PLANS (Continued)
83 Changes in Plan Assets, Benefits Obligations, and Funded Status The following table reconciles the funded status of the plans with the accrued pension liability and the net postretirement benefit liability as of December 31, 2023 and 2022:

Pension Benefits Other Benefits
2023 2022 2023 2022
Change in projected benefit obligation:

Beginning of year $ 685,254 $ 887,477 $ 101,752 $ 142,470 Service cost 22,159 34,847 4,489 6,830
Interest cost 34,190 25,596 5,219 4,009
Actuarial (gain) loss (1) (8,532) (243,769) 27,208 (49,462) Benefits paid, net of retiree premiums (22,302) (18,897) (3,935) (2,095) End of year $ 710,769 $ 685,254 $ 134,733 $ 101,752
Change in plan assets:

Fair value of plan assets at beginning of year $ 637,330 $ 810,469 $ 144,686 $ 169,436 Actual return on plan assets 95,280 (171,517) 22,133 (23,326) Employer contributions 5,965 17,275 189 671
Retiree contributions and Medicare part D subsidies — — 2,449 2,176 Benefits paid (22,302) (18,897) (6,557) (4,421)
Other adjustments — — 467 150
Fair value of plan assets at end of year $ 716,273 $ 637,330 $ 163,367 $ 144,686 Funded status (2) $ 5,504 $ (47,924) $ 28,634 $ 42,934
Unrecognized actuarial gain (66,073) (19,512) (26,764) (44,555) Unrecognized prior service cost 2,680 3,205 1,428 1,583 Net amount recognized $ (57,889) $ (64,231) $ 3,298 $ (38) _______________________________________________________________________________

1. The actuarial gain for pension and other benefits in 2022 was mainly due to a higher discount rate used in the calculation.

2. The short-term portion of the pension benefits was $2.8 million as of December 31, 2023 and $2.6 million as of December 31, 2022 and was recorded as part of other accrued liabilities on the Company's Consolidated Balance Sheets.

Table of Contents

Pension Benefits Other Benefits
2023 2022 2023 2022
Noncurrent assets (1) $ 91,051 $ 32,848 $ 28,634 $ 42,934 Accrued benefit costs — (307) (1) (465)
Accrued benefit liability (2) (85,547) (80,772) — —
Regulatory assets (3) — — — 171
Regulatory liabilities (3) (63,393) (16,000) (25,335) (42,678) Net amount recognized $ (57,889) $ (64,231) $ 3,298 $ (38) _______________________________________________________________________________

1. Noncurrent assets represent the overfunded status of the employee pension plan and PBOP plan in 2023 and 2022. The amounts are recorded as part of "Other" noncurrent assets on the Consolidated Balance Sheets.

2. Accrued benefit liability represents the underfunded status of the SERP plan in 2023 and 2022. The amounts are recorded as part of "Pension" in the Consolidated Balance Sheets.

3. Changes in the funded status of the plans that would be recorded in accumulated other comprehensive income for an unregulated entity are recorded as a regulatory assets and liabilities as the Company believes it is probable that an amount equal to the regulatory asset or liability will be collected or refunded through the setting of future rates.

Valuation Assumptions
Below are the actuarial assumptions used in determining the benefit obligation for the benefit plans:

Pension Benefits Other Benefits
2023 2022 2023 2022
Weighted average assumptions as of December 31:

Discount rate - employee pension plan 5.25 % 5.27 % — — Discount rate - SERP 5.19 % 5.24 % — —
Discount rate - other benefits — — 5.25 % 5.27 %
Long-term rate of return on plan assets 7.56 % 7.50 % 7.41 % 7.36 % Rate of compensation increases - employee pension plan 4.25 % 4.28 % — — Rate of compensation increases - SERP 5.00 % 5.00 % — — Cost of living adjustment 2.23 % 2.25 % — —
The long-term rate of return assumption is the expected rate of return on a balanced portfolio invested roughly 60% in equities and 40% in fixed income securities. Returns on equity investments were estimated based on estimates of dividend yield and real earnings added to a 2.23% long-term inflation rate. For the pension plans and other benefits, the assumed returns were

8.41% for domestic equities and 9.00% for foreign equities. Returns on fixed-income investments were projected based on investment maturities and credit spreads added to a 2.23% long-term inflation rate. For the pension and other benefit plans, the assumed returns were 5.43% and 5.15%, respectively, for fixed income investments. The Company is using a long-term rate of return of 7.56% for the pension plan and 7.41% for the other benefit plan.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 11. EMPLOYEE BENEFIT PLANS (Continued)
85 Components of Net Periodic Benefit Cost
Net periodic benefit costs for the pension and other postretirement plans for the years ended December 31, 2023 and 2022, included the following components:

Pension Plan Other Benefits
2023 2022 2021 2023 2022 2021
Service cost $ 22,159 $ 34,847 $ 35,055 $ 4,489 $ 6,830 $ 6,072 Interest cost 34,190 25,596 21,667 5,219 4,009 3,217
Expected return on plan assets (53,684) (45,228) (39,472) (10,543) (9,927) (8,769) Net amortization and deferral (3,043) 5,781 10,003 (2,019) (824) (293) Net periodic (income) cost $ (378) $ 20,996 $ 27,253 $ (2,854) $ 88 $ 227 Service cost portion of the pension plan and other postretirement benefits is recognized in administrative and general within the Consolidated Statements of Operations. Other components of net periodic benefit costs include interest costs, expected return on plan assets, amortization of prior service costs, and recognized net actuarial loss and are reported together as other components of net periodic benefit cost within the Consolidated Statements of Operations.

Below are the actuarial assumptions used in determining the net periodic benefit costs for the benefit plans, which uses the end of the prior year as the measurement date:

Pension Benefits Other Benefits
2023 2022 2023 2022
Weighted average assumptions as of December 31:

Discount rate - employee pension plan 5.27 % 3.28 % — — Discount rate - SERP 5.24 % 3.18 % — —
Discount rate - other benefits — — 5.27 % 3.27 %
Long-term rate of return on plan assets 7.50 % 6.34 % 7.36 % 5.88 % Rate of compensation increases - employee pension plan 4.28 % 4.25 % — — Rate of compensation increases - SERP 5.00 % 5.00 % — — Cost of living adjustment 2.25 % 2.20 % — —
The health care cost trend rate assumption has a significant effect on the amounts reported. For 2023 measurement purposes, the Company assumed a 6.2% annual rate of increase in the per capita cost of covered benefits with the rate decreasing to 6.0% by 2024, then gradually grading down to 4.0% by 2060.

The Company intends to make annual contributions that meet the funding requirements of ERISA. The Company estimates in 2024 that the annual contribution to the pension plans will be $0.7 million and the annual contribution to the other postretirement plan will be $0.2 million.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 11. EMPLOYEE BENEFIT PLANS (Continued)
86 NOTE 12. STOCK-BASED COMPENSATION PLANS
The Company's equity incentive plan was approved and amended by stockholders on April 27, 2005 and May 20, 2014.

The Company is authorized to issue awards up to 2,000,000 shares of common stock.

During 2023, the Company granted RSAs of common stock to Officers and to the Board of Directors (Board). An RSA share represents the right to receive a share of the Company's common stock and is valued based on the fair market value of the Company's common stock at the date of grant. RSAs granted to Officers vest over 36 months with the first year cliff vesting. In general, RSAs granted to Board vest at the end of 12 months. The RSAs are recognized as expense evenly over 36 months for the shares granted to Officers and 12 months for the shares granted to Board. As of December 31, 2023, there was approximately $1.8 million of total unrecognized compensation cost related to RSAs. The cost is expected to be recognized over a weighted average period of 1.6 years.

A summary of the status of the outstanding RSAs as of December 31, 2023 is presented below:

Number of RSA
Shares
Weighted-Average
Grant-Date Fair
Value
RSAs at January 1, 2023 52,066 $ 55.77
Granted 44,215 $ 55.33
Vested (40,953) $ 55.71
Forfeited (2,025) 55.59
RSAs at December 31, 2023 53,303 $ 55.48
During 2023, the Company granted performance-based RSUs of common stock to Officers. Each award reflects a target number shares of common stock that may be issued to the award recipient. The Company may settle RSUs in shares of the Company's common stock, cash or a combination of both. The 2023 awards may be earned upon the completion of a 3-year performance period. Whether RSUs are earned at the end of the performance period will be determined based on the achievement of certain performance objectives set by the Organization and Compensation Committee of the Board in connection with the issuance of the RSUs. The performance objectives are based on the Company's business plan covering the performance period. The performance objectives include achieving the budgeted return on equity, growth in stockholders' equity, and environmental, social, and governance targets. Depending on the results achieved during the 3-year performance period, the actual number of shares that a grant recipient receives at the end of the performance period may range from 0% to 200% of the target shares granted, provided that the grantee is continuously employed by the Company through the vesting date. If prior to the vesting date employment is terminated by reason of death, disability or normal retirement, then a pro rata portion of this award will vest, which has typically been settled in cash. The RSUs are recognized as expense ratably over the 3- year performance period using a fair market value of the Company's common share at the date of grant and an estimated number of RSUs earned during the performance period. As of December 31, 2023, there was approximately $2.4 million of total unrecognized compensation cost related to RSUs. The cost is expected to be recognized over a weighted average period of

1.4 years.

A summary of the status of the outstanding RSUs as of December 31, 2023 is presented below:

Number of RSU
Shares
Weighted-Average
Grant-Date Fair
Value
RSUs at January 1, 2023 92,625 $ 54.06
Granted 43,633 $ 55.48
Performance share award adjustment 14,822 $ 56.84
Vested (40,589) $ 56.84
Forfeited (17,413) $ 54.43
RSUs at December 31, 2023 93,078 $ 55.41
The Company has recorded compensation costs for the RSAs and RSUs which are included in administrative and general operating expenses in the amount of $2.7 million for 2023 and $4.9 million for 2022.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
87 NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires certain disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance. The three levels in the hierarchy are described in Note 11 - Employee Benefit Plans.

Specific valuation methods include the following:

Cash, Accounts receivable, short-term borrowings, and accounts payable carrying amounts approximated the fair value because of the short-term maturity of the instruments.

Long-term debt fair values were estimated using the published quoted market price, if available, or the discounted cash flow analysis, based on the current rates available using a risk-free rate (a U.S. Treasury securities yield curve) plus a risk premium of 0.6%.

December 31, 2023
Fair Value
Cost Level 1 Level 2 Level 3 Total
Long-term debt, including current
maturities, net $ 1,053,440 $ — $ 965,444 $ — $ 965,444 December 31, 2022
Fair Value
Cost Level 1 Level 2 Level 3 Total
Long-term debt, including current
maturities, net $ 1,055,797 $ — $ 977,227 $ — $ 977,227 Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
88 NOTE 14. COMMITMENTS AND CONTINGENCIES
Commitments
Water Supply Contracts
The Company has long-term commitments to purchase water from water wholesalers. The commitments are noted in the table below.

Water Supply
Contracts*
2024 $ 33,362
2025 32,708
2026 32,712
2027 32,713
2028 32,709
Thereafter 435,518
_______________________________________________________________________________ * Estimated annual contractual obligations are based on the same payment levels as 2023.

The Company has a long-term contract with Valley Water that requires the Company to purchase minimum annual water quantities. Purchases are priced at the districts then-current wholesale water rate. The Company operates to purchase sufficient water to equal or exceed the minimum quantities under the contract. The total paid to Valley Water was $12.6 million in 2023, $11.3 million in 2022, and $11.9 million in 2021.

The Company also has a water supply contract with Stockton East Water District (SEWD) that requires a fixed monthly payment. Each year, the fixed monthly payment is adjusted for changes to SEWD's costs. The total paid under the contract was $11.5 million in 2023, $15.3 million in 2022, and $12.9 million in 2021.

On September 21, 2005, the Company entered into an agreement with Kern County Water Agency (Agency) to obtain treated water for the Company's operations. The term of the agreement is to January 1, 2035, or until the repayment of the Agency's bonds (described hereafter) occurs. Under the terms of the agreement, the Company is obligated to purchase approximately 20,500 acre feet of treated water per year. The Company is obligated to pay the Capital Facilities Charge and the Treated Water Charge regardless of whether it can use the water in its operation, and is obligated for these charges even if the Agency cannot produce an adequate amount to supply the 20,500 acre feet in the year. This agreement supersedes a prior agreement with Kern County Water Agency for the supply of 11,500 acre feet of water per year.

Three other parties, including the City of Bakersfield, are also obligated to purchase a total of 32,500 acre feet per year under separate agreements with the Agency. Further, the Agency has the right to proportionally reduce the water supply provided to all of the participants if it cannot produce adequate supplies. If any of the other parties does not use its allocation, that party is obligated to pay its contracted amount.

If any of the parties were to default on making payments of the Capital Facilities Charge, then the other parties are obligated to pay for the defaulting party's share on a pro-rata basis. If there is a payment default by a party and the remaining parties have to make payments, they are also entitled to a pro-rata share of the defaulting party's water allocation.

The Company expects to use all its entitled water in its operations every year. In addition, if the Company were to pay for and receive additional amounts of water due to a default of another participating party; the Company believes it could use this additional water in its operations without incurring substantial incremental cost increases. If additional treated water is available, all parties have an option to purchase this additional treated water, subject to the Agency's right to allocate the water among the parties.

The total obligation of all parties, excluding the Company, is approximately $82.4 million to the Agency. Based on the credit worthiness of the other participants, which are government entities, it is believed to be highly unlikely that the Company would be required to assume any other parties' obligations under the contract due to their default.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
89 The Company pays a capital facilities charge and charges related to treated water that together total $11.5 million annually, which equates to $560.22 dollars per acre foot. Total treated water charge for 2023 was $4.7 million. As treated water is being delivered, the Company will also be obligated for the Company's portion of the operating costs; that portion is currently estimated to be $51.69 dollars per acre foot. The actual amount will vary due to variations from estimates, inflation, and other changes in the cost structure. Our overall estimated cost of $560.22 dollars per acre foot is less than the estimated cost of procuring untreated water (assuming water rights could be obtained) and then providing treatment.

On August 16, 2022, BVRT Utility Holding Company (BVRT), a majority owned subsidiary of Texas Water, entered into a long-term water supply agreement with the Guadalupe Blanco River Authority (GBRA) through its wholly owned subsidiary, Camino Real Utility (Camino Real). The Company has provided a limited guarantee to GBRA for the agreed upon obligations.

GBRA is a water conservation and reclamation district established by the Texas Legislature that oversees water resources for 10 counties. Under the terms of the agreement with GBRA, Camino Real is contracted to receive up to 2,419 acre-feet of potable water annually. The GBRA agreement involves four off-takers, including Camino Real, and GBRA plans to extend a potable water pipeline from the City of Lockhart to the City of Mustang Ridge and surrounding areas. Camino Real is contracted to be the utility service provider in this area of the Austin metropolitan region and to provide potable water, recycled water, and wastewater services to portions of the City of Mustang Ridge and surrounding areas. In 2022, Camino Real committed $21.5 million for its share of the cost of the pipeline project. In 2023, Camino Real committed an additional $22.3 million for its share of the cost of the pipeline project. As of December 31, 2023, this committed cash has not been transferred to GBRA and is classified as part of restricted cash on the Consolidated Balance Sheets. The Company currently expects this committed cash to be transferred to GBRA in the first half of 2024.

Leases
The Company has operating and finance leases for water systems, offices, land easements, licenses, equipment, and other facilities. The leases generally have remaining lease terms of 1 year to 50 years, some of which include options to extend the lease for up to 25 years. The exercise of lease renewal options is at the Company’s sole discretion. Most of the Company’s lease agreements contain mutual termination options that require prior written notice by either lessee or lessor. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain leases include options to purchase the leased property. The depreciable life of the assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option that is reasonably certain of exercise. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet as the Company applied the short-term lease exception allowed by the Financial Accounting Standards Board guidance. Lease expense for these leases is recognized on a straight-line basis over the lease term. A subset of the Company’s leases contains variable lease payments that depend on changes in the CPI.

The Company determines if an arrangement is a lease at contract inception. Generally, a lease agreement exists if the Company determines that the arrangement gives the Company control over the use of an identified asset and obtains substantially all of the benefits from the identified asset.

The right-of-use (ROU) assets that are recorded represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset and lease liability may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Variable lease payments that are based on changes in CPI are included in the measurement of ROU asset and lease liability on the basis of the rate at lease commencement. Subsequent changes to the payments as a result of changes to the CPI rate are recognized in the period in which the obligation of these payments is incurred.

Table of Contents

As of December 31, 2023 As of December 31, 2022
Operating leases
Other assets: Other $ 13,387 $ 14,762
Other accrued liabilities $ 962 $ 1,065
Other long-term liabilities 12,605 13,838
Total operating lease liabilities $ 13,567 $ 14,903
Finance leases
Depreciable plant and equipment $ 19,087 $ 19,820
Accumulated depreciation and amortization (14,339) (14,017) Net utility plant $ 4,748 $ 5,803
Current maturities of long-term debt, net $ 844 $ 2,555 Long-term debt, net 3,057 2,675
Total finance lease liabilities $ 3,901 $ 5,230
Weighted average remaining lease term
Operating leases 112 months 119 months
Finance leases 29 months 32 months
Weighted average discount rate
Operating leases 3.6 % 3.5 %
Finance leases 5.5 % 4.4 %
Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 14. COMMITMENTS AND CONTINGENCIES (Continued)
91 The components of lease expense were as follows:
2023 2022
Operating lease cost $ 2,520 $ 2,514
Finance lease cost:

Amortization of right-of-use assets $ 1,609 $ 1,606
Interest on lease liabilities 190 246
Total finance lease cost $ 1,799 $ 1,852
Short-term lease cost $ 1,442 $ 2,101
Variable lease cost 549 519
Total lease cost $ 6,310 $ 6,986
Supplemental cash flow information related to leases was as follows:
2023 2022
Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 2,534 $ 2,498 Operating cash flows from finance leases $ 190 $ 246
Financing cash flows from finance leases $ 1,400 $ 824
Non-cash activities: right-of-use assets obtained in exchange for lease obligations:

Operating leases $ 558 $ 1,634
Finance leases $ (61) $ 326
Maturities of lease liabilities as of December 31, 2023 are as follows:

Year Ending December 31, Operating Leases Finance Leases 2024 $ 2,244 $ 1,034
2025 1,956 2,505
2026 1,740 705
2027 1,547 —
2028 1,460 —
Thereafter 6,744 —
Total lease payments 15,691 4,244
Less imputed interest (2,124) (343)
Total $ 13,567 $ 3,901
Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 14. COMMITMENTS AND CONTINGENCIES (Continued)
92 Contingencies
Groundwater Contamination
The Company has undertaken litigation against third parties to recover past and future costs related to ground-water contamination in our service areas. The cost of litigation is generally expensed as incurred and any settlement is first offset against such costs. The CPUC's general policy requires all proceeds from contamination litigation to be used first to pay transactional expenses, then to make customers whole for water treatment costs to comply with the CPUC's water quality standards. The CPUC allows for a risk-based consideration of contamination proceeds which exceed the costs of the remediation described above and may result in some sharing of proceeds with the shareholder, determined on a case-by-case basis. The CPUC has authorized various memorandum accounts that allow the Company to track significant litigation costs to request recovery of these costs in future filings and uses of proceeds to comply with CPUC's general policy.

Other Legal Matters
From time to time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of business. The status of each significant matter is reviewed and assessed for potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount of the range of loss can be estimated, a liability is accrued for the estimated loss in accordance with the accounting standards for contingencies. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. While the outcome of these disputes and litigation matters cannot be predicted with any certainty, management does not believe when taking into account existing reserves the ultimate resolution of these matters will materially affect the Company's financial position, results of operations, or cash flows. The Company has recognized a liability of $6.0 million for all known legal matters as of December 31, 2023 primarily due to potable water main leaks and other work related legal matters. The cost of litigation is expensed as incurred and any settlement is first offset against such costs. Any settlement in excess of the cost to litigate is accounted for on a case-by-case basis, dependent on the nature of the settlement.

NOTE 15. SUBSEQUENT EVENT
2021 GRC
On January 24, 2024, the assigned CPUC Administrative Law Judges (ALJs) issued a proposed decision (PD) on the litigated 2021 GRC, and concurrently, the assigned CPUC Commissioner issued an alternate proposed decision (APD) opposing and modifying certain decisions made by the ALJs. The PD issued by the ALJs was closer aligned to Cal Water’s requested revenue requirement whereas the APD issued by the assigned Commissioner was closer aligned to the Public Advocates’ requested revenue requirement. On February 13, 2024, Cal Water filed a request to change several elements in the PD and APD, including correction of possible 2021 GRC technical issues. The Company is unable to determine which of the two proposed decisions will be adopted by the CPUC, or if a second alternate proposed decision will be issued by the CPUC.

As a result of the uncertainty of the decision that will ultimately be made by the CPUC, the Company is unable to reasonably estimate the impact on 2023 operating revenue and expenses. The 2021 GRC cumulative adjustment plus interest which is retroactive to January 1, 2023, will be recorded when the final decision is issued by the CPUC.

Table of Contents

CALIFORNIA WATER SERVICE GROUP
Notes to Consolidated Financial Statements (Continued)
December 31, 2023, 2022, and 2021
Dollar amounts in thousands unless otherwise stated
NOTE 14. COMMITMENTS AND CONTINGENCIES (Continued)
93 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Management's Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, management, including the Chief Executive Officer and Chief Financial Officer, recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Accordingly, our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, have concluded that our disclosure controls and procedures were effective at a reasonable assurance level.

Management's Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in "Internal Control— Integrated Framework (2013)". Management has concluded that, as of December 31, 2023 our internal control over financial reporting is effective based on these criteria. Our independent registered public accounting firm, Deloitte & Touche LLP, has audited the effectiveness of our internal control over financial reporting as of December 31, 2023, as stated in their report, which is included in Item 8 and incorporated herein.

Changes to Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.
(a)
On February 28, 2024, the Board adopted an amendment and restatement of the Company’s Amended and Restated Bylaws as previously adopted by the Board (as amended and restated, the “Amended and Restated Bylaws”), effective as of such date, in order to clarify the scope of certain information to be provided in connection with a notice of stockholder business and nominations.
(b) Trading Plans
During the last fiscal quarter, no director or Section 16 officer of the Company adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement (as defined under SEC rules).

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

PART III
Item 10. Directors and Executive Officers and Corporate Governance.

Table of Contents
94 The information required by this Item as to directors of the Company and the Company's Audit Committee is contained in the sections captioned "Board Structure," "Proposal No. 1—Election of Directors" and, as applicable, "Delinquent Section 16(a) Reports" of the definitive Proxy Statement for our Annual Meeting of Stockholders to be held on or about May 29, 2024 (the "2024 Proxy Statement"), and is incorporated herein by reference.

Information required by this Item regarding executive officers is included in a separate section captioned "Information About Our Executive Officers" contained in Part I of this annual report.

We have adopted codes of ethics that apply to all of our directors, officers, and employees, including our principal executive, financial and accounting officers, or persons performing similar functions. Our codes of ethics are posted on our corporate governance website located at http://www.calwatergroup.com. In addition, amendments to the codes of ethics and any grant of a waiver from a provision of the codes of ethics requiring disclosure under applicable SEC and NYSE rules will be disclosed at the same location as the codes of ethics on our corporate governance website located at http:// www.calwatergroup.com within four business days of such amendment or waiver.

Item 11. Executive Compensation.

The information required by this Item is contained under the captions "Compensation Discussion and Analysis," "Report of the Organization and Compensation Committee of the Board on Executive Compensation," and "Organization and Compensation Committee Interlocks and Insider Participation" of the 2024 Proxy Statement and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item regarding security ownership of certain beneficial owners and management is contained in the section captioned "Stock Ownership of Management and Certain Beneficial Owners" of the 2024 Proxy Statement and is incorporated herein by reference.

The following table represents securities authorized to be issued under our equity compensation plan:

Plan Category
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Rights
(a) (1)
Weighted-Average
Exercise Price of
Outstanding
Rights (1)
Number of
Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plan
(Excluding
Securities
Reflected in Column)
(a)
Equity compensation plans approved by security
holders 93,078 $ 55.41 1,679,724
Equity compensation plans not approved by security
holders — — —
Total 93,078 $ 55.41 1,679,724

1. Represents restricted stock units, which have no exercise price and are not included in the weighted-average exercise price of outstanding rights.

Item 13. Certain Relationships and Related Transactions and Director Independence.

The information required by this Item is contained in the sections captioned "Certain Related Persons Transactions" and "Board Structure" of the 2024 Proxy Statement and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

Information about aggregate fees billed to us by our principal accountant, Deloitte & Touche LLP (PCAOB ID No. 34) will be presented in the sections captioned "Report of the Audit Committee" and "Relationship with the Independent Registered Public Accounting Firm" of the 2024 Proxy Statement and is incorporated herein by reference.

PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) As part of this Form 10-K, the following documents are being filed:

Table of Contents
95 1. Financial Statement: See "Index to Consolidated Financial Statements" in Part II, Item 8 of this Form 10-K.

2. Financial Statement Schedules: No financial statement schedules are being included since the information otherwise required is included in the financial statements and the notes thereto.

3. Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference.

Table of Contents
96 EXHIBIT INDEX
Unless filed with this Form 10-K, the documents listed are incorporated by reference to the filings referred to:

1.1 Equity Distribution Agreement, dated as of April 29, 2022, between California Water Service Group and Morgan Stanley & Co. LLC, Robert W. Baird & Co. Incorporated, Blaylock Van, LLC, Wells Fargo Securities, LLC, Janney Montgomery Scott LLC and Samuel A. Ramirez & Company, Inc. (incorporated by reference to the Company’s Form 8-K filed April 29, 2022)

3.1 Certificate of Incorporation of California Water Service Group (Exhibit 3.1 to the Quarterly Report on Form 10-Q filed August 9, 2006)

3.2 Certificate of Amendment to Certificate of Incorporation of California Water Service Group (Exhibit 3.1 to the Current Report on Form 8-K filed June 10, 2011)

3.3 Certificate of Amendment to Amended Certificate of Incorporation of California Water Service Group (Exhibit 3.3 to the Quarterly Report on Form 10-Q filed July 28, 2022)

3.4 Certificate of Amendment to Amended Certificate of Incorporation of California Water Service Group (Exhibit 3.4 to the Quarterly Report on Form 10-Q filed July 27, 2023)

3.5 Amended and Restated Bylaws of California Water Service Group, as amended on February 28, 2024

4.1 Certificate of Designations regarding Series D Participating Preferred Stock, as filed with Delaware Secretary of State on September 16, 1999 (Exhibit 4.2 to Annual Report on Form 10-K for the year ended December 31, 2003)

4.2 Certificate of Elimination of the Series D Participating Preferred Stock, as filed with Delaware Secretary of State on February 27, 2019 (Exhibit 4.2 to Annual Report on Form 10-K for the year ended December 31, 2018)

4.3 Thirty-Ninth Supplemental Indenture dated as of April 17, 2009, between California Water Service Company and U.S. Bank National Association, as Trustee (Exhibit 4.1 to Current Report on Form 8-K filed April 21, 2009)

4.4 Forty-Third Supplemental Indenture dated as of April 17, 2009, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 7.28% First Mortgage Bonds due 2025, Series AAA. (Exhibit 4.5 to Current Report on Form 8-K filed April 21, 2009)

4.5 Forty-Fourth Supplemental Indenture dated as of April 17, 2009, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 6.77% First Mortgage Bonds due 2028, Series BBB. (Exhibit 4.6 to Current Report on Form 8-K filed April 21, 2009)

4.6 Forty-Fifth Supplemental Indenture dated as of April 17, 2009, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 8.15% First Mortgage Bonds due 2030, Series CCC. (Exhibit 4.7 to Current Report on Form 8-K filed April 21, 2009)

4.7 Forty-Sixth Supplemental Indenture dated as of April 17, 2009, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 7.13% First Mortgage Bonds due 2031, Series DDD. (Exhibit 4.8 to Current Report on Form 8-K filed April 21, 2009)

4.8 Forty-Seventh Supplemental Indenture dated as of April 17, 2009, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 7.11% First Mortgage Bonds due 2032, Series EEE. (Exhibit 4.9 to Current Report on Form 8-K filed April 21, 2009)

4.9 Fifty-First Supplemental Indenture dated as of April 17, 2009, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 5.54% First Mortgage Bonds due 2023, Series III. (Exhibit 4.13 to Current Report on Form 8-K filed April 21, 2009)

4.10 Fifty-Seventh Supplemental Indenture dated as of April 17, 2009, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 6.02% First Mortgage Bonds due 2031, Series OOO. (Exhibit 4.19 to Current Report on Form 8-K filed April 21, 2009)

4.11 Fifty-Eighth Supplemental Indenture dated as of November 22, 2010, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 5.50% First Mortgage Bonds due 2040, Series PPP. (Exhibit 4.1 to Current Report on form 8-K filed November 22, 2010).

4.12 Sixty-Second Supplemental Indenture dated as of June 11, 2019, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 3.40% First Mortgage Bonds due 2029, Series VVV, 4.07% First Mortgage Bonds due 2049, Series WWW, and 4.17% First Mortgage Bonds due 2059, Series YYY (Exhibit 10.1 to the Current Report on Form 8-K filed June 18, 2019)

4.13 Sixty-Third Supplemental Indenture dated as of May 11, 2021, between California Water Service Company and U.S. Bank National Association, as Trustee, covering 2.87% First Mortgage Bonds due 2051, Series ZZZ and 3.02% First Mortgage Bonds due 2061, Series 1 (Exhibit 10.1 to the Current Report on Form 8-K filed May 11, 2021)
Exhibit
Number
Table of Contents
97 4.14 The Company agrees to furnish upon request to the Securities and Exchange Commission a copy of each instrument defining the rights of holders of long-term debt of the Company.

4.15 Description of securities

10.1 Water Supply Contract between Cal Water and County of Butte relating to Cal Water's Oroville District; Water Supply Contract between Cal Water and the Kern County Water Agency relating to Cal Water's Bakersfield District; Water Supply Contract between Cal Water and Stockton East Water District relating to Cal Water's Stockton District. (Exhibits 5(g), 5(h), 5(i), 5(j), Registration Statement No. 2-53678, which exhibits are incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 1974)

10.2 Water Supply Contract between the City and County of San Francisco and wholesale customers in Alameda County, San Mateo County and Santa Clara County for a term of twenty-five years beginning on July 1, 2009 and ending on June 30, 2034. The agreement was dated June 24, 2009. (Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ending September 30, 2009).

10.3 Water Supply Contract dated July 1, 2009 between the City and County of San Francisco and California Water Service Company to provide water to Bear Gulch and Bayshore service areas for a term of twenty-five years beginning July 1, 2009 and ending June 30, 2034. (Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ending September 30, 2009).

10.4 Water Supply Contract dated January 27, 1981, between Cal Water and the Santa Clara Valley Water District relating to Cal Water's Los Altos District (Exhibit 10.3 to Annual Report on Form 10-K for the year ended December 31, 1992)

10.5 Amendments No. 3, 6 and 7 and Amendment dated June 17, 1980, to Water Supply Contract between Cal Water and the County of Butte relating to Cal Water's Oroville District. (Exhibit 10.5 to Annual Report on Form 10-K for the year ended December 31, 1992)

10.6 Amendment dated May 31, 1977, to Water Supply Contract between Cal Water and Stockton East Water District relating to Cal Water's Stockton District. (Exhibit 10.6 to Annual Report on Form 10-K for the year ended December 31, 1992)

10.7 Second Amended Contract dated September 25, 1987, among Stockton East Water District, California Water Service Company, the City of Stockton, the Lincoln Village Maintenance District, and the Colonial Heights Maintenance District Providing for the Sale of Treated Water. (Exhibit 10.7 to Annual Report on Form 10-K for the year ended December 31, 1987)

10.8 Water Supply Contract dated April 19, 1927, and Supplemental Agreement dated June 5, 1953, between Cal Water and Pacific Gas and Electric Company relating to Cal Water's Oroville District. (Exhibit 10.9 to Annual Report on Form 10-K for the year ended December 31, 1992)

10.9 Water Supply Agreement dated September 25, 1996, between the City of Bakersfield and California Water Service Company. (Exhibit 10.18 to Quarterly Report on Form 10-Q for the quarter ended September 30, 1996)

10.10 Water Supply Contract dated November 16, 1994, between California Water Service Company and Alameda County Flood Control and Water Conservation District relating to Cal Water's Livermore District (Exhibit 10.15 to Annual Report on Form 10-K for the year ended December 31, 1994)

10.11 California Water Service Group Directors' Retirement Plan (As amended and restated on February 22, 2006) (Exhibit 10.14 to the Annual Report on Form 10-K for the year ended December 31, 2005)

10.12 Credit Agreement dated as of March 31, 2023 among California Water Service Group and certain of its subsidiaries from time to time party thereto, as borrowers, Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, BofA Securities, Inc., as sole lead arranger and sole bookrunner, CoBank, ACB, and U.S. Bank National Association as co-syndication agents, Bank of China, Los Angeles Branch as documentation agent, and the other lender parties thereto (Exhibit 10.2 to the Current Report on Form 8-K filed April 5, 2023)

10.13 Credit Agreement dated as of March 31, 2023 among California Water Service Company as borrower, Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, BofA Securities, Inc., as sole lead arranger and sole bookrunner, CoBank, ACB, and U.S. Bank National Association as co-syndication agents, Bank of China, Los Angeles Branch as documentation agent, and the other lender parties thereto (Exhibit 10.1 to the Current Report on Form 8-K filed April 5, 2023)

10.14 Executive Severance Plan (Exhibit 10.24 to Annual Report on Form 10-K for the year ended December 31, 1998)*

10.15 California Water Service Group Deferred Compensation Plan effective January 1, 2001 (Exhibit 10.22 to Annual Report on Form 10-K for the year ended December 31, 2000)*

10.16 California Water Service Company Supplemental Executive Retirement Plan effective January 1, 2001 (Exhibit 10.23 to Annual Report on Form 10-K for the year ended December 31, 2000)*

10.17 Amendment No. 1 to California Water Service Company Supplemental Executive Retirement Plan effective January 1, 2001 (Exhibit 10.22 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)* Exhibit
Number
Table of Contents
98 10.18 Water Supply Contract 99-73 between the City of Bakersfield and California Water Service Company, dated March 31, 1999 (Exhibit 10.25 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2003)

10.19 Amendment No. 1 to Water Supply Contract between the City of Bakersfield and California Water Service Company, dated October 3, 2001 (Exhibit 10.26 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2003)

10.20 Amendment No. 2 to California Water Service Company Supplemental Executive Retirement Plan effective January 1, 2001 (Exhibit 10.27 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)*

10.21 California Water Service Group Amended and Restated Equity Incentive Plan (filed as Appendix A of the California Water Service Group proxy statement dated April 8, 2014, for its Annual Meeting of Stockholders to be held on May 20, 2014, as filed with the SEC on April 8, 2014)*

10.22 The registrant's policy on option repricing under its Equity Incentive Plan (incorporated by reference to Item 8.01 Other Events in the registrant's Current Report on Form 8-K dated April 7, 2005)*

10.23 Water Supply Contract dated September 21, 2005, between Cal Water and the Kern County Water Agency. (Exhibit 10.1 to Current Report on Form 8-K filed on September 21, 2005)

10.24 Form of Restricted Stock Award Grant Notice under the California Water Service Group Equity Incentive Plan. (Exhibit 10.36 to the Annual Report on Form 10-K for the year ended December 31, 2005)

10.25 Form of Restricted Stock Award Agreement under the California Water Service Group Equity Incentive Plan with Assignment Separate From Certificate and Joint Escrow Instructions. (Exhibit 10.38 to the Annual Report on Form 10-K for the year ended December 31, 2005)

10.26 Form of Indemnification Agreement to be entered between California Water Service Group and its directors and officers. (Exhibit 10.44 to the Annual Report on Form 10-K for the year ended December 31, 2006)

10.27 Offer letter between James P. Lynch and California Water Service Group dated January 2, 2024

21.0 Subsidiaries of the Registrant

22.1 List of Subsidiary Issuers and Guarantors

23.1 Consent of Independent Registered Public Accounting Firm

31.1 Chief Executive Officer certification of financial statements pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Chief Financial Officer certification of financial statements pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.0 Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97 Incentive Compensation Clawback Policy
101
The following materials from this Annual Report on Form 10-K formatted in iXBRL (Inline extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Common Stockholders' Equity and (v) the Notes to the Consolidated Financial Statements. 104 The cover page from this Annual Report on Form 10-K, formatted in iXBRL (included as exhibit 101).

Exhibit
Number
_______________________________________________________________________________ * Management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary.

None.

Table of Contents
99 SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized

CALIFORNIA WATER SERVICE GROUP
By /s/ MARTIN A. KROPELNICKI
Date: February 29, 2024
MARTIN A. KROPELNICKI,
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The members of the Board of Directors who have signed below constitute a majority of the Board of the Directors. /s/ MARTIN A. KROPELNICKI
President and Chief Executive Officer; Principal Executive Officer; Chairman, Board of Directors Date: February 29, 2024 MARTIN A. KROPELNICKI
/s/ GREGORY E. ALIFF Member, Board of Directors Date: February 29, 2024 GREGORY E. ALIFF
/s/ SHELLY M. ESQUE Member, Board of Directors Date: February 29, 2024 SHELLY M. ESQUE
/s/ JEFFREY KIGHTLINGER Member, Board of Directors Date: February 29, 2024

JEFFREY KIGHTLINGER
/s/ THOMAS M. KRUMMEL Member, Board of Directors Date: February 29, 2024 THOMAS M. KRUMMEL, M.D.
/s/ YVONNE A. MALDONADO Member, Board of Directors Date: February 29, 2024 YVONNE A. MALDONADO
/s/ SCOTT L. MORRIS Member, Board of Directors Date: February 29, 2024 SCOTT L. MORRIS
/s/ CHARLES R. PATTON Member, Board of Directors Date: February 29, 2024 CHARLES R. PATTON
/s/ CAROL M. POTTENGER Member, Board of Directors Date: February 29, 2024 CAROL M. POTTENGER
/s/ LESTER A. SNOW Member, Board of Directors Date: February 29, 2024 LESTER A. SNOW
/s/ PATRICIA K. WAGNER Member, Board of Directors Date: February 29, 2024 PATRICIA K. WAGNER
/s/ DAVID B. HEALEY Principal Financial Officer Date: February 29, 2024 DAVID B. HEALEY
/s/ THOMAS A. SCANLON Corporate Controller, Principal Accounting Officer Date: February 29, 2024 THOMAS A. SCANLON
Table of Contents
Exhibit 3.5

AMENDED AND RESTATED BYLAWS
OF

CALIFORNIA WATER SERVICE GROUP
(A DELAWARE CORPORATION)
AS AMENDED EFFECTIVE FEBRUARY 28, 2024

AMENDED AND RESTATED BYLAWS
OF

CALIFORNIA WATER SERVICE GROUP
(a Delaware corporation)
as amended effective February 28, 2024
ARTICLE 1. OFFICES
SECTION 1.1. REGISTERED OFFICE.

The registered office of the corporation shall be fixed in the certificate of incorporation of the corporation, as the same may be amended and/or restated from time to time.

SECTION 1.2. PRINCIPAL PLACE OF BUSINESS.

The corporation’s principal place of business shall be 1720 North First Street, San Jose, California, or such other place as the board of directors shall designate from time to time.

SECTION 1.3. OTHER OFFICES.

One or more branch or other subordinate offices may at any time be fixed and located by the board of directors at such place or places within or without the State of Delaware as it deems appropriate.

ARTICLE 2. DIRECTORS
SECTION 2.1. EXERCISE OF CORPORATE POWERS.

Except as otherwise provided by the certificate of incorporation of the corporation or by the laws of the State of Delaware now or hereafter in force, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. The board may delegate the management of the day-to-day operation of the business of the corporation as permitted by law provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board.

SECTION 2.2. NUMBER.

The number of the corporation’s directors shall be not less than seven (7) not more than twelve (12), the exact number of which shall be fixed by a resolution approved by the stockholders or by the board of directors.

SECTION 2.3. CHAIRMAN OF THE BOARD
The Chairman of the board of directors shall preside at meetings of the stockholders and of the board of directors and shall do and perform such other duties as may from time to time be assigned to him by the board of directors. If the Chairman of the board of directors is not present at a meeting of the stockholders or the board of directors, the lead director or another person chosen by the board of directors shall preside. The Chairman of the board of directors shall be chosen from the directors, and may or may not be an officer of the corporation. Officers, other than the Chairman of the board, may or may not be directors.

SECTION 2.4. DIRECTORS NEED NOT BE STOCKHOLDERS.

The directors of the corporation need not be stockholders of the corporation.

SECTION 2.5. COMPENSATION.

Directors shall receive such compensation for their services as directors and such reimbursement for their expenses of attendance at meetings as may be determined from time to time by resolution of the board. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefore.

SECTION 2.6. ELECTION AND TERM OF OFFICE.

At each annual meeting of stockholders, directors shall be elected to hold office until the next annual meeting, provided, that if for any reason, said annual meeting or an adjournment thereof is not held or the directors are not elected thereat, then the directors may be elected at any special meeting of the stockholders called and held for that purpose. The term of office of the directors shall begin immediately after their election and shall continue until the expiration of the term for which elected and until their respective successors have been elected and qualified.

SECTION 2.7. VACANCIES.

A vacancy or vacancies in the board of directors shall exist when any authorized position of director is not then filled by a duly elected director, whether caused by death, resignation, removal, change in the authorized number of directors (by the board or the stockholders) or otherwise. The board of directors may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony. Except for a vacancy created by the removal of a director, vacancies on the board 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. A vacancy created by the removal of a director may be filled only by the approval of the stockholders. Any director may resign effective upon giving written notice to the Chairman of the board, the President, the Corporate Secretary or the board of directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.

SECTION 2.8. REMOVAL.
a. Any and all directors may be removed without cause if such removal is approved by the affirmative vote of a majority of the votes entitled to be cast by the outstanding voting shares at an election of directors, except that when by the provisions of the certificate the holders of the shares of any class or series, voting as a class or series, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series. b. Any reduction of the authorized number of directors does not remove any director prior to the expiration of such director’s term of office.
c. A director shall be deemed to be removed for cause if such person ceases to be eligible to serve as a director under the terms of Section 2.9.

SECTION 2.9. DIRECTOR CONFLICT OF INTEREST.
a. In order to protect the best interests of the stockholders of the corporation, no person shall be qualified to be elected as a director of the corporation or be qualified to continue to serve as a director of the corporation if it is determined in accordance with this Section 2.9 that such person is (i) an owner, part owner, stockholder, partner, member, director, officer, manager, employee of or consultant to, or otherwise has a fiduciary duty to, any Strategic Competitor or (ii) an owner, part owner, stockholder, partner, member, director, officer, manager, employee of or consultant to, or otherwise has a fiduciary duty to, any business organization that beneficially owns five percent or more of the voting securities or five percent or more of the equity securities of a Strategic Competitor.
b. For purposes of this Section 2.9, a “Strategic Competitor” is any business organization (whether a corporation, partnership, limited liability company, proprietorship or any other form) whose activities, products or services are competitive with those of the corporation or its subsidiaries and which, in the opinion of a majority of the corporation’s board of directors, would obtain an unfair competitive advantage over the corporation if it were to receive disclosure of the substance of any nonpublic deliberations by the corporation’s board of directors.
c. Notwithstanding the foregoing, a director or nominee for director may make a passive investment in a Strategic Competitor the shares of which are publicly traded if such investment constitutes less than five percent of the voting securities and less than five percent of the equity securities of such enterprise and has a market value not greater than $100,000. Such investment alone shall not make a person ineligible to become or remain a director of the corporation.
d. In furtherance of the foregoing, each person elected as a director of the corporation shall enter into a confidentiality agreement with the corporation in the form provided by the corporation. e. Any person who, at the time he or she is a nominee for a position as a director of the corporation, fails to qualify under the provisions of this Section 2.9 or to enter into or comply with the terms of such confidentiality agreement, as determined by a majority of the directors in office immediately prior to any such election (exclusive of the nominee under consideration), shall no longer qualify as a nominee for director and shall not be elected as a director of the corporation, irrespective of any vote of the stockholders of the corporation. The Chairman of the board of directors is authorized to instruct the inspector of elections to disregard any votes or proxies voted in favor of any person at any meeting or otherwise, and the inspector of elections shall comply with any such instruction. f. Any director of the corporation who, at any time during his/her term of office, fails to qualify under the provisions of this Section 2.9 or to enter into or comply with the terms of such confidentiality agreement, in each case as determined by a majority of the directors (exclusive of the director under consideration), shall automatically be removed for cause and shall cease to be a director of the corporation, without any vote of the stockholders of the corporation. The Chairman of the board of directors is authorized to instruct the Corporate Secretary to certify the removal for cause of any person as a director if such person ceases to be eligible to serve as a director under the terms of this Section 2.9, and the Corporate Secretary shall comply with any such instruction.
g. Subsection (f) of this Section 2.9 shall not apply to directors in office on the date of the adoption of Section

2.9 with respect to relationships and conflicts in existence on such date. Subsection (f) shall apply to existing directors with respect to relationships and conflicts that arise after the date of the adoption of this Section 2.9.
h. This Section 2.9 is intended to prescribe certain qualifications for directors as authorized by Section 141 of the Delaware General Corporation Law.

ARTICLE 3. OFFICERS
SECTION 3.1. ELECTION AND QUALIFICATIONS.

The officers of this corporation shall consist of a President, a Corporate Secretary, a Treasurer and a Controller who shall be chosen by the board of directors and such other officers as the board of directors shall deem expedient, who shall be chosen in such manner and hold their offices for such terms as the board of directors may prescribe. Any two or more of such offices may be held by the same person. Officers may or may not be directors. The board of directors may determine to leave any office vacant.

SECTION 3.2. TERM OF OFFICE AND COMPENSATION.

The term of office and salary of each of said officers and the manner and time of the payment of such salaries shall be fixed and determined by the board of directors and may be altered by said board of directors from time to time at its pleasure, subject to the rights, if any, of said officers under any contract of employment.

SECTION 3.3. REMOVAL AND VACANCIES.

Any officer of the corporation may be removed, with or without cause, by the board of directors at any meeting or by any officer who may be granted such power by a resolution of the board of directors without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. If any vacancy occurs in any office of the corporation, the board of directors may elect a successor to fill such vacancy for the remainder of the unexpired term and until a successor is duly chosen and qualified, or such office may be left vacant.

ARTICLE 4. PRESIDENT
The President shall do and perform all such duties as may from time to time be assigned to him by the board of directors and such other duties as pertain to the office of the President. The President shall have the power and authority to affix the signature of the corporation to all deeds, conveyances, mortgages, leases, obligations, bonds, contracts, certificates and other papers and instruments in writing which have been authorized or directed by the board of directors or which, in the President’s judgment, should be executed on behalf of the corporation, and to sign certificates for shares of stock of the corporation.

ARTICLE 5. CORPORATE SECRETARY
The powers and duties of the Corporate Secretary are:
a. To keep at the principal place of business of the corporation, or such other place as the board of directors may order, a book of minutes of all meetings of directors and stockholders with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at directors’ meetings, the number of shares present or represented at stockholders’ meetings and the proceedings thereof.
b. To keep the seal of the corporation and to affix the same to all instruments which may require it. c. To keep or cause to be kept at the principal office of the corporation, or at the office of the transfer agent or agents, a share register, or duplicate share registers, showing the names of the stockholders and their addresses, the number and classes of shares held by each, the number and date of any certificates issued for shares, and the number and date of cancellation of any certificate surrendered for cancellation. d. To keep a supply of certificates for shares of the corporation, to fill in all certificates issued, and to make a proper record of each issuance of certificates or uncertificated shares; provided that so long as the corporation shall have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares of the corporation, such duties with respect to such shares shall be performed by such transfer agent or transfer agents.
e. To transfer upon the share books of the corporation any and all shares of the corporation; provided that so long as the corporation shall have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares, of the corporation, such duties with respect to such shares shall be performed by such transfer agent or transfer agents, and the method of transfer of such shares shall be subject to the reasonable regulations of the transfer agent to which the shares are presented for transfer, and also, if the corporation then has one or more duly appointed and acting registrars, to the reasonable regulations of the registrar to which any new shares are presented for registration; and provided, further, that no certificate for shares of stock shall be issued or delivered or, if issued or delivered, shall have any validity whatsoever until and unless it has been signed or authenticated in the manner provided in Section 11.4 hereof. f. To make service and publication of all notices that may be necessary or proper, and without command or direction from anyone. In case of the absence, disability, refusal or neglect of the Corporate Secretary to make service or publication of any notices, then such notices may be served and/or published by the President, or by any person thereunto authorized by either of them or by the board of directors or by the holders of a majority of the outstanding shares of the corporation. g. Generally to do and perform all such duties as may from time to time be assigned by the board of directors and such other duties as pertain to the office of the Corporate Secretary.

ARTICLE 6. TREASURER
The Treasurer shall supervise and be responsible for all the funds and securities of the corporation, the deposit of all moneys and other valuables to the credit of the corporation in depositories of the corporation, borrowings and compliance with the provisions of all indentures, agreements and instruments governing such borrowings to which the corporation is a party, the disbursement of funds of the corporation and the investment of its funds, and generally do and perform all such duties as may from time to time be assigned by the board of directors and such other duties as pertain to the office of the Treasurer.

ARTICLE 7. CONTROLLER
The Controller shall have charge of the corporation’s books of accounts, records and auditing, and generally do and perform all such duties as may from time to time be assigned by the board of directors and such other duties as pertain to the office of the Controller.

ARTICLE 8. COMMITTEES OF THE BOARD
SECTION 8.1. APPOINTMENT AND PROCEDURE.

The board of directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees each consisting of two or more directors to serve at the pleasure of the board.

The board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee.

SECTION 8.2. POWERS.

Any committee appointed by the board of directors, to the extent provided in the resolution of the board or in these bylaws, shall have all the authority of the board except with respect to:
a. the approval of any action which requires the approval or vote of the stockholders; b. the filling of vacancies on the board or on any committee; c. the fixing of compensation of the directors for serving on the board or on any committee; d. the amendment or repeal of bylaws or the adoption of new bylaws; e. the amendment or repeal of any resolution of the board which by its express terms is not so amendable or repealable;
f. a distribution to the stockholders of the corporation, except at a rate or in a periodic amount or within a price range determined by the board; and
g. the appointment of other committees of the board or the members thereof.

SECTION 8.3. EXECUTIVE COMMITTEE.

In the event that the board of directors appoints an executive committee, such executive committee shall include the Chairman of the board as one of its members. In all cases in which specific directions to the contrary shall not have been given by the board of directors, such executive committee shall have and may exercise, during the intervals between the meetings of the board of directors, all the powers and authority of the board of directors in the management of the business and affairs of the corporation (except as provided in Section 8.2 hereof) in such manner as the executive committee may deem in the best interests of the corporation.

ARTICLE 9. MEETINGS OF THE STOCKHOLDERS
SECTION 9.1. PLACE OF MEETINGS.

Meetings (whether regular, special or adjourned) of the stockholders of the corporation shall be held at the principal place of business as specified in accordance with Section 1.2 hereof, or any place which may be designated by the board of directors. Notwithstanding the foregoing sentence, the board of directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a)(2) of the Delaware General Corporation Law.

SECTION 9.2. TIME OF ANNUAL MEETINGS.

The annual meeting of the stockholders shall be held at such time on such date as shall be designated from time to time by resolution of the board of directors, in accordance with applicable law.

SECTION 9.3. SPECIAL MEETINGS.
a. General. Special meetings of the stockholders of the corporation: (1) may be called by the Chairman of the board or by the board of directors pursuant to a resolution adopted by a majority of the total number of directors which the corporation would have if there were no vacancies; and (2) shall be called by the Chairman of the board of directors or the Corporate Secretary of the corporation upon the written request or requests of one or more stockholders of record (or their duly authorized agents) that, at the time a request is delivered, Own, or who are acting on behalf of persons who Own, shares representing 10% (the “Requisite Percent”) or more (measured as of the Requisite Percent Solicitation Record Date, as defined in Section

9.3(b)(3), if applicable) of the voting power of the then outstanding Voting Stock (as defined in Section

9.8(a)) entitled to vote on the matter or matters to be brought before the proposed special meeting, provided that a special meeting called at the request of one or more stockholders (a “Stockholder Requested Special Meeting”) shall be called by the Chairman of the board or the Corporate Secretary of the corporation only if the stockholder(s) requesting such meeting provide the information regarding such stockholder(s) (and regarding the persons for whom such stockholders are acting, as applicable) and the proposed special meeting and comply with such procedures set forth in Section 9.3(b) of these bylaws. If a stockholder of record is the nominee for more than one beneficial owner of shares of Voting Stock, the stockholder of record may deliver a request pursuant to this Section 9.3 solely with respect to the shares of Voting Stock owned by the beneficial owner who is directing the stockholder of record to sign such request. For the purposes of this Section 9.3, a person shall be deemed to “Own” only those shares of outstanding Voting Stock as to which the person possesses both (i) full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (A) sold by such person or any of its affiliates in any transaction that has not been settled or closed, including any Short Interest (as defined in Section 9.16(a)(2)(ii)(E)), (B) borrowed by such person or any of its affiliates for any purposes or purchased by such person or any of its affiliates pursuant to an agreement to resell, or (C) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such person or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding Voting Stock, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (x) reducing in any manner, to any extent or at any time in the future, such person’s or affiliates’ full right to vote or direct the voting of any such shares, and/or (y) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such person or affiliate. A person shall Own shares held in the name of a nominee or other intermediary so long as the person retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A person’s ownership of shares shall be deemed to continue during any period in which the person has loaned such shares provided that the person has the power to recall such loaned shares on three (3) business days’ notice and during any period in which the person has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the person. The determination of the extent to which a person “Owns” any shares of Voting Stock for these purposes shall be made in good faith by the board of directors, which determination shall be conclusive and binding. b. Stockholder Requested Special Meeting.
i. In order for a Stockholder Requested Special Meeting to be called by the Chairman of the board or the Corporate Secretary of the corporation, one or more written requests for a special meeting (individually or collectively, a “Special Meeting Request”) must be delivered to the Corporate Secretary at the principal executive offices of the corporation by one or more stockholders of record (or their duly authorized agents), who (x) at the time the Special Meeting Request is delivered Own, or who are acting on behalf of persons who Own (as applicable), the Requisite Percent of Voting Stock (measured as of the Requisite Percent Solicitation Record Date, as defined in Section 9.3(b)(3), if applicable); (y) shall not revoke such Special Meeting Request; and (z) shall continue to Own not less than the Requisite Percent through the date of the Stockholder Requested Special Meeting; provided that, notwithstanding the foregoing, one or more Special Meeting Requests that have been obtained by an Initiating Stockholder pursuant to a Requisite Percent Solicitation under Section 9.3(b)(3) only need to evidence that the stockholder of record or the beneficial owner(s) on whose behalf the Special Meeting Request is delivered Owned the relevant Voting Stock as of the appropriate Requisite Percent Solicitation Record Date. Such Special Meeting Request must be accompanied by:

1. in the case of any Stockholder Requested Special Meeting at which director nominations are proposed to be presented, the information, representations, and completed and signed questionnaires required by Section 9.16(a)(3) and (4), including as to the person(s) seeking to propose such nominations at such meeting, the information required under Section 9.16(a)(2)(ii), which notice shall be further updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct, as provided in the last sentence of Section 9.16(a)(1); and/or

2. in the case of any Stockholder Requested Special Meeting at which any business other than nominations of persons for election to the corporation’s board of directors is proposed to be presented, the information required by Section 9.16(b)(3) (which shall be in addition to the information required by this Section 9.3(b)(1) if director nominations also are proposed to be considered), including as to the person(s) seeking to propose such business at such meeting, the information required under Section 9.16(b)(3), which notice shall be further updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct, as provided in the last sentence of Section 9.16(b)(2); and

3. as to each stockholder of the corporation signing such Special Meeting Request, or if such stockholder is a nominee or custodian, the beneficial owner(s) on whose behalf such request is signed, (a) an affidavit by each such person stating the number of shares of Voting Stock that it Owns (as defined in Section 9.3(a)), as of the date such request was signed and an agreement by such person to update and supplement such affidavit, if necessary, so that the information provided in such affidavit regarding the number of shares of Voting Stock that such person Owns shall be true and correct as of the record date for the Stockholder Requested Special Meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Corporate Secretary at the principal executive offices of the corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof; provided that in the event of any decrease in the number of shares of Voting Stock Owned by such person, such person’s Special Meeting Request shall be deemed to have been revoked with respect to such shares of Voting Stock comprising such reduction and shall not be counted toward the calculation of the Requisite Percent, and (b) as to the stockholder seeking to call the special meeting (or the person on whose behalf the stockholder is acting, as applicable) or any stockholder or beneficial owner who has solicited other stockholders to request the special meeting, the information as to such stockholder or beneficial owner required under Section

9.16(a)(2)(ii).
ii. One or more written requests for a special meeting delivered to the Corporate Secretary shall constitute a valid Special Meeting Request only if each such written request satisfies the requirements set forth in this Section 9.3 and has been dated and delivered to the Corporate Secretary within sixty (60) days of the earliest dated of such requests. If the record holder is not the signatory to the Special Meeting Request, such Special Meeting Request will not be valid unless documentary evidence from the record holder is supplied to the Corporate Secretary at the time of delivery of such Special Meeting Request (or within ten (10) business days thereafter) of such signatory’s authority to execute the Special Meeting Request on behalf of the record holder.

The determination of the validity of a Special Meeting Request shall be made in good faith by the board of directors (and which determination shall be conclusive and binding) and the date of such determination is referred to herein as the “Request Receipt Date.” A Special Meeting Request shall not be valid if: (i) such Special Meeting Request relates to an item of business that is not a matter on which stockholders are authorized to act under, or that involves a violation of, applicable law, or (ii) such Special Meeting Request relates to an item of business that is the same or substantially similar (as determined in good faith by the board of directors, a “Similar Item” (and which determination shall be conclusive and binding)) to any item of business that was presented at a meeting of stockholders occurring within ninety (90) days preceding the earliest dated request for a special meeting, or (iii) the Request Receipt Date occurs during the period commencing ninety (90) days prior to the first anniversary of the date of the most recent annual meeting of stockholders and ending on the date of the next annual meeting of stockholders. For purposes of this Section 9.3, the election of directors shall be deemed to be a “Similar Item” with respect to all items of business involving the election or removal of directors, changing the size of the board of directors and the filling of vacancies and/or newly created directorships resulting from an increase in the number of directors).
iii. Notwithstanding any other provision of these bylaws, any stockholder (an “Initiating Stockholder”) seeking to engage in a solicitation (as the term “solicitation” is defined under Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or any subsequent provisions replacing such Act or regulations)), disregarding clause (iv) of Rule 14a-1(l)(2) and including any otherwise exempt solicitation pursuant to Rule 14a-2(b) to attain the Requisite Percent (a “Requisite Percent Solicitation”) shall first deliver to the Corporate Secretary at the principal executive offices of the corporation a request that the board of directors fix a record date to determine the stockholders entitled to deliver a Special Meeting Request in connection with such Requisite Percent Solicitation (the “Requisite Percent Solicitation Record Date”). The request for a Requisite Percent Solicitation Record Date shall: (i) contain a representation that the Initiating Stockholder plans to engage in a Requisite Percent Solicitation to attain the Requisite Percent; (ii) describe the matter or matters to be taken at the proposed special meeting; and (iii) contain, with respect to the Initiating Stockholder and each person that is part of a group (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations)) with the Initiating Stockholder, the information, representations, and completed and signed questionnaires (as applicable) required under Section 9.3(b)(1) of these bylaws, which shall be updated and supplemented in accordance with the requirements of Section 9.3(b)(1)(iii). Following delivery of a request for a Requisite Percent Solicitation Record Date, the board of directors may, by the later of: (i) ten (10) days after delivery of such request, and (ii) five (5) days after delivery of all information requested by the corporation to determine the validity of such request (including whether such request relates to a matter that may be considered at a Stockholder Requested Special Meeting pursuant to this Section 9.3), determine the validity of such request and, if appropriate, adopt a resolution fixing the Requisite Percent Solicitation Record Date. The Requisite Percent Solicitation Record Date shall be no more than ten (10) days after the date upon which the resolution fixing the Requisite Percent Solicitation Record Date is adopted by the board of directors and shall not precede the date on which such resolution is adopted. If a valid request for a Requisite Percent Solicitation Record Date has been duly delivered to the Corporate Secretary but no Requisite Percent Solicitation Record Date has been fixed by the board of directors by the date required by the third sentence of this paragraph, the Requisite Percent Solicitation Record Date shall be at the close of business on the first date on which a valid request for the Requisite Percent Solicitation Record Date is delivered to the Corporate Secretary in accordance with this Section 9.3. To be valid, any Special Meeting Request that has been the subject of a Requisite Percent Solicitation must be delivered to the Corporate Secretary no earlier than the applicable Requisite Percent Solicitation Record Date and no later than sixty (60) days after the applicable Requisite Percent Solicitation Record Date. iv. The corporation may require any Initiating Stockholder, and any other person seeking to request a special meeting, to furnish such other information as may reasonably be required by the corporation to determine the validity of any Special Meeting Request, and to determine whether any such request relates to a matter that may be considered at a Stockholder Requested Special Meeting.
c. Holding a Special Meeting. Any special meeting of stockholders shall be held at such date and time as may be fixed by the board of directors in accordance with these bylaws; provided, however, that a Stockholder Requested Special Meeting shall be called for a date not later than the date that is (1) ninety (90) days after the Request Receipt Date (or, in the case of any litigation related to the validity of the requests for a Stockholder Requested Special Meeting, ninety (90) days after the resolution of such litigation), or (2) fifty (50) days after the date the corporation files definitive soliciting materials with respect to such meeting pursuant to Schedule 14A under the Exchange Act, whichever is latest. d. Business Transacted at a Special Meeting. Business transacted at a Stockholder Requested Special Meeting shall be limited to (1) the business stated in the valid Special Meeting Request(s) received from the Requisite Percent of stockholders, (2) any additional business that the board of directors determines to include in the corporation’s notice of meeting, and (3) in the case of nominees for director nominated by a stockholder who has not delivered, and has not directed the delivery of, a Special Meeting Request with respect to the Stockholder Requested Special Meeting, nominees proposed in accordance with Section

9.16(c). If none of the stockholders who submitted the Special Meeting Request(s) (or their qualified representatives, as defined in Section 9.16(d)(1)) appears at the Stockholder Requested Special Meeting to present the matter or matters to be brought before the special meeting that were specified in the Special Meeting Request(s), the corporation need not present the matter or matters for a vote at the meeting, notwithstanding that proxies in respect of such vote may have been received by the corporation. e. Revocation of Special Meeting Request. The stockholder seeking to call the special meeting may revoke a Special Meeting Request by written revocation delivered to, or mailed and received by, the Corporate Secretary at any time prior to the special meeting and any stockholder signing a Special Meeting Request may revoke such request as to the shares that such person Owns (or that are Owned by the person on whose behalf the stockholder is acting, as applicable) and shall be deemed to revoke a Special Meeting Request as and to the extent provided in Section 9.3(b)(1)(iii); provided that if as a result of such revocation(s), there no longer are valid unrevoked Special Meeting Request(s) from stockholders who Own the Requisite Percent of the voting power of the then outstanding Voting Stock entitled to vote on the matter or matters to be brought before the proposed special meeting, there shall be no requirement to call a special meeting.

Further, in the event that the stockholder requesting the Stockholder Requested Special Meeting withdraws such Special Meeting Request, there shall be no requirement to call or hold such special meeting.

SECTION 9.4. NOTICE OF MEETINGS.
a. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than ten (10) nor more than sixty (60) days before the day of the meeting to each stockholder entitled to vote thereat. Such notice shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting and (1) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (2) in the case of the annual meeting, those matters which the board, at the time of the mailing of the notice, intends to present for action by the stockholders, but subject to provisions of subdivision (b) any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by management for election.
b. Any stockholder approval at a meeting on any matter, other than unanimous approval by those entitled to vote, on any of the matters listed below shall be valid only if the general nature of the proposal so approved was stated in the notice of meeting or in any written waiver of notice:
i. a proposal to approve a contract or other transaction between the corporation and one or more of its directors, or between the corporation and any corporation, firm or association in which one or more directors has a material financial interest;
ii. a proposal to amend the certificate of incorporation; iii. a proposal regarding a reorganization, merger or consolidation involving the corporation; iv. a proposal to wind up and dissolve the corporation; or v. a proposal to adopt a plan of distribution of the shares, obligations or securities of any other corporation, domestic or foreign, or assets other than money which is not in accordance with the liquidation rights of any preferred shares as specified in the certificate of incorporation.

SECTION 9.5. DELIVERY OF NOTICE.

Notice of a stockholders’ meeting or any report shall be given either personally or by mail or other means of written communication, addressed to the stockholder at the address of such stockholder appearing on the books of the corporation or given by the stockholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with the provisions of this section, executed by the Corporate Secretary or any transfer agent, shall be prima facie evidence of the giving of notice or report.

If any notice or report addressed to the stockholders at the address of such stockholder appearing on the books of the corporation is returned to the corporation by United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the stockholder at such address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available for the stockholder upon written demand of the stockholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice to all other stockholders.

SECTION 9.6. ADJOURNED MEETINGS.

When a stockholders’ meeting is adjourned to another time or place (including an adjournment taken to address a technical failure to convene or continue a meeting using remote communication), unless the bylaws otherwise require and except as provided in this section, notice need not be given of the adjourned meeting if the place, if any, and date and time thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are: (a) announced at the meeting at which the adjournment is taken; (b) displayed, during the time scheduled for the meeting, on the same electronic network used to enable stockholders and proxyholders to participate in the meeting by means of remote communication; or (c) set forth in the notice of meeting given in accordance with Section 9.4 of these bylaws. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

SECTION 9.7. ATTENDANCE AT STOCKHOLDERS’ MEETING.

Attendance of a person at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by the Delaware General Corporation Law to be included in the notice but not so included in the notice if such objection is expressly made at the meeting.

SECTION 9.8. QUORUM.
a. The presence in person or by proxy at any meeting of persons entitled to cast a majority of the votes entitled to be cast by the outstanding voting shares shall constitute a quorum for the transaction of business.

If a quorum is present, the affirmative vote of a majority of votes entitled to be cast by the shares represented at the meeting and entitled to vote (the “Voting Stock”) on any matter shall be the act of the stockholders, unless the vote of a different number or voting by classes is required by law or the certificate of incorporation or these bylaws and except as provided in subdivision (b). b. The stockholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken (other than (i) adjournment or (ii) an election of directors, which shall be governed by Section 9.13) is approved by an affirmative vote equal to at least a majority of the votes required to constitute a quorum.
c. In the absence of a quorum, any meeting of stockholders may be adjourned from time to time by the vote of a majority of votes entitled to be cast by the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (b).

SECTION 9.9. ACTIONS WITHOUT MEETING.

As provided in the certificate of incorporation, stockholders may not take action by written consent without a stockholder meeting held in accordance with applicable law and these bylaws.

SECTION 9.10. VOTING RIGHTS.

Each holder of common shares entitled to be voted shall be entitled to one vote for each common share with respect to each matter submitted to a vote of stockholders. Any holder of shares entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, other than elections to office for which plurality voting applies, but, if the stockholder fails to specify the number of shares such stockholder is voting affirmatively, it will be conclusively presumed that the stockholder’s approving vote is with respect to all shares such stockholder is entitled to vote.

SECTION 9.11. DETERMINATION OF HOLDERS OF RECORD.
a. In order that the corporation may determine the stockholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days prior to any other action. b. In the absence of any record date set by the board of directors pursuant to subdivision (a) above, then:
i. The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.
ii. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such other action, whichever is later. iii. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting, but the board shall fix a new record date if the meeting is adjourned for more than thirty (30) days from the date set for the original meeting. c. Stockholders on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the certificate or these bylaws or by agreement or applicable law.

SECTION 9.12. ELECTIONS FOR DIRECTORS.
a. No stockholder shall be entitled to cumulate votes (i.e., cast for any one or more candidates a number of votes greater than the number of votes to which the stockholder’s shares are entitled pursuant to Section

9.11).
b. At all meetings of stockholders for the election of directors at which a quorum is present, each director shall be elected by the affirmative vote of the majority of the votes cast; provided, that if as of a date that is five (5) business days in advance of the date the corporation files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission the number of nominees exceeds the number of directors to be elected, the directors, not exceeding the authorized number of directors as fixed by the board of directors in accordance with the bylaws, shall be elected by a plurality of the votes entitled to be cast by the shares represented at any such meeting and entitled to vote on the election of directors. For purposes of this Section 9.13(b), a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director. If, for any cause, the entire board of directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in the bylaws. c. Elections for directors need not be by ballot unless a stockholder demands election by ballot at the meeting and before the voting begins or unless the bylaws so require.

SECTION 9.13. PROXIES.
a. Every person entitled to vote shares may authorize another person or persons to act by proxy with respect to such shares. Any proxy purporting to be executed in accordance with the provisions of the General Corporation Law of the State of Delaware shall be presumptively valid. b. No proxy shall be valid after the expiration of three (3) years from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by, or by attendance at the meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. c. A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.

SECTION 9.14. INSPECTOR OF ELECTION.
a. In advance of any meeting of stockholders the board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of stockholders may, and on the request of any stockholder or a stockholder’s proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one (1) or three (3). If appointed at a meeting on the request of one or more stockholders or proxies, the holders of shares entitled to cast a majority of the votes entitled to be cast by the shares represented in person or by proxy shall determine whether one (1) or three (3) inspectors are to be appointed. b. The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all stockholders.
c. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

SECTION 9.15. INSPECTION OF STOCKHOLDER LIST AND OTHER RECORDS. a. The officer who has charge of the stock ledger of the corporation shall prepare and make, no later than the tenth (10th) day before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for ten (10) days ending on the day before the meeting date: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting; or (ii) during ordinary business hours at the principal place of business of the corporation. This stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the corporation, or to vote in person or by proxy at any meeting of stockholders. b. Any stockholder, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hour for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A “proper purpose” shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in this state or at its principal place of business.

SECTION 9.16. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS. a. Notice of Director Nominations at Meetings of Stockholders. i. At any annual meeting or Stockholder Requested Special Meeting of the stockholders, only such nominations of persons for election to the board of directors shall be made as shall have been properly brought before the meeting. (i) For nominations to be properly made at an annual meeting, nominations must be (A) specified in the corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the board of directors delivered pursuant to Section 9.4 of these bylaws, (B) otherwise made at the annual meeting by or at the direction of the Chairman of the board or the board of directors or (C) otherwise properly requested to be brought before the annual meeting by a stockholder of record at the time of giving notice provided for in this Section 9.16(a) of these bylaws, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 9.16(a) of these bylaws. Clause (C) of the immediately preceding sentence shall be the exclusive means for a stockholder to make nominations before an annual meeting of stockholders. (ii) For nominations to be properly made at a Stockholder Requested Special Meeting, nominations must be (a) specified in the corporation’s notice of meeting given by or at the direction of the board of directors delivered pursuant to Section 9.4 of these bylaws, (b) otherwise made at the special meeting by or at the direction of the Chairman of the board or the board of directors or (c) otherwise have been properly requested to be brought before the special meeting by the stockholder in accordance with Section 9.3(b) of these bylaws or Section 9.16(c) of these bylaws. The number of nominees a stockholder may nominate for election at an annual meeting (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the annual meeting on behalf of the beneficial owner) shall not exceed the number of directors to be elected at such annual meeting. For nominations of persons for election to the board of directors of the corporation to be properly brought before an annual meeting by a stockholder pursuant to clause(C) of paragraph (a)(1)(i) in this Section 9.16 of these bylaws, the stockholder must have given timely notice thereof in writing to the Corporate Secretary of the corporation (including the completed and signed questionnaires, and representation and agreement required by paragraph (a)(4) in this Section 9.16 of these bylaws), and timely updates and supplements thereof as required by these bylaws, in writing to the Corporate Secretary. To be timely, a stockholder’s notice (including the questionnaires, and representation and agreement) shall be delivered to the Corporate Secretary at the principal executive offices of the corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of an annual meeting is more than thirty (30) days before or more than sixty (60) days after such first anniversary date of the previous year’s annual meeting, or if no annual meeting was held in the prior year, notice by the stockholder to be timely must be so delivered not earlier than the one hundred twentieth (120th) day prior to the date of such annual meeting and not later than the later of the ninetieth (90th) day prior to the date of such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. In no event shall any adjournment, recess or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. In addition, to be considered timely, a stockholder’s notice (including the questionnaires, and representation and agreement) shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice (including the questionnaires, and representation and agreement) shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Corporate Secretary at the principal executive offices of the corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof.
ii. To be in proper form, a stockholder’s notice to the Corporate Secretary with respect to the nomination of directors (whether given pursuant to paragraph (a)(1)(i) in this Section 9.16 of these bylaws with respect to an annual meeting or paragraph (c) in this Section 9.16 of these bylaws with respect to a special meeting) shall set forth: (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (A) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election, in each case pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in a proxy statement and form of proxy as a nominee and to serving as a director if elected, (B) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder and beneficial owner on whose behalf the nomination is made, if any, and their respective affiliates or associates or others known to be acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others known to be acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K of the Exchange Act if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person known to be acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant, and (C) a written statement, not to exceed 500 words, in support of such person; and (ii) as to the stockholder giving the notice and any beneficial owner of the corporation’s Voting Stock on whose behalf the nomination is made, and if such stockholder or beneficial owner is an entity, each individual who is a director, executive officer, general partner or managing member of such entity or of any other entity that has or shares control of such entity (any such individual or entity, a “Related Person”) (A) the name and address of such stockholder, and of any such beneficial owner, as they appear on the corporation’s books, and the names and addresses of any Related Person, (B) the class and number of shares of the corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, any such beneficial owner and any Related Person, (C) any option, warrant, convertible security, stock appreciation right, profits interests or similar right or interest with an exercise or conversion privilege (whether or not presently exercisable or convertible) or a settlement payment or mechanism at a price related to any class of shares of the corporation or with a value derived in whole or in part from the value of any class of shares of the corporation and any other derivative positions or synthetic arrangements (including any position resulting from hedging, pledging, swap, forward contract, contract of sale, securities lending or other similar transaction relating to the corporation’s capital stock), whether or not such instrument or right shall be subject to settlement in the underlying class of capital stock of the corporation or otherwise, (any of the foregoing, a “Derivative Position”) held or beneficially held by the stockholder, any such beneficial owner or any Related Person, including a description of the substantive terms thereof including the amount, value and/or number so held and the extent to which any such Derivative Position is intended to have or has the effect of increasing or decreasing the actual or apparent voting power of such stockholder, beneficial owner or any Related Person with respect to the corporation’s securities and information identifying all parties thereto, (D) any proxy (other than a revocable proxy given in response to a public proxy solicitation made pursuant to, and in accordance with, the Exchange Act), contract, arrangement, understanding or relationship, the effect or intent of which is to maintain, increase or decrease, the voting power of such stockholder, beneficial owner or any Related Person with respect to any class of shares of the corporation, (E) any short interest in any security of the corporation (for purposes of this Section 9.16 of these bylaws, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from, or avoid, mitigate or offset in whole or in part any loss related to, any decrease in the value of the subject security), (a “Short Interest”) held by such stockholder, beneficial owner or any Related Person, (F) any rights to dividends on the shares of the corporation owned beneficially by such stockholder, beneficial owner or any Related Person that are separated or separable from the underlying shares of the corporation, (G) any proportionate interest in securities of the corporation or Derivative Positions held, directly or indirectly, by a general or limited partnership in which such stockholder, beneficial owner or any Related Person is a general partner, or directly or indirectly, beneficially owns an interest in a general partner, (H) any performance related fees (other than an asset-based fee) that such stockholder, beneficial owner or any Related Person is entitled to based on any increase or decrease in the value of securities of the corporation or Derivative Positions, if any, including without limitation any such interests held by members of such person’s immediate family sharing the same household, (I) a description of (1) any plans or proposals which such stockholder, beneficial owner or any Related Person may have with respect to securities of the corporation that would be required to be disclosed pursuant to Item 4 of Exchange Act Schedule 13D and (2) any agreement, arrangement or understanding with respect to the nomination between or among such stockholder, beneficial owner or any Related Person and any other person, including, without limitation, any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D, which description shall include, in addition to all other information, information identifying all parties thereto (in the case of either clause (1) or (2), regardless of whether the requirement to file a Schedule 13D is applicable), (J) a representation as to whether the stockholder, any beneficial owner, any Related Person or any other participant (as defined in Item 4 of Schedule 14A under the Exchange Act) will engage in a solicitation with respect to such nomination and, if so, whether or not such solicitation will be conducted as an exempt solicitation under Rule 14a-2(b) of the Exchange Act, the name of each participant in such solicitation and the amount of the cost of solicitation that has been and will be borne, directly or indirectly, by each participant in such solicitation and, if the solicitation is subject to Rule 14a-19 of the Exchange Act, confirming that such person or group intends to deliver, through means satisfying each of the conditions that would be applicable to the corporation under either Exchange Act Rule 14a-16(a) or Exchange Act Rule 14a-16(n), a proxy statement and form of proxy to holders (including any beneficial owners pursuant to Rule 14b-1 and Rule 14b-2 of the Exchange Act) of at least 67% of the voting power of the capital stock of the corporation entitled to vote generally in the election of directors, (K) a representation that promptly after soliciting the percentage of stockholders referred to in the representation required under the immediately foregoing clause (J) of this paragraph, and no later than the tenth (10th) day before such meeting of stockholders, such stockholder or beneficial owner will provide the corporation with documents, which may take the form of a certified statement and documentation from a proxy solicitor, specifically demonstrating that the necessary steps have been taken to deliver a proxy statement and form of proxy to holders of such percentage of shares of the capital stock of the corporation (together with the representation required under the immediately foregoing clause (J) of this paragraph, the “Nomination Solicitation Representation”), (L) a representation that the stockholder (or a qualified representative of the stockholder) intends to appear at the meeting to make such nomination, and (M) any other information relating to such stockholder, beneficial owner and Related Person, if any, that would be required to be disclosed in a proxy statement and form or proxy or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Regulation 14(A) of the Exchange Act.
iii. A stockholder’s notice to the Corporate Secretary with respect to the nomination of directors (whether given pursuant to paragraph (a)(1)(i) in this Section 9.16 of these bylaws with respect to an annual meeting, Section 9.3(b) of these bylaws or paragraph (c) in this Section 9.16 of these bylaws with respect to a special meeting) must also include all completed and signed questionnaires prepared by the corporation with respect to the background and qualification of the nominee for director and the background of any other person or entity on whose behalf the nomination is being made or who is reasonably expected to participate in the solicitation of proxies with respect to the election of such person (including those questionnaires required of the corporation’s directors and any other questionnaire the corporation determines is necessary or advisable to assess whether the nominee for director will satisfy any qualifications or requirements imposed by the certificate of incorporation or these bylaws, any law, rule, regulation or listing standard that may be applicable to the corporation, and the corporate governance policies and guidelines of the corporation) (which questionnaires shall be provided by the Corporate Secretary of the corporation promptly upon written request) and a signed written representation and agreement (in the form provided by the Corporate Secretary of the corporation promptly upon written request) that such nominee for director (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the corporation, and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the corporation, and will comply with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the corporation and any other policies and guidelines applicable to directors (which shall be provided by the Corporate Secretary of the corporation promptly upon written request). For the avoidance of doubt, all completed and signed questionnaires and all written and signed representations and agreements described in the foregoing sentence shall be deemed part of and provided to the corporation simultaneously with the stockholder’s notice submitted pursuant to this Section 9.16(a) of these bylaws. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director of the corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee, which information shall be provided to the corporation promptly upon request by the corporation (but in any event within five (5) business days after such request) and deemed part of the stockholder’s notice submitted pursuant to this Section 9.16(a) of these bylaws.

Notwithstanding the foregoing, if any information or communication submitted pursuant to this Section 9.16(a)(3) of these bylaws is inaccurate or incomplete in any material respect (as determined by the board of directors), such information shall be deemed not to have been provided in accordance with this Section 9.16(a)(3) of these bylaws. Any stockholder providing information pursuant to this this Section 9.16(a)(3) of these bylaws shall promptly notify the Corporate Secretary of the corporation in writing at the principal executive offices of the corporation of any inaccuracy or change in any previously provided information within two (2) business days after becoming aware of such inaccuracy or change. Upon written request of the Corporate Secretary of the corporation, such stockholder shall provide, within five (5) business days after delivery of such request (or such longer period as may be specified in such request), (i) written verification, reasonably satisfactory to the corporation, to demonstrate the accuracy of any information submitted and (ii) a written affirmation of any information submitted as of an earlier date. If the stockholder giving notice of an intent to nominate a candidate for election fails to provide such written verification or affirmation within such period, the information as to which written verification or affirmation was requested may be deemed not to have been provided in accordance with this Section 9.16(a)(3) of these bylaws. iv. For nominations of persons for election to the board of directors of the corporation pursuant to Section 9.16(a)(1)(i)(A) or (B) of these bylaws or Section 9.16(c) of these bylaws with respect to a special meeting, the nominee must also provide all completed and signed questionnaires, and a representation and agreement with the same information, and delivered in accordance with the same time period that applies to nominations to be brought by a stockholder of the corporation, required by Section 9.16(a)(3) of these bylaws.
v. Notwithstanding anything in this Section 9.16(a) of these bylaws to the contrary, in the event that the number of directors to be elected to the corporation’s board of directors at an annual meeting is increased and there is no public announcement by the corporation naming all of the nominees for director or specifying the size of the increased board of directors made by the corporation at least ten (10) days prior to the last day a stockholder may deliver a notice in accordance with clause (1) of this Section 9.16(a) of these bylaws, a stockholder’s notice required by this Section 9.16(a) of these bylaws shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Corporate Secretary of the corporation at the principal executive offices of the corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the corporation.
b. Notice of Other Business at Meetings of Stockholders. i. At any annual meeting or Stockholder Requested Special Meeting of the stockholders, only such business to be considered by the stockholders, other than nominations of persons for election to the corporation’s board of directors which is addressed by Section 9.16(a) of these bylaws (“Other Business”), shall be made at such meeting of stockholders as shall have been properly brought before the meeting. (i) For proposals of Other Business to be properly brought before an annual meeting, proposals of Other Business must be: (A) specified in the corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the board of directors delivered pursuant to Section 9.4 of these bylaws, (B) otherwise properly made at the annual meeting, by or at the direction of the Chairman of the board or the board of directors or (C) otherwise properly requested to be brought before the annual meeting by any stockholder of the corporation in accordance with this Section 9.16(b) of these bylaws. (ii) For proposals of Other Business to be properly brought before a Stockholder Requested Special Meeting, proposals of Other Business must be: (A) specified in the corporation’s notice of meeting given by or at the direction of the board of directors delivered pursuant to Section 9.4 of these bylaws, (B) otherwise properly made at the Stockholder Requested Special Meeting, by or at the direction of the Chair of the board or the board of directors or (C) otherwise have been properly requested to be brought before the Stockholder Requested Special Meeting by the stockholder in accordance with Section 9.3(b) of these bylaws. (iii) For proposals of Other Business to be properly requested by a stockholder to be made at an annual meeting of stockholders, a stockholder must (a) be entitled to vote at the meeting, (b) comply with the notice procedures and other procedures set forth in this Section 9.16 of these bylaws as to such proposal, and (c) be a stockholder of record at the time such stockholder’s notice pursuant to this Section 9.16 of these bylaws is delivered to the Corporate Secretary of the corporation and at the time of the annual meeting. The immediately preceding sentence shall be the exclusive means for a stockholder to submit proposals for Other Business (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the corporation’s proxy statement) to be considered at an annual meeting of stockholders. ii. For a proposal of Other Business to be properly brought before an annual meeting by a stockholder pursuant to clause (i)(C) of paragraph (b)(1) of this Section 9.16 of these bylaws, the stockholder must have given timely notice thereof in writing to the Corporate Secretary of the corporation and such Other Business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Corporate Secretary at the principal executive offices of the corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of an annual meeting is more than thirty (30) days before or more than sixty (60) days after such first anniversary date of the previous year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the one hundred twentieth (120th) day prior to the date of such annual meeting and not later than the later of the ninetieth (90th) day prior to the date of such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. In no event shall any adjournment, recess or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. In addition, to be considered timely, a stockholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Corporate Secretary at the principal executive offices of the corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof. iii. To be in proper form, a stockholder’s notice to the Corporate Secretary with respect to the Other Business (whether given pursuant to paragraph (b)(1) in this Section 9.16 of these bylaws with respect to an annual meeting or Section 9.3(c)(2) of these bylaws with respect to a special meeting) shall set forth (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any substantial interest (within the meaning of Item 5 of Schedule 14A under the Exchange Act) in such business of such stockholder and any beneficial owner on whose behalf the proposal is made, (ii) the text of the proposal of business (including the text of any resolutions proposed for consideration and, in the event that such proposal or business includes a proposal to amend these bylaws, the text of the proposed amendment), and (iii) as to the stockholder giving the notice, any beneficial owner of the corporation’s Voting Stock on whose behalf the proposal of Other Business is made and any Related Person with respect to the proposal (A) the name and address of such stockholder, and of such beneficial owner, as they appear on the corporation’s books and the names and addresses of any Related Person, (B) the class and number of shares of the corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, any such beneficial owner and any Related Person, (C) any Derivative Position held or beneficially held by the stockholder, any such beneficial owner or any Related Person, including a description of the substantive terms thereof including the amount, value and/or number so held and the extent to which any such Derivative Position is intended to or has the effect of increasing or decreasing the actual or apparent voting power of such stockholder, beneficial owner or any Related Person with respect to the corporation’s securities and information identifying all parties thereto, (D) any proxy (other than a revocable proxy given in response to a public proxy solicitation made pursuant to, and in accordance with, the Exchange Act), contract, arrangement, understanding or relationship, the effect or intent of which is to maintain, increase or decrease, the voting power of such stockholder, beneficial owner or any Related Person with respect to any class of shares of the corporation, (E) any Short Interest held by such stockholder, beneficial owner or any Related Person, (F) any rights to dividends on the shares of the corporation owned beneficially by such stockholder, beneficial owner or any Related Person that are separated or separable from the underlying shares of the corporation, (G) any proportionate interest in securities of the corporation or Derivative Positions held, directly or indirectly, by a general or limited partnership in which such stockholder, beneficial owner or any Related Person is a general partner, or directly or indirectly, beneficially owns an interest in a general partner, (H) any performance-related fees (other than an asset-based fee) that such stockholder, beneficial owner or any Related Person is entitled to based on any increase or decrease in the value of securities of the corporation or Derivative Positions, if any, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household, (I) a description of (1) any plans or proposals which such stockholder, beneficial owner or any Related Person may have with respect to securities of the corporation that would be required to be disclosed pursuant to Item 4 of Exchange Act Schedule 13D and (2) any agreement, arrangement or understanding with respect to such Other Business between or among such stockholder, beneficial owner or any Related Person and any other person, including, without limitation, any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D, which description shall include, in addition to all other information, information identifying all parties thereto (in the case of either clause (1) or (2), regardless of whether the requirement to file a Schedule 13D is applicable), (J) a representation as to whether the stockholder, any beneficial owner, any Related Person or any other participant (as defined in Item 4 of Schedule 14A under the Exchange Act) will engage in a solicitation with respect to such Other Business proposed to be brought before the meeting and, if so, whether or not such solicitation will be conducted as an exempt solicitation under Rule 14a-2(b) of the Exchange Act, the name of each participant in such solicitation and the amount of the cost of solicitation that has been and will be borne, directly or indirectly, by each participant in such solicitation and whether such person or group intends to deliver, through means satisfying each of the conditions that would be applicable to the corporation under either Exchange Act Rule 14a-16(a) or Exchange Act Rule 14a-16(n), a proxy statement and form of proxy to holders (including any beneficial owners pursuant to Rule 14b-1 and Rule 14b-2 of the Exchange Act) of at least the percentage of shares of the capital stock of the corporation entitled to vote and required under applicable law to carry the proposal of Other Business (such representation, the “Business Solicitation Representation”), (K) a representation that the stockholder (or a qualified representative of the stockholder) intends to appear at the meeting to propose such Other Business, and (L) any other information relating to such stockholder, beneficial owner and any Related Person, if any, that would be required to be disclosed in a proxy statement and form or proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal pursuant to Regulation 14(A) of the Exchange Act. c. Special Meetings of Stockholders.
i. At any special meeting of the stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the corporation’s notice of meeting pursuant to Section 9.4 of these bylaws. Nominations of persons for election to the board of directors may be made at a special meeting of stockholders at which directors are to be elected, as reflected in the corporation’s notice of meeting pursuant to Section 9.4 of these bylaws, (i) by or at the direction of the board of directors or (ii) in the case of a special meeting other than a Stockholder Requested Special Meeting, or in the case of a special meeting that is a Stockholder Requested Special Meeting and the person wishing to make such nominations did not deliver, and did not otherwise direct the delivery of, a Special Meeting Request with request to such meeting, by any stockholder of the corporation who (A) is entitled to vote at the meeting, (B) complies with the notice and other procedures set forth in this Section 9.16 of these bylaws as to such nomination and (C) is a stockholder of record at the time such stockholder’s notice is delivered pursuant to this Section 9.16 of these bylaws to the Corporate Secretary of the corporation and at the time of the special meeting, or (iii) in the case of a Stockholder Requested Special Meeting, by any stockholder of the corporation pursuant to Section 9.3(b). The number of nominees a stockholder may nominate for election at a special meeting (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the special meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such special meeting.
ii. In the event the corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the board of directors, any stockholder entitled to vote in such election of directors (other than a stockholder who has delivered, or who is acting on behalf of a person who directed the delivery of, a written request with respect to such special meeting, in the case of a Stockholder Requested Special Meeting (an “Excluded Stockholder”)) may nominate a person or persons, as the case may be, for election to the board of directors of the corporation as specified in the corporation’s notice of meeting, by delivering the stockholder’s notice in the form required by paragraphs (a)(3) and (a)(4) in this Section 9.16 of these bylaws (including the completed and signed questionnaires, and representation and agreement required by paragraph (a)(4) in this Section 9.16 of these bylaws), and timely updates and supplements thereof as required by this Section 9.16 of these bylaws, to the Corporate Secretary at the principal executive offices of the corporation not earlier than the one hundred twentieth (120th) day prior to such special meeting and not later than the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. In no event shall any adjournment, recess or postponement of a special meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. In addition, to be considered timely, a stockholder’s notice (including the questionnaires, and representation and agreement) shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice (including the questionnaires, and representation and agreement) shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Corporate Secretary at the principal executive offices of the corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof. Notwithstanding any other provision of these bylaws, in the case of a Stockholder Requested Special Meeting, no Excluded Stockholder may nominate a person for election to the board of directors at the meeting, except pursuant to the written request(s) delivered for such special meeting pursuant to Section 9.3(a). Notwithstanding any other provision of these bylaws, in the case of a Stockholder Requested Special Meeting, no stockholder may propose any other business to be considered at the meeting, except pursuant to the written request(s) delivered for such special meeting pursuant to Section 9.3(a). d. General.
i. Except as otherwise required by law, only such persons who are nominated in accordance with the procedures set forth in the certificate of incorporation, or this Section 9.16 of these bylaws and Section 9.3 (as applicable), shall be eligible to be elected at any meeting of stockholders of the corporation to serve as director and only such Other Business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 9.16 and Section 9.3 (as applicable). Except as otherwise provided by law, the certificate of incorporation or these bylaws, the chair of the meeting or any other person designated by the board of directors shall have the power and duty to determine whether a nomination or any Other Business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 9.16 of these bylaws (including whether a stockholder or beneficial owner solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in compliance with the representations set forth in the Nomination Solicitation Representation or the Business Solicitation Representation, as applicable, or complied or did not comply with the requirements of Rule 14a-19 under the Exchange Act) and, if any proposed nomination or Other Business is not in compliance with this Section 9.16 of these bylaws, including due to a failure to comply with the requirements of Rule 14a-19 under the Exchange Act, to declare that such defective nomination shall be disregarded or such Other Business shall not be transacted, notwithstanding that votes and proxies in respect of any such nomination or Other Business may have been received by the corporation.

In furtherance and not by way of limitation of the foregoing provisions of this Section 9.16, unless otherwise required by law or otherwise determined by the chair of the meeting or any other person designated by the board of directors, if the stockholder does not provide the information required under Section 9.3(b) and/or this Section 9.16 to the corporation within the time frames specified herein, or if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the corporation to present a nomination or Other Business, such nomination shall be disregarded and such Other Business shall not be transacted, notwithstanding that votes and proxies in respect of such any such nomination or Other Business may have been received by the corporation. For purposes of Section 9.3(b) and this Section 9.16, to be considered a qualified representative of a stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the corporation prior to the making of such nomination or proposal at such meeting by such stockholder (and in any event not fewer than five (5) business days before the meeting) stating that such person is authorized to act for such stockholder as proxy at the meeting of stockholders. ii. For purposes of this Section 9.16 of these bylaws, (A) “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act; and (B) shares shall be treated as “beneficially” owned or held by a person if the person beneficially owns such shares, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Regulations 13D and 13G thereunder or has or shares pursuant to any agreement, arrangement or understanding (whether or not in writing): (i) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition or both); (ii) the right to vote such shares, alone or in concert with others; and/or (iii) investment power with respect to such shares, including the power to dispose of, or to direct the disposition of, such shares.
iii. Notwithstanding the foregoing provisions of this Section 9.16 of these bylaws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 9.16 of these bylaws; provided, however, that any references in these bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals of Other Business to be considered pursuant to this Section 9.16.

Nothing in this Section 9.16 of these bylaws shall be deemed to affect any rights of (A) stockholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (B) holders of any series of Preferred Stock to elect directors under specified circumstances. Subject to Rule 14a-8 and Rule 14a-19 under the Exchange Act, nothing in these bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the corporation’s proxy statement any nomination of director or directors or any Other Business proposal. iv. Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for the exclusive use for solicitation by the board of directors of this corporation.

ARTICLE 10. MEETINGS OF DIRECTORS
SECTION 10.1. PLACE OF MEETINGS.

Unless otherwise specified in the notice thereof, meetings (whether regular, special or adjourned) of the board of directors of this corporation shall be held at the principal place of business, as specified in accordance with Section

1.2 hereof, which is hereby designated as an office for such purpose in accordance with the laws of the State of Delaware, or at any other place which has been designated from time to time by the board.

SECTION 10.2. REGULAR MEETINGS.

Regular meetings of the board of directors, of which no notice need be given except as required by the laws of the State of Delaware, shall be held after the adjournment of each annual meeting of the stockholders (which meeting shall be designated the Regular Annual Meeting) and at such other times as may be designated from time to time by resolution of the board of directors.

SECTION 10.3. SPECIAL MEETINGS.

Special meetings of the board of directors may be called at any time by the Chairman of the board or the President or the Corporate Secretary or by any two or more of the directors.

SECTION 10.4. NOTICE OF MEETINGS.

Except in the case of regular meetings, notice of which has been dispensed with, the meetings of the board of directors shall be held upon four (4) days’ notice by mail or forty-eight (48) hours’ notice delivered personally or by telephone or electronic transmission. If the address of a director is not shown on the records and is not readily ascertainable, notice shall be addressed to him at the city or place in which the meetings of the directors are regularly held. Except as set forth in Section 9.6, notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned.

SECTION 10.5. QUORUM.

A majority of the authorized number of directors constitute a quorum of the board for the transaction of business.

Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the board of directors except as otherwise provided by law. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting.

SECTION 10.6. ADJOURNED MEETINGS.

A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than twenty-four (24) hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.

SECTION 10.7. WAIVER OF NOTICE AND CONSENT.
a. Notice of a meeting need not be given to any director who submits a waiver of notice, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such director.
b. The transactions of any meeting of the board, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present submits a waiver of notice, a consent to holding the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

SECTION 10.8. ACTION WITHOUT A MEETING.

Any action required or permitted to be taken by the board may be taken without a meeting, if all members of the board shall individually or collectively consent in writing or by electronic transmission to such action. Such writing or writings or electronic transmission or transmissions shall be filed with the minutes of the proceedings of the board. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Such action by consent in writing or by electronic transmission shall have the same force and effect as a unanimous vote of such directors.

SECTION 10.9. CONFERENCE TELEPHONE MEETINGS.

Members of the board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another.

Participation in a meeting pursuant to this section constitutes presence in person at such meeting.

SECTION 10.10. MEETINGS OF COMMITTEES.

The provisions of this section apply also to committees of the board and action by such committees and incorporators.

ARTICLE 11. SUNDRY PROVISIONS
SECTION 11.1. INSTRUMENTS IN WRITING.

All checks, drafts, demands for money and notes of the corporation, and all written contracts of the corporation, shall be signed by such officer or officers, agent or agents, as the board of directors may from time to time by resolution designate. No officer, agent, or employee of the corporation shall have power to bind the corporation by contract or otherwise unless authorized to do so by these bylaws or by the board of directors.

SECTION 11.2. FISCAL YEAR.

The fiscal year of this corporation shall be the calendar year.

SECTION 11.3. SHARES HELD BY THE CORPORATION.

Shares in other corporations standing in the name of this corporation may be voted or represented and all rights incident thereto may be exercised on behalf of this corporation by the President or by any other officer of this corporation authorized so to do by resolution of the board of directors.

SECTION 11.4. CERTIFICATES OF STOCK.

The shares of the capital stock of the corporation shall be represented by certificates, provided that the board of directors may provide by resolution or resolutions that some or all of any or all classes or series of shares shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. There shall be issued to each holder of fully paid shares of the capital stock of the corporation represented by a certificate or certificates for such shares. Any holder of shares in the corporation shall be entitled to have a certificate signed in the name of the corporation by the Chairman or Vice Chairman of the board or the President and by the Treasurer or the Corporate Secretary, certifying the number of shares and the class or series of shares owned by the stockholder. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.

SECTION 11.5. LOST CERTIFICATES.

The board of directors may by resolution provide that in the event any certificate or certificates for shares of the capital stock of the corporation shall be alleged to have been lost or destroyed, no new certificate or certificates, or uncertificated shares, shall be issued in lieu thereof until an indemnity bond in such form and in such amount as shall be approved by the President of the corporation shall have been furnished. The board of directors may adopt such other provisions and restrictions with reference to lost certificates as it shall in its discretion deem appropriate.

SECTION 11.6. CERTIFICATION AND INSPECTION OF BYLAWS.

The corporation shall keep at its principal place of business the original or a copy of these bylaws as amended to date, which shall be open to inspection by the stockholders at all reasonable times during office hours.

SECTION 11.7. NOTICES.

Any reference in these bylaws to the time a notice is given or sent means, unless otherwise expressly provided, the time a written notice by mail is deposited in the United States mail, postage prepaid; or the time any other written notice is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or the time any oral notice is communicated, in person or by telephone or wirelessly, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient.

SECTION 11.8. REPORTS TO STOCKHOLDERS.

The board of directors shall cause an annual report to be sent to the stockholders not later than one hundred twenty (120) days after the close of the fiscal year or within such shorter time period as may be required by applicable law, and such annual report shall contain such information and be accompanied by such other documents as may be required by applicable law.

ARTICLE 12. FORUM FOR ADJUDICATION OF DISPUTES
SECTION 12.1. FORUM.

Unless the corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for any stockholder (including any beneficial owner) to bring: (a) any derivative action or proceeding brought on behalf of the corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or employee of the corporation to the corporation or the corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the certificate of incorporation or bylaws of the corporation, (d) any action asserting a claim governed by the internal affairs doctrine, or (e) any other action asserting an internal corporate claim, as defined in Section 115 of the Delaware General Corporation Law, shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware); in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

SECTION 12.2. ENFORCEABILITY.

In furtherance and not in limitation of Section 13.3, if any provision of this Article 12 shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Article 12 (including, without limitation, each portion of any sentence of this Article 12 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities or circumstances shall not in any way be affected or impaired thereby.

ARTICLE 13. CONSTRUCTION OF BYLAWS WITH REFERENCE TO PROVISIONS OF LAW SECTION 13.1. DEFINITIONS.

Unless defined otherwise in these bylaws or unless the context otherwise requires, terms used herein shall have the same meaning, if any, ascribed thereto in the Delaware General Corporation Law, as amended from time to time.

SECTION 13.2. BYLAW PROVISIONS ADDITIONAL AND SUPPLEMENTAL TO PROVISIONS OF LAW.

All restrictions, limitations, requirements and other provisions of these bylaws shall be construed, insofar as possible, as supplemental and additional to all provisions of law applicable to the subject matter thereof and shall be fully complied with in addition to the said provisions of law unless such compliance shall be illegal.

SECTION 13.3. BYLAW PROVISIONS CONTRARY TO OR INCONSISTENT WITH PROVISIONS OF LAW.

Any section, subsection, subdivision, sentence, clause or phrase of these bylaws which upon being construed in the manner provided in Section 13.2 hereof, shall be contrary to or inconsistent with any applicable provision of law, shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these bylaws, it being hereby declared that these bylaws, and each section, subsection, subdivision, sentence, clause or phrase thereof, would have been adopted irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses or phrases is or are illegal.

ARTICLE 14. ADOPTION, AMENDMENT OR REPEAL OF BYLAWS
SECTION 14.1. BY STOCKHOLDERS.

Bylaws may be adopted, amended or repealed by the affirmative vote of a majority of the votes entitled to be cast by the outstanding voting shares of the corporation.

SECTION 14.2. BY THE BOARD OF DIRECTORS.

Subject to the right of stockholders to adopt, amend or repeal bylaws, any bylaw may be adopted, amended or repealed by the board of directors. A bylaw adopted by the stockholders may restrict or eliminate the power of the board of directors to adopt, amend or repeal any or all bylaws.

Exhibit 4.15
DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
The following description of the common stock of California Water Service Group (the “Group,” “us,” “our” or ”we”) does not purport to be complete and is subject to, and qualified in its entirety by, our certificate of incorporation, as amended (“certificate”), and our amended and restated bylaws (“bylaws”), each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part.

General
Our authorized capital stock consists of 136,000,000 shares of common stock, $0.01 par value, and 241,000 shares of preferred stock, $0.01 par value per share. We have one class of securities registered under Section 12 of the Securities Exchange Act of 1934, our common stock, which is listed on the New York Stock Exchange under the symbol “CWT.” There are no shares of preferred stock outstanding.

Common Stock
Voting rights. The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of stockholders. A majority of the votes cast is required for stockholders to elect directors (except that directors are elected by a plurality of the votes cast in a contested director election). All other matters put to a stockholder vote generally require the approval of a majority of the votes entitled to be cast by the shares represented at a meeting of the stockholders, except as otherwise provided by our certificate or bylaws or required by law. Stockholders do not have cumulative voting rights.

Dividends. The holders of our common stock have the right to receive any dividends we declare and pay on our common stock, subject to the rights, privileges, preferences, restrictions and conditions attaching to any other class or series of our securities. After all cumulative dividends are declared and paid or set apart on any series of our preferred stock which may be outstanding, the board may declare any additional dividends on our common stock out of our surplus (the excess, if any, of our net assets over total paid-in capital) or if there is no surplus, the net profits for the current fiscal year or the fiscal year before which the dividend is declared. Our board may only declare cash dividends if after paying those dividends we would be able to pay our liabilities as they become due.

Liquidation. The holders of our common stock have the right to receive our remaining assets and funds upon liquidation, dissolution or winding-up, if any, after we pay to the holders of any series of our preferred stock the amounts they are entitled to, and after we pay all our debts and liabilities.

Preemptive, subscription and conversion rights. Our common stock is not redeemable and has no preemptive, subscription or conversion rights.

Transfer agent. The transfer agent and registrar for our common stock is Computershare Limited.

Our common stock is subject and subordinate to any rights and preferences granted under our certificate and any rights and preferences which may be granted to any series of preferred stock by our board pursuant to the authority conferred upon our board under our certificate.

Anti-Takeover Provisions
Some provisions of our certificate, bylaws and Delaware law may have the effect of delaying, discouraging or preventing a change in control of us or changes in our management. Pursuant to our certificate and bylaws:
• the board of directors is authorized to issue “blank check” preferred stock without stockholder approval; • the board of directors is expressly authorized to make, alter or repeal any provision of our bylaws; • stockholders may not cumulate votes in the election of directors; • stockholders may take action only at a duly called meeting of the stockholders, and stockholders are not permitted to act by written consent;
• special meetings of the stockholders may be called by the stockholders only upon the request of stockholders owning shares representing 10% or more of the voting power of the then outstanding shares of capital stock entitled to vote on the matter or matters to be brought before the proposed special meeting; • stockholders must satisfy advance notice procedures to submit proposals or nominate directors for consideration at a stockholders meeting; and
• we will indemnify officers and directors against losses that they may incur as a result of investigations and legal proceedings resulting from their services to us, which may include services in connection with takeover defense measures.

In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”). In general, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date that the person became an interested stockholder unless, with some exceptions, the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the stockholder, and an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior, did own) 15% or more of the corporation’s outstanding voting stock. This provision may have the effect of delaying, deferring or preventing a change in control without further action by the stockholders.

Exclusive Forum
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for any stockholder (including any beneficial owner) to bring: (a) any derivative action or proceeding brought on our behalf; (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or employees to us or our stockholders; (c) any action asserting a claim arising pursuant to any provision of the DGCL, our certificate or our bylaws; (d) any action asserting a claim governed by the internal affairs doctrine; or (e) any other action asserting an internal corporate claim, as defined in Section 115 of the DGCL; in all cases subject to the court's having personal jurisdiction over the indispensable parties named as defendants. It is possible that a court of law could rule that the choice of forum provision contained in our bylaws is inapplicable or unenforceable if it is challenged in a proceeding or otherwise. Such exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.

Exhibit 10.27
OFFER LETTER BETWEEN JAMES P. LYNCH AND CALIFORNIA WATER SERVICE GROUP DATED JANUARY 2, 2024
VIA – REGULAR MAIL
Dear Jim:

I am pleased to confirm your recent conversation with Marty Kropelnicki, Chairman, President & CEO regarding our offer as Senior Vice President, Chief Financial Officer & Treasurer reporting to Marty.

In this position, your starting salary will be $39,166.67 monthly ($470,000 annually). In addition, you will have the use of a company vehicle for business and limited personal use per our Company Vehicle Policy.

You will be eligible to participate in our At Risk Pay (ARP) plan for 2024, with a target of 40%, vesting zero to 200% based on Company performance. In addition, you are eligible for the Long Term Incentive (LTI) plan; restricted Stock Award (RSA) of $75,000 vesting 1/3 after the first anniversary, with balance vesting over the remaining 24 months (three year vesting schedule); restricted Stock Units (RSU) of $140,000 vesting zero to 200% based on Company performance at the end of the three (3) years performance period. RSU payouts are in Cal Water stock.

This position is eligible to participate in the Supplemental Executive Retirement Program (SERP) and funded 100% by the company.

Cal Water provides a number of comprehensive benefit programs with varying eligibility, including but not limited to the following:
• 401(k) Plan
• Comprehensive Medical, Dental and Vision Benefits through the California Water Service Health Care Plan or Kaiser Permanente Health Maintenance Organization effective your date of conversion to a regular employee. (Depending on the service area in which you reside/work) • Supplemental Medical Plan for Executives the first day of the month following your date of conversion to a regular employee
• California Water Service Pension Plan
• Life Insurance effective date of conversion to a regular employee • Long Term Disability
• Deferred Compensation
• Tuition Reimbursement
• Additional benefits information will be provided upon your acceptance You will be eligible for 11 paid holidays per calendar year. After the completion of six months of service, you will be eligible for four floating holidays. Thereafter, you will receive four floating holidays per calendar year.

You are eligible for vacation under the Officer Vacation Plan. Employees in this plan do not accrue vacation, instead the Officer may take as much vacation as their job responsibilities reasonably allow.

This letter does not constitute an employment contract. Your employment with California Water Service is “atwill,” which means there is no guarantee of your continued employment nor is it for any definite term. As an “atwill” employee, you are free to quit your employment voluntarily at any time; the Company similarly is free to terminate your employment at any time without notice and without cause. The Company reserves the right to change the hours, wages, working conditions, and job responsibilities at any time. All such changes will be communicated through official notices.

Jim, we are pleased that you have accepted this position.

Sincerely,
California Water Service
Ron Webb
Vice President, Chief Human Resources Officer
cc: File
RW/tn
Please confirm acceptance of this offer by signing below and returning a copy of this letter. Thank you. /s/ James P. Lynch January 2, 2024
Signature Date
Exhibit 21
Subsidiaries of the Registrant
Subsidiary Name State of Incorporation Business Name
California Water Service Company California California Water Service Company CWS Utility Services California CWS Utility Services
New Mexico Water Service Company New Mexico New Mexico Water Service Company Washington Water Service Company Washington Washington Water Service Company Hawaii Water Service Company, Inc. Hawaii Hawaii Water Service Company HWS Utility Services LLC Hawaii HWS Utility Services
TWSC, Inc. Texas TWSC, Inc.

Exhibit 22.1
List of Subsidiary Issuers and Guarantors
As of December 31, 2023, the Company is the guarantor of the registered mortgage bonds issued by the following entities. The Company owns, directly or indirectly, 100% of each such entity.

California Water Service Company
a. 5.50% First Mortgage Bonds due 2040, Series PPP, issued in 2010 Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement Nos 333-234389, 333-158484, and 333-181329 on Form S-3 and Registration Statement Nos. 333-60810, 333-127495, and 333-228824 on Form S-8 of our report dated February 29, 2024, relating to the consolidated financial statements of California Water Service Group and the effectiveness of California Water Service Group’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2023.
/s/ DELOITTE & TOUCHE LLP
San Francisco, California
February 29, 2024
Exhibit 31.1

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

CERTIFICATION
I, Martin A. Kropelnicki, certify that:

1. I have reviewed this annual report on Form 10-K of California Water Service Group;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 29, 2024 By: /s/ MARTIN A. KROPELNICKI
Martin A. Kropelnicki
Chairman, President and Chief Executive Officer
Exhibit 31.2

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

CERTIFICATION
I, David B. Healey, certify that:

1. I have reviewed this annual report on Form 10-K of California Water Service Group;

Date: February 29, 2024 By: /s/ DAVID B. HEALEY
DAVID B. HEALEY
Principal Financial Officer
Exhibit 32

CERTIFICATION OF CEO AND CFO
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby certifies, in his capacity as an officer of California Water Service Group, that the Annual Report of California Water Service Group on Form 10-K for the period ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Annual Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of California Water Service Group.

Date: February 29, 2024 By: /s/ MARTIN A. KROPELNICKI
MARTIN A. KROPELNICKI
Chairman, President and Chief Executive Officer
California Water Service Group
Date: February 29, 2024 By: /s/ DAVID B. HEALEY
DAVID B. HEALEY
Principal Financial Officer
California Water Service Group
Exhibit 97

CALIFORNIA WATER SERVICE GROUP

INCENTIVE COMPENSATION CLAWBACK POLICY
This Incentive Compensation Clawback Policy (this “Policy”) has been adopted by the Board of Directors (the “Board”) of California Water Service Group (the “Company”) effective October 2, 2023 (the “Effective Date”) and replaces in its entirety the Company’s Clawback Policy dated November 28, 2012 (the “Prior Policy”).

Notwithstanding the foregoing, this Policy shall not affect any remedies or rights of recoupment that may become available to the Company under the Prior Policy with respect to any incentive compensation (or any portion thereof) that (i) was made, granted or Received prior to the Effective Date and (ii) is not recoverable under this Policy. The Board may amend or change the terms of this Policy at any time for any reason, including as required to comply with any laws, rules, regulations and listing standards that may be applicable to the Company.

Recoupment of Incentive-Based Compensation
In the event the Company is required to prepare an accounting restatement of the Company’s financial statements due to the Company’s material non-compliance with any financial reporting requirement under the federal securities laws (including any such correction that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period), the Company will recover on a reasonably prompt basis the amount of any Incentive-Based Compensation Received by a Covered Executive during the Recovery Period that exceeds the amount that otherwise would have been Received had it been determined based on the restated financial statements (each as defined below).

Policy Administration and Definitions
This Policy is administered by the Organization and Compensation Committee (the “Committee”) of the Board, subject to ratification by the independent members of the Board with respect to application of this Policy to the Company’s Chief Executive Officer, and is intended to comply with, and as applicable to be administered and interpreted consistent with, and subject to the exceptions set forth in, Listing Rule 303A.14 adopted by the New York Stock Exchange (“NYSE”) to implement Rule 10D-1 under the Securities Exchange Act of 1934, as amended (collectively, “Rule 10D-1”).

For purposes of this Policy:
• “Covered Executive” means all officers as appointed by the Board or the Board of Directors of any of the Company’s subsidiaries, including but not limited to any “executive officer” of the Company as defined under Rule 10D-1.
• A “Financial Reporting Measure” is (i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements and any measure derived wholly or in part from such a measure, and (ii) any measure based in whole or in part on the Company’s stock price or total shareholder return.
• “Incentive-Based Compensation” means any compensation granted, earned or vested based in whole or in part on the Company’s attainment of a Financial Reporting Measure that was Received by a person (i) on or after the Effective Date and after the person began service as a Covered Executive, and (ii) who served as a Covered Executive at any time during the performance period for the Incentive-Based Compensation. • Incentive-Based Compensation is deemed to be “Received” in the fiscal period during which the relevant Financial Reporting Measure is attained, regardless of when the compensation is actually paid or awarded. • “Recovery Period” means the three completed fiscal years immediately preceding the date that the Company is required to prepare the accounting restatement described in this Policy and any transition period of less than nine months that is within or immediately following such three fiscal years, all as determined pursuant to Rule 10D-1.

Determination by the Committee
If the Committee determines the amount of Incentive-Based Compensation Received by a Covered Executive during a Recovery Period exceeds the amount that would have been Received if determined or calculated based on the Company’s restated financial results, such excess amount of Incentive-Based Compensation shall be subject to recoupment by the Company pursuant to this Policy. For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of erroneously awarded compensation is not subject to mathematical recalculation directly from the information in an accounting restatement, the Committee will determine the amount based on a reasonable estimate of the effect of the accounting restatement on the relevant stock price or total shareholder return. In all cases, the calculation of the excess amount of Incentive-Based Compensation to be recovered will be determined on a pre-tax basis (i.e., without regard to any taxes paid with respect to such compensation). The Company will maintain and will provide to NYSE documentation of all determinations and actions taken in complying with this Policy. Any determinations made by the Committee under this Policy shall be final and binding on all affected individuals.

Methods of Clawback
The Company may effect any recovery pursuant to this Policy in any manner consistent with applicable law, including by requiring payment of such amount(s) to the Company, by set-off, by reducing future compensation, or by such other means or combination of means as the Committee determines to be appropriate. The Company need not recover the excess amount of Incentive-Based Compensation if and to the extent that the Committee determines that such recovery is impracticable, subject to and in accordance with any applicable exceptions under the NYSE listing rules and not required under Rule 10D-1, including if the Committee determines that the direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered after making a reasonable attempt to recover such amounts. The Company is authorized to take appropriate steps to implement this Policy with respect to Incentive-Based Compensation arrangements with Covered Executives.

Not Exclusive Remedy
Any right of recoupment or recovery pursuant to this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any other policy, any employment agreement or plan or award terms, and any other legal remedies available to the Company (including, but not limited to, Section 304 of the Sarbanes-Oxley Act of 2002); provided that the Company shall not recoup amounts pursuant to such other policy, terms or remedies to the extent it is recovered pursuant to this Policy.

The Company shall not indemnify any Covered Executive against the loss of any Incentive-Based Compensation pursuant to this Policy (or provide any advancement of expenses in such instance), nor will the Company pay or reimburse or agree to pay or reimburse any insurance premium to cover any such loss.

Certification
All Covered Executives subject to this Policy will be required to certify their understanding of and intent to comply with this Policy periodically.

Approved November 15, 2023
Appendix D:

Non-Collusion Affidavit

Appendix E:

Conflict-of-Interest Disclosure

Appendix F:

W-9

City of Lindsay
Utility Provider
Selection
Background: System Challenges
• Aging groundwater wells & declining water levels
• Capital repair & replacement needs
• Increasing water-quality regulatory complexity
• Outdated wastewater collection infrastructure
• Limited financial capacity for upgrades
• General Fund fiscal constraints
City System Overview
• 2 active groundwater wells (Wells 14 & 15)
• Surface water contract with Bureau of Reclamation
• Well 11 under rehabilitation
• 2.5 MGD wastewater treatment facility
• Emergency pond for overflow & maintenance
Purpose of Utility Provider
Selection
Secure long-term
investment &
modernization
Improve regulatory
compliance & service
reliability
Ensure employment
stability for staff
Address long-term rate
stability
Evaluation Summary
• Weighted criteria: experience, financial strength, regulatory record • Operational approach & community commitment
• Cal Water ranked top candidate
Why Cal Water?
Regional presence:
50+ employees
Strong regulatory
compliance record
(Clean Water Act,
CPUC)
Proven wastewater
operations & asset
management
capability
Financial strength
& investment
capacity
Customer
programs &
community
support
Transition Plan Overview
Structured 3-phase transition: Pre-Transition, Day 1, PostTransition Employee stability & training
Regulatory coordination
Uninterrupted operations ensured
Financial
Considerations
• Cal Water has $4.5B+ in assets
• Highest S&P credit rating in U.S.
water sector
• Experience securing grants &
financing infrastructure
• Sample valuation scenarios based on
City’s audited financials
Staff Recommendation
• Select Cal Water as the preferred Utility Provider
• Authorize City Manager to negotiate price & terms
• Supports long-term reliability, investment, and compliance

STAFF REPORT
TO: Lindsay City Council
MEETING DATE: June 9, 2026
DEPARTMENT: City Services
FROM: Dario Dominguez, Director of Public Works
Agenda Title: Adoption of Ordinance No. 704 – Adding Chapter 4 to Title 12 of the Lindsay Municipal Code Pertaining to Requirements for Installation and Relocation of Utility Facilities Underground

ACTION & RECOMMENDATION
Staff recommends that the City Council adopt Ordinance No. 704, adding Chapter 4 to Title 12 of the Lindsay Municipal Code to establish undergrounding requirements for electrical and communication utilities.

BACKGROUND | ANALYSIS
The City Council has identified concerns related to the presence of above-ground and overhead electrical and communication facilities both within public rights-of-way and on private properties. These facilities present public safety risks and negatively impact the appearance and aesthetics of the community.

Ordinance No. 704 has been prepared to address these concerns by implementing standards and procedures that require certain utility facilities—new installations, rebuilds, and major additions—to be placed underground when feasible and in the public interest.

ENVIRONMENTAL REVIEW
The ordinance is regulatory in nature and intended to enhance public safety and aesthetic conditions. Staff will prepare the appropriate CEQA determination based on City procedures (e.g., exemption under Class 1 or 3 depending on application).

FISCAL IMPACT
Adoption of this ordinance is not expected to create direct costs to the City. Any undergrounding work required is the financial responsibility of utilities and/or the owners of the properties affected by the undergrounding requirements.

ATTACHMENTS

1. Ordinance No. 704 – Adding Chapter 4 to Title 12 of the Lindsay Municipal Code Reviewed/Approved: ______
Item #: 15.1
Public Hearing
ORDINANCE NO. 704
AN ORDINANCE OF THE CITY OF LINDSAY ADDING CHAPTER 4 TO TITLE 12 OF THE LINDSAY

MUNICIPAL CODE PERTAINING TO REQUIREMENTS FOR INSTALLATION AND RELOCATION OF

UTILITY FACILITIES UNDERGROUND
The City Council finds that above-ground and overhead electrical and communication facilities in the public right-of-way and on private property create public safety risks and negatively impact the appearance and aesthetics of the City. The Council further finds that it is in the public interest to require electrical and communication facilities to be located underground when and where reasonable and to adopt regulations governing such installation and relocation.

The City Council of the City of Lindsay hereby ordains as follows:

Section 1. Chapter 4 is added to Title 12 of the Lindsay Municipal Code to read in its entirety as follow:

CHAPTER 4 - REQUIREMENTS FOR UNDERGROUND UTILITIES
Sections:
12-4.01 Findings and Purpose.
12-4.02 Undergrounding Requirements.
12-4.03 Exempt Facilities.
12-4.04 Cost of Undergrounding.
12-4.05 Permits and Fees.
12-4.06 Street Lighting.
12-4.07 Site Screening.
12-4.08 As-Built Drawings.
12-4.09 Joint Trenches.
12-4.10 Director Review.
12-4.11 Severability.

12.04.01 Findings and Purpose
The City seeks to decrease above ground and overhead utility facilities in the public rightof-way and on private property, and thereby improve public safety and the appearance and aesthetics of the City by requiring utility facilities to be installed and relocated underground. The purpose of this Chapter is to establish minimum requirements and procedures for the underground installation and relocation of electrical and communication facilities within the City.

Chapter shall apply to electrical and communication facilities, including but not limited to electric power, telephone, telecommunication, and cable television facilities within the City limits.

12.04.02 Undergrounding Requirements
New Services and Facilities:
a) All electrical service and communication service to a new commercial building shall be constructed underground including undergrounding of overhead utility lines across the frontage of the subject property.
b) All electrical service and communication service to an existing commercial building shall be constructed underground from the point of connection. c) All electrical service and communication service to a new residential building exceeding two units shall be constructed underground including undergrounding of overhead utility lines across the frontage of the subject property. d) All electrical service and communication service to a new residential building having two units or fewer and accessory dwelling units shall be constructed underground where existing surrounding services are underground. e) All electrical service and communication service to a new residential building having two units or fewer and accessory dwelling units may be constructed aerially where existing surrounding services are aerial.

Rebuilds, Replacements and Additions:
a) All existing electrical service and communication service to a rebuilt residential building of two units or fewer where overhead service previously existed may remain overhead.
b) All existing electrical service and communication service to rebuilds or additions exceeding 50% of the original building area of existing commercial or residential facilities in excess of two units shall be constructed underground including overhead utility transmission across the frontage of the subject property. c) All existing electrical service and communication service to rebuilds or additions of existing residential or commercial facilities not exceeding 50% of the original building area may be maintained overhead where existing surrounding services are overhead. Any new service must be placed underground from the point of connection in accordance with subdivision B(2) of this Section. d) A minor rebuilds, replacement or relocation of existing overhead facilities that does not alter the essential system configuration may be constructed overhead. e) When there is casualty damage to an overhead service system or other major service outage, the facilities may be restored overhead. f) Installation of additional conductors to provide one three-phase circuit is allowed on existing overhead facilities.
g) Reconductoring for routine maintenance that does not constitute a major rebuild is allowed on existing overhead facilities. Routine maintenance is also allowed on existing facilities for pole replacements and replacement of miscellaneous hardware.

Residential tract transformers:
a) Electrical transformers within residential tracts, approved by the City, shall be placed underground.
b) No work permitted by this Section shall result in an increase in the number of utility poles, except an additional pole may be installed if an existing pole that is suitable as a termination for underground installation from an overhead system that is intended to remain is not available within 300 feet of the closest property line of the development site.

12.04.03 Exempt Facilities
The following facilities are exempt from the undergrounding requirements of this Chapter:
a) Electric utility substations and switching facilities not located in the public right-ofway where site screening will be provided. b) Electric transmission systems of a voltage of 115 kV or more (including poles and wires) and equivalent communication facilities.
c) Telephone pedestals, cross connect terminals, repeaters, cable warning signs, and other equivalent communication facilities.
d) Municipal equipment, including but not limited to traffic control equipment and police and fire vehicle detections systems.
e) Temporary services for construction.
f) Replacement of existing overhead facilities due to damage by natural or manmade causes.
g) The Public Works Director shall decide if a facility qualifies for an exemption under this Section, and the Director’s decision shall be determinative and final.

12.04.04 Cost of Undergrounding
The cost of constructing new facilities underground or relocating existing overhead facilities underground shall be borne by the impacted utilities and/or the owners of the real property to be served, as applicable, and shall include the cost of acquisition of any private property necessary for such construction or relocation necessitated by the undergrounding work.

12.04.05 Permits and Fees
Except as otherwise provided in any existing franchise agreement with the impacted utility, an encroachment permit for underground construction shall be obtained from the City prior to construction of facilities in the public right-of-way.

12.04.06 Street Lighting
Street lighting facilities or systems in conformance with the applicable City standards shall be installed as an integral part of all underground projects constructed after the effective date of this Chapter.

12.04.07 Site Screening
Where a permit for an underground project is required by this Chapter, plans for any aboveground facilities shall be submitted to the City for approval of site screening and setbacks prior to issuance of an encroachment permit.

12.04.08 As-Built Drawings
A drawing of the completed underground utility facilities in a form acceptable to the City and conforming to generally accepted engineering practices shall be submitted to the Public Works Department within thirty (30) days of the completion of any underground project within the City. The encroachment permit shall remain open until the as-built drawings are submitted.

12.04.09 Joint Trenches
Where several utilities are planned or required in the same corridor, every effort shall be made by the impacted utilities to use joint trenches for such facilities.

12.04.10 Director Review
The Public Works Director has authority to review and authorize minor deviations to the requirements of this Chapter upon a determination that there is an undue hardship or extenuating circumstances justifying an exception. The Director’s determination shall be final. The Director may, in his/her discretion, refer any particular review and authorization to the City Council for consideration, in which case the City Council’s determination shall be final.

12.04.11 Severability
If any section, subsection, phrase, or clause of this Chapter is for any reason held to be invalid, such decision shall not affect the validity of the remaining portions of this Chapter.

The City Council hereby declares that it would have adopted this Chapter and each section, subsection, phrase, or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared invalid.

Section 2. This Ordinance shall take effect thirty (30) days after its adoption.

Section 3. The City Clerk is further directed to cause this ordinance or a summary of this ordinance to be published once in a newspaper of general circulation published and circulated within the City of Lindsay, within fifteen (15) days after its adoption. If a summary of the ordinance is published, then the City Clerk shall cause a certified copy of the full text of the proposed ordinance to be posted in the office of the City Clerk at least five days prior to the Council meeting at which the ordinance is adopted and again after the meeting at which the ordinance is adopted. The summary shall be approved by the City Attorney.

The foregoing ordinance read by title only with waiving of the reading in full was introduced at the regularly scheduled meeting of the City Council on May 12, 2026.

PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council held on the ___ day of June 2026.

ATTEST: CITY COUNCIL OF THE CITY OF LINDSAY
Miranda Cordova, City Clerk Misty Villarreal, Mayor

STAFF REPORT
TO: Lindsay City Council
MEETING DATE: June 9, 2026
DEPARTMENT: Finance
FROM: Soledad Ruiz-Nunez, Director of Finance
Agenda Title: Public Hearing – Annual Levy of Refuse Charges on Tulare County Property Tax Roll (FY 2026–2027)

ACTION & RECOMMENDATION
Staff recommends that the City Council:

1. Conduct the public hearing, receive oral and written protests, and direct staff to finalize the annual Refuse Report for Fiscal Year 2026–2027.

2. Adopt Resolution No. 26-22 ordering the levy and collection of annual solid waste refuse charges on the Tulare County property tax roll for Fiscal Year 2026–2027, as set forth in the Annual Refuse Report.

3. Adopt Resolution No. 26-23 confirming and placing delinquent water, sewer, and refuse charges from the period ending June 9, 2026 on the Tulare County property tax roll for Fiscal Year 2026–2027 BACKGROUND | ANALYSIS
On May 12, 2026, the City Council adopted Resolution No. 26-16 declaring the City's intent to levy annual refuse charges for properties receiving solid waste services provided by Mid-Valley Disposal, LLC, and to collect those charges on the Tulare County property tax roll.

Under Health and Safety Code §§ 5470–5473.1, the City is authorized to place refuse service charges on the tax roll to be collected in the same manner as property taxes. The adopted resolution established today, June 9, 2026 at 6:00 p.m., as the date and time for the required public hearing on the Annual Report of charges.

The City Clerk has completed all required noticing:
• Publication of the hearing notice pursuant to Government Code §6066. • Mailed notice to each affected property owner as required under Health and Safety Code §5473.1.

Additionally, a separate delinquency notice has been prepared and mailed to property owners with past‑due refuse, sewer, or water charges that may be added to the tax roll if left unpaid.

FISCAL IMPACT

1. Annual Solid Waste Charges:

The levy ensures full cost recovery for contracted refuse collection and compliance with franchise and regulatory obligations. Assessments are paid directly to the City after County collection and credited to a restricted solid waste fund.

2. Delinquent Utility Charges:

Transferring delinquencies to the County tax roll increases the likelihood of collection and protects the financial integrity of the water, sewer, and refuse enterprise funds. Actual revenue impact depends on final collected amounts.

ATTACHMENTS

1. Public Hearing / Delinquency Notice (English & Spanish)

2. Resolution No. 26-22 ordering the levy and collection of annual solid waste refuse charges on the Tulare County property tax roll for Fiscal Year 2026–2027, as set forth in the Annual Refuse Report.

3. Annual Report – FY 2026–27 Residential Accounts Trash Enrollments Item #: 15.2
Public Hearing

4. Resolution No No. 26-23 confirming and placing delinquent water, sewer, and refuse charges from the period ending June 9, 2026 on the Tulare County property tax roll for Fiscal Year 2026–2027

5. Annual Report – FY 2026-27 Delinquent Enrollments
Reviewed/Approved: ______

CITY OF LINDSAY PUBLIC HEARING NOTICE

LEVY AND COLLECTION OF DELINQUENT SERVICE FEES ON TULARE COUNTY PROPERTY TAX ROLLS Date: Tuesday, June 9, 2026
Time: 6:00PM or as soon thereafter
Location: Council Chambers City Hall
251 East Honolulu Street, Lindsay, CA 93247
NOTICE IS HEREBY GIVEN that the City Council of the City of Lindsay, California, will hold a public hearing on Tuesday, June 9, 2026, beginning at 6:00 PM (or as soon thereafter as the matter can be heard) to consider the matter:

Pursuant to Health and Safety Code Sections 5470, et. seq., and 5473, et. seq., written report has been filed with the City Clerk of the City of Lindsay containing a description of each parcel of real property receiving sewer, refuse, and/or water services for which payment is delinquent and containing the amount of delinquent service charges for each such parcel for the period ending June 30, 2026.

The public hearing will be held in the Council Chambers at the Lindsay City Hall, 251 East Honolulu Street, Lindsay, CA 93247, unless, pursuant to Executive Order N-29-20 or other order, the meeting may be conducted by teleconference or at another location to accommodate social distancing.

The purpose of the hearing is to determine whether the delinquent fees and charges described in said report shall be collected with and not separately from, the general taxes of the City of Lindsay. This means that, if the delinquent charges are not paid in a timely manner, they may be assessed against the property and collected as a tax lien.

All interested persons will be afforded the opportunity to hear and be heard at the June 9, 2026, public hearing. The City Council will consider all oral statements and all written protests made or filed by an interested person. If the City Council finds that protest is made by the owners of a majority of separate parcels of property described in the report, then the report shall not be adopted and the charges shall be collected separately from the tax roll and shall not constitute a lien against any parcel or parcels of land. Any written protests or objections must contain or refer to a description of the property in which each protester thereof is interested sufficient to identify the same and if the protester is not shown on the last equalized assessment roll as the owner of the property, must contain or be accompanied by evidence that such protester is the owner of the property. Written comments may be made to the City Council by letter (for mail or hand delivery) to:

City Clerk
251 East Honolulu Street
Lindsay, CA 93247
The written report describing each parcel is available for review at the Office of the City Clerk between the hours of 9:00 a.m. and 5:00 p.m., Monday through Friday. Please contact the Office of the City Clerk at (559) 562-7102, Ext. 8034 if you would like to schedule an appointment to review the report of parcels. In the event that City Hall remains closed to the public in the days leading up to the public hearing, a copy may be requested from the Office of the City Clerk at [email protected].

To avoid having a lien placed against your property, you must pay the assessment amount directly to the Lindsay Finance Department by July 17, 2026, at 4:00 PM.

CIUDAD DE LINDSAY AVISO DE AUDIENCIA PÚBLICA

COBRO POR SERVICIOS NO PAGADOS EN LAS ROLLAS DE IMPUESTOS A LA PROPIEDAD DEL

CONDADO DE TULARE
Fecha: martes 9 de junio de 2026
Hora: 6:00 PM o tan pronto como sea posible
Ubicación: Ayuntamiento de las Cámaras del Consejo
251 East Honolulu Street, Lindsay, CA 93247
POR LA PRESENTE SE DA AVISO que el Concejo Municipal de la Ciudad de Lindsay, California, llevará a cabo una audiencia pública el 9 de junio de 2026 a partir de las 6:00 p.m. (o tan pronto como se escuche el asunto) para considerar el asunto:

De conformidad con las Secciones 5470, et. Del Código de Salud y Seguridad. seq., y 5473, et. seq., se ha presentado un informe escrito a la Secretaria Municipal de la Ciudad de Lindsay que contiene una descripción de cada parcela de propiedad que recibe servicios de alcantarillado, basura y/o agua cuyo pago(s) están atrasados y que contiene la cantidad de cobro por dichos servicios no pagados de cada parcela a partir del 30 de junio de 2026.

La audiencia pública se llevará a cabo en las Cámaras del Consejo en el Ayuntamiento de Lindsay, 251 East Honolulu Street, Lindsay, CA 93247, a menos que, de conformidad con la Orden Ejecutiva N-29-20 u otra orden, la reunión se pueda llevar a cabo por teleconferencia o en otro lugar para acomodar el distanciamiento social.

El propósito de la audiencia es determinar si las tarifas y los cargos por los servicios no pagados descritos en dicho informe se cobrarán con los impuestos generales de la Ciudad de Lindsay y no por separado de ellos. Todas las personas interesadas tendrán la oportunidad de escuchar y ser escuchadas. El Ayuntamiento considerará todas las declaraciones orales y todas las protestas escritas realizadas o presentadas por una persona interesada. Si el Concejo Municipal determina que los propietarios de la mayoría de las parcelas de propiedad descritas en el informe presentan una protesta, el informe no se adoptará y los cargos se cobrarán por separado del registro de impuestos y no constituirán un gravamen contra cualquier parcela o parcelas de tierra.

Cualquier protesta u objeción por escrito debe contener o hacer referencia a una descripción de la propiedad lo suficiente como para identificar la propiedad y si el manifestante no aparece en la última lista de tasación como propietario, debe contener o ir acompañado de evidencia de que dicho manifestante es el dueño/a de la propiedad.

Se pueden hacer comentarios por escrito al Concejo Municipal por carta (por correo o entrega en mano) a:

Secretaria Municipal
251 East Honolulu Street
Lindsay, CA 93247
El informe escrito que describe cada parcela de propiedad está disponible para su revisión en la Oficina de la Secretaria Municipal entre las 9:00 a.m. y las 5:00 p.m., de lunes a viernes. Comuníquese con la Oficina de la Secretaria Municipal de la Ciudad al (559) 562-7102, Ext. 8034 si desea agendar una cita para revisar el informe de parcelas. En el caso de que el Ayuntamiento permanezca cerrado al público en los días previos a la audiencia pública, se puede solicitar una copia a la Oficina de la Secretaria Municipal de la Ciudad en [email protected].

Para evitar que se le imponga un gravamen sobre su propiedad, debe pagar los cobros atrasados directamente al Departamento de Finanzas de la Ciudad de Lindsay antes del Julio 17 a las 4 de la tarde.

A RESOLUTION OF THE CITY

COUNCIL OF THE CITY OF LINDSAY
RESOLUTION NO. 26-20

Page 1 of 3 ends

Lindsay City CouncilJune 9, 2026

Lindsay City Council
June 9, 2026