**Exhibit 4.1.6**

**SUBURBAN WATER SYSTEMS**

**TO**

**U.S. BANK NATIONAL ASSOCIATION,TRUSTEE**

**FIFTHAMENDMENT AND SUPPLEMENT TO**

**INDENTURE OF MORTGAGE AND DEED OF TRUSTDATED OCTOBER 1, 1986**

[This instrument is anamendment to an Indenture which is a mortgage of both real and personalproperty, including chattels, and also constitutes, among other things, asecurity agreement creating a security interest in personal property.  Such Indenture contains after-acquiredproperty provisions.]

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**THIS FIFTHAMENDMENT AND SUPPLEMENT TO INDENTURE OF MORTGAGE AND DEED OF TRUST DATEDOCTOBER 1, 1986** (the “*Fifth Amendment*”),is made and entered into as of October 20, 2006, by and between **SUBURBAN WATER SYSTEMS**, a California corporation formerlyknown as Southwest Suburban Water (herein, the “*Company*”),and **U.S. BANK NATIONAL ASSOCIATION**, anational banking association, as trustee (herein, the “*Trustee*”),with respect to the following:

A.            The Company executed anddelivered that certain Indenture of Mortgage and Deed of Trust dated October 1,1986 ( the “*Original Indenture*”) to Security PacificNational Bank, a national banking association, predecessor to Bank of AmericaNT & SA, predecessor trustee to U.S. Bank Trust National Association(originally named First Trust of California, National Association), predecessorto the Trustee.  The Original Indenturewas recorded on November 17, 1986, as Instrument No. 86-1574184 in the OfficialRecords of the County of Los Angeles, State of California, and was recorded onNovember 17, 1986, as Instrument No. 86-563570 in the Official Records ofthe County of Orange, State of California.

B.            The Original Indenture wasamended pursuant to that certain First Amendment and Supplement to Indenture ofMortgage and Deed of Trust Dated October 1, 1986 (the “*FirstAmendment*”), dated as of February 7, 1990, and recorded on April 12,1990, as Instrument No. 90-694089 in the Official Records of the County of LosAngeles, State of California, and was recorded on May 8, 1990, as InstrumentNo. 90-241742 in the Official Records of the County of Orange, State ofCalifornia, and further amended pursuant to that certain Second Amendment andSupplement to Indenture of Mortgage and Deed of Trust Dated October 1, 1986(the “*Second Amendment*”), dated as of January24, 1992, and recorded on February 14, 1992, as Instrument No. 92-260829 in theOfficial Records of the County of Los Angeles, State of California, and wasrecorded on February 14, 1992, as Instrument No. 92-091620 in the officialrecords of the County of Orange, State of California, and further amendedpursuant to that certain Third Amendment and Supplement to Indenture ofMortgage and Deed of Trust Dated October 1, 1986 (the “*ThirdAmendment*”), dated as of October 9, 1996, and recorded on October18, 1996, as Instrument No. 96-1696870 in the Official Records of the County ofLos Angeles, State of California, and was recorded on October 18, 1996, asInstrument No. 199650531190 in the official records of the County of Orange,State of California, and further amended pursuant to that certain FourthAmendment and Supplement to Indenture of Mortgage and Deed of Trust DatedOctober 1, 1986 (the “*Fourth Amendment*”),dated as of October 19, 2004, and recorded on October 19, 2004, as InstrumentNo. 04-2682597 in the Official Records of the County of Los Angeles, State ofCalifornia, and recorded on October 19, 2004, as Instrument No. 2004000939642in the Official Records of the County of Orange, State of California.  The Original Indenture, as amended andsupplemented by the First Amendment, the Second Amendment, the Third Amendment,and the Fourth Amendment, is hereinafter referred to as the “ExistingIndenture,” and the Existing Indenture, as amended and supplemented by thisFifth Amendment, is hereinafter referred to as the “Indenture.”

C.            The Company has requestedthat the Trustee enter into this Fifth Amendment setting forth the terms andconditions of the issuance of certain Bonds in the aggregate principal amountof $10,000,000, which Bonds shall be issued as “Series E” under and pursuant tothe Indenture.  Proceeds from the Series “E”Bonds will be used to repay the maturing Series “C” Bonds in the entire $8million amount outstanding on October 20, 2006, the date of the Series “E” Bondclosing.  The remaining $2 million proceedswill be used for general corporate purposes.

D.            The Company has duly authorized the creation,execution and delivery of the Series E Bonds, and all things have been donewhich are necessary to make the Series E Bonds, when executed by the Company andauthenticated and delivered by the Trustee under the Indenture and duly issuedby the Company, the valid and binding obligations of the Company, and toconstitute the Indenture a valid

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mortgage and deed of trust and a security agreement and contract forthe security of the Bonds (including, without limitation, the Series E Bonds),in accordance with the terms of the Bonds and the Indenture.  In addition, all other instruments andactions required pursuant to law and pursuant to the requirements of the ExistingIndenture for the Trustee to execute and deliver this Fifth Amendment have beenduly delivered or taken.

E.             The Company redeemed 100% ofthe issued and outstanding Series A Bonds.

F.             The Company will pay allprincipal and accrued interest payable on 100% of the issued and outstandingSeries C Bonds concurrently with and out of the proceeds of sale of the SeriesE Bonds pursuant to this Fifth Amendment.

**AMENDMENT**

**INCONSIDERATION** of the foregoing recitals and pursuant to theauthority granted under Section 13.01 of the Indenture [Supplemental IndenturesWithout Consent of Bondholders], the Company and the Trustee agree that theExisting Indenture shall be amended in the following respects.

**1.****            ****DEFINITIONS.**

All terms used in this FifthAmendment with initial capital letters and not defined herein shall have themeanings given in the Existing Indenture.

**2.****            ****ORIGINAL ISSUANCE OF SERIES EBONDS**.

There is hereby added tothe Existing Indenture a new Article, to be entitled Article XIX, and whichshall read in its entirety as follows:

**“ARTICLE XIXTERM AND ISSUE OF SERIES E BONDS**

**Section 19.01.  Specific Title, Terms and Forms.**  Thereshall be a fifth series of Bonds entitled “First Mortgage Bonds, Series E 6.295%,Due October 20, 2026” (herein called the “*Series E Bonds*”).  The forms thereof shall be substantially asset forth in Article II with such insertions, omissions, substitutions andvariations as may be determined by the officers executing the same as evidencedby their execution thereof to reflect the applicable terms of the Series EBonds established by this Article.  Theprecise form of Series E Bonds shall be as set forth in an exhibit to the BondPurchase Agreement (the “*Purchase Agreement*”)dated as of October 20, 2006, between the Company and the Purchaser namedtherein pursuant to which the Series E Bonds are sold, and the Trustee isauthorized to refer to such Purchase Agreement when any Series E Bonds arepresented to the Trustee for authentication.

The Maturity of theSeries E Bonds shall be October 20, 2026, and the aggregate principal amountthereof which may be authenticated and delivered and Outstanding is limited to$10,000,000.

The Series E Bonds may be issued only as registered Bonds indenominations of $1,000 and any multiple thereof.  The Series E Bonds shall bear interest fromthe later of the initial issuance of the Series E Bonds or the most recentInterest Payment Date to which interest has been paid or duly providedfor.  The Series E Bonds shall bearinterest payable semi-annually on April 1 and October 1 of each year (theInterest Payment Dates of the Series E Bonds), at the rate of 6.295% per annum,until the principal

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thereof shall bepaid or duly provided for; *provided* thatinterest on any overdue principal, overdue Redemption Price, and (to the extentpermitted by applicable law) overdue interest, shall accrue at a rate equal tothe lesser of (a) the highest rate allowed by applicable law or (b) 7.295% perannum.  Interest shall be computed on thebasis of a 360-day year of twelve 30-day months.

Notwithstanding theprovisions of Section 5.05 [Deposit of Redemption Price] or other provisions inthe Indenture to the contrary, the principal or the Redemption Price of, andany applicable accrued and unpaid interest on, the Series E Bonds shall bepayable by depositing such amounts, before 12:00 noon, New York time, on theRedemption Date or Maturity date, as the case may be, by federal funds bankwire transfer, in the account of each Bondholder of the Series E Bonds in anybank in the United States as may be designated in a written notice to theCompany by such Bondholder, or in such other manner as may be directed, or tosuch other address in the United States as may be designated, in writing bysuch Bondholder.  The address on Annex 1to the Purchase Agreement with respect to the initial purchaser of the Series EBonds shall be deemed to constitute notice, direction or designation (asappropriate) to the Company with respect to direct payments to such purchaseras aforesaid.  With regard to any SeriesE Bond, the bank designated pursuant to this paragraph with respect to suchSeries E Bond shall be the Place of Payment in respect of such Series E Bond.

The Regular Record Datereferred to in Section 2.10 [Payment of Interest on Bonds, Interest RightsPreserved] for the payment of the interest payable on the Series E Bonds, andpunctually paid or duly provided for, on any Interest Payment Date shall be the20th day (whether or not a Business Day) of the calendar month next precedingsuch Interest Payment Date.

If any payment due on, orwith respect to, any Series E Bonds shall fall due on a day other than aBusiness Day, then such payment shall be made on the First Business Dayfollowing the day on which such payment shall have so fallen due; *provided* that if all or any portion of such payment shallconsist of a payment of interest, for purposes of calculating such interest,such payment shall not be deemed to have been originally due on such firstfollowing Business Day, and such interest shall accrue and be payable only tothe Interest Payment Date.

**Section 19.02.  Exchangeability.** Subject to Section 2.08 [Registration, Transfer and Exchange], allSeries E Bonds shall be fully interchangeable, and, upon surrender at theoffice or agency of the Company which the Company maintains pursuant to Section6.02 [Maintenance of Office or Agency], shall be exchangeable for other SeriesE Bonds of a different authorized denomination or denominations, as requestedby the Holder surrendering the same.  TheCompany will execute, and the Trustee shall authenticate and deliver, Series EBonds whenever the same are required for any such exchange.

**Section 19.03.  Redemption.**

A.            The Series E Bonds are subject to redemption, in wholeor in part, before their Maturity in the following events and in the mannerprovided in Article V [Redemption of Bonds] (unless a different manner is setforth in this Section 19.03, in which case the provisions of this Section shallcontrol):

(1)           at any time after issuance, at the option of theCompany evidenced by a Board Resolution, in an amount not less than 5% of theaggregate principal amount of the Series E Bonds Outstanding in the case of apartial redemption, at a Redemption Price equal to 100% of the principal amountof the Series E Bonds to be redeemed, together with the Make Whole Surcharge atsuch time (as shall be calculated by Purchaser which calculations shall be setforth in an Officers’ Certificate delivered to each Holder of Series E Bondsand to the Trustee two (2) Business Days prior to the Redemption Date) andinterest accrued and unpaid to the Redemption Date, on a Redemption Datespecified by the

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Companyin compliance with Section 5.02 [Election to Redeem; Notice to Trustee], exceptthat notice of the Redemption Date and other matters specified in Section 5.02[Election to Redeem; Notice to Trustee] shall be given not less than 30 normore than 60 days prior to the Redemption Date specified by the Company.  The Company shall obtain from Purchaser acalculation of the estimated Make Whole Surcharge and interest due three (3)business days prior to the Redemption Date. A final determination of the Make Whole Surcharge will be recalculated inagreement with Purchaser on the Redemption Date; and

(2)           from moneys received by theTrustee as a result of a major casualty or condemnation as provided in ArticlesVII [Possession and Release of Property] and VIII [Application of TrustMoneys], at a Redemption Price equal to 100% of the principal amount of Bondsto be redeemed, together with the Make Whole Surcharge at such time (providedthat in the case of any redemption resulting from a major casualty event,such Make Whole Surcharge shall be calculated without the additional amount requiredby paragraph B of the definition of such term) and together with interestaccrued and unpaid to the Redemption Date, and on a Redemption Date that is thefirst date for which notice of redemption can be given by the Trustee asprovided in Article V [Redemption of Bonds]. For purposes of this Section 19.03, a “major” casualty or condemnationis one in which either or both of (i) the compensation for, or proceeds ofsale of, any part of the Trust Estate Taken by Eminent Domain, or (ii) theproceeds of insurance upon any part of the Trust Estate, is equal to or greaterthan $10,000,000.

B.            Notwithstanding the last sentence of the firstparagraph of Section 5.04 [Notice of Redemption] and the first sentence of thesecond paragraph of Section 1.04 [Notices to Bondholders, Waiver], the givingof notice of redemption to each Holder of a Series E Bond, as provided inSection 5.04, shall be a condition precedent to the Company’s right toredeem Series E Bonds in accordance with the foregoing clauses A(1) and A(2) ofthis Section 19.03.  Any notice of redemptionto any Holder of Series E Bonds for a redemption pursuant to clause A(1) ofthis Section 19.03 shall be accompanied by an Officers’ Certificate as to theestimated Make Whole Surcharge due in connection with such redemption(calculated as if the date of such notice were the date of such redemption)setting forth the details of such computation.

C.            Notwithstanding the provisions of Section 5.03[Selection by Trustee of Bonds to Be Redeemed], if there is more than oneHolder of the Series E Bonds, the aggregate principal amount of each requiredor optional partial redemption of the Series E Bonds shall be allocated inunits of $1,000 or multiples thereof among the Holders of the Series E Bonds atthe time Outstanding in proportion, as nearly as practicable, to the respectiveunpaid principal amounts of the Series E Bonds then Outstanding held by each suchHolder of Series E Bonds, with adjustments, to the extent practicable, toequalize for any prior redemptions not in such proportion.

D.            Notwithstanding the second sentence of Section 5.06[Bonds Payable on Redemption Date] or the provisions of Section 5.07 [BondsRedeemed in Part], no Holder of any Series E Bond shall be required tosurrender such Bond to any Person, or to file, or cause to be filed, with theTrustee any agreement or certificate required by Section 5.07, prior toreceiving any payment thereon or in respect thereof; *provided,however*, that upon payment of the principal or Redemption Price infull, and accrued and unpaid interest on and all other amounts in respect ofsuch Series E Bond, the Holder thereof shall promptly thereafter surrender suchSeries E Bond to the Company.  Any suchSeries E Bond so surrendered shall be cancelled and shall not be reissued, andno new Series E Bond shall be issued in lieu of such surrendered Series E Bond.

E.             The Series E Bonds may be redeemed fromTrust Moneys, as provided in Section 8.04 [Retirement of Bonds], including frommoneys received by the Trustee as a result of casualty or condemnation, asprovided in Articles VII [Possession and Release of Property] and VIII[Application of

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Trust Moneys], butonly at the time, in the manner and at the Redemption Price specified inclauses (A)(1) and (A)(2) of this Section 19.03.  If the Series E Bonds shall be redeemed underSection  19.03.A(2), then said Series E Bonds shall be redeemed pro ratawith the Series B Bonds, the Series D Bonds, and any other Bonds having thebenefit of a redemption provision substantially identical to that contained in 19.03.A(2),in proportion, as nearly as practicable, to the respective unpaid principalamounts of all such Bonds Outstanding on the Redemption Date.

**Section 19.04.  Payment of Optional Redemption Price.** If the giving of notice of optional redemption shall have been completedas required in Article V [Redemption of Bonds], the Series E Bonds or portionsof such Series E Bonds specified in such notice shall become due and payable onthe Redemption Date at the applicable Redemption Price set forth in Section 19.03.  On and after the Redemption Date (unless theCompany shall default in the payment of such Bonds on the Redemption Date)interest on the Series E Bonds or the portions of the Series E Bonds so calledfor redemption shall cease to accrue.

If any Holder of anySeries E Bond which is redeemed in part only shall present such Bonds to theCompany, the Company shall execute and the Trustee shall authenticate anddeliver to such Holder, at the expense of the Company, a new Series E Bond orBonds in aggregate principal amount equal to the unredeemed portion of theSeries E Bond so presented.

**Section 19.05.  Authentication and Delivery.** Upon the execution and delivery of this Fifth Amendment, the Companyshall execute and deliver to the Trustee, and the Trustee shall authenticate,the Series E Bonds and deliver them to the purchasers thereof as instructed bythe Company.

Prior to the delivery bythe Trustee of the Series E Bonds there shall be filed with the Trusteeoriginal executed counterparts of this Fifth Amendment, the Purchase Agreement,the Title Policies or commitments for issuance thereof and evidence ofrecording of this Fifth Amendment in the land records of Los Angeles and OrangeCounties, California.

**3.**             CERTAINAMENDMENTS TO DEFINITIONS.

(a)           **Make Whole Surcharge Definitions.**  Section 1.01[Definitions] of the Existing Indenture is hereby amended by adding thefollowing definition of Make Whole Surcharge for the Series E Bonds andthe following related definitions:

**“Make WholeSurcharge”** means,with respect to any Series E Bond, an amount determined as follows:

To determine the surcharge designed to compensate CoBank for any actualor imputed funding losses incurred by CoBank as a result of the repayment,CoBank will:

(A)          Determine the difference between:  (1) the rate estimated by CoBank on the datethe rate was fixed to be its cost to fund the loan on that day in the mannerset forth in its then current methodology; minus (2) the rate estimated byCoBank on the date the surcharge is calculated to be its cost, less dealerconcessions and other issuance costs, to fund a new fixed rate loan inaccordance with its then current methodology having the same fixed rate periodand repayment characteristics as the balance being repaid.  If such difference is negative,

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then for purposes of the remaining calculations, such difference shallbe deemed to be zero.

(B)           Add 1⁄2 of 1% to such difference (such that theminimum result shall at all times be 1⁄2 of 1%).

(C)           Divide the result determined in (B) above by the numberof times interest is payable during the year.

(D)          For each interest period (or portion thereof) duringwhich interest was scheduled to accrue at the fixed rate, multiply the amountdetermined in (C) above by the principal balance scheduled to have beenoutstanding during such period (such that there is a calculation for eachinterest period during which the amount repaid was scheduled to have beenoutstanding at the fixed rate).

(E)           Determine the present value of each calculation madeunder (D) above based upon the scheduled time that interest on the amountrepaid would have been payable and a discount rate equal to the rate set forthin (A)(2) above.

(F)           Add all of the calculations made under (E) above.  The result shall be the Make Whole Surcharge.

Nothing contained herein shall prevent CoBank from funding its loans inany manner as CoBank may, in its sole discretion, elect, and the surchargesprovided for herein shall not be increased or decreased based on the actualmethods chosen by CoBank to fund or hedge the loan being repaid.”

(b)           **Definition of Place of Payment.**  The definitionof “Place of Payment” in Section 1.01 [Definitions] of the Existing Indentureis hereby amended to read, in its entirety, as follows:

**“Place of Payment”** means, (a)when used with respect to the Series B Bonds (except as provided in clause (d)below), the place for payment of the principal, Make Whole Amount, if any, andinterest upon the Series B Bonds designated in Section 16.01; (b) when usedwith respect to the Series D Bonds (except as provided in clause (d) below),the place for payment of the principal, Make Whole Amount, if any, and interestupon the Series D Bonds designated in Section 18.01; (c) when used with respectto the Series E Bonds (except as provided in clause (d) below), the place forpayment of the principal, Make Whole Surcharge, if any, and interest upon theSeries E Bonds designated in Section 19.01; and (d) with respect to anyexchange of Series B Bonds pursuant to Section 16.02 [Exchangeability]; with respectto any exchange of Series D Bonds pursuant to Section 18.02[Exchangeability]; with respect to any exchange of Series E Bonds pursuant toSection 19.02 [Exchangeability]; and with respect to Bonds of any other series,means a city or any political subdivision thereof in which the Company is bythis Indenture required to maintain an office or agency pursuant toSection 6.02 [Maintenance of Office or Agency].”

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** **

**4.**             REPLACEMENTOF MUTILATED, DESTROYED, LOST AND STOLEN BONDS.

The proviso in lines 5through 7 of the first paragraph of Section 2.09 [Mutilated, Destroyed, Lostand Stolen Bonds] of the Existing Indenture is hereby amended to add theretothe words “or Series E Bond” immediately after the words “Series D Bond.”

**5.****            ****COVENANTS.**

In consideration of andin connection with the issuance of the Series E Bonds, the Company makes thefollowing additional covenants in favor of the Series E Bondholders (but notthe Series A Bondholders, the Series B Bondholders, the Series C Bondholders,the Series D Bondholders, or the Bondholders of any subsequent series of Bonds,if any).

(a)           **Redemption of Series E Bonds**.  If Bondshaving the benefit of a redemption provision substantially identical to thatcontained in Section 3.03A(3) shall be redeemed under Section 3.03A(3), thenSeries E Bonds shall be redeemed *pro rata* withthe Bonds having the benefit of a redemption provision substantially identicalto that contained in Section 3.03A(3) in proportion, as nearly as practicable,to the respective unpaid principal amount of all such Bonds outstanding on theRedemption Date.

(b)           **Financial Reports to Series E Bondholders.** Article VI [Covenants] of the Existing Indenture is hereby amended byadding thereto a new Section, to be entitled Section 6.18 and to read in itsentirety as follows:

“**Section 6.18.  Financial Reports to Series E Bondholders.**  For so long as any of the Series E Bonds areOutstanding, the Company shall furnish to each of the Series E Bondholders attheir addresses for notices pursuant to Section 1.04 [Notices to Bondholders;Waiver] all financial statements and information, notices, reports and otherinformation required pursuant to, and otherwise comply with each of, theprovisions of Section 4.1 (together with any successor provision, and as suchprovision or successor provision may be amended from time to time), of thePurchase Agreement pursuant to which the Series E Bonds were originally sold,which provisions are incorporated by reference herein, *mutatismutandis*, with the same effect as if set forth therein.”

(c)           **Dividend Covenant**.  Section 6.14 [Payment ofDividends] of the Existing Indenture is hereby amended by adding the followingto the end of the first paragraph thereof:

“In addition to the foregoing, for so long asany of the Series E Bonds are Outstanding the Company will not declare or makeor incur any liability to make any Distribution in respect of the common stockof the Company if, immediately after giving effect to the proposedDistribution, the aggregate amount of Distributions in respect of its commonstock made during the period subsequent to December 31, 2003 would exceed:  the sum of (a) $24,077,000.00, plus (b) 95%of the aggregate Net Income (or 100% of Net Income if Net Income shall be adeficit) accrued subsequent to December 31, 2003.”

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(d)           **No Change in Business**.  Article VI[Covenants] of the Existing Indenture is hereby amended by adding thereto a newSection 6.19, reading in its entirety as follows:

“**Section6.19.  No Change in Business**.

The Company shall not cease to conduct itsprincipal business as a regulated water/wastewater public utility under thelaws of one or more states of the United States of America.  In the event that the Company shall engage ina consolidation, merger, conveyance, transfer or lease transaction pursuant tothe provisions of Section 12.01 and 12.02 of the Indenture, the Company agreesthat any surviving or successor entity will be a regulated water/wastewaterpublic utility under the laws of one or more states of the United States ofAmerica.”

**6.****            ****POWERS EXERCISABLENOTWITHSTANDING DEFAULT.**

(a)           **Section 7.04.**  Section 7.04 [PowersExercisable Notwithstanding Default] of the Existing Indenture, as previouslyamended and restated by the Fourth Amendment, is hereby amended to read, in itsentirety, as follows:

“While in possession of all or substantiallyall of the Trust Estate (other than any cash and securities constituting partof the Trust Estate and deposited with the Trustee), the Company may exercisethe powers conferred upon it in the Sections of this Article even though it isprohibited from doing so while a Default exists as provided therein, if (i) theHolders of not less than 66-2/3% in principal amount of each of the followingseries of Bonds then Outstanding, the Series B Bonds, the Series D Bonds, andthe Series E Bonds, and (ii) the Holders of not less than 66-2/3% in principalamount of all other Bonds then Outstanding (as a group), in each case by Act ofsuch Bondholders, shall consent to such action, in which event none of theinstruments required to be furnished to the Trustee under any of such Sectionsas a condition to the exercise of such powers need state that no Default existsas provided therein.”

(b)           **Section 8.07.**  Section 8.07 [PowersExercisable Notwithstanding Default] of the Existing Indenture, is herebyamended to read, in its entirety, as follows:

“While in possession of all or substantiallyall of the Trust Estate (other than any cash and securities constituting partof the Trust Estate and deposited with the Trustee), the Company may do any ofthe things enumerated in Sections 8.02 [Withdrawal on Basis of BondableCapacity] to 8.06 [Amounts under $100,000], inclusive, which it is prohibitedfrom doing while a Default exists as provided therein, if (i) the Holders ofnot less than 66-2/3% in principal amount of each of the following series ofBonds then Outstanding: the Series B Bonds, the Series D Bonds, and the SeriesE Bonds, and (ii) the Holders of not less than 66-2/3% in principal amount ofall other Bonds then Outstanding (as a group), in each case by Act of suchBondholders, shall consent to such action, in which event any Certificate filedunder any of said

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Sections shall omit any statement to the effect that no Default existsas provided thereunder.”

**7.****            ****EVENTS OF DEFAULT.**

Section 9.01 [Events ofDefault] of the Existing Indenture is hereby amended by adding thereto a newsubsection 9.01.F, to read in its entirety as follows:

“F.           “Event of Default” with respect to the Series EBonds only means any one of the events specified in clause A of this Section9.01 or any one of the following events (whatever the reason for such event andwhether it shall be voluntary or involuntary or be effected by operation of lawor pursuant to any judgment, decree or order of any court or any order, rule orregulation of any administrative or governmental body):

(1)           **Principal or Premium Payments** – the Companyfails to make any payment of principal or Make Whole Surcharge on any Series EBond when such payment is due,

(2)           **Interest Payments** – the Companyfails to make any payment of interest on any Series E Bond within 5 days afterthe date such payment is due,

(3)           **Particular Covenant Defaults** – the Companyfails to perform or observe any covenant contained in Section 6.06, Section6.09, Section 6.14, the last sentence of Section 6.12, or Article XII,

(4)           **Other Defaults** – the Company fails tocomply with any other provision of this Indenture or the Purchase Agreementpursuant to which the Series E Bonds were sold, and such failure continues formore than 30 days after such failure shall first become known to any officer ofthe Company;

(5)           **Warranties or Representations** – any warrantyor representation by the Company or by Southwest Water Company, a Delawarecorporation, contained in this Indenture, the Purchase Agreement pursuant towhich the Series E Bonds were sold or in any instrument or certificatefurnished by the Company in compliance with this Indenture or the PurchaseAgreement pursuant to which the Series E Bonds were sold is false or incorrectin any material respect on the date as of which made,

(6)           **Default on Indebtedness** – the Companyfails to make any payment due on any indebtedness for borrowed money(including, without limitation, Bonds of any other series) in an amountaggregating in excess of $1,000,000, or any event shall occur or any conditionsshall exist in respect of any such indebtedness of the Company, or under anyagreement securing or relating to such indebtedness, the effect of which is (i)to cause (or permit any Holder of such indebtedness or a trustee to cause) suchindebtedness, or a portion thereof, to become due prior to its

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stated maturity or prior to its regularly scheduled date or dates ofpayment or (ii) to permit a trustee to elect a majority of the directors on theBoard of Directors of the Company, and

(7)           **Undischarged Final Judgments** – a finaljudgment or judgments for the payment of money aggregating in excess of$100,000 is or are outstanding against the Company and any one of suchjudgments has been outstanding for more than thirty (30) days from the date ofits entry and has not been discharged in full or stayed.”

**8.****            ****CONDEMNATION OF ENTIRE TRUSTESTATE.**

The parentheticalphrase in lines 5 and 6 of Section 8.10 [Condemnation of Entire Trust Estate]of the Existing Indenture is hereby amended in its entirety to read as follows:

“(other than the Series B Bonds, which shall only be redeemablepursuant to Section 16.03 [Redemption], the Series D Bonds, which shall only beredeemable pursuant to Section 18.03 [Redemption]), and the Series E Bonds,which shall only be redeemable pursuant to Section 19.03 [Redemption]).”

**9.****            ****INCIDENTS OF SALE.**

Section 9.05.A [Incidentsof Sale] of the Existing Indenture is hereby amended to read, in its entirety,as follows:

“A.  the principal, the Make Whole Amount, the MakeWhole Surcharge or other premium, if any, and accrued interest on allOutstanding Secured Bonds, if not previously due, shall at once become and beimmediately due and payable,”

**10.****         ****NOTICE OF DEFAULTS.**

Section 10.02.  [Notice of Defaults] of the ExistingIndenture is hereby amended and restated to read in its entirety as follows:

“Within 90 days after the Trustee shall haveactual knowledge of any Default hereunder, the Trustee shall transmit by mailto all Bondholders entitled to receive reports pursuant to Section 11.03.C [Reportsby Trustee], if operative, and if Section 11.03.C is not operative, to allRegistered Holders of Bonds as their names and addresses appear in the BondRegister, notice of such Default hereunder known to the Trustee, unless suchDefault shall have been cured or waived; PROVIDED, HOWEVER, that, except in thecase of a Default in the payment of the principal of (or premium, if any) orinterest on any Bond or in the payment of any sinking or purchase fundinstallment, and except for notice to the Holders of Series B Bonds, Series DBonds, or Series E Bonds, which shall not be withheld in any event, the Trusteeshall be protected in withholding such notice if and so long as the board of directors,the executive committee or a trust committee of directors and/or ResponsibleOfficers of the Trustee in good faith determine that

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the withholding of such notice is in the interests of the Bondholders;PROVIDED, FURTHER, that in the case of any Default of the character specifiedin Section 9.01.A(3) [Events of Default], except as specified in thenext succeeding provision, no such notice to Bondholders shall be given untilat least 30 days after the occurrence thereof; and, PROVIDED, FURTHER, that inthe case of any Default with respect to the Series B Bonds, Series D Bonds, orSeries E Bonds, the Trustee shall give written notice thereof to the Holdersof, respectively, Series B Bonds, Series D Bonds, or Series E Bonds, astheir names and addresses appear in the Bond Register, promptly after theTrustee has actual knowledge of such Default.

**11.****         ****SUPPLEMENTAL INDENTURES WITH CONSENT OF BONDHOLDERS.**

The proviso in lines 4through 7 of the second to last paragraph of Section 13.02 [SupplementalIndentures with the Consent of Bondholders] of the Existing Indenture is herebyamended and restated in its entirety to read as follows:

“, PROVIDED, HOWEVER, that the Trustee shall not at any time make anysuch determination with respect to the Series B Bonds, Series D Bonds, orSeries E Bonds, respectively, without the prior written consent of theHolders of a majority in principal amount of, respectively, the Series B Bonds,Series D Bonds, or Series E Bonds, as the case may be, Outstanding at suchtime.”

**12.****         ****EFFECTIVE DATE.**

As used herein, theEffective Date of this Fifth Amendment shall be that date upon which anexecuted and acknowledged counterpart of this Fifth Amendment is recorded inthe Offices of the County Recorders of Los Angeles and Orange Counties, California.

**13.****         ****INDENTURE IN EFFECT.**

The Company and theTrustee agree and acknowledge that the Existing Indenture, as amended andsupplemented by this Fifth Amendment, remains in full force and effect inaccordance with its terms.

**14.****         ****COMPANY COVENANT TO PAY TRUSTEE FEES.**

By its signature hereto,the Company covenants and agrees to pay the reasonable fees and costs of theTrustee incurred or charged in connection with the review and execution of thisFifth Amendment and all other instruments described in Recital D to this FifthAmendment.

**15.****         ****COUNTERPARTS AND INCLUSIONS IN INDENTURE.**

This Fifth Amendment maybe executed in two or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute a single instrument.  Upon recordation of this Fifth Amendment inthe Offices of the County Recorders of Los Angeles and Orange Counties,California, this Fifth Amendment shall be and become a part of the Indentureand shall be construed as a part thereof. By its signature hereto, the Trustee authorizes the Company to recordexecuted and acknowledged counterparts of this Fifth Amendment in the Officesof the County Recorders of Los Angeles and Orange Counties, California.

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**16.****         ****SEPARABILITY CLAUSE.**

In case any provision inthis Fifth Amendment shall be invalid, illegal or unenforceable, the validity,legality and enforceability of the remaining provisions, and of the otherprovisions of the Indenture, shall not in any way be affected or impairedthereby.

**17.****         ****GOVERNING LAW.**

**THIS FIFTH AMENDMENT SHALL BECONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OFCALIFORNIA.**

**INWITNESS WHEREOF**,the parties hereto have caused this Fifth Amendment and Supplement to Indentureof Mortgage and Deed of Trust Dated October 1, 1986, to be duly executed, withthe Company’s corporate seal to be hereunto affixed and attested, all as of theday and year first above written.
|        |   | SUBURBAN WATER SYSTEMS,         |
|--------|--------|---------------------------------|
|   |   | Mortgagor                       |
|   |   |                            |
|   |   |                            |
|   |   | By                              | /s/ Michael O. Quinn |   |
|   |   |                            | Michael O. Quinn |
|   |   |                            | President |
|   |   |                            |
|   |   | By                              | /s/ John A. Brettl |   |
|   |   |                            | John A. Brettl |
|   |   |                            | Chief Financial Officer |
|   |   |                            |
|   |   |                            |
|   |   | U.S. BANK NATIONAL ASSOCIATION, |
|   |   | As Trustee,                     |
|   |   | Mortgagee                       |
|   |   |                            |
|   |   |                            |
|   |   | By                              | /s/ Julia Hommel |   |
|   |   |                            | Authorized Officer |

 

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