Exhibit
4.1


 


AMERICAN STATES WATER COMPANY


 


AND


 


CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION


 


TRUSTEE


 






 


INDENTURE


 


Dated as of December 1, 1998


 






 


DEBT SECURITIES


 

















 


PARTIAL
CROSS-REFERENCE TABLE


 


	
  Indenture Section

  	
   

  	
  TIA
  Section

  
	
  2.04

  	
   

  	
  317(b)

  
	
  2.05

  	
   

  	
  312(a)

  
	
  2.10

  	
   

  	
  316(a) (last
  sentence)

  
	
  4.04

  	
   

  	
  314(a)(4)

  
	
  4.05

  	
   

  	
  314(a)(1)

  
	
  6.04

  	
   

  	
  316(a)(1)(B)

  
	
  6.05

  	
   

  	
  316(a)(1)(A)

  
	
  6.07

  	
   

  	
  317(a)(1)

  
	
  7.04

  	
   

  	
  315(b)

  
	
  7.05

  	
   

  	
  313(a)

  
	
  7.05

  	
   

  	
  313(d)

  
	
  7.07

  	
   

  	
  310(a), 310(b)

  
	
  7.10

  	
   

  	
  310(b)(1)

  
	
  8.02

  	
   

  	
  310(a), 310(b)

  
	
  9.04

  	
   

  	
  316(c)

  
	
  10.01

  	
   

  	
  318(a)

  
	
  10.02

  	
   

  	
  313(c)

  
	
  10.03

  	
   

  	
  314(c)(1)

  
	
   

  	
   

  	
  314(c)(2)

  
	
  10.04

  	
   

  	
  314(e)

  



 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1

  	
  - DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  SECTION  1.01

  	
  Definitions

  	
  1

  
	
  SECTION  1.02

  	
  Other
  Definitions

  	
  1

  
	
  SECTION  1.03

  	
  Rules of
  Construction

  	
  1

  
	
   

  	
   

  
	
  ARTICLE
  2

  	
  -THE
  SECURITIES

  	
  2

  
	
   

  	
   

  
	
  SECTION 
  2.01

  	
  Issuable
  in Series

  	
  2

  
	
  SECTION 
  2.02

  	
  Execution
  and Authentication

  	
  2

  
	
  SECTION 
  2.03

  	
  Securities
  Agents

  	
  3

  
	
  SECTION 
  2.04

  	
  Paying
  Agent to Hold Money in Trust

  	
  3

  
	
  SECTION 
  2.05

  	
  Securityholder
  Lists

  	
  3

  
	
  SECTION 
  2.06

  	
  Transfer
  and Exchange

  	
  3

  
	
  SECTION 
  2.07

  	
  Replacement
  Securities

  	
  3

  
	
  SECTION 
  2.08

  	
  Outstanding
  Securities

  	
  3

  
	
  SECTION 
  2.09

  	
  Discounted
  Securities

  	
  4

  
	
  SECTION 
  2.10

  	
  Treasury
  Securities

  	
  4

  
	
  SECTION 
  2.11

  	
  Global
  Securities

  	
  4

  
	
  SECTION 
  2.12

  	
  Temporary
  Securities

  	
  4

  
	
  SECTION 
  2.13

  	
  Cancellation

  	
  4

  
	
  SECTION 
  2.14

  	
  Defaulted
  Interest

  	
  4

  
	
   

  	
   

  
	
  ARTICLE
  3

  	
  -
  REDEMPTION

  	
  4

  
	
   

  	
   

  
	
  SECTION 
  3.01

  	
  Notices
  to Trustee

  	
  4

  
	
  SECTION 
  3.02

  	
  Selection
  of Securities to Be Redeemed

  	
  4

  
	
  SECTION 
  3.03

  	
  Notice
  of Redemption

  	
  5

  
	
  SECTION 
  3.04

  	
  Effect
  of Notice of Redemption

  	
  5

  
	
  SECTION 
  3.05

  	
  Payment
  of Redemption Price

  	
  5

  
	
  SECTION 
  3.06

  	
  Securities
  Redeemed in Part

  	
  5

  
	
   

  	
   

  
	
  ARTICLE 4

  	
  - COVENANTS

  	
  5

  
	
   

  	
   

  
	
  SECTION  4.01

  	
  Certain Definitions

  	
  5

  
	
  SECTION 
  4.02

  	
  Payment
  of Securities

  	
  5

  
	
  SECTION 
  4.03

  	
  Overdue
  Interest

  	
  5

  
	
  SECTION 
  4.04

  	
  No
  Lien Created, etc.

  	
  5

  
	
  SECTION 
  4.05

  	
  Compliance
  Certificate

  	
  6

  
	
  SECTION 
  4.06

  	
  SEC
  Reports

  	
  6

  
	
   

  	
   

  
	
  ARTICLE
  5

  	
  -
  SUCCESSORS

  	
  6

  
	
   

  	
   

  
	
  SECTION 
  5.01

  	
  When
  Company May Merge, etc.

  	
  6

  
	
   

  	
   

  
	
  ARTICLE
  6

  	
  -
  DEFAULTS AND REMEDIES

  	
  6

  
	
   

  	
   

  
	
  SECTION 
  6.01

  	
  Events
  of Default

  	
  6

  
	
  SECTION 
  6.02

  	
  Acceleration

  	
  7

  
	
  SECTION 
  6.03

  	
  Other
  Remedies

  	
  7

  
	
  SECTION 
  6.04

  	
  Waiver
  of Past Defaults

  	
  7

  
	
  SECTION 
  6.05

  	
  Control
  by Majority

  	
  7

  
	
  SECTION 
  6.06

  	
  Limitation
  on Suits

  	
  7

  
	
  SECTION 
  6.07

  	
  Collection
  Suit by Trustee

  	
  7

  
	
  SECTION 
  6.08

  	
  Priorities

  	
  8

  
	
   

  	
   

  
	
  ARTICLE
  7

  	
  -
  TRUSTEE

  	
  8

  
	
   

  	
   

  
	
  SECTION 
  7.01

  	
  Rights
  of Trustee

  	
  8

  
	
  SECTION 
  7.02

  	
  Individual
  Rights of Trustee

  	
  8

  
	
  SECTION 
  7.03

  	
  Trustee’s
  Disclaimer

  	
  8

  
	
  SECTION 
  7.04

  	
  Notice
  of Defaults

  	
  9

  
	
  SECTION 
  7.05

  	
  Reports
  by Trustee to Holders

  	
  9

  
	
  SECTION 
  7.06

  	
  Compensation
  and Indemnity

  	
  9

  
	
  SECTION 
  7.07

  	
  Replacement
  of Trustee

  	
  9

  
	
  SECTION 
  7.08

  	
  Successor
  Trustee by Merger, etc.

  	
  9

  
	
  SECTION 
  7.09

  	
  Trustee’s
  Capital and Surplus

  	
  10

  
	
   

  	
   

  
	
  ARTICLE
  8

  	
  -
  DISCHARGE OF INDENTURE

  	
  10

  
	
   

  	
   

  
	
  SECTION 
  8.01

  	
  Defeasance

  	
  10

  
	
  SECTION 
  8.02

  	
  Conditions
  to Defeasance

  	
  10

  
				



 


i

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 
  8.03

  	
  Application
  of Trust Money

  	
  10

  
	
  SECTION 
  8.04

  	
  Repayment
  to Company

  	
  10

  
	
   

  	
   

  
	
  ARTICLE
  9

  	
  -
  AMENDMENTS

  	
  11

  
	
   

  	
   

  
	
  SECTION 
  9.01

  	
  Without
  Consent of Holders

  	
  11

  
	
  SECTION 
  9.02

  	
  With
  Consent of Holders

  	
  11

  
	
  SECTION 
  9.03

  	
  Compliance
  with Trust Indenture Act

  	
  11

  
	
  SECTION 
  9.04

  	
  Effect
  of Consents

  	
  11

  
	
  SECTION 
  9.05

  	
  Notation
  on or Exchange of Securities

  	
  11

  
	
  SECTION 
  9.06

  	
  Trustee
  Protected

  	
  11

  
	
   

  	
   

  
	
  ARTICLE
  10

  	
  -
  MISCELLANEOUS

  	
  12

  
	
   

  	
   

  
	
  SECTION 
  10.01

  	
  Trust
  Indenture Act

  	
  12

  
	
  SECTION 
  10.02

  	
  Notices

  	
  12

  
	
  SECTION 
  10.03

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
  12

  
	
  SECTION 
  10.04

  	
  Statements
  Required in Certificate or Opinion

  	
  12

  
	
  SECTION 
  10.05

  	
  Rules by
  Company and Agents

  	
  12

  
	
  SECTION 
  10.06

  	
  Legal
  Holidays

  	
  12

  
	
  SECTION 
  10.07

  	
  No
  Recourse Against Others

  	
  13

  
	
  SECTION 
  10.08

  	
  Counterparts

  	
  13

  
	
  SECTION  10.09

  	
  Governing Law

  	
  13

  
				



 


ii

















 


INDENTURE dated as of December 1,
1998 between AMERICAN STATES WATER COMPANY, a California corporation (“Company”),
and CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association, as trustee (“Trustee”).


 


Each party agrees as follows
for the benefit of the Holders of the Company’s debt securities issued under
this Indenture:


 


ARTICLE 1 - DEFINITIONS


 


SECTION  1.01            Definitions.


 


“Affiliate” means any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company (other than any trust or other entity subject
to the Employee Retirement Income Security Act of 1974, as amended from time to
time and any successor statute).


 


“Agent” means any Registrar,
Transfer Agent or Paying Agent with respect to the Securities.


 


“Board” means the Board of
Directors of the Company or any authorized committee of the Board.


 


“Company” means the party
named as such above until a successor replaces it and thereafter means the
successor.


 


“Default” means any event
which is, or after notice or passage of time would be, an Event of Default.


 


“Discounted Security” means a
Security where the amount of principal due upon acceleration is less than the
stated principal amount.


 


“Holder” or “Securityholder”
means the person in whose name a Security is registered as to principal and
interest by the Registrar.


 


“Indenture” means this
Indenture and any Securities Resolution as amended or supplemented from time to
time.


 


“Officer” means the Chairman,
the President, the Chief Financial Officer, any Executive Vice-President, any
Senior Vice-President, any Vice-President, the Treasurer, the Secretary, any
Assistant Treasurer, or any Assistant Secretary of the Company.


 


“Officers’ Certificate” means
a certificate signed by two Officers or by an Officer.


 


“Opinion of Counsel” means a
written opinion from legal counsel who is reasonably acceptable to the
Trustee.  The counsel may be an employee
of or counsel to the Company or the Trustee.


 


“principal” of a debt
security means the principal of the security plus the premium, if and when
applicable, on the security.


 


“SEC” means the Securities
and Exchange Commission.


 


“Securities” means the debt
securities issued under this Indenture.


 


“Securities Resolution” means
a resolution authorizing a series of Securities adopted by the Board.


 


“series” means a series of
Securities or the Securities of the series.


 


“TIA” means the Trust
Indenture Act of 1939 (15 U.S. Code Section 77aaa-77bbbb) as in effect on
the date shown above.


 


“Trustee” means the party
named as such above until a successor replaces it and thereafter means the
successor.


 


“Trust Officer” means the
Chairman of the Board, the President or any other officer or assistant officer
of the Trustee assigned by the Trustee to administer its corporate trust
matters.


 


“United States” means the
United States of America, its territories and possessions and other areas
subject to its jurisdiction.


 


SECTION  1.02            Other
Definitions.


 


	
  Term

  	
   

  	
  Defined in Section

  
	
  “Indenture”

  	
   

  	
  6.01

  
	
  “Bankruptcy Law”

  	
   

  	
  6.01

  
	
  “Custodian”

  	
   

  	
  6.01

  
	
  “Event of Default”

  	
   

  	
  10.06

  
	
  “Legal Holiday”

  	
   

  	
  4.01

  
	
  “Lien”

  	
   

  	
  2.03

  
	
  “Paying Agent”

  	
   

  	
  2.03

  
	
  “Registrar”

  	
   

  	
  4.01

  
	
  “Subsidiary”

  	
   

  	
  2.03

  
	
  “Transfer Agent”

  	
   

  	
  3.02

  
	
  “U.S. Government “Obligations”

  	
   

  	
  4.01

  
	
  “Voting Stock”

  	
   

  	
  4.01

  
	
  “Yield to Maturity”

  	
   

  	
  7.02

  



 


SECTION  1.03            Rules of
Construction.


 


Unless the context otherwise
requires:


 


(1)  a
term has the meaning assigned to it;


 


1

















 


(2)  an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles in the United States;


 


(3) 
generally accepted accounting principles are those applicable from time to
time;


 


(4) 
all terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule under the TIA have the
meanings assigned to them by such definitions;


 


(5)  “or”
is not exclusive; and


 


(6) 
words in the singular include the plural, and in the plural include the
singular.


 


ARTICLE 2 -THE SECURITIES


 


SECTION  2.01            Issuable
in Series.


 


The aggregate principal
amount of Securities that may be issued under this Indenture is unlimited.  The Securities may be issued from time to
time in one or more series.  Each series
shall be created by a Securities Resolution or a supplemental indenture that
establishes the terms of the series, which may include the following:


 


(1)     the title of the series;


 


(2)     the aggregate principal
amount of the series;


 


(3)     the interest rate or rates,
if any, or method of calculating the interest rate or rates;


 


(4)     the date from which interest
will accrue;


 


(5)     the record dates for interest
payable on Securities;


 


(6)     the dates when principal and
interest are payable;


 


(7)     the manner of paying
principal and interest;


 


(8)     the places where principal
and interest are payable;


 


(9)     the Registrar, Transfer Agent
and Paying Agent;


 


(10)   the terms of any mandatory or
optional redemption by the Company or by the Holder;


 


(11)   the denominations in which
Securities are issuable;


 


(12)   whether and upon what terms
Securities may be exchanged;


 


(13)   the terms on which Securities
may be converted;


 


(14)   whether any Securities will
be represented by a Security in global form and the terms of any global
Security;


 


(15)   if amounts of principal or
interest may be determined by reference to an index, formula or other method,
the manner for determining such amounts;


 


(16)   provisions for electronic
issuance of Securities or for Securities in uncertificated form;


 


(17)   the amount or portion of
principal payable upon acceleration of a Discounted Security;


 


(18)   any Events of Default or
covenants in addition to or in lieu of those set forth in this Indenture;


 


(19)   whether and upon what terms
Securities may be defeased;


 


(20)   the form of the Securities;


 


(21)   any terms that may be required
by or advisable under U.S. or other applicable laws; and


 


(22)   any other terms not
inconsistent with this Indenture.


 


All Securities of one series
need not be issued at the same time and, unless otherwise provided in the
Securities Resolution or supplemental indenture for such series, a series may
be reopened for issuances of additional Securities of such series.


 


SECTION  2.02            Execution
and Authentication.


 


Two Officers shall sign the
Securities by manual or facsimile signature. 
The Company’s seal shall be reproduced on the Securities.


 


If an Officer whose signature
is on a Security no longer holds that office at the time the Security is
authenticated or delivered, the Security shall nevertheless be valid.


 


A Security shall not be valid
until the Security is authenticated by the manual signature of the Registrar.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.


 


Each Security shall be dated
the date of its authentication.


 


Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreement or
usage.


 

















 


In the event Securities are
issued in electronic or other uncertificated form, such Securities may be
validly issued without the signatures or seal contemplated by this Section 2.02.


 


SECTION  2.03            Securities
Agents.


 


The Company shall maintain an
office or agency where Securities may be authenticated (“Registrar”), where
Securities may be presented for registration of transfer or for exchange (“Transfer
Agent”) and where Securities may be presented for payment (“Paying Agent”).  Whenever the Company must issue or deliver
Securities pursuant to this Indenture, the Registrar shall authenticate the
Securities at the Company’s request contained in an Officer’s Certificate
delivered to the Registrar.  The Transfer
Agent shall keep a register of the Securities and of their transfer and
exchange.


 


The Company may appoint more
than one Registrar, Transfer Agent or Paying Agent for a series.  The Company shall notify the Trustee of the
name and address of any Agent not a party to this Indenture. If the Company
fails to maintain a Registrar, Transfer Agent or Paying Agent for a series, the
Trustee shall act as such.


 


SECTION  2.04            Paying
Agent to Hold Money in Trust.


 


The Company shall require
each Paying Agent for a series other than the Trustee to agree in writing that
the Paying Agent will hold in trust for the benefit of the persons entitled
thereto all money held by the Paying Agent for the payment of principal of or interest
on the series, and will notify the Trustee of any default by the Company in
making any such payment.


 


While any such default
continues, the Trustee may require a Paying Agent to pay all money so held by
it to the Trustee.  The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee upon
delivery to the Paying Agent of an Officer’s Certificate so stating.  Upon payment over to the Trustee of all money
held by it in trust, the Paying Agent shall have no further liability for the
money.


 


If the Company or an
Affiliate acts as Paying Agent for a series, it shall segregate and hold as a
separate trust fund all money held by it as Paying Agent for the series.


 


SECTION  2.05            Securityholder
Lists.


 


The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders.  If the Trustee is not the Transfer Agent, the
Company shall furnish, or cause the Registrar to furnish, to the Trustee semiannually
and at such other times as the Trustee may reasonably request a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of Holders.


 


SECTION  2.06            Transfer
and Exchange.


 


Where Securities of a series
are presented to the Transfer Agent with a request to register a transfer or to
exchange them for an equal principal amount of Securities of other
denominations of the series, the Transfer Agent shall register the transfer or
make the exchange if its requirements for such transactions are met.  The Transfer Agent need not exchange or
register the transfer of any Security or portion of a Security selected for
redemption. Also, it need not exchange or register the transfer of any
Securities for a period of 15 days before a selection of Securities to be
redeemed.


 


The Transfer Agent may
require a Holder to pay a sum sufficient to cover any taxes imposed on a
transfer or exchange.


 


SECTION  2.07            Replacement
Securities.


 


If the Holder of a Security
claims that it has been lost, destroyed or wrongfully taken, then, in the
absence of notice to the Company or the Trustee that the Security has been
acquired by a bona fide purchaser, the Company shall issue a replacement
Security if the Company and the Trustee receive:


 


(1)     evidence satisfactory to them
of the loss, destruction or taking;


 


(2)     an indemnity bond
satisfactory to them; and


 


(3)     payment of a sum sufficient
to cover their expenses and any taxes for replacing the Security.


 


Every replacement Security is
an additional obligation of the Company.


 


SECTION  2.08            Outstanding
Securities.


 


The Securities outstanding at
any time are all the Securities authenticated by the Registrar except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.


 


If a Security is replaced
pursuant to Section 2.07, it ceases to be outstanding unless the Trustee
and the Company receive proof satisfactory to them that the replaced Security
is held by a bona fide purchaser.


 


If Securities are considered
paid under Section 4.02, they cease to be outstanding and interest on them
ceases to accrue.


 


A Security does not cease to
be outstanding because the Company or an Affiliate holds the Security.


 


SECTION  2.09            Discounted
Securities.


 


In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, the principal amount of a Discounted Security
shall be the amount of principal that would be due as of the date of such
determination if payment of the Security were accelerated on that date.


 

















 


SECTION  2.10            Treasury
Securities.


 


In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or an Affiliate
shall be disregarded, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities which the Trustee knows are so owned shall be so disregarded.


 


SECTION  2.11            Global
Securities.


 


If the Securities Resolution
or supplemental indenture so provides, the Company may issue some or all of the
Securities of a series in temporary or permanent global form.  A global Security may be in registered form,
in bearer form with or without coupons or in uncertificated form.  A global Security shall represent that amount
of Securities of a series as specified in the global Security or as endorsed
thereon from time to time.  At the
Company’s request, the Registrar shall endorse a global Security to reflect the
amount of any increase or decrease in the Securities represented thereby.


 


The Company may issue a
global Security only to a depository designated by the Company.  A depository may transfer a global Security
only as a whole to its nominee or to a successor depository.


 


The Securities Resolution or
supplemental indenture may establish, among other things, the manner of paying
principal and interest on a global Security and whether and upon what terms a
beneficial owner of an interest in a global Security may exchange such interest
for definitive Securities.


 


The Company, an Affiliate,
the Trustee and any Agent shall not be responsible for any acts or omissions of
a depository, for any depository records of beneficial ownership interests or
for any transactions between the depository and beneficial owners.


 


SECTION  2.12            Temporary
Securities.


 


Until definitive Securities
of a series are ready for delivery, the Company may use temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Temporary Securities may be in global form.  Without unreasonable delay, the Company shall
deliver definitive Securities in exchange for temporary Securities.  Until so exchanged, the temporary Securities
are entitled to the same benefits under this Indenture as definitive
Securities.


 


SECTION  2.13            Cancellation.


 


The Company at any time may
deliver Securities to the Registrar for cancellation.  The Transfer Agent and the Paying Agent shall
forward to the Registrar any Securities surrendered to them for payment,
exchange or registration of transfer. 
The Registrar shall cancel all Securities surrendered for payment,
registration of transfer, exchange or cancellation which have been received by
it. The Registrar shall destroy cancelled Securities unless the Company
otherwise directs.


 


Unless the Securities
Resolution or supplemental indenture otherwise provides, the Company may not
issue new Securities to replace Securities that the Company has paid or that
the Company has delivered to the Registrar for cancellation.


 


SECTION  2.14            Defaulted
Interest.


 


If the Company defaults in a
payment of interest on Securities, it need not pay the defaulted interest to
Holders on the regular record date.  The
Company may fix a special record date for determining Holders entitled to
receive defaulted interest or the Company may pay defaulted interest in any
other lawful manner.


 


ARTICLE 3 - REDEMPTION


 


SECTION  3.01            Notices
to Trustee.


 


Securities of a series that
are redeemable before maturity shall be redeemable in accordance with their
terms and, unless the Securities Resolution or supplemental indenture otherwise
provides, in accordance with this Article.


 


In the case of a redemption
by the Company, the Company shall notify the Trustee and the Transfer Agent of
the redemption date and the principal amount of Securities to be redeemed.  The Company shall notify the Trustee and
Transfer Agent at least 45 days before the redemption date unless a shorter
notice is satisfactory to the Trustee.


 


If the Company is required to
redeem Securities, it may reduce the principal amount of Securities required to
be redeemed to the extent it is permitted a credit by the terms of the
Securities and it notifies the Trustee of the amount of the credit and the
basis for it.  If the reduction is based
on a credit for acquired or redeemed Securities that the Company has not previously
delivered to the Registrar for cancellation, the Company shall deliver the
Securities at the same time as the notice.


 


SECTION  3.02            Selection
of Securities to Be Redeemed.


 


If less than all the
Securities of a series are to be redeemed, the Trustee shall select the
Securities to be redeemed by a method the Trustee considers fair and
appropriate, which shall reflect any method required by applicable law or stock
exchange regulations. The Trustee shall make the selection from the outstanding
Securities of the series not previously called for redemption.  The Trustee may select for redemption
portions of the principal of Securities having denominations larger than the
minimum denomination for the series. Securities and portions thereof selected
for redemption shall be in amounts equal to the minimum denomination for the
series or an integral multiple thereof. 
Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.  At least 20 days before a redemption date,
the Trustee shall notify the Company, the Registrar, the Transfer Agent and
each Paying Agent of the Securities to be redeemed and, if a Security is to be
redeemed only in part, the principal amount thereof so to be redeemed.


 

















 


SECTION  3.03            Notice
of Redemption.


 


At least 20 days but not more
than 60 days before a redemption date, the Company shall mail a notice of
redemption by first-class mail to each Holder whose Securities are to be
redeemed.


 


A notice shall identify the
Securities of the series to be redeemed and shall state:


 


(1)     the redemption date;


 


(2)     the redemption price;


 


(3)     the name and address of the
Paying Agent;


 


(4)     that Securities called for
redemption, in whole or in part, must be surrendered to the Paying Agent to
collect the redemption price; and


 


(5)     that interest on Securities,
or portions thereof, called for redemption ceases to accrue on and after the
redemption date.


 


At the Company’s written
request, the Trustee shall give the notice of redemption in the Company’s name
and at its expense.


 


SECTION  3.04            Effect
of Notice of Redemption.


 


Except as provided below,
once notice of redemption is given, Securities called for redemption become due
and payable on the redemption date at the redemption price stated in the
notice.


 


A notice of redemption may
provide that it is subject to the occurrence of any event before the date fixed
for such redemption as described in such notice (“Conditional Redemption”), and
such notice of Conditional Redemption shall be of no effect unless all such
conditions to the redemption have occurred on or before such date or have been
waived by the Company in its sole discretion.


 


SECTION  3.05            Payment
of Redemption Price.


 


On or before the redemption
date, the Company shall deposit with the Paying Agent money sufficient to pay
the redemption price of and accrued interest, if any, on all Securities to be
redeemed on that date.


 


When the Holder of a Security
surrenders it for redemption in accordance with the redemption notice, the
Company shall pay, or cause the Paying Agent to pay, to the Holder on the
redemption date the redemption price and accrued interest, if any, to such
date, except that the Company will pay any such interest (except defaulted
interest) to Holders on the record date (as such term is defined in the
applicable Securities Resolution) if the redemption date occurs on an interest
payment date (as such term is defined in the applicable Securities Resolution).


 


SECTION  3.06            Securities
Redeemed in Part.


 


Upon surrender of a Security
that is redeemed in part, the Company shall deliver or cause the Transfer Agent
to deliver to the Holder a new Security of the same series equal in principal
amount to the unredeemed principal amount of the Security surrendered.


 


ARTICLE 4 - COVENANTS


 


SECTION  4.01            Certain
Definitions.


 


“Lien” means any mortgage,
pledge, security interest or lien.


 


“Subsidiary” means a
corporation a majority of whose Voting Stock is owned by the Company or a
Subsidiary.


 


“Voting Stock” means capital
stock having voting power under ordinary circumstances to elect directors.


 


“Yield to Maturity” means the
yield to maturity on a Discounted Security at the time of its issuance or at
the most recent


 


determination of interest on
the Discounted Security.


 


SECTION  4.02            Payment
of Securities.


 


The Company shall pay the
principal of and interest on a series in accordance with the terms of the
Securities for the series and this Indenture. 
Principal and interest on a series shall be considered paid on the date
due if the Paying Agent for the series holds on that date money sufficient to
pay all principal and interest then due on the series.


 


SECTION  4.03            Overdue
Interest.


 


Unless the Securities
Resolution or supplemental indenture otherwise provides, the Company shall pay
interest on overdue principal of a Security of a series at the rate (or Yield
to Maturity in the case of a Discounted Security) borne by the series; it shall
pay interest on overdue installments of interest at the same rate or Yield to
Maturity to the extent lawful.


 


SECTION  4.04            No Lien
Created, etc.


 


This Indenture and the
Securities do not create a Lien, charge or encumbrance on any property of the
Company or any Subsidiary.


 


SECTION  4.05            Compliance
Certificate.


 


          The Company
shall deliver to the Trustee, within 120 days after the end of each fiscal year
of the Company, a brief certificate signed on its behalf by the principal
executive officer, principal financial officer or principal accounting officer
of the Company, as to the signer’s knowledge of the Company’s compliance with
all conditions and covenants under this Indenture as of the end of such fiscal
year (determined without regard to any period of grace or requirement of notice
provided herein).


 

















 


Any other obligor on the
Securities also shall deliver to the Trustee such a certificate similarly
signed as to its compliance with this Indenture within 120 days after the end
of each of its fiscal years.


 


SECTION  4.06            SEC
Reports.


 


The Company shall file with
the Trustee, within 15 days after the Company is required to file the same with
the SEC, copies of the annual reports and of the information, documents, and
other reports (or such portions of the foregoing as the SEC may prescribe)
which the Company is required to file with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934.


 


Any other obligor on the
Securities shall do likewise as to the above items which it is required to file
with the SEC pursuant to those Sections.


 


ARTICLE 5 - SUCCESSORS


 


SECTION  5.01            When
Company May Merge, etc.


 


The Company shall not consolidate
with or merge into, or transfer all or substantially all of its assets to, any
person unless:


 


(1)     the person is organized under
the laws of the United States or a State thereof;


 


(2)     the person assumes by
supplemental indenture all the obligations of the Company under this Indenture
and the


 


(3)     Securities; and


 


(4)     immediately after the
transaction no Default exists.


 


The successor shall be
substituted for the Company, and thereafter all obligations of the Company
under this Indenture and the Securities shall terminate.


 


ARTICLE 6 - DEFAULTS AND REMEDIES


 


SECTION  6.01            Events
of Default.


 


An “Event of Default” on a
series occurs if:


 


(1)     the Company defaults in any
payment of interest on any Securities of the series when the same becomes due
and payable and the Default continues for a period of 60 days;


 


(2)     the Company defaults in the
payment of the principal of any Securities of the series when the same becomes
due and payable at maturity or upon redemption, acceleration or otherwise and
the Default continues for a period of three business days;


 


(3)     the Company defaults in the
payment or satisfaction of any sinking fund obligation with respect to any
Securities of a series as required by the Securities Resolution or supplemental
indenture establishing such series and the Default continues for a period of
three business days;


 


(4)     the Company defaults in the
performance of any of its other agreements applicable to the series and the
Default continues for 90 days after the notice specified below;


 


(5)     the Company pursuant to or
within the meaning of any Bankruptcy Law:


 


(A)  commences a voluntary case,


 


(B)   consents to the entry of an
order for relief against it in an involuntary case,


 


(C)   consents to the appointment
of a Custodian for it or for all or substantially all of its property, or


 


(D)  makes a general assignment
for the benefit of its creditors;


 


(6)     a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that:


 


(A)  is for relief against the
Company in an involuntary case,


 


(B)   appoints a Custodian for the
Company or for all or substantially all of its property, or


 


(C)   orders the liquidation of the
Company; and the order or decree remains unstayed and in effect for 60 days; or


 


(7)     any other Event of Default
provided for in the series occurs.


 


The term “Bankruptcy Law”
means Title 11, U.S. Code or any similar Federal or State law for the relief of
debtors.  The term “Custodian” means any
receiver, trustee, assignee, liquidator or a similar official under any
Bankruptcy Law.


 


A Default under clause (4) is
not an Event of Default until the Trustee or the Holders of at least 33-1/3% in
principal amount of the series notify the Company of the Default and the Company
does not cure the Default within the time specified after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a “Notice of Default.” 
If Holders notify the Company of a Default, they shall notify the
Trustee at the same time.


 


The
failure to redeem any Security subject to a Conditional Redemption is not an
Event of Default if any event on which such redemption is so conditioned does
not occur and is not waived before the scheduled redemption date.


 

















 


A Default on any series of
Securities shall not constitute a Default on any other series unless so
provided in such other series.


 


SECTION  6.02            Acceleration.


 


If an Event of Default occurs
and is continuing on a series, the Trustee by notice to the Company, or the
Holders of at least 33- 1/3% in principal amount of the series by notice to the
Company and the Trustee, may declare the principal of and accrued interest on
all the Securities of the series to be due and payable immediately.  Discounted Securities may provide that the
amount of principal due upon acceleration is less than the stated principal
amount.


 


The Holders of a majority in
principal amount of the series by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default on the series have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration.


 


SECTION  6.03            Other
Remedies.


 


If an Event of Default occurs
and is continuing on a series, the Trustee may pursue any available remedy to
collect principal or interest then due on the series, to enforce the
performance of any provision applicable to the series, or otherwise to protect
the rights of the Trustee and Holders of the series.


 


The Trustee may maintain a
proceeding even if it does not possess any of the Securities or does not
produce any of them in the proceeding.  A
delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent
permitted by law.


 


SECTION  6.04            Waiver
of Past Defaults.


 


Unless the Securities
Resolution or supplemental indenture otherwise provides, the Holders of a
majority in principal amount of a series by notice to the Trustee may waive an
existing Default or Event of Default on the series and its consequences except:


 


(1)     an Event of Default under
clauses (1), (2) or (3) of Section 6.01, or


 


(2)     a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of
each Securityholder affected.


 


SECTION  6.05            Control
by Majority.


 


The Holders of a majority in
principal amount of a series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or of
exercising any trust or power conferred on the Trustee, with respect to the
series. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture.


 


SECTION  6.06            Limitation
on Suits.


 


A Securityholder of a series
may pursue a remedy with respect to the series only if:


 


(1)     the Holder gives to the
Trustee notice of a continuing Event of Default on the series;


 


(2)     the Holders of at least
33-1/3% in principal amount of the series make a request to the Trustee to
pursue the remedy;


 


(3)     such Holder or Holders offer
to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;


 


(4)     the Trustee does not comply
with the request within 60 days after receipt of the request and the offer of
indemnity; and


 


(5)     during such 60-day period the
Holders of a majority in principal amount of the series do not give the Trustee
a direction inconsistent with such request.


 


A Securityholder may not use
this Indenture to prejudice the rights of another Securityholder or to obtain a
preference or priority over another Securityholder.


 


Notwithstanding any other
provision in this Indenture, the Holder of any Security shall have the right,
which is absolute and unconditional, to receive payment of the principal and
(except as contemplated by Section 2.14) interest on such Security on the
respective stated maturities expressed in such Security and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.


 


SECTION  6.07            Collection
Suit by Trustee.


 


If an Event of Default in
payment of interest, principal or sinking fund payment specified in Section 6.01(1),
(2) or (3) occurs and is continuing on a series, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal and interest remaining unpaid on the
series.


 


SECTION  6.08            Priorities.


 


If the Trustee collects any
money for a series pursuant to this Article, it shall pay out the money in the
following order:


 


First:  to the Trustee for amounts due under Section 7.06;


 


Second:  to Securityholders of the series for amounts
due and unpaid for principal and interest, ratably, without reference or
priority of any kind, according to the amounts due and payable for principal
and interest, respectively; and


 


Third:  to the Company.


 

















 


The Trustee may fix a payment
date for any payment to Securityholders.


 


ARTICLE 7 - TRUSTEE


 


SECTION  7.01            Rights
of Trustee.


 


(1)     The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person.  The Trustee need not
investigate any fact or matter stated in the document.


 


(2)     Before the Trustee acts or
refrains from acting, it may require an Officers’ Certificate or an Opinion of
Counsel.  The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Certificate or Opinion.


 


(3)     The Trustee may act through
agents and shall not be responsible for the misconduct or negligence of any
agent appointed with due care, unless such Agent is affiliated with the
Trustee.


 


(4)     The Trustee shall not be
liable for any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.05.


 


(5)     The Trustee may refuse to
perform any duty or exercise any right or power which it reasonably believes
may expose it to any loss, liability or expense unless it receives indemnity
satisfactory to it against such loss, liability or expense.


 


(6)     The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
with the Company.  Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law.


 


(7)     The Trustee shall have no
duty with respect to a Default unless it has actual knowledge of the Default.


 


(8)     The Trustee shall not be
liable for any action it takes or omits to take in good faith which it believes
to be authorized and within its powers.


 


(9)     Any Agent shall have the same
rights and be protected to the same extent as if it were Trustee.


 


(10)   The right of the Trustee to
perform any discretionary act specified in or contemplated by this Indenture
shall not be construed as a duty.


 


(11)   The Trustee shall not be
required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights and powers.


 


(12)   The Trustee may consult with
counsel (who may be counsel for the Company or for the Holders), and with other
experts, and the written advice or opinion of such counsel or other experts
shall be full and complete authorization and protection in respect of any
action taken, suffered, or omitted by it hereunder in good faith and in
reliance thereon.


 


(13)   Any request or direction of
the Company mentioned herein shall be sufficiently evidenced by a written order
signed in the name of the Company by any Officer of the Company and delivered
to the Trustee or by resolution duly adopted by the Board.


 


(14)   Whether or not therein
expressly provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.


 


(15)   Except during the continuance
of an Event of Default, the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee.


 


SECTION  7.02            Individual
Rights of Trustee.


 


The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or an Affiliate with the same rights it would
have if it were not Trustee.  Any Agent
may do the same with like rights.


 


The Trustee is hereby
authorized to act as trustee under that certain indenture between Southern
California Water Company and the Trustee, dated September 1, 1993 (the “1993
Indenture”) notwithstanding any provisions of this Indenture or the 1993
Indenture affecting the relative rights of holders of securities issued under
such indentures to payment thereon and to security given to secure such
payment.  Subject to the acceptance of
appointment by a successor trustee under Section 7.07 of this Indenture
and/or Section 7.07 of the 1993 Indenture, as applicable, the Trustee is
further authorized to resign from either or both of its appointments as Trustee
hereunder and as trustee under the 1993 Indenture in the event that the Trustee
determines in good faith that its performance hereunder or thereunder subjects
the Trustee to a conflict of interest.


 


SECTION  7.03            Trustee’s
Disclaimer.


 


The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities;it shall not be accountable for the Company’s use of the proceeds
from the Securities; it shall not be responsible for any statement in the
Securities; it shall not be responsible for any overissue; it shall not be
responsible for determining whether the form and terms of any Securities were
established in conformity with this Indenture; and it shall not be responsible
for determining whether any Securities were issued in accordance with this
Indenture.


 


SECTION  7.04            Notice
of Defaults.


 


If a Default occurs and is continuing
on a series and if it is actually known to the Trustee, the Trustee shall mail
a notice of the Default within 90 days after it occurs to Holders of Securities
of the series.  Except in the case of a
Default in payment on a series, the Trustee may withhold the notice if and so
long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interest of Holders of the series.


 
















 


SECTION  7.05            Reports
by Trustee to Holders.


 


Any report required by TIA Section 313(a) to
be mailed to Securityholders shall be mailed by the Trustee on or before June 30
of each year.


 


A copy of each report at the
time of its mailing to Securityholders shall be filed with the SEC and each
stock exchange on which any Securities are listed.  The Company shall notify the Trustee when any
Securities are listed on a stock exchange. 
The Trustee shall send a copy of each such report to the Company.


 


SECTION  7.06            Compensation
and Indemnity.


 


The Company shall pay to the
Trustee from time to time reasonable compensation for its services.  The Trustee’s compensation shall not be
limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred by it in connection
with this Indenture.  Such expenses shall
include the reasonable compensation and expenses of the Trustee’s agents and
counsel.


 


The Company shall indemnify
the Trustee and each of the Trustee’s directors, officers, employees, agents,
successors and assigns against any loss or liability incurred in connection
with the exercise or performance of the powers or duties as Trustee, Registrar,
Transfer Agent or Paying Agent.  The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall cooperate
in the defense.  The Trustee may have
separate counsel, reasonably acceptable to the Company, and the Company shall
pay the reasonable fees and expenses of such counsel.


 


The Company need not
reimburse any expense or indemnify against any loss or liability incurred by
the Trustee through negligence or willful misconduct.


 


To secure the Company’s
payment obligations in this Section, the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee, except
that held in trust to pay principal or interest on particular Securities.  Such lien shall survive the removal or
resignation of the Trustee for such period as any amount shall remain due and
payable to the Trustee (including any successor Trustee).


 


SECTION  7.07            Replacement
of Trustee.


 


A resignation or removal of
the Trustee and appointment of a successor Trustee shall become effective only upon the
successor Trustee’s acceptance of appointment as provided
in this Section.


 


The Trustee may resign by so
notifying the Company.  The Holders of a
majority in principal amount of the Securities may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee with the Company’s
consent.


 


The Company may remove the
Trustee if:


 


(1)     the Trustee fails to comply
with TIA Section 310(a) or TIA Section 310(b) or with Section 7.09;


 


(2)     the Trustee is adjudged a
bankrupt or an insolvent;


 


(3)     a Custodian or other public
officer takes charge of the Trustee or its property;


 


(4)     the Trustee becomes incapable
of acting; or


 


(5)     an event of the kind
described in Section 6.01(5) or (6) occurs with respect to the
Trustee.


 


The Company also may remove
the Trustee with or without cause if the Company so notifies the Trustee 30
days in advance and if no Default occurs during the 30-period.


 


If the Trustee resigns or is
removed or if a vacancy exists in the office of Trustee for any reason, the
Company shall promptly appoint a successor Trustee.


 


If a successor Trustee does
not take office within 30 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the Holders of a majority in
principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.


 


If the Trustee fails to
comply with TIA Section 310(a) or TIA Section 310(b) or
with Section 7.09, any Securityholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.


 


A successor Trustee shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Company.  Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture.  The successor Trustee shall
mail a notice of its succession to Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject
to the lien provided for in Section 7.06.


 


SECTION  7.08            Successor
Trustee by Merger, etc.


 


If the Trustee consolidates,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation, the successor corporation without any
further act shall be the successor Trustee.


 


SECTION  7.09            Trustee’s
Capital and Surplus.


 


The Trustee at all times
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published report of condition; provided, however, that the
initial Trustee hereunder shall have a combined capital and surplus of at least
$10,000,000 and shall be a wholly owned subsidiary of a bank with combined
capital and surplus of at least $50,000,000.


 

















 


ARTICLE 8 - DISCHARGE OF INDENTURE


 


SECTION  8.01            Defeasance.


 


Securities of a series may be
defeased in accordance with their terms and, unless the Securities Resolution
or supplemental indenture otherwise provides, in accordance with this Article.


 


The Company at any time may
terminate as to a series all of its obligations under this Indenture, the Securities of a
series and any related coupons (“legal defeasance option”).  The Company at any time may terminate as to a
series its obligations, if any, under any restrictive covenants which may be
applicable to a particular series (“covenant defeasance option”). However, in
the case of the legal defeasance option, the Company’s obligations in Sections
2.03, 2.04, 2.05, 2.06, 2.07, 7.06, 7.07 and 8.04 shall survive until the
Securities of the series are no longer outstanding; thereafter the Company’s
obligations in Section 7.06 shall survive.


 


The Company may exercise its
legal defeasance option notwithstanding its prior exercise of its covenant
defeasance option.  If the Company
exercises its legal defeasance option, a series may not be accelerated because
of an Event of Default.  If the Company
exercises its covenant defeasance option, a series may not be accelerated by
reference to any restrictive covenants which may be applicable to a particular
series so defeased under the terms of the series.


 


The
Trustee upon request shall acknowledge in writing the discharge of those
obligations that the Company terminates.


 


SECTION  8.02            Conditions
to Defeasance.


 


The Company may exercise as
to a series its legal defeasance option or its covenant defeasance option if:


 


(1)     the Company irrevocably
deposits in trust with the Trustee or another trustee money or U.S. Government
Obligations;


 


(2)     the Company delivers to the
Trustee a certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal and
interest when due on the deposited U.S. Government Obligations without
reinvestment plus any deposited money without investment will provide cash at
such times and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities of the series to maturity or
redemption, as the case may be;


 


(3)     immediately after the deposit
no Default exists;


 


(4)     the deposit does not
constitute a default under any other agreement binding on the Company;


 


(5)     the deposit does not cause the
Trustee to have a conflicting interest under TIA Section 310(a) or
TIA Section 310(b) as to another series;


 


(6)     the Company delivers to the
Trustee an Opinion of Counsel to the effect that Holders of the series will not
recognize income, gain or loss for Federal income tax purposes as a result of
the defeasance; and


 


(7)     91 days pass after the
deposit is made and during the 91-day period no Default specified in Section 6.01(4) or(5) occurs
that is continuing at the end of the period.


 


Before or after a deposit the
Company may make arrangements satisfactory to the Trustee for the redemption of
Securities at a future date in accordance with Article 3.


 


“U.S. Government Obligations”
means direct obligations of the United States which have the full faith and
credit of the United States pledged for payment and which are not callable at
the issuer’s option, or certificates representing an ownership interest in such
obligations.


 


SECTION  8.03            Application
of Trust Money.


 


The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to Section 8.02.  It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal and interest on
Securities of the defeased series.


 


SECTION  8.04            Repayment
to Company.


 


The Trustee and the Paying
Agent shall promptly turn over to the Company upon written request any money or
securities held by them at any time in excess of amounts required under the
terms of the Securities Resolution to be held by them.


 


The Trustee and the Paying
Agent shall pay to the Company upon request any money held by them for the
payment of principal or interest that remains unclaimed for one year.  After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as unsecured general
creditors unless an abandoned property or similar law designates another
person.


 


ARTICLE 9 - AMENDMENTS


 


SECTION  9.01            Without
Consent of Holders.


 


The Company and the Trustee
may amend this Indenture and the Securities without the consent of any
Securityholder:


 


(1)     to cure any ambiguity,
omission, defect or inconsistency;


 


(2)     to comply with Article 5;


 


(3)     to provide that specific
provisions of this Indenture shall not apply to a series not previously issued;


 

















 


(4)     to create a series and
establish its terms;


 


(5)     to provide for a separate
Trustee for one or more series;


 


(6)     to make any change that does
not materially adversely affect the rights of any Securityholder under this
Indenture or the Securities; or


 


(7)     to make any change that may
be necessary to comply with the TIA.


 


SECTION  9.02            With
Consent of Holders.


 


Unless the Securities
Resolution otherwise provides, the Company and the Trustee may amend this
Indenture and the Securities with the written consent of the Holders of a
majority in principal amount of the Securities of all series affected by the
amendment voting as one class.  However,
without the consent of each Securityholder affected, an amendment under this Section may
not:


 


(1)     reduce the amount of
Securities whose Holders must consent to an amendment;


 


(2)     reduce the interest on or
change the time for payment of interest on any Security;


 


(3)     change the dates on which
principal and interest on any Security are payable;


 


(4)     change the times at which
principal or sinking fund payments are payable pursuant to, or the amounts of
principal or sinking fund payments subject to, provisions, if any, relating to
mandatory redemption;


 


(5)     reduce the principal of any
non-Discounted Security or reduce the amount of principal of any Discounted
Security that would be due upon an acceleration thereof; or


 


(6)     make any change in Section 6.04
or 9.02, except to increase the amount of Securities whose Holders must consent
to an amendment or waiver or to provide that other provisions of this Indenture
cannot be amended or waived without the consent of each Securityholder affected
thereby.


 


An amenment applicable solely
to one or more series, or a provision included solely for the benefit of one or
more series, does not affect Securityholders of any other series.


 


Securityholders need not
consent to the exact text of a proposed amendment or waiver; it is sufficient
if they consent to the substance thereof.


 


SECTION  9.03            Compliance
with Trust Indenture Act.


 


Every amendment pursuant to Section 9.01
or 9.02 shall be set forth in a supplemental indenture that complies with the
TIA as then in effect.


 


SECTION  9.04            Effect
of Consents.


 


An amendment or waiver
becomes effective in accordance with its terms and thereafter binds every
Securityholder entitled to consent to it.


 


A consent to an amendment or
waiver by a Holder of a Security is a continuing consent by the Holder and
every subsequent Holder of a Security that evidences the same debt as the
consenting Holder’s Security.  Any Holder
or subsequent Holder may revoke the consent as to his Security if the Trustee
receives notice of the revocation before the amendment or waiver becomes
effective.


 


The Company may fix a record
date for the determination of Holders entitled to give a consent.  The record date shall not be less than 10 nor
more than 60 days prior to the first written solicitation of Securityholders.


 


SECTION  9.05            Notation
on or Exchange of Securities.


 


The Company or the Trustee
may place an appropriate notation about an amendment or waiver on any Security
thereafter authenticated.  The Company
may issue in exchange for affected Securities new Securities that reflect the
amendment or waiver.


 


SECTION  9.06            Trustee
Protected.


 


The Trustee need not sign any
supplemental indenture that adversely affects its rights.


 


ARTICLE 10 - MISCELLANEOUS


 


SECTION  10.01         Trust Indenture Act.


 


The provisions of TIA
Sections 310 through 317 that impose duties on any person (including the
provisions automatically deemed included herein unless expressly excluded by
this Indenture) are a part of and govern this Indenture, whether or not
expressly set forth herein.


 


If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.


 


SECTION  10.02         Notices.


 


Any notice by one party to
another is duly given if in writing and delivered in person, sent by facsimile
transmission confirmed by mail or mailed by first-class mail to the other’s
address shown below:


 


Company:
American States Water Company


 

















 


630
East Foothill Boulevard


San
Dimas, California  91773


 


Attention:   Chief Financial Officer


 


Trustee:Chase
Manhattan Bank and Trust Company, National Association


101 California Street, Suite 2725


San Francisco, California 94111


 


Attention:  Paula Oswald


 


A party by notice to the
other parties may designate additional or different addresses for subsequent
notices. Any notice mailed to a Securityholder shall be mailed to his address
shown on the register kept by the Transfer Agent.  Failure to mail a notice to a Securityholder
or any defect in a notice mailed to a Securityholder shall not affect the
sufficiency of the notice mailed to other Securityholders or the sufficiency of
any published notice.


 


If a notice is mailed in the
manner provided above within the time prescribed, it is duly given, whether or
not the addressee receives it.


 


If the Company mails a notice
to Securityholders, it shall mail a copy to the Trustee and each Agent at the
same time.


 


If in the Company’s opinion
it is impractical to mail a notice required to be mailed or to publish a notice
required to be published, the Company may give such substitute notice as the
Trustee approves. Failure to publish a notice as required or any defect in it
shall not affect the sufficiency of any mailed notice.


 


All notices shall be in the
English language, except that any published notice may be in an official
language of the country of publication.


 


A “notice” includes any
communication required by this Indenture.


 


SECTION  10.03         Certificate and Opinion as to
Conditions Precedent.


 


Upon any request or
application by the Company to the Trustee to take any action under this
Indenture, the Company shall if so requested furnish to the Trustee:


 


(1)     an Officers’ Certificate
stating that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with; and


 


(2)     an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent, if any,
have been complied with.


 


SECTION  10.04         Statements
Required in Certificate or Opinion.


 


Each certificate or opinion
with respect to compliance with condition or covenant provided for in this
Indenture shall include:


 


(1)     a statement that the person
making such certificate or opinion has read such covenant or condition;


 


(2)     a brief statement as to the
nature and scope of the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are based;


 


(3)     as to each certificate, a
statement that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied with; and


 


(4)     a statement as to whether or
not, in the opinion of such person, such condition or covenant has been
complied with.


 


SECTION  10.05         Rules by Company and Agents.


 


The Company may make
reasonable rules for action by or at a meeting of Securityholders.  An Agent may make reasonable rules and
set reasonable requirements for its functions.


 


SECTION  10.06         Legal Holidays.


 


A “Legal Holiday” is a
Saturday, a Sunday or a day on which banking institutions in California or New
York are not required to be open.  If a
payment date is a Legal Holiday at a place of payment, unless the Securities
Resolution otherwise provides, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.


 


SECTION  10.07         No Recourse Against Others.


 


A director, officer, employee
or shareholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation.  Each Securityholder by
accepting a Security waives and releases all such liability.  The waiver and release are part of the
consideration for the issue of the Securities.


 


SECTION  10.08         Counterparts.


 


This Indenture may be
executed by the parties in counters, each of which shall be an original, but
all of such counterparts shall together constitute one and the same instrument.


 

















 


SECTION  10.09         Governing Law.


 


The laws of the State of
California shall govern this Indenture and the Securities, unless federal law
governs.


 

















 


	
  SIGNATURES

  	
   

  
	
   

  	
   

  
	
  AMERICAN
  STATES WATER COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By
  /s/ McClellan Harris III

  	
   

  
	
  McClellan
  Harris III

  	
   

  
	
  Chief
  Financial Officer

  	
   

  
	
  Vice
  President - Finance

  	
   

  
	
  Treasurer
  and Corporate

  	
   

  
	
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  CHASE
  MANHATTAN BANK AND

  	
   

  
	
  TRUST
  COMPANY, NATIONAL ASSOCIATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By
  /s/ Paula Oswald

  	
   

  
	
  Paula
  Oswald

  	
   

  
	
  Assistant
  Vice President

  	
   

  



 


1

















 


FIRST
SUPPLEMENTAL INDENTURE


 


This FIRST SUPPLEMENTAL
INDENTURE, is dated as of July 31, 2009 (this “Supplemental
Indenture”) between American States Water Company, a corporation
duly organized and existing under the laws of the State of California
(hereinafter called the “Company”), and
The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of
New York Trust Company, N.A.), as successor to JPMorgan Chase Bank, National
Association (formerly Chase Manhattan Bank and Trust Company, National
Association, and then J.P. Morgan Trust Company, National Association), as
Trustee (hereinafter called the “Trustee”).


 


RECITALS


 


WHEREAS, the Company and the Trustee have
executed and delivered an Indenture dated as of December 1, 1998 (the “Original Indenture”) providing, among other things, for the
issuance from time to time by the Company of its debt securities in one or more
series as provided in the Original Indenture;


 


WHEREAS, the Original Indenture permits the
Company and the Trustee to amend the Original Indenture to make any change that
does not materially affect the rights of any Securityholder or the Securities
without the consent of the Securityholders;


 


WHEREAS, the Company has duly authorized the
execution and delivery of this Supplemental Indenture; and


 


WHEREAS, all things necessary to make this
Supplemental Indenture a valid agreement of the Company, in accordance with its
terms, have been done.


 


NOW,
THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:


 


For and in consideration
of the premises, it is mutually covenanted and agreed as follows:


 


1.             Original Indenture Terms. 
All terms used in this Supplemental Indenture which are defined in the Original
Indenture shall have the meanings assigned to them in the Original
Indenture.  Except as otherwise set forth
in any supplemental indenture or Securities Resolution, all references in the
Original Indenture to “this Indenture” (and indirect references such as “hereunder,”
“hereby” and “herein”) shall be deemed to be references to the Original
Indenture as amended by this Supplemental Indenture with respect to all
Securities issued after July 31, 2009.


 


2.             Modification of Terms. 
The Original Indenture is hereby amended as follows with respect to all
Securities issued after July 31, 2009:


 


(a)           The definition of “Officer” in Section 1.01 of
the Original Indenture is amended to read in its entirety as follows:


 


“Officer” means the Chief Executive Officer, the President, the
Chief Financial Officer, the Chief Operating Officer, any Executive Vice
President, any Senior Vice President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary, any Assistant Secretary, the Controller or
any Assistant Controller of the Company.


 


(b)           The definition of “Opinion of Counsel” in Section 1.01
of the Original Indenture is amended to read in its entirety as follows:


 


“Opinion
of Counsel” means
a written opinion from legal counsel who is reasonably acceptable to the
Trustee.  The counsel may be an employee
of or counsel to the Company.


 


(c)           Section 2.02 of the Original Indenture is amended
by adding the following paragraph at the end of Section 2.02:


 


1

















 


Prior
to authenticating such Securities, the Trustee shall receive an Opinion of
Counsel stating that:


 


(1)           The form and terms of such Securities have been
established in conformity with the provisions of this Indenture;


 


(2)           Such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
binding obligations of the Company enforceable in accordance with their terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws relating to or affecting creditors’
rights and by general principles of equity; and


 


(3)           All conditions precedent to the execution and delivery
by the Company of such Securities have been complied with.


 


(d)           Section 4.06 of the Original Indenture is amended
by adding the following paragraph at the end of Section 4.06:


 


Delivery
of such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of
its covenants hereunder (as to which, subject to Section 7.01(a), the
Trustee is entitled to conclusively rely exclusively on Officers’
Certificates).


 


(e)           Section 7.01 of the Original Indenture is amended
to read in its entirety as follows:


 


(a)           Except during the continuance of an Event of Default,


 


(1)           the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and


 


(2)           in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).


 


(b)           In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.


 


(c)           No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:


 


(1)           This Subsection shall not be construed to limit the
effect of Subsection (a) of this Section 7.01;


 

















 


(2)           The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;


 


(3)           The Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the Outstanding
Securities of any series relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture with respect to the
Securities of such series; and


 


(4)           No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers.


 


(d)           The Trustee shall have the following additional
rights:


 


(1)           The Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or
matter stated in the document.


 


(2)           Before the Trustee acts or refrains from acting, it
may require an Officers’ Certificate or an Opinion of Counsel.  The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Certificate
or Opinion.


 


(3)           The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care, unless such Agent is affiliated with the Trustee.


 


(4)           The Trustee may refuse to perform any duty or exercise
any right or power which it reasonably believes may expose it to any loss,
liability or expense unless it receives indemnity satisfactory to it against
such loss, liability or expense.


 


(5)           The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree with the Company.  Money held in trust by the Trustee need not
be segregated from other funds except to the extent required by law.


 


(6)           The Trustee shall have no duty with respect to a
Default unless it has actual knowledge of the Default.


 


(7)           The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized and
within its powers.


 


(8)           Any Agent shall have the same rights and be protected
to the same extent as if it were Trustee.


 


(9)           The right of the Trustee to perform any discretionary
act specified in or contemplated by this Indenture shall not be construed as a
duty.


 


(10)         Any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a written order signed in the name of
the Company by any Officer of the Company and delivered to the Trustee or by
resolution duly adopted by the Board.


 

















 


(11)         The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer has actual knowledge thereof
or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Securities and this Indenture.


 


(12)         In no event shall the Trustee be responsible or liable
for any failure or delay in the performance of its obligations hereunder
arising out of or caused by, directly or indirectly, forces beyond its control,
including, without limitation strikes, work stoppages, accidents, acts of war
or terrorism, civil or military disturbances, nuclear or natural catastrophes
or acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; it being
understood that the Trustee shall use reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as soon
as practicable under the circumstances.


 


(e)           Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section 7.01.


 


(f)            Section 7.02 of the Original Indenture is amended
to read in its entirety as follows:


 


The Trustee in its individual or any other capacity
may become the owner or pledgee of Securities and may otherwise deal with the
Company or an Affiliate with the same rights it would have if it were not
Trustee.  Any Agent may do the same with
like rights.


 


The Trustee is hereby authorized to act as trustee
under that certain indenture between Golden State Water Company (formerly known
as Southern California Water Company) and the Trustee, dated September 1,
1993, as supplemented (the “1993 Indenture”), notwithstanding any provisions of
this Indenture or the 1993 Indenture affecting the relative rights of holders
of securities issued under such indentures to payment thereon and to security
given to secure such payment.  Subject to
the acceptance of appointment by a successor trustee under Section 7.07 of
this Indenture and/or Section 7.07 of the 1993 Indenture, as applicable,
the Trustee is further authorized to resign from either or both of its
appointments as Trustee hereunder and as trustee under the 1993 Indenture in
the event that the Trustee determines in good faith that its performance
hereunder or thereunder subjects the Trustee to a conflict of interest.


 


(g)           Section 7.06 of the Original Indenture is amended
by adding the following paragraph at the end of Section 7.06:


 


When
the Trustee incurs expenses or renders services in connection with an Event of
Default specified in Section 6.01(5) or Section 6.01(6), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.


 


(h)           Section 9.06 of the Original Indenture is amended
by adding the following paragraph at the end of Section 9.06:


 


In
executing any supplemental indenture, the Trustee will receive, and (subject to
Section 9.01) will be fully protected in relying upon, an Officers’
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture.


 


(i)            Section 10.02 of the Original Indenture is
amended to read in its entirety as follows:


 

















 


Any
notice by one party to another is duly given if in writing and delivered in
person, sent by facsimile or electronic transmission and confirmed by mail or
mailed by first-class mail to the other’s address shown below:


 


	
  Company:

  	
  American States Water
  Company

  	
   

  
	
   

  	
  630 East Foothill
  Boulevard

  	
   

  
	
   

  	
  San Dimas, California
  91773

  	
   

  
	
   

  	
  Attention: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  Trustee:  The Bank of New York Mellon Trust
  Company,

  	
   

  
	
  N.A.

  	
   

  	
   

  
	
   

  	
  700 South Flower Street, Suite 500

  	
   

  
	
   

  	
  Los Angeles, CA 90017

  	
   

  
	
   

  	
  Attention: Corporate Trust Department

  	
   

  



 


A
party by notice to the other parties may designate additional or different
addresses for subsequent notices.


 


Any
notice mailed to a Securityholder shall be mailed to the address of the
Securityholder shown on the register kept by the Transfer Agent.  Failure to mail a notice to a Securityholder
or any defect in a notice mailed to a Securityholder shall not affect the
sufficiency of the notice mailed to other Securityholders or the sufficiency of
any published notice.


 


If a
notice is mailed in the manner provided above within the time prescribed, it is
duly given, whether or not the addressee receives it.


 


If the
Company mails a notice to Securityholders, it shall mail a copy to the Trustee
and each Agent at the same time.


 


If in the Company’s
opinion it is impractical to mail a notice required to be mailed or to publish
a notice required to be published, the Company may give such substitute notice
as the Trustee approves.  Failure to publish
a notice as required or any defect in it shall not affect the sufficiency of
any mailed notice.


 


All
notices shall be in the English language, except that any published notice may
be in an official language of the county of publication.


 


A “notice”
includes any communication required by this Indenture.


 


3.             Continued Applicability. 
Except as specifically amended, supplemented or deleted by this
Supplemental Indenture, all provisions of the Original Indenture shall be
applicable for all purposes with respect to the Securities issued after July 31,
2009, and the Original Indenture, as supplemented and amended hereby, is hereby
ratified, confirmed and approved with respect to all Securities issued and to
be issued thereunder.  The Original
Indenture as supplemented and amended by this Supplemental Indenture shall be
construed as one and the same instrument.


 


4.            Counterparts.  This
Supplemental Indenture may be executed by the parties in counterparts, each of
which shall be an original, but all of such counterparts shall together
constitute one and the same instrument.


 


5.             Trustee Disclaimer.  The Trustee
has not investigated any fact or matter stated in the Recitals.    


 

















 


IN
WITNESS WHEREOF,
the parties hereto have caused this Supplemental Indenture to be duly executed
as of the day and year first above written.


 


 


	
   

  	
  AMERICAN STATES

  
	
   

  	
  WATER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Sprowls

  
	
   

  	
   

  	
  Name:

  	
  Robert J. Sprowls

  
	
   

  	
   

  	
  Title:

  	
  President and Chief

  
	
   

  	
   

  	
   

  	
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK MELLON

  TRUST COMPANY, N.A.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Raymond Torres

  
	
   

  	
   

  	
  Name:

  	
  Raymond Torres

  
	
   

  	
   

  	
  Title:

  	
  Senior Associate