Document:

exv10w2

Exhibit 10.2

SUPPLEMENTARY AGREEMENT

This Supplementary Agreement (“Agreement”) is executed on 10 April 2009 by and between the
following parties:

Synthesis Energy Systems (Zaozhuang) New Gas Company Ltd. (the “Company”); and

Shandong Hai Hua Coal & Chemical Company Ltd. (“Hai Hua”)

WHEREAS:

	1.	 	The Company has executed with Hai Hua a Contract for Synthesis Gas Purchase and Sales (“S&P
Contract”) on October 22, 2006.
	 
	2.	 	The Company has executed with Hai Hua a Memorandum of Understanding (“MOU”) on March 27,
2009, by which the Parties agreed upon additional points to supplement and clarify the S&P
Contract.

NOW, therefore, the Parties agree as follows:

	1.	 	Definitions

Unless otherwise provided, capitalized terms used in this Agreement follow their corresponding
definitions in the S&P Contract. In addition:

	 	 	 
	“Cold Standby”

	 	shall have the meaning given in clause 6.2.2(b) of this
Agreement.
	 
	 	 
	“Compliant Gas”

	 	means Net Syngas corresponding with specifications numbered
1-8 (inclusive) in Appendix II of the S&P Contract.
	 
	 	 
	“Operating Day”

	 	means 08:30am of a day to 08:29am of the immediately
following day.
	 
	 	 
	“Hot Standby”

	 	shall have the meaning given in clause 6.2.2(a) of this
Agreement.
	 
	 	 
	“Non-compliant Gas”

	 	means Net Syngas which does not correspond with
specifications numbered 1-8 (inclusive) in Appendix II of
the S&P Contract.
	 
	 	 
	“Non-compliant Period”

	 	means a period referred to in Section 3.2 of this Agreement
when Compliant Gas is not supplied to Hai Hua.

1

 

	 	 	 
	“Threshold Gas Offtake
  Volume”

	 	means 7,500 Ncum/hr.of Net Syngas Volume, which, as deemed
by the Parties, is the lowest gas offtake volume at which
the Company may assure the safe operation of the Plant
	 
	 	 
	“Unscheduled Stop”

	 	means a cessation of gas offtake from the Company by Hai Hua
not specified in the annual gas usage plan
	 
	 	 
	“ASU”

	 	shall have the meaning given in clause 5.1 of this Agreement.
	 
	 	 
	“ASU Project”

	 	shall have the meaning given in clause 5.1 of this Agreement.

	2.	 	Syngas Contents
	 
	2.1	 	The Parties agree to add the following to Appendix II of the S&P Contract:
	 
	 	 	“8. Nitrogen in the Net Syngas shall be no higher than 3%”.
	 
	2.2	 	For the avoidance of doubt, the synthesis gas supplied by Company shall be deemed to be
Compliant Gas if the specifications numbered 1-8 (inclusive) in Appendix II of the S&P
Contract have been met. The gas composition described in the table contained in the Appendix
II of the S&P Contract is shown as a sample.
	 
	3.	 	Non-compliant Gas
	 
	3.1	 	Hai Hua shall immediately notify the Company if and when it receives Non-compliant Gas. The
Company, upon receipt of such notice, will work collaboratively with Hai Hua to investigate
and if such Non-compliant Gas supply is confirmed, the Company shall immediately take
corrective actions. The Company shall immediately notify Hai Hua once it is able to deliver
Compliant Gas again.
	 
	3.2	 	The period starting from Hai Hua’s notification to the Company of the latter’s Non-compliant
Gas and the Company’s notification to Hai Hua of its remedy (in delivering Compliant Gas
again) (“Non-compliant Period”) shall be deemed to be a period during which the Company has
delivered Non-compliant Gas and the Capacity Fee and Energy Fee shall be calculated
accordingly during such Non-compliant Period as follows:

	 	3.2.1.	 	If Hai Hua rejects the Company’s gas after such notice, then Hai Hua will not be
charged, provided that the Company confirmed the gas to be Non-compliant Gas.
	 
	 	3.2.2.	 	If Hai Hua continues to accept the Company’s gas after such notice, the Capacity Fee
as outlined in the S&P Contract shall apply, and the Energy Fee for any Non-compliant
Gas taken by Hai Hua will enjoy a 30% discount on the Energy Fee calculations for such
Non-compliant Period.

	3.3	 	For the purpose of Energy Fee calculation, if during any Operating Day the volume of
Compliant Gas offtaken by Hai Hua is less than 50% of the total volume of synthesis gas
offtaken by Hai Hua during such Operating Day, then the entire synthesis gas volume

2

 

	 	 	offtaken
by Hai Hua during such Operating Day shall be considered Non-Compliant Gas and shall be
charged for accordingly.
	 
	4.	 	Threshold Gas Offtake Volume
	 
	4.1.	 	Hai Hua’s contracted gas volume pursuant to the S&P Contract is 22,000Ncum/hr, and the
Contract further specifies a minimum 19,000Ncum/hr gas offtake. Hai Hua has since forecasted
that its demand for Net Syngas from the Company is substantially below these levels, and Hai
Hua understands that the Company’s Plant cannot operate optimally at below its designed
capacity, including ensuring Compliant Gas production.
	 
	4.2.	 	The Parties agree to accommodate Hai Hua’s lower volume, in terms of Energy Fee, provided
that (i) such lower volume shall not be less than the Threshold Gas Offtake Volume; and (ii)
Hai Hua shares the Company’s ASU in accordance with a further agreement to be reached between
the Parties as envisaged in Section 5 of this Agreement.
	 
	4.3.	 	For the avoidance of doubt, any synthesis gas volume offtaken by Hai Hua below 7,500Ncum/hr
shall be considered and calculated, when calculating Energy Fee, as and at 7,500Ncum/hr.
	 
	4.4.	 	In the event the Company fails to deliver synthesis gas up to the Threshold Gas Offtake
Volume, Hai Hua has the right to reject such synthesis gas and not pay the Energy Fee and
Capacity Fee. However if Hai Hua chooses to offtake such synthesis gas, Hai Hua shall pay
the Company the Energy Fee and Capacity Fee as if the Company is able to deliver synthesis gas
up to the Threshold Gas Offtake Volume.
	 
	5.	 	ASU Sharing
	 
	5.1.	 	The Parties have mutual understanding that operating the Company’s Plant below the design
capacity is more expensive on a unit cost basis than operating at full capacity; and the
Parties shall work actively and in good faith pursuing a project (“ASU Project”) to have Hai
Hua share the Company’s air separation unit (“ASU”) capacity with the Company on a cost
recovery basis, which will substantially lower both Hai Hua’s and the Company’s unit power
costs.
	 
	5.2.	 	Both parties shall in good faith and on an urgent basis, before the end of June 2009,
cooperate to complete the ASU Project, including negotiating commercial terms of the ASU
Project. The goal is to fully compensate for the higher costs of power incurred by the
Company as a result of the under-utilization of its ASU.
	 
	5.3.	 	Details of the rights and obligations of each Party in pursuant to the ASU Project shall be
in accordance with a further written agreement to be reached between the Parties.
	 
	6.	 	Unscheduled Stops and Changes in Gas Offtake
	 
	6.1.	 	Hai Hua shall maintain a stable gas offtake in accordance with its annual gas usage plan.
For any Unscheduled Stop, Hai Hua shall give the Company a notice specifying, whether

3

 

	 	 	it is a
Hot Standby or a Cold Standby and the expected duration of the Unscheduled Stop. Hai Hua
shall give the Company as much warning as is practicably possible of its request for the
Company to start or shut down, or significantly change the volume of its synthesis gas
production, and the Company shall also need time to adjust the synthesis gas quality during
such events.
	 
	6.2.	 	Subject to Section 6.1, the Company shall be entitled to the following:

	 	6.2.1.	 	If Hai Hua fails to provide the Company with prior notifications of its desire for
an Unscheduled Stop, then Hai Hua shall be charged as if it is still offtaking gas as
usual;
	 
	 	6.2.2.	 	If Hai Hua provides the Company with the required notification of an Unscheduled
Stop, then it would also specify if this would be classified as:

	 	(a)	 	Hot Standby, whereby the Company shall be entitled to 3
hour periods each to stabilize its operations in ramping down to the
Threshold Gas Offtake Volume (to coincide with Hai Hua stopping) and in
ramping up from the Threshold Gas Offtake Volume (to coincide with Hai Hua
starting up again). Any synthesis gas produced during such ramping down
period and ramping-up period shall be considered as Compliant Gas and Hai Hua
shall be charged the relevant Capacity Fee and Energy Fee, although Hai Hua
will enjoy a 50% discount on the Energy Fee calculation. During such period
between ramping down and ramping up, the Company’s Plant is still operating
and shall be considered producing Syngas up to the Threshold Gas Offtake
Volume and the relevant Capacity Fee and Energy Fee will both be charged.
	 
	 	(b)	 	Cold Standby, whereby the Company shall be entitled to a
30-hours period to shut down and 120-hours period to start up. Any synthesis
gas produced during such shut-down period and start-up period shall be
considered as Compliant Gas, and Hai Hua shall be charged the relevant
Capacity Fee and Energy Fee, although Hai Hua will enjoy a 50% discount on
the Energy Fee calculation. During the period between such shut down and
start up, the Company shall be entitled to the relevant Capacity Fee.

	6.3.	 	The Company shall provide 3-hour prior notifications to Hai Hua for unscheduled stops of
synthesis gas production by the Company. If the Company gives less than 3 hours such notice
and such stoppages directly cause damage to equipment at Hai Hua, and such damages are agreed
to by both Parties, then, Hai Hua shall be entitled to:

	 	6.3.1.	 	no charging, by the Company, of the Energy Fee and Capacity Fee for the duration of
the stop; and
	 
	 	6.3.2.	 	compensation, by the Company, for, whichever is the lesser, (i) either the value of
such damages to the equipment, or (ii) ten times the Energy Fee and Capacity Fee, for
such 3-hour period, at the gas level before the Company’s notice of unscheduled stop.

4

 

	6.4.	 	For the avoidance of doubt, the provisions of this Section 6 of the Agreement shall not apply
to either Party in respect of start-ups and shutdowns caused directly by the implementation
and commissioning of the ASU Project before the end of June 2009.
	 
	7.	 	Miscellaneous
	 
	7.1.	 	This Agreement is supplemental to the S&P Contract and constitutes an integral part of the
S&P Contract. In the event of any inconsistency between the terms of the S&P Contract and the
terms of this Agreement, the terms of this Agreement shall prevail.
	 
	7.2.	 	References to Appendices and its Sections are to appendices and its sections in the S&P
Contract.
	 
	7.3.	 	This Agreement shall have the same binding legal effect as the S&P Contract.
	 
	7.4.	 	This Agreement shall be executed in Chinese and English. Both versions have equal legal
effect.
	 
	7.5.	 	This Agreement shall be governed by the laws of the PRC and construed in accordance
therewith.

	 	 	 	 	 	 	 	 	 
	Synthesis Energy Systems (Zaozhuang)

New Gas Company Ltd.	 	Shangdong Hai Hua Coal & Chemical
Company Ltd.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Donald P. Bunnell
 

	 	By:
	 	/s/ Zhou Si Yuan
 

	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Donald P. Bunnell
	 	Name:
	 	Zhou Si Yuan	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	Authorized Representative
	 	Title:
	 	General Manager	 	 

5exv4w1

Exhibit 4.1

EXECUTION COPY

Supplemental Mortgage of Chattels

and

Trust Indenture

(Thirty-Ninth Supplemental Indenture)

 

CALIFORNIA WATER SERVICE COMPANY

to

U.S. BANK NATIONAL ASSOCIATION

as

Trustee

 

Dated as of April 17, 2009

 

 

 

Tie of Applicable Provisions

of

Trust Indenture, Act of 1939, as amended,

with

California Water Service Company Indenture,

dated April 1, 1928,

as Amended by Supplemental Mortgage of Chattels and

Trust Indenture dated as of November 1, 1945,

and as further amended by

Supplemental Mortgage of Chattel and Trust Indenture

dated as of April 17, 2009.

	 	 	 
	Act	 	Indenture
	Sec. 310(a)(1) 
	 	Sec. 10.09
	Sec. 310(a)(2) 
	 	Sec. 10.09
	Sec. 310(a)(3) 
	 	Sec. 10.14
	Sec. 310(a)(4) 
	 	Not required
	Sec. 310(a)(5) 
	 	Sec. 10.09
	Sec. 310(b) 
	 	Sec 10.08
	Sec. 310(c) 
	 	Not applicable
	Sec. 311(a) and (b) 
	 	Sec 10.13
	Sec. 311(c) 
	 	Not applicable
	Sec. 312(a) 
	 	Sec. 11.02
	Sec. 312(b) 
	 	Sec. 11.03
	Sec. 312(c) 
	 	Sec, 11.01
	Sec. 313(a) 
	 	Sec. 11.03
	Sec. 313(b) 
	 	Sec. 11.03
	Sec. 313(c) 
	 	Sec. 11.03
	Sec. 313(d) 
	 	Sec. 11.03
	Sec. 314(a) 
	 	Sec. 11.02

 

 

	 	 	 
	Act	 	Indenture
	Sec. 314(b) 
	 	Sec. 3.08
	Sec. 314(c)(1) 
	 	Sec. 15.01
	Sec. 314(c)(2) 
	 	Sec. 15.01
	Sec. 314(c)(3) 
	 	Sec. 2.02(B)
	Sec. 314(d)(1) 
	 	Sec. 5.03, 5.06
	Sec. 314(d)(2) 
	 	Sec. 5.03
	Sec. 314(d)(3) 
	 	Sec. 2.02, 5.03 and 6.02
	Sec. 314(e) 
	 	Sec. 5.03
	Sec. 315(a) 
	 	Sec. 10.01 and 10.03
	Sec. 315(b) 
	 	Sec. 7.02
	Sec. 315(c) 
	 	Sec. 10.01
	Sec. 315(d) 
	 	Sec. 10.01
	Sec. 315(e) 
	 	Sec. 15.02
	Sec. 316(a)(1)(A) 
	 	Sec. 7.08
	Sec. 316(a)(1)(B) 
	 	Sec. 7.20
	Sec. 316(a)(2) 
	 	Not Applicable
	Sec. 316(a)(1), last paragraph 
	 	Sec. 2.17
	Sec. 316(b) 
	 	Sec. 7.06
	Sec. 317(a)(1) and (2) 
	 	Sec. 7.17
	Sec. 317(b) 
	 	Sec. 2.13 and 3.02
	Sec. 318(a) 
	 	Sec. 15.03

 

 

Table of Contents

	 	 	 	 	 
	sec.	 	page	 
	PART I AMENDMENT AND RESTATEMENT OF GRANTING CLAUSES OF ORIGINAL INDENTURE
	 	 	5	 
	PART II AMENDMENT OF ORIGINAL INDENTURE
	 	 	9	 
	ARTICLE I . Definitions and Rules of Construction
	 	 	10	 
	SECTION 1.01. Definitions
	 	 	10	 
	SECTION 1.02. Rules of Construction
	 	 	18	 
	SECTION 1.03. Incorporation by Reference of the Trust Indenture Act
	 	 	19	 
	ARTICLE II The Bonds
	 	 	19	 
	SECTION 2.01. Bonds Generally
	 	 	20	 
	SECTION 2.02. Authentication and Delivery of Bonds Against Property Additions
	 	 	23	 
	SECTION 2.03. Conditions and Limitations on Authentication and Delivery of Bonds
under Section 2.02 in Case of Prior Liens Against Property Additions
	 	 	30	 
	SECTION 2.04. Reservation of Additional Bonds and Delivery Thereof upon Compliance
with Net Earnings Requirements
	 	 	32	 
	SECTION 2.05. Reliance of Trustee upon Documents; Right and Duty to Make Independent
Investigation
	 	 	32	 
	SECTION 2.06. Authentication and Delivery of Bonds on or about the Closing Date
	 	 	32	 
	SECTION 2.07. Authentication and Delivery of Bonds Against Deposit of Cash;
Application of Cash Deposited
	 	 	33	 
	SECTION 2.08. Authentication and Delivery of Bonds to Refund Outstanding Bonds under
this Indenture and Indebtedness Secured by Prior Liens on Property Additions
	 	 	34	 
	SECTION 2.09. Reserved
	 	 	36	 
	SECTION 2.10. Form and Dating
	 	 	36	 
	SECTION 2.11. Execution and Authentication
	 	 	37	 
	SECTION 2.12. Registrar, Paying Agent and Depositary
	 	 	38	 

 

 

Table of Contents

	 	 	 	 	 
	sec.	 	page	 
	SECTION 2.13. Paying Agent To Hold Money In Trust
	 	 	38	 
	SECTION 2.14. Holder Lists
	 	 	39	 
	SECTION 2.15. Transfer and Exchange
	 	 	39	 
	SECTION 2.16. Replacement Bonds
	 	 	43	 
	SECTION 2.17. Outstanding Debt Securities
	 	 	44	 
	SECTION 2.18. Temporary Bonds
	 	 	45	 
	SECTION 2.19. Cancellation
	 	 	45	 
	SECTION 2.20. Payment of Interest; Defaulted Interest
	 	 	45	 
	SECTION 2.21. CUSIP, ISIN or Common Code Numbers
	 	 	46	 
	ARTICLE III . Particular Covenants of the Company
	 	 	47	 
	SECTION 3.01. Title to Property; Authority to Mortgage; Prior Liens
	 	 	47	 
	SECTION 3.02. Payment of Principal and Interest
	 	 	47	 
	SECTION 3.03. Maintenance of Office or Agency; Money for Bonds; Payments to be Held
in Trust
	 	 	47	 
	SECTION 3.04. Preservation of Corporate Existence, Franchises, etc; Payment of
Taxes, Assessments and Charges; Compliance with Requirements of Governmental
Authorities and Covenants, Terms and Conditions; Other Liens
	 	 	49	 
	SECTION 3.05. Insurance
	 	 	49	 
	SECTION 3.06. Maintenance, Repairs, Replacements and Depreciation Reserve
	 	 	50	 
	SECTION 3.07. Advances by Trustee to Perform Covenants; Reimbursement and Lien for
Advances
	 	 	50	 
	SECTION 3.08. Recording
	 	 	50	 
	SECTION 3.09. Further Assurance
	 	 	51	 
	SECTION 3.10. Examination of Books and Records by Trustee; Furnishing of Financial
Statements
	 	 	51	 

 

 

Table of Contents

	 	 	 	 	 
	sec.	 	page	 
	SECTION 3.11. Compliance with Indenture in Issuance of Bonds; General Covenant to
Perform and Observe Terms and Conditions of Indenture
	 	 	52	 
	SECTION 3.12. Covenant Against Indebtedness Secured by Prior Liens
	 	 	52	 
	ARTICLE IV . Redemption of Bonds
	 	 	52	 
	SECTION 4.01. Optional Redemption
	 	 	52	 
	SECTION 4.02. Election to Redeem; Notice to Trustee
	 	 	52	 
	SECTION 4.03. Selection by Trustee of Bonds to be Redeemed
	 	 	53	 
	SECTION 4.04. Notice of Redemption
	 	 	53	 
	SECTION 4.05. Deposit of Redemption Price
	 	 	54	 
	SECTION 4.06. Bonds Payable on Redemption Date
	 	 	54	 
	SECTION 4.07. Bonds Redeemed in Part
	 	 	54	 
	ARTICLE V . Possession, Use and Release of Property
	 	 	55	 
	SECTION 5.01. Possession, Use and Disposition of Property
	 	 	55	 
	SECTION 5.02. Additional Rights and Powers with Respect to Property
	 	 	55	 
	SECTION 5.03. General Provisions for Release of Property
	 	 	56	 
	SECTION 5.04. Reliance by Trustee on Documents; Right and Duty to Investigate
	 	 	58	 
	SECTION 5.05. Subjection to Lien of Property Acquired
	 	 	58	 
	SECTION 5.06. Release of Property Taken by Eminent Domain, etc
	 	 	58	 
	SECTION 5.07. Non-Liability of Purchasers of Property; Execution of Releases
	 	 	59	 
	SECTION 5.08. Releases if Receiver, Trustee or Assignee or Indenture Trustee in
Possession
	 	 	59	 
	SECTION 5.09.Release upon Discharge of Indenture or Defeasance
	 	 	60	 
	ARTICLE VI . Application of Moneys Received by the Trustee
	 	 	60	 

 

 

Table of Contents

	 	 	 	 	 
	sec.	 	page	 
	SECTION 6.01. Custody and Collection of Obligations Received for Released Property
	 	 	60	 
	SECTION 6.02. Release of Cash to Reimburse for Property Additions and Replace
Damaged or Destroyed Property
	 	 	60	 
	SECTION 6.03.Application of Moneys to Purchase or Redemption of Bonds
	 	 	61	 
	SECTION 6.04.Investment of Moneys
	 	 	61	 
	SECTION 6.05.No Purchase or Redemption in Case of Default
	 	 	61	 
	ARTICLE VII . Remedies Upon Default
	 	 	61	 
	SECTION 7.01. Events of Default; Acceleration of Maturity and Annulment Thereof
	 	 	62	 
	SECTION 7.02. Notice of Defaults to Be Given by the Trustee to Holders
	 	 	63	 
	SECTION 7.03. Right of Entry
	 	 	63	 
	SECTION 7.04. Power of Sale
	 	 	64	 
	SECTION 7.05. Rights of the Trustee to Take Judicial Proceedings
	 	 	64	 
	SECTION 7.06. Limitations on Holders’ Rights to Sue
	 	 	65	 
	SECTION 7.07. Remedies Cumulative; Rights of the Trustee Under the California
Commercial Code
	 	 	65	 
	SECTION 7.08. Right of Holders to Control Proceedings by the Trustee; Bonds Excluded
in Determining Required Percentage
	 	 	66	 
	SECTION 7.09. Appointment of Receiver
	 	 	66	 
	SECTION 7.10. Acceleration of Maturity of Bonds Upon Sale
	 	 	66	 
	SECTION 7.11. Right of the Trustee and Holders to Purchase Property; Application of
Bonds on Purchase Price
	 	 	66	 
	SECTION 7.12. Non-Liability of Purchaser for Application of Purchase Money
	 	 	66	 
	SECTION 7.13. Application of Proceeds of Sale
	 	 	67	 
	SECTION 7.14. Waiver of Stay, Extension or Redemption Laws, etc
	 	 	67	 

 

 

Table of Contents

	 	 	 	 	 
	sec.	 	page	 
	SECTION 7.15. Waiver of Default Not to Extend to Other Defaults
	 	 	68	 
	SECTION 7.16. Effect of Discontinuance or Abandonment of Proceedings
	 	 	68	 
	SECTION 7.17. Recovery of Judgment by the Trustee; Filing Proofs of Debt, etc;
Application of Moneys Collected
	 	 	68	 
	SECTION 7.18. Rights of Action Enforceable by the Trustee Without Bonds
	 	 	69	 
	SECTION 7.19. Delay or Omission Not Waiver of Default; Repeated Exercise of Powers
and Remedies
	 	 	69	 
	SECTION 7.20. Waiver of Certain Defaults by Holders
	 	 	69	 
	SECTION 7.21. Provisions of Article VII Subject to Mandatory Provisions of
Applicable Law
	 	 	70	 
	ARTICLE VIII . Evidence of Rights of Holders
	 	 	70	 
	SECTION 8.01. Proof of Execution of Requests, etc. by Holders and of Holding and
Ownership of Bonds
	 	 	70	 
	SECTION 8.02.Effect of Holder’s Action on Subsequent Holders
	 	 	71	 
	ARTICLE IX . Merger, Consolidation, Lease or Sale
	 	 	71	 
	SECTION 9.01. Conditions Under Which Merger, Consolidation, Sale or Lease Permitted
	 	 	71	 
	SECTION 9.02. Substitution of Successor Corporation for Company Under Indenture;
Contents of Indenture to Be Executed by Successor Corporation
	 	 	71	 
	SECTION 9.03. Properties of Successor Corporation Excluded from Lien of Indenture;
Earnings of Successor Corporation Excluded in Net Earnings Certificate
	 	 	72	 
	SECTION 9.04. “Company” to Include Successor Corporation
	 	 	73	 
	SECTION 9.05. Surrender of Powers Reserved Under Article IX
	 	 	73	 
	SECTION 9.06. Liability of Predecessor Company
	 	 	73	 
	ARTICLE X . The Trustee
	 	 	73	 
	SECTION 10.01. Certain Duties and Responsibilities
	 	 	73	 

 

 

Table of Contents

	 	 	 	 	 
	sec.	 	page	 
	SECTION 10.02. Notice of Defaults
	 	 	74	 
	SECTION 10.03. Certain Rights of Trustee
	 	 	74	 
	SECTION 10.04. Not Responsible For Recitals or Issuance of Bonds or Application of
Proceeds
	 	 	76	 
	SECTION 10.05. May Hold Bonds
	 	 	76	 
	SECTION 10.06. Money Held in Trust
	 	 	76	 
	SECTION 10.07. Compensation and Reimbursement
	 	 	76	 
	SECTION 10.08. Disqualification; Conflicting Interests
	 	 	77	 
	SECTION 10.09. Corporate Trustee Required; Eligibility
	 	 	77	 
	SECTION 10.10. Resignation and Removal; Appointment of Successor
	 	 	78	 
	SECTION 10.11. Acceptance of Appointment By Successor
	 	 	79	 
	SECTION 10.12. Merger, Conversion, Consolidation Or Succession To Business
	 	 	80	 
	SECTION 10.13. Preferential Collection of Claims Against Company
	 	 	80	 
	SECTION 10.14. Co-Trustees and Separate Trustees
	 	 	80	 
	SECTION 10.15. Appointment Of Authenticating Agent
	 	 	81	 
	ARTICLE XI . Reports by the Company and the Trustee
	 	 	83	 
	SECTION 11.01. Communication by Holders with Other Holders
	 	 	83	 
	SECTION 11.02. Filing of Reports and Information with Trustee
	 	 	83	 
	SECTION 11.03. Reports by the Trustee to Holders
	 	 	83	 
	ARTICLE XII . Supplemental Indenture
	 	 	84	 
	SECTION 12.01. Supplemental Indentures without Consent of Holders
	 	 	84	 
	SECTION 12.02. Supplemental Indentures with Consent of Holders
	 	 	85	 
	SECTION 12.03. Execution of Supplemental Indentures
	 	 	86	 
	SECTION 12.04. Effect of Supplemental Indentures
	 	 	87	 

 

 

Table of Contents

	 	 	 	 	 
	sec.	 	page	 
	SECTION 12.05. Conformity with Trust Indenture Act
	 	 	87	 
	SECTION 12.06. Reference in Bonds to Supplemental Indentures
	 	 	87	 
	ARTICLE XIII . Reserved
	 	 	87	 
	ARTICLE XIV . Discharge and Defeasance
	 	 	88	 
	SECTION 14.01. Satisfaction and Discharge of Indenture
	 	 	88	 
	SECTION 14.02. Application of Trust Money
	 	 	89	 
	SECTION 14.03. Applicability of Article
	 	 	89	 
	SECTION 14.04. Legal Defeasance and Covenant Defeasance
	 	 	89	 
	SECTION 14.05. Conditions to Legal or Covenant Defeasance
	 	 	90	 
	SECTION 14.06. Deposited Moneys and Government Securities to be Held in Trust
	 	 	92	 
	SECTION 14.07. Repayment to Company
	 	 	92	 
	ARTICLE XV . Miscellaneous Provisions
	 	 	92	 
	SECTION 15.01. Contents of Certificates and Opinions
	 	 	92	 
	SECTION 15.02. Consent to Undertaking for Costs
	 	 	93	 
	SECTION 15.03. Conflict with Trust Indenture Act
	 	 	93	 
	SECTION 15.04. Governing Law
	 	 	93	 
	SECTION 15.05. Notices
	 	 	93	 
	SECTION 15.06. Holders and Parties Exclusive Beneficiaries
	 	 	94	 
	SECTION 15.07. Separability of Invalid Provisions
	 	 	94	 
	SECTION 15.08. Effect on Successors and Assigns of Parties
	 	 	94	 
	SECTION 15.09. Titles Not Part of Indenture
	 	 	94	 
	SECTION 15.10. No Recourse Against Others
	 	 	95	 
	SECTION 15.11. Fixture Filing
	 	 	95	 

 

 

Table of Contents

	 	 	 	 	 
	sec.	 	page	 
	PART III MISCELLANEOUS PROVISIONS WITH RESPECT TO SUPPLEMENTAL INDENTURE
	 	 	95	 
	EXECUTION
	 	 	1	 

 

 

THIRTY-NINTH SUPPLEMENTAL MORTGAGE OF CHATTELS and TRUST INDENTURE (this “Supplemental Indenture”)
dated as of April 17, 2009, between CALIFORNIA WATER SERVICE COMPANY, a California corporation (the
“Company”), and U.S. Bank National Association, as trustee (the “Trustee”), having its Corporate
Trust Office at One California Street, Suite 2100, San Francisco, CA 94111.

RECITALS

     WHEREAS, the Company heretofore made, executed and delivered the Indenture from California
Water Service Company to American Trust Company and Los Angeles-First National Trust & Savings
Bank, as Trustees, dated as of the 1st day of April, 1928, (the “Original Base Indenture”), and the
Original Base Indenture has been recorded in the Office of the Recorders of the following counties
and city and county of the State of California on the respective dates and in the respective books
of record hereafter set forth:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Volume of Official	 	 
	County of	 	Date of	 	Records	 	Page at Which
	City and County	 	Recordation	 	(except as noted)	 	Record Commences
	Contra Costa

	 	May 2, 1928
	 	 	141	 	 	 	7	 
	City and County of
San Francisco

	 	May 3, 1928
	 	 	1637	 	 	 	346	 
	Glenn

	 	May 2, 1928
	 	62

(Book of Mortgages)
	 	 	190	 
	Kings

	 	January 7, 1929
	 	 	40	 	 	 	348	 
	San Joaquin

	 	May 2, 1928
	 	 	243	 	 	 	295	 
	Solano

	 	May 2, 1928
	 	 	14	 	 	 	7	 
	Tulare

	 	May 3, 1928
	 	 	260	 	 	 	11	 
	Alameda

	 	May 2, 1928
	 	 	1877	 	 	 	35	 
	Sonoma

	 	May 2, 1928
	 	 	196	 	 	 	136	 
	Los Angeles

	 	May 4, 1928
	 	 	7105	 	 	 	102	 
	Butte

	 	May 2, 1928
	 	116

(Book of Mortgages)
	 	 	106	 
	Kern

	 	May 3, 1928
	 	 	249	 	 	 	1	 
	Shasta

	 	May 2, 1928
	 	 	38	 	 	 	80	 
	Fresno

	 	May 2, 1928
	 	 	894	 	 	 	32	 
	San Mateo

	 	January 20,1939
	 	 	837	 	 	 	16	 
	Yuba

	 	September 12, 1942
	 	 	69	 	 	 	291	 
	Santa Clara

	 	November 2, 1945
	 	 	1305	 	 	 	286	 
	Monterey

	 	February 21, 1962
	 	Serial No. 6604
	 	 	 	 
	Ventura

	 	November 15, 1983
	 	Doc. No. 130176; and
	 	 	 	 

 

 

     WHEREAS, Los Angeles-First National Trust & Savings Bank changed its name to Security-First
National Bank of Los Angeles and later to Security First National Bank and later to
Security-Pacific National Bank; and

     WHEREAS, American Trust Company changed its name to Wells Fargo Bank and Wells Fargo Bank
subsequently merged into Wells Fargo Bank, National Association; and

     WHEREAS, by instrument entitled “Resignations of Wells Fargo Bank, National Association as
Authenticating Trustee and Security Pacific National Bank as Trustee and Appointment and Acceptance
of Bank of America National Trust and Savings Association as Authenticating Trustee under Mortgage
of Chattels and Trust Indenture dated as of April 1, 1928 as Supplemented, Amended and Modified
from California Water Service Company” dated as of August 1, 1983, recorded in the offices of the
Recorders of those counties and city and county of the State of California on the respective dates
and in the respective books of record and/or as the respective document numbers set forth in
SCHEDULE A, which is annexed hereto and hereby made a part hereof, (a) Wells Fargo Bank, National
Association, resigned as authenticating trustee under the Original Base Indenture, as theretofore
supplemented, amended and modified by the First through Thirty-First Supplemental Indentures,
effective August 1, 1983, (b) the Company appointed Bank of America National Trust and Savings
Association as successor authenticating trustee to Wells Fargo Bank, National Association,
effective August 1, 1983, (c) Bank of America National Trust and Savings Association accepted such
appointment as authenticating trustee under the Original Base Indenture, as theretofore
supplemented, amended and modified by the First through Thirty-First Supplemental Indentures,
effective August 1, 1983, (d) Security Pacific National Bank resigned as trustee under the Original
Base Indenture, as theretofore supplemented, amended and modified by the First through Thirty-First
Supplemental Indentures, effective August 1, 1983, (e) the Company appointed no successor trustee
to said Security Pacific National Bank, (f) Bank of America National Trust and Savings Association
as of August 1, 1983 became fully vested with all the estates, properties, rights powers trusts,
duties and obligations of Wells Fargo Bank, National Association and Security Pacific National
Bank, as trustees under the Original Base Indenture, as theretofore supplemented, amended and
modified by the First through Thirty-First Supplemental Indentures, with like effect as if
originally named as trustee therein, (g) Bank of America National Trust and Savings Association
resigned as trustee under the Original Base Indenture, as theretofore supplemented, amended and
modified by First through Thirty-First Supplemental Indentures, effective December 15, 1995, (h)
the Company appointed, with the concurrence of a majority of the Holders, First Trust, a subsidiary
of First Trust Bank System of Minneapolis, as successor trustee to Bank of America National Trust
and Savings Association, effective December 15, 1995, (i) First Trust, a subsidiary of First Trust
Bank System of Minneapolis, accepted such appointment as trustee under the Original Base Indenture,
as supplemented, amended and modified by the First through Thirty-eighth Supplemental Indentures,
(j) First Trust Bank
System of Minneapolis merged with U. S. Bank Trust National Association, effective August 1,
1997; as a result of said merger, the corporate name became U. S. Bank Trust National Association,
effective March 30, 1998, (k) effective January 10, 2002, U. S. Bank Trust National Association
merged into U. S. Bank National Association and (l) U. S. Bank National

2

 

Association became the
trustee under the Original Base Indenture, as therefore supplemented, amended and modified by the
First through Thirty-eighth Supplemental Indentures referred to below, said Original Base Indenture
as so supplemented, amended and modified being hereinafter called the “Original Indenture;” and

     WHEREAS, the Company has heretofore made, executed and delivered thirty-eight certain
supplemental indentures supplemental to said Original Base Indenture, one such supplemental
indenture from California Water Service Company to American Trust Company and Los Angeles-First
National Trust & Savings Bank, as trustees, dated January 3, 1929, hereinafter sometimes called the
“First Supplemental Indenture;” twelve such supplemental indentures from said California Water
Service Company to American Trust Company and Security-First National Bank of Los Angeles, as
trustees, dated and hereinafter sometimes called, respectively, as follows:

	 	 	 
	Date	 	Name
	August 19, 1929

	 	Second Supplemental Indenture
	February 25, 1930

	 	Third Supplemental Indenture
	February 1, 1931

	 	Fourth Supplemental Indenture
	March 23, 1932

	 	Fifth Supplemental Indenture
	May 1, 1936

	 	Sixth Supplemental Indenture
	April 1, 1939

	 	Seventh Supplemental Indenture
	November 1, 1945

	 	Eighth Supplemental Indenture
	May 1, 1951

	 	Ninth Supplemental Indenture
	May 1, 1953

	 	Tenth Supplemental Indenture
	May 1, 1954

	 	Eleventh Supplemental Indenture
	May 1, 1955

	 	Twelfth Supplemental Indenture
	November 1, 1956

	 	Thirteenth Supplemental Indenture

four supplemental indentures from California Water Service Company to Wells Fargo Bank and Security
First National Bank, as trustees, dated and hereinafter sometimes called, respectively, as follows:

	 	 	 
	Date	 	Name
	November 1, 1963

	 	Fourteenth Supplemental Indenture
	November 1, 1965

	 	Fifteenth Supplemental Indenture
	November 1, 1966

	 	Sixteenth Supplemental Indenture
	November 1, 1967

	 	Seventeenth Supplemental Indenture

fourteen supplemental indentures from California Water Service Company to Wells Fargo Bank,
National Association and Security Pacific National Bank, as trustees, dated and hereinafter
sometimes called, respectively, as follows:

3

 

	 	 	 
	Date	 	Name
	November 1, 1969

	 	Eighteenth Supplemental Indenture
	May 1, 1970

	 	Nineteenth Supplemental Indenture
	November 1, 1970

	 	Twentieth Supplemental Indenture
	October 1, 1972

	 	Twenty-first Supplemental Indenture
	November 1,1972

	 	Twenty-second Supplemental Indenture
	November 15, 1972

	 	Twenty-third Supplemental Indenture
	November 1, 1973

	 	Twenty-fourth Supplemental Indenture
	May 1, 1975

	 	Twenty-fifth Supplemental Indenture
	May 1, 1976

	 	Twenty-sixth Supplemental Indenture
	November 1, 1977

	 	Twenty-seventh Supplemental Indenture
	May 1, 1978

	 	Twenty-eighth Supplemental Indenture
	November 1, 1979

	 	Twenty-ninth Supplemental Indenture
	November 1, 1980

	 	Thirtieth Supplemental Indenture
	May 1, 1982

	 	Thirty-first Supplemental Indenture

and seven supplemental indentures from California Water Service Company to Bank of America National
Trust and Savings Association, as trustee, dated and hereinafter sometimes called respectively as
follows:

	 	 	 
	Date	 	Name
	September 1, 1983

	 	Thirty-second Supplemental Indenture
	May 1, 1988

	 	Thirty-third Supplemental Indenture
	November 1, 1990

	 	Thirty-fourth Supplemental Indenture
	November 3, 1992

	 	Thirty-fifth Supplemental Indenture
	May 1, 1993

	 	Thirty-sixth Supplemental Indenture
	September 1, 1993

	 	Thirty-seventh Supplemental Indenture
	November 2, 1993

	 	Thirty-eighth Supplemental Indenture; and

     WHEREAS, the First through Thirty-eighth Supplemental Indentures (and in the case of Marin
County, a Memorandum of Indenture referencing the Original Base Indenture and the First through
Thirty-eighth Supplemental Indentures) have been recorded in the offices of the Recorders of those
counties and city and county of the State of California on the respective dates and in the
respective books of record and/or as the respective document numbers set forth in SCHEDULE B, which
is annexed hereto and hereby made a part hereof;

     WHEREAS, this Supplemental Indenture is being filed concurrently with, among other
Supplemental Indentures, the Fortieth, Forty-second, Forty-fourth, Forty-ninth, Fiftieth and
Fifty-fourth Supplemental Indentures;

     WHEREAS, as of the date hereof, the sole Bonds outstanding under the Original Indenture are
the First Mortgage 9.86% Bonds, Series CC, due November 1, 2020 (the “Series CC Bonds”), issued
pursuant to the Thirty-Fourth Supplemental Indenture dated as of November 1, 1990 (the
“Thirty-Fourth Supplemental Indenture”);

4

 

     WHEREAS, the Company has requested that the Trustee, at the direction of the Holders of the
Series CC Bonds, agree to amend the Original Indenture on the terms set forth herein;

     WHEREAS, the Company now proposes to issue additional Bonds under and pursuant to and secured
by the Original Indenture, as supplemented by this Supplemental Indenture (this “Indenture”), as
more particularly provided in Article II thereof, and proposes to confirm substantially all of the
Liens and security of the Original Indenture with respect to such additional Bonds and to provide
certain additional rights and limitations as set forth in this Supplemental Indenture;

     WHEREAS, the Company, under and by virtue of the provisions of the Original Indenture and
under and by virtue of appropriate resolutions of its Board of Directors, has duly resolved to
make, execute and deliver to the Trustee this Supplemental Indenture, in the form hereof for the
purposes herein provided;

     WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a
valid, binding and legal instrument in accordance with its terms have been done, performed and
fulfilled and the execution and delivery hereof have been in all respects duly authorized;

PART I

AMENDMENT AND RESTATEMENT OF GRANTING, HABENDUM, USES AND TRUSTS AND AGREEMENT OF COMPANY AND

TRUSTEES CLAUSES OF ORIGINAL INDENTURE

     NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, that, in consideration of the premises
and of the purchase of the Bonds by the Holders thereof, and in order to secure the payment of the
principal of and premium, if any, and interest, if any, on all Bonds from time to time Outstanding
and the performance of the covenants therein and herein contained, and to declare the terms and
conditions on which such Bonds are secured, the Company hereby (i) amends and restates the
description of all properties, premises, rights, franchises and interests more particularly
described in the Original Indenture as “mortgaged property” or “trust estate” or otherwise
designated as security for the obligations under the Original Indenture to read as follows, (ii)
grants, bargains,
sells, conveys, assigns, transfers, mortgages, pledges, sets over and confirms to the Trustee,
and grants to the Trustee a security interest in and continuing Lien on, with power of sale and
right of entry and possession, the following (subject, however, to the terms and conditions set
forth in this Indenture) and (iii) amends and restates the Habendum, Uses and Trusts and Agreement
of Company and Trustees clauses of the Original Indenture as follows:

     The following property described in Granting Clauses First through Fourth, collectively, the
“Mortgaged Property.”

5

 

GRANTING CLAUSE FIRST

(PROPERTIES UNDER PRIOR INDENTURES)

     All real and personal, tangible and intangible properties, premises, rights, franchises and
interests more particularly described in the Original Base Indenture and the First through
Thirty-Eighth Supplemental Indentures thereto, excepting therefrom, however, (i) all properties,
premises, rights, franchises and interests shown in such First through Thirty-Eighth Supplemental
Indentures, inclusive, to have been released, (ii) all properties, premises, rights, franchises and
interests sold, conveyed or otherwise disposed of by the Company and released and reconveyed by the
Trustee under and pursuant to the terms and provisions of the Original Indenture, or which have
been condemned or taken by the power of eminent domain and are no longer subject to the Lien of the
Original Indenture or any supplement thereto and (iii) Excepted Property;

GRANTING CLAUSE SECOND

(PROPERTIES NOW OWNED OR ACQUIRED)

     All other real and personal, tangible and intangible properties, premises, rights, franchises
and interests as of the Closing Date owned by the Company of whatever character and wherever
situated, other than Excepted Property. Said properties include, among other things, the
following, but reference to or enumeration of any particular kinds, classes or items of property
shall not be deemed to exclude from the operation and effect of this Indenture any kind, class or
item not so referred to or enumerated: (i) real property, (ii) all rights of way, water rights or
privileges appurtenant to the real property included in clause (i) or used or usable in connection
therewith and all renewals, extensions or modifications of any of the foregoing, (iii) all and
singular tenements, hereditaments and appurtenances belonging or in anywise appertaining to the
aforesaid property, real estate, franchises, rights, privileges and other property or any part
thereof; with the reversion and reversions, remainder and remainders, tolls, rents, revenues,
issues, income, product and profits thereof, and all the estate, right, title, interest and claim
whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and
to the same and every part and parcel thereof and (iv) all buildings, plants, systems, works,
improvements, structures, fixtures, supplies, appliances, machinery, equipment, materials,
transporting and distributing systems, filter systems, ditches, dams, waterworks, wells, pumps,
reservoirs, conduits, pipes, mains, purifiers, washers, holders, boilers, engines, motors (but not
motor vehicles), pipe lines, sewers, meters, services, fuel, office furniture, books, records,
office supplies, tools, accounts receivable, bills receivable and all personal property of every
kind and
nature whatsoever, appertaining to or useful in the conduct of the Company’s present or future
business that does not comprise Excepted Property;

GRANTING CLAUSE THIRD

(AFTER-ACQUIRED PROPERTY)

     All properties, premises, rights, franchises and interests, of whatever character and wherever
situated, hereafter acquired by the Company, other than Excepted Property, but including, without
limiting the generality of the foregoing description, all New or Additional Property and all
Permanent Improvements, Extensions or Additions (as those terms are used in Section 2.02(A) of this
Indenture) hereafter acquired or constructed by the Company, whether

6

 

fully constructed or erected
or in process of construction or erection, so far as actually constructed or erected;

     All buildings, plants, systems, works, improvements, structures, fixtures, supplies,
appliances, machinery, equipment, materials, transporting and distributing systems, filter systems,
ditches, dams, water works, wells, pumps, reservoirs, conduits, pipes, mains, purifiers, washers,
holders, boilers, engines, motors (but not motor vehicles), pipe lines, sewers, meters, services,
fuel, office furniture, books, records, office supplies, tools, accounts receivable, bills
receivable, and all personal property of every kind and nature whatsoever appertaining to or useful
in the conduct of the Company’s present or future business which the Company may hereafter acquire
or in which it may have any interest that does not comprise Excepted Property;

     All franchises, permits, licenses, rights, easements, grants, privileges and immunities,
pertaining to or used or usable in connection with New or Additional Property and Permanent
Improvements, Extensions or Additions; all rights of way, water rights or privileges appurtenant to
New or Additional Property and Permanent Improvements, Extensions or Additions or used or usable in
connection therewith, and all renewals, extensions or modifications of any of the foregoing;

     All and singular tenements, hereditaments and appurtenances belonging or in anywise
appertaining to the New or Additional Property and Permanent Improvements, Extensions or Additions,
franchises, rights, privileges and other property, or any part thereof; with the reversion and
reversions, remainder and remainders, tolls, rents, revenues, issues, income, product and profits
thereof, and all the estate, right, title, interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and to the same and every part and
parcel thereof, in each case other than Excepted Property;

     The foregoing property described in this Granting Clause Third, “After-Acquired Property”;

GRANTING CLAUSE FOURTH

(CERTAIN PROCEEDS AND PROPERTY ELECTED TO BE MORTGAGED PROPERTY)

     Whatever is acquired upon the sale, lease, license, exchange, or other disposition of any of
the foregoing; rights arising out of any of the foregoing; to the extent of the value of foregoing,
claims arising out of the loss, nonconformity, or interference with the use of, defects or
infringement of rights in, or damage to, the foregoing; to the extent of the value of the foregoing
and to the extent payable to the Company or the Trustee, insurance payable by reason of the loss or
nonconformity of, defects or infringement of rights in, or damage to, the foregoing; and

     All property otherwise included in the definition of Excepted Property that the Company elects
be included under the Lien of this Indenture;

     PROVIDED, HOWEVER, that nothing herein contained is intended or shall be deemed to,
and the conveyance and mortgage hereby made is upon the express condition that it shall not, render
any New or Additional Property or Permanent Improvements, Extensions or Additions unavailable under
this Indenture, or any supplemental indenture thereto, or any provision of any

7

 

thereof, (i) as a
basis for the issue, authentication and delivery of additional Bonds, or for the withdrawal of any
money held by the Trustee under this Indenture or by any trustee under an instrument of Lien prior
to the Lien of this Indenture, (ii) as Substituted Property, (iii) as used or usable to provide any
increase required by the provisions of clauses (2) or (3) of Section 2.03 of this Indenture, (iv)
as used or usable as a credit against any sinking fund provided for in any instrument of Lien prior
to the Lien of this Indenture, or provided for in any supplemental indenture to this Indenture or
(v) for any other purpose for which it is provided in this Indenture, the Company may use New or
Additional Property or Permanent Improvements, Extensions or Additions.

EXCEPTED PROPERTY

     Expressly excepting and excluding, however, from the Lien of this Indenture all right, title
and interest of the Company in, to or under the following property, whether now owned or hereafter
acquired (the “Excepted Property”), unless elected by the Company after the Closing Date to be
included under the Lien of this Indenture:

     (i) all cash, Cash Equivalents, deposit accounts holding cash and brokerage and securities
accounts holding cash and Cash Equivalents (as such terms are defined in the California Commercial
Code) other than cash and Cash Equivalents acquired as a result of the transactions or claims
described in Granting Clause Fourth, and all cash or Cash Equivalents on hand or on deposit in
banks or other financial institutions, other than cash and Cash Equivalents acquired as a result of
the transactions or claims described in Granting Clause Fourth, in each case to the extent not
hereafter paid or delivered to, deposited with, or held by the Trustee hereunder;

     (ii) all automobiles, buses, trucks, truck cranes, tractors, trailers, motor vehicles and
similar vehicles and movable equipment; all rolling stock, rail cars and other railroad equipment;
all vessels, boats, barges and other marine equipment; all airplanes, helicopters, aircraft engines
and other flight equipment; and all parts, accessories and supplies used in connection with any
business of the Company;

     (iii) all oil, gas and other minerals (as such terms are defined in the California Commercial
Code); and all coal, ore, gas, oil and other minerals and all timber, and all rights and interests
in any of the foregoing, whether or not such minerals or timber shall have been mined or extracted
or otherwise separated from the land;

     (iv) any lease, license, franchise, contract, property rights or agreement to which the
Company is a party or any of its rights or interests thereunder if and for so long as the grant of
such security interest shall constitute or result in (1) the abandonment, invalidation or
unenforceability of any right, title or interest of the Company therein or (2) in a breach or
termination pursuant to the terms of, or an default under, any such lease, license, contract,
property rights or agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9406, 9407, 9408 or 9409 of the California Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction or any other applicable Law),
provided, however, that the Mortgaged Property shall include and such security interest shall
attach immediately at such time as the condition causing such abandonment, invalidation or

8

 

unenforceability shall be remedied and to the extent severable, shall attach immediately to any
portion of such lease, license, contract, property rights or agreement that does not result in any
of the consequences specified in (1) or (2) above, after which any such portion of such lease,
license, contract, property rights or agreement shall cease to be Excepted Property; and

     (v) any asset owned by the Company that is subject to a Lien securing Indebtedness (including
capitalized lease obligations) incurred to finance the purchase, lease or improvement of such asset
if the contract or other agreement in which such Lien is granted (or the documentation providing
for such Indebtedness) validly prohibits the creation of any other Lien on such asset.

     TO HAVE AND TO HOLD all the hereinbefore described properties, real, personal and mixed,
mortgaged, conveyed, assigned or pledged by the Company, or intended so to be, unto the Trustee in
the trust hereby and by the Original Indenture and by the prior supplemental indentures created,
and to their assigns forever;

     SUBJECT, HOWEVER, to Permitted Liens;

     IN TRUST NEVERTHELESS upon the terms and trusts set forth in this Indenture, and for the
benefit and security of the Holders of the Bonds issued and to be issued under this Indenture,
without preference of any of said Bonds over any others thereof by reason of priority in the time
of issue or negotiation thereof or by reason of the date of maturity thereof, or for any reason
whatsoever, and upon and subject to the covenants,
conditions, uses and trusts set forth in this Indenture, all with the same force and effect as
though the hereinbefore described properties;

     PROVIDED, HOWEVER, that the right, title and interest of the Trustee in and to the
Mortgaged Property shall cease, terminate and become void in accordance with, and subject to the
conditions set forth in, Article V hereof;

     AND IT IS HEREBY COVENANTED, DECLARED AND AGREED, by and between the Company and the Trustee
that all the Bonds are to be authenticated and delivered, and that the Mortgaged Property is to be
held, subject to the further covenants, conditions and trusts hereinafter set forth, and the
Company hereby covenants and agrees to and with the Trustee, for the equal and ratable benefit of
all Holders of the Bonds, as follows:

PART II

AMENDMENT OF ORIGINAL INDENTURE

     Articles I to XV of the Original Base Indenture, as amended by the Eighth Supplemental
Indenture thereto, are hereby deleted in their entireties and amended to read as follows:

ARTICLE I.

Definitions and Rules of Construction

     SECTION 1.01. Definitions.

9

 

     “Act” means any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders that is embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such holders in person or by an
agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered to the Trustee,
and, where it is hereby expressly required, to the Company.

     “Additions Credit” has the meaning set forth in Section 2.02.

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For the
purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”) as used with respect to any Person
means the power to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by agreement or otherwise.

     “After-Acquired Property” has the meaning set forth in Granting Clause Third in the Recitals
of this Indenture.

     “Agent” means any Registrar, Paying Agent, co-registrar or additional paying agent.

     “Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial
interests in any Global Bond, the rules and procedures of the Depositary that apply to such
transfer or exchange at the relevant time.

     “Authenticating Agent” means an agent appointed by the Trustee and authorized to act on behalf
of the Trustee to authenticate Bonds of a series pursuant to the terms of Section 10.15.

     “Authentication Order” has the meaning set forth in Section 2.11.

     “Bankruptcy Law” means Title 11, U.S. Code, or any similar federal, state or foreign law for
the relief of debtors.

     “Board of Directors” means the board of directors of the Company or any duly authorized
committee of such board.

     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company that has been duly adopted by the Board of Directors, that is in full
force and effect on the date of such certification and that has been delivered to the Trustee.

     “Bond Custodian” means the custodian with respect to any Global Bond (as appointed by the
Depositary).

     “Bond Register” means a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Bonds and of transfers and
exchanges of such Bonds which the Company shall cause to be kept at the Corporate Trust Office of
the Trustee (or at the appropriate office of any other Registrar appointed hereunder).

10

 

     “Bonds” means any bond (including any Global Bond) authenticated and delivered under this
Indenture.

     “Business Day” means each day which is not a Saturday, a Sunday or a day on which commercial
banking institutions are not required to be open in the State of California.

     “California Commercial Code” means the Uniform Commercial Code as enacted and in effect from
time to time in the State of California.

     “Cash Equivalents” means, as at any date of determination, any of the following: (i)
marketable securities (a) issued or directly and unconditionally guaranteed as to interest and
principal by the United States government or (b) issued by any agency of the United States the
obligations of which are backed by the full faith and credit of the United States, in each case
maturing within one year after such date; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date and having, at the
time of the acquisition thereof, a rating of at least A-1 from S&P, or at least P-1 from Moody’s;
(iii) commercial paper maturing no more than three months from the date of creation thereof
and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least
P-1 from Moody’s; and (iv) shares of any money market mutual fund that (a) has substantially all of
its assets invested continuously in the types of investments referred to in clauses (i) and (ii)
above, (b) has net assets of not less than $3,000,000,000, and (c) has the highest rating
obtainable from either S&P or Moody’s.

     “Closing Date” means April 17, 2009.

     “Commission” means the Securities and Exchange Commission.

     “Company Request” means a written request or order signed in the name of the Company by the
Chief Executive Officer, the President, the Chief Financial Officer or an Executive or Senior Vice
President and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,
the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee.

     “Company” has the meaning in the first paragraph of this Indenture, or any Successor
Corporation pursuant to the terms of Section 9.02 of this Indenture.

     “condemnation” has the meaning set forth in Section 5.06.

     “Corporate Trust Office” means the office of the Trustee specified in Section 15.05 or any
other office specified by the Trustee from time to time pursuant to such Section.

     “Covenant Defeasance” has the meaning set forth in Section 14.04(c).

     “CUCC” has the meaning set forth in Section 15.11.

     “Default” means any event that, with the passage of time or the giving of notice or both,
would be an Event of Default.

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     “Defaulted Interest” has the meaning set forth in Section 2.20(B).

     “Definitive Bond” means one or more certificated Bonds established pursuant to Section 2.10(C)
and issued under this Indenture.

     “Depositary” means, with respect to the Global Bonds, the Person specified in or pursuant to
Section 2.12 as the Depositary with respect to such Bonds, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter,
“Depositary” means or includes such successor.

     “Event of Default” has the meaning specified in Section 7.01.

     “Excepted Property” has the meaning set forth in the Granting Clauses in the Recitals of this
Indenture.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Fair Value” means the amount which would be likely to be obtained in an arm’s-length
transaction with respect to such property between an informed and willing buyer and an informed and
willing seller, under no compulsion, respectively, to buy or sell, as determined in good faith by
the Company or an engineer, appraiser or other expert, as applicable.

     “First Mortgage Bonds” has the meaning specified in Section 2.01.

     “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accounts and statements and pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as have been approved by a significant segment of the
accounting profession, which are in effect from time to time.

     “Global Bonds” means one or more Bonds established pursuant to Section 2.10(B) and issued
under this Indenture that is deposited with or on behalf of and registered in the name of the
Depositary or its nominee.

     “Global Bond Legend” means the legend set forth in Section 2.15(F), which is required to be
placed on all Global Bonds issued under this Indenture.

     “Government Securities” means readily marketable (a) direct full faith and credit obligations
of the United States of America or obligations guaranteed by the full faith and credit of the
United States of America and (b) obligations of an agency or instrumentality of, or corporation
owned, controlled or sponsored by, the United States of America that are generally considered in
the securities industry to be implicit obligations of the United States of America.

     “Hedging Obligations” means, with respect to any Person, the obligations of such Person under
any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement,
commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange
contract, currency swap agreement or similar agreement providing

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for the transfer, modification or
mitigation of interest rate, commodity or currency risks either generally or under specific
contingencies.

     “Holder” means the Person in whose name a Bond is registered on the Registrar’s books.

     “Indebtedness” means, with respect to any Person, without duplication:

     (a) any indebtedness of such Person, whether or not contingent:

     (i) in respect of borrowed money;

     (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit
or bankers’ acceptances (or, without duplication, reimbursement agreements in respect
thereof);

     (iii) representing the balance deferred and unpaid of the purchase price of any
property (including capitalized lease obligations), except (A) any such balance that
constitutes a trade payable or similar obligation to a trade creditor, in each case accrued
in the ordinary course of business and (B) any earn-out obligations until such obligation
becomes a liability on the balance sheet of such Person in accordance with GAAP; or

     (iv) representing net obligations under any Hedging Obligations;

if and to the extent that any of the foregoing Indebtedness (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with GAAP;

     (b) to the extent not otherwise included, any obligation by such Person to be liable for, or
to pay, as obligor, guarantor or otherwise on, the obligations of the type referred to in clause
(a) of a third Person (whether or not such items would appear upon the balance sheet of the such
obligor or guarantor), other than by endorsement of negotiable instruments for collection in the
ordinary course of business; and

     (c) to the extent not otherwise included, the obligations of the type referred to in clause
(a) of a third Person secured by a Lien on any asset owned by such first Person, whether or not
such Indebtedness is assumed by such first Person.

     “Indenture” means this Indenture as amended or supplemented from time to time.

     “Indirect Participant” means an entity that, with respect to any Depositary, clears through or
maintains a direct or indirect, custodial relationship with a Participant.

     “Interest Payment Date” with respect to any Bond means the dates set for the payment of
interest with respect to the Bonds of any series, provided that if such Interest Payment Date falls
on a day that is not a Business Day, interest due on such Interest Payment Date shall be payable on
the next succeeding Business Day.

     “Legal Defeasance” has the meaning set forth in Section 14.04(b).

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     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit, arrangement,
encumbrance, security interest, lien (statutory or otherwise), or preference, priority or other
security or similar agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).

     “Maturity” when used with respect to any Bond means the date on which the principal of such
Bond or an installment of principal becomes due and payable as therein or herein provided, whether
at the Stated Maturity or by declaration of acceleration, call for redemption, repayment or
otherwise.

     “Moody’s” means Moody’s Investor Services, Inc.

     “Mortgaged Property” has the meaning set forth in the first paragraph of the Granting Clauses
in the Recitals of this Indenture.

     “Net Earnings Certificate” has the meaning set forth in Section 2.02(B).

     “New or Additional Property” has the meaning set forth in Section 2.02(A).

     “1934 Act Reporting Company” has the meaning set forth in Section 11.02.

     “Officers’ Certificate” means a certificate signed by the Chairman of the Board of Directors,
the Chief Executive Officer, the President, the Chief Financial Officer, or a Vice President and by
the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee.

     “Opinion of Counsel” means a written opinion of counsel, who may be counsel to the Company
(including an employee of the Company).

     “Outstanding” has the meaning set forth in Section 2.17.

     “Outstanding Bonds” has the meaning set forth in Section 2.17.

     “Parent” means California Water Service Group, a Delaware corporation.

     “Participant” means, with respect to the Depositary, a Person who has an account with the
Depositary.

     “Paying Agent” has the meaning set forth in Section 2.12.

     “Payment Default” has the meaning set forth in Section 7.01(c).

     “Permanent Improvements, Extensions or Additions” has the meaning set forth in Section
2.02(A).

     “Permitted Liens” means, as of any particular time, any of the following:

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     (a) to the extent the Company consolidates with, or merges into, or purchases all or
substantially all of the assets of, another entity, Liens on the assets of such entity in
existence on the date of such consolidation, merger or purchase and securing Indebtedness of
such entity, provided that such Indebtedness and Liens were not created or incurred in
anticipation of such consolidation, merger or purchase and do not extend to any other
Mortgaged Property of the Company in existence immediately prior to the consolidation,
merger or purchase;

     (b) (i) Liens on any asset owned by the Company securing Indebtedness (including
capitalized lease obligations) incurred in the ordinary course of business to finance the
purchase, lease or improvement of such asset, or the replacement or
refinancing thereof, if the contract or other agreement in which such Lien is granted
(or the documentation providing for such Indebtedness) does not prohibit the creation of any
other Lien on such asset; provided that such Liens do not extend to any asset other than the
asset acquired, leased or improved; and provided further that the principal amount of the
Indebtedness secured thereby does not exceed the cost or fair market value, whichever is
lower, of the property acquired, leased or improved on the date of such acquisition, lease
or improvement and (ii) as to property acquired by the Company after the Closing Date, Liens
existing or placed thereon at the time of the acquisition thereof; provided that such Liens
do not extend to any other Mortgaged Property; and provided further that the principal
amount of the Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property acquired on the date of such acquisition;

     (c) Liens for taxes, assessments and other governmental charges or requirements which
are not delinquent or which are being contested in good faith by appropriate proceedings;

     (d) mechanics’, workmen’s, repairmen’s, materialmen’s, warehousemen’s and carriers’
Liens, other Liens incident to construction, Liens or privileges of any employees of the
Company for salary or wages earned, but not yet payable, and other Liens, including, without
limitation, Liens for workers’ compensation awards, arising in the ordinary course of
business for charges or requirements which are not delinquent or which are being contested
in good faith and by appropriate proceedings;

     (e) easements, encumbrances, rights-of-way, reservations, reversionary rights or other
rights of others in, on, over or across, and laws, regulations and restrictions affecting,
and defects, irregularities, exceptions and limitations in title to, the Mortgaged Property
or any part thereof; provided, however, that such easements, encumbrances, leases,
reservations, reversionary rights, other rights, laws, regulations, restrictions, defects,
irregularities, exceptions and limitations do not materially impair the use by the Company
of the Mortgaged Property considered as a whole for the purposes for which it is held by the
Company;

     (f) defects, irregularities, exceptions and limitations in title to real property
subject to rights-of-way or other similar rights in favor of the Company or used or to be
used by the Company primarily for right-of-way purposes or real property held under

15

 

lease,
easement, license or similar right; provided, however, that (i) the Company shall have
obtained from the apparent owner or owners of such real property a sufficient right, by the
terms of the instrument granting such right-of-way, lease, easement, license or similar
right, to the use thereof for the purposes for which the Company acquired the same, (ii) the
Company has power under eminent domain or similar statutes to remove such defects,
irregularities, exceptions or limitations or (iii) such defects, irregularities, exceptions
and limitations may be otherwise remedied without undue effort or expense; and defects,
irregularities, exceptions and limitations in title to flood lands, flooding rights or water
rights;

     (g) leases existing at the Closing Date, affecting Mortgaged Properties owned by the
Company at said date and renewals and extensions thereof; and leases affecting such
Mortgaged Properties entered into after the Closing Date or affecting Mortgaged Properties
acquired by the Company after such date which, in either case, (i) have respective terms of
not more than twenty years (including extensions or renewals at the option of the tenant) or
(ii) do not materially impair the use by the Company of such properties for the respective
purposes for which they are held by the Company; provided that if any such lease is
subordinated to the Lien of this Indenture on terms taken as a whole substantially as set
forth in Exhibit B hereto, or on other terms reasonably satisfactory to the Trustee, the
Trustee upon Company Request shall execute and deliver a non-disturbance agreement
substantially as set forth in Exhibit B hereto, or in a form otherwise reasonably
satisfactory to the Trustee;

     (h) Liens vested in lessors, licensors, franchisors or permittors for rent or other
amounts to become due or for other obligations or acts to be performed, the payment of which
rent or other amounts or the performance of which other obligations or acts is required
under leases, subleases, licenses, franchises or permits, so long as the payment of such
rent or other amounts or the performance of such other obligations or acts is not delinquent
or is being contested in good faith and by appropriate proceedings;

     (i) controls, restrictions, obligations, duties or other burdens imposed by federal,
state, municipal or other law, or by rules, regulations or orders of governmental
authorities upon the Mortgaged Property or any part thereof or the operation or use thereof
or upon the Company with respect to the Mortgaged Property or any part thereof or the
operation or use thereof or with respect to any franchise, grant, license, permit or public
purpose requirement, or any rights reserved to or otherwise vested in governmental
authorities to impose any such controls, restrictions, obligations, duties or other burdens;

     (j) rights which governmental authorities may have by virtue of franchises, grants,
licenses, permits or contracts, or by virtue of law, to purchase, recapture or designate a
purchaser of or order the sale of the Mortgaged Property or any part thereof, to terminate
franchises, grants, licenses, permits, contracts or other rights or to regulate the property
and business of the Company; and any and all obligations of the Company correlative to any
such rights;

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     (k) Liens required by law or governmental regulations (i) as a condition to the
transaction of any business or the exercise of any privilege or license, (ii) to enable the
Company to maintain self-insurance or to participate in any funds established to cover any
insurance risks, (iii) in connection with workers’ compensation, unemployment insurance,
social security, any pension or welfare benefit plan or (iv) to share in the privileges or
benefits required for companies participating in one or more of the arrangements described
in clauses (ii) and (iii) above;

     (l) Liens on the Mortgaged Property or any part thereof which are granted by the
Company to secure duties or public or statutory obligations or to secure, or serve in lieu
of, surety, stay or appeal bonds;

     (m) rights reserved to or vested in others to take or receive any part of any coal,
ore, gas, oil and other minerals, any timber or any electric capacity or energy, gas, water,
steam and any other products, developed, produced, manufactured, generated, purchased or
otherwise acquired by the Company or by others on property of the Company;

     (n) (i) rights and interests of Persons other than the Company arising out of
contracts, agreements and other instruments to which the Company is a party and which relate
to the common ownership or joint use of property; and (ii) all Liens on the interests of
Persons other than the Company in property owned in common by such Persons and the Company
if and to the extent that the enforcement of such Liens would not adversely affect the
interests of the Company in such property in any material respect;

     (o) any restrictions on assignment or requirements of any assignee to qualify as a
permitted assignee or a public utility or public service corporation;

     (p) any Liens which have been bonded for the full amount in dispute or for the payment
of which other adequate security arrangements have been made;

     (q) Liens securing loans made by The California Department of Water Resources or other
governmental agency to the Company in connection with the installation, upgrade, or
replacement of infrastructure to ensure the quality of drinking water and the protection of
public health; and

     (r) Liens granted in favor of the Trustee pursuant to this Indenture and the Bonds.

     “Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, joint stock company, trust, estate, unincorporated organization or government
or any agency or political subdivision thereof or any other entity.

     “Prior Lien Debt” has the meaning given in Section 3.12.

     “protected purchaser” has the meaning set forth in Section 2.16.

17

 

     “PUC” means the California Public Utilities Commission or any commission or other public
agency succeeding to or otherwise exercising the powers vested in the California Public Utilities
Commission as of the Closing Date.

     “Redemption Date” means the date fixed for redemption of any Bond pursuant to this Indenture.

     “Redemption Price” means the price the Company shall pay to redeem Bonds of any series
pursuant to the terms thereof.

     “Registrar” has the meaning specified in Section 2.12.

     “Regular Record Date” for the interest payable on the Bonds of any series on any Interest
Payment Date means the dates designated as the record dates in the Bonds of any such series.

     “Responsible Officer” means any officer within the corporate trust department of the Trustee
who customarily performs functions similar to those performed by the Persons who at the time shall
be such officers, respectively, or to whom any corporate trust matter is referred because of such
person’s knowledge of and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.

     “S&P” means Standard & Poor’s, a Division of The McGraw-Hill Companies, Inc.

     “Special Record Date” has the meaning set forth in Section 2.20(B)(1).

     “Stated Maturity” when used with respect to any Bond or any payment of principal thereof or
premium thereon or interest thereon means the date specified in such Bond or in this Indenture, as
the date on which the principal of such Bond or such payment of principal, premium or interest is
due and payable.

     “Substituted Property” has the meaning specified in Section 5.02(1).

     “Successor Corporation” has the meaning specified in Section 9.02.

     “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb).

     “Trustee” means U.S. Bank National Association until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean
or include each Person who is then a Trustee hereunder.

     SECTION 1.02. Rules of Construction.

     Unless the context otherwise requires:

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

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     (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with
GAAP and all financial calculations and determinations contemplated by this Indenture shall be made
in conformity with GAAP;

     (c) “or” is not exclusive;

     (d) “including” means “including without limitation”;

     (e) words in the singular include the plural and words in the plural include the singular;

     (f) all exhibits are incorporated by reference herein and expressly made a part of this
Indenture;

     (g) all references to articles, sections and exhibits (and subparts thereof) are to this
Indenture;

     (h) all references to statutes or rules (or their subparts) include amendments and replacement
or successor provisions; and

     (i) all references to Persons include their successors.

     SECTION 1.03. Incorporation by Reference of the Trust Indenture Act.

     This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by
reference in and made a part of this Indenture. The following TIA terms have the following
meanings:

     “indenture securities” means the Bonds.

     “indenture security holder” means a Holder.

     “indenture to be qualified” means this Indenture.

     “indenture trustee” or “institutional trustee” means the Trustee.

     “obligor” on the indenture securities means the Company and any other obligor on the Bonds.

     All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by Commission rule have the meanings assigned to them by
such definitions.

ARTICLE II

 The Bonds

     SECTION 2.01. Bonds Generally. (A) Amount Unlimited; Issuable in Series; Equal Security of All Bonds. The
aggregate principal amount of Bonds that may be authorized pursuant to this Article II and
authenticated or delivered under this Indenture is unlimited, except

19

 

by the terms set forth herein,
and shall be designated generally as the “First Mortgage Bonds”. The Bonds may be issued in one or
more series.

     All Bonds issued under and pursuant to this Indenture and at any time Outstanding shall in all
respects be equally and ratably secured hereby, without preference, priority or distinction on
account of the actual date or dates thereof or of the time or times of the issue or Maturity of
said Bonds, or of any of them, so that all Bonds at any time issued and Outstanding hereunder shall
have the same right, Lien and preference under and by virtue of this Indenture, and shall all be
equally and ratably secured hereby, with like effect as if they had all been made, issued and
authenticated simultaneously on the Closing Date, whether the same, or any of them, shall actually
be sold or disposed of at such date, or whether they, or any of them, shall be sold or disposed of
at some future date, or whether they, or any of them, shall have been authorized to be issued as of
the Closing Date, or may be authorized to be issued hereafter pursuant to other provisions of this
Article II.

     (B) General Provisions as to Documents Required for Authentication and Delivery of Bonds.
Whenever requesting the authentication and delivery under this Article II of any Bonds issuable
hereunder, the Company shall (except where otherwise specified) furnish the Trustee, in addition to
any other instruments elsewhere in this Article II required, the following:

     (1) A Board Resolution authorizing the issuance, authentication and delivery of Bonds
of such series, specifying the series, maturities (if Bonds of such series are of serial
maturities), and principal amount of Bonds called for, and designating the officer or
officers of the Company to whom or upon whose order shall be delivered the Bonds of which
the authentication and delivery is called for.

     (2) In case the Bonds to be authenticated and delivered are of a series not theretofore
created, either a Board Resolution or an indenture supplemental hereto authorized by a Board
Resolution, designating the new series to be created and prescribing:

     (a) the title of the Bonds of the series, including CUSIP number(s) (which
shall distinguish the Bonds of the series from Bonds of any other series), if any;

     (b) any limit upon the aggregate principal amount of the Bonds of the series
which may be authenticated and delivered under this Indenture (except for Bonds
authenticated and delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Bonds of the series pursuant to Sections 2.15, 2.16, 2.18, 4.07
and 12.06);

     (c) the date or dates on which the principal of any Bonds of the series is
payable;

     (d) the rate or rates at which any Bonds of the series shall bear interest, if
any, the date or dates from which any such interest shall accrue, the interest
payment dates on which any such interest shall be payable and the Regular Record
Date for any such interest payable on any Interest Payment Date;

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     (e) the place or places where the principal of and any premium and interest on
any Bonds of the series shall be payable;

     (f) the period or periods within which, the price or prices at which and the
terms and conditions upon which any Bonds of the series may be redeemed, in whole or
in part, at the option of the Company and, if other than by a resolution of the
Board of Directors, the manner in which any election by the Company to redeem the
Bonds shall be evidenced;

     (g) if the amount of principal of or any premium or interest on any Bonds of
the series may be determined with reference to a financial or economic measure or
pursuant to a formula, the manner in which such amounts shall be determined;

     (h) if other than the entire principal amount thereof, the portion of the
principal amount of any Bonds of the series which shall be payable upon declaration
of acceleration of the Maturity thereof pursuant to Section 7.01;

     (i) if the principal amount payable at the Stated Maturity of any Bonds of the
series will not be determinable as of any one or more dates prior to the Stated
Maturity, the amount which shall be deemed to be the principal amount of such Bonds
as of any such date for any purpose thereunder or hereunder, including the principal
amount thereof which shall be due and payable upon any maturity other than the
Stated Maturity or which shall be deemed to be Outstanding as of any date prior to
the Stated Maturity (or, in any such case, the manner in which such amount deemed to
be the principal amount shall be determined);

     (j) if other than by a resolution of the Board of Directors, the manner in
which any election by the Company to defease any Bonds of the series pursuant to
Section 14.04 shall be evidenced; or, that the Bonds of the series, in whole or any
specified part, shall not be defeasible pursuant to Section 14.04;

     (k) if any Bonds of the series shall be issuable as Definitive Bonds or if any
Bonds of the series shall be issuable in whole or in part in the form of one or more
Global Bonds and, in such case, the respective Depositaries for such Global Bonds,
the form of any legend or legends which shall be borne by any such Global Bond in
addition to or in lieu of that set forth in Section 2.15(F) and any circumstances in
addition to or in lieu of those set forth in Section 2.15 in which any such Global
Bonds may be exchanged in whole or in part for Bonds registered, and any transfer of
such Global Bond in whole or in part may be registered, in the name or names of
Persons other than the Depositary for such Global Bond or a nominee thereof;

     (l) any addition to or change in the Events of Default which apply to any Bonds
of the series and any change in the right of the Trustee or the requisite

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Holders of
such Bonds to declare the principal amount thereof due and payable pursuant to
Section 7.01;

     (m) any addition to, deletion from or change in the covenants set forth in
Article III which apply to Bonds of the series;

     (n) the designation of the Trustee in respect of Bonds of the series;

     (o) if applicable, that any Bonds of the series shall be guaranteed and the
terms and conditions, if any, upon which such Bonds shall be guaranteed and, if
applicable, upon which such guarantees may be subordinated to other Indebtedness of
the respective guarantors;

     (p) if applicable, that any Bonds of the series shall be convertible into, or
exchangeable for, any other securities issued by the Company or any other Persons
and the terms and conditions, if any, upon which such Bonds shall be convertible or
exchangeable; and

     (q) any other terms of the series (which terms shall not be inconsistent with
the provisions of this Indenture).

All Bonds of any one series shall be substantially identical except as to denomination and
except as may otherwise be provided in or pursuant to the Board Resolution referred to above
and (subject to Section 2.10(A)) set forth, or determined in the manner provided, in any
such indenture supplemental hereto. All Bonds of any one series need not be issued at one
time and, unless otherwise provided in or pursuant to the Board Resolution referred to above
and (subject to Section 2.10(A)) set forth, or determined in the manner provided in any such
indenture supplemental hereto with respect to a series of Bonds, additional Bonds of a
series may be issued, at the option of the Company, without the consent of any Holder, at
any time and from time to time.

     (3) Either (i) an Officers’ Certificate certifying that the documents attached thereto
constitute evidence of the authorization, approval or consent of the PUC with respect to the
issuance of the Bonds or (ii) an Opinion of Counsel that no such prior approval is necessary
for the issuance of the Bonds.

     (4) An Opinion of Counsel that all instruments furnished such Trustee conform to the
requirements of this Indenture, constitute sufficient authority under this Indenture for it
to authenticate and deliver the Bonds applied for and that all laws and requirements in
respect of the authentication and delivery thereof by the Trustee have been complied with,
and that the authentication and delivery of the Bonds then applied for will not make the
total amount of Outstanding Bonds exceed the amount permitted by law.

     (5) An Officers’ Certificate complying with the provisions of Section 15.01, and
stating that all conditions precedent provided for in this Indenture which relate to the
authentication and delivery of the Bonds applied for have been complied with.

22

 

     (6) An Opinion of Counsel, which may be the same Opinion of Counsel as provided
pursuant to clause (4) above, complying with the provisions of Section 15.01, and stating
that in his or their opinion all conditions precedent provided for in the Indenture which
relate to the authentication and delivery of the Bonds applied for have been complied with.

     SECTION 2.02. Authentication and Delivery of Bonds Against Property Additions. (A) Amount of Bonds Which
May Be Issued; Property Additions Which May Be Made Basis for Issue of Bonds. Subject as above in
Section 2.01 provided, from time to time after the Closing Date the Company, in addition to the
Bonds to be issued on the Closing Date and the Bonds authorized to be issued pursuant to other
provisions of this Article II, may execute, and the Trustee shall authenticate and deliver
additional Bonds hereby secured for an aggregate principal amount not exceeding the sum of (i)
662/3% of the cash cost to the Company, or of the Fair Value to the Company
should such Fair Value be less than such cash cost, of items of property constructed or acquired
subsequent to the Closing Date, properly chargeable (under the then existing rules and regulations
of the PUC, or if there be no such body or no such pertinent rules or regulations, under GAAP) as
additions to property account, such items of property being hereinafter in this Indenture referred
to as “Permanent Improvements, Extensions or Additions” or as “New or Additional Property” and (ii)
if then available pursuant to the terms of this Section 2.02, then existing and unused Additions
Credit, if any; provided that if any such Permanent Improvements, Extensions or Additions or any
such New or Additional Property shall have been constructed or acquired in whole or in part through
the issue or delivery of securities in payment therefor rather than cash, the Fair Value in cash of
any such securities at the time of the issue or delivery thereof in payment for such Permanent
Improvements, Extensions or Additions or for such New or Additional Property (certified as
hereinafter provided) shall be included in computing the cash cost of the Permanent Improvements,
Extensions or Additions or of the New or Additional Property so constructed or acquired; and
provided further that for any issuance of Bonds under this Section 2.02 if any of the property
subject to the Lien of this Indenture shall be condemned or sold and released from the Lien of this
Indenture since the later of the Closing Date and the date of the last issuance of Bonds pursuant
to this Section 2.02 and the Company receives as consideration therefor a sum in cash, obligations
or property having a Fair Value aggregating less than the book value of the property so condemned
or sold then, unless the consideration for such condemnation or sale shall have been received by
the Company entirely in cash and such cash shall have been applied to the purchase and cancellation
or redemption of Bonds within one year after the delivery of such consideration to the Trustee, the
amount of the additions to property which may be made the basis for such issuance of additional
Bonds under this Section 2.02(A) shall be reduced by the amount of the book loss resulting from
such condemnation or sale.

     The words “New or Additional Property” shall mean, without duplication of any property of the
Company comprising Permanent Improvements, Extensions or Additions, any
property acquired by the Company after the Closing Date that consists of Mortgaged Property,
including the plants, property and equipment acquired as an entirety or substantially as an
entirety by the Company of any utility or utilities located entirely in the State of California and
primarily and principally engaged in (1) supplying water for domestic and industrial use, (2)
distributing gas (whether artificial or natural gas) for domestic and industrial use, (3) producing

23

 

or distributing electricity, (4) furnishing telephone service, or (5) combining any two or more of
said activities; provided that no telephone utility property shall be included in the class of
utilities hereinabove described unless (A) it is acquired by the Company from a seller which has
owned and which sells together both such telephone utility property and one or more other utility
properties of the character hereinabove described, and (B) in such case the gross revenue from said
other utility property or properties for the preceding fiscal year of such seller shall have
exceeded the gross revenue for such fiscal year from said telephone utility property. In addition,
New or Additional Property shall include items of Excepted Property elected by the Company to be
included in the Lien of this Indenture after the Closing Date.

     The words “Permanent Improvements, Extensions or Additions” shall mean, without duplication of
any property of the Company comprising New or Additional Property, any permanent improvement,
extension or addition to Mortgaged Property, and shall include:

     (a) the portion of the cost of Substituted Property that exceeds the original cost of
the property replaced by such Substituted Property;

     (b) Permanent Improvements, Extensions or Additions acquired or constructed on or after
the Closing Date to any Mortgaged Property in existence as of the Closing Date, whether
already constructed or erected or in process of construction or erection, so far as actually
constructed or erected; and

     (c) Permanent Improvements, Extensions or Additions, whether already constructed or
erected or in process of construction or erection, so far as actually constructed or
erected, in respect of New or Additional Property acquired by the Company on or after the
Closing Date.

Anything to the contrary notwithstanding, the words “New or Additional Property” or “Permanent
Improvements, Extensions or Additions” shall not include:

     (i) the portion of the cost of Substituted Property equal to the original cost of the
property replaced by such Substituted Property, or New or Additional Property or Permanent
Improvements, Extensions or Additions acquired or constructed with the proceeds of any
property released pursuant to Section 5.03 or property taken by the power of eminent domain
or purchased or ordered sold by any municipality or other public body or agency in the
exercise of any right which it shall have had to purchase, or designate a purchaser of, or
order the sale of the same, or with insurance moneys received in payment of losses or
derived from any insurance reserve of the Company;

     (ii) New or Additional Property or Permanent Improvements, Extensions or Additions
acquired or constructed by the Company and used to provide any increase required by the
provisions of clause (2) or clause (3) of Section 2.03;

     (iii) Permanent Improvements, Extensions or Additions made prior to the Closing Date;

     (iv) properties other than properties consisting of, used in or related to utilities
located in the State of California supplying water for domestic and industrial use,

24

 

distributing gas (whether artificial or natural gas) for domestic and industrial use,
producing or distributing electricity or furnishing telephone service;

     (v) Excepted Property; and

     (vi) any property on which there exists a Lien described in clause (q) of the
definition of Permitted Liens.

     The words “Additions Credit” shall mean an amount equal to the sum of (i) with respect to each
prior issuance of Bonds under Section 2.02, the excess of (a) 662/3% of the
cash cost to the Company, or of the Fair Value to the Company should such Fair Value be less than
such cash cost, of the Permanent Improvements, Extensions or Additions and New or Additional
Property made the basis for such issuance of Bonds under Section 2.02 over (b) the principal amount
of Bonds issued under Section 2.02 with respect to such issuance, plus (ii) the aggregate principal
amount of Bonds previously issued under this Indenture which have been redeemed or repaid since the
Closing Date; provided that Additions Credit shall not include any amount that has previously been
added to Permanent Improvements, Extensions or Additions or New or Additional Property in respect
of a prior issuance of Bonds pursuant to Section 2.02 or, with respect to Bonds previously issued
under this Indenture, any amount attributable to Bonds the redemption or repayment of which has
been made the basis for the issuance of additional Bonds pursuant to Section 2.08. The Company
shall have the right, at any time and from time to time, to establish Additions Credit (i) with
respect to Permanent Improvements, Extensions or Additions and New or Additional Property by
furnishing the Trustee with the instruments provided for in clauses (2), (3), (4), (5) and (6) of
Section 2.02(B), with such additions, omissions and modifications thereof as may be necessary to
make the same applicable and (ii) with respect to Bonds previously issued under this Indenture that
have been repaid or redeemed, by delivering to the Trustee evidence reasonably satisfactory to the
Trustee of the repayment or redemption of such previously issued Bonds. The foregoing
notwithstanding, in no event shall any Additions Credit be available pursuant to this Section 2.02
at any time prior to the repayment in full or other satisfaction in full of amounts owing in
respect of the Series CC Bonds, the Series KK Bonds, the Series GGG Bonds and the Series HHH Bonds,
unless otherwise agreed to by Holders holding a majority in aggregate principal amount of each of
the Series CC Bonds, the Series KK Bonds, the Series GGG Bonds and the Series HHH Bonds.

     (B) Documents to Be Furnished to the Trustee. Bonds shall be authenticated and delivered by
the Trustee under this Section 2.02 only upon receipt by the Trustee, in addition to
the resolutions, certificates and other instruments provided for in Section 2.01(B), of the
following:

     1. A certificate (a “Net Earnings Certificate”), signed by the President or the Chief
Financial Officer and by the Treasurer or an Assistant Treasurer of the Company, which shall
comply with the provisions of Section 15.01 and shall state in substance as follows:

     That the net earnings of the Company available for interest, reserves
(other than any reserve for depreciation, replacements or renewals) and
dividends, calculated as hereinafter provided, for a period of any twelve
consecutive

25

 

calendar months within the fourteen calendar months immediately
preceding the calendar month in which the application for the authentication and
delivery of Bonds is made, have been in the aggregate equal to at least twice
the annual interest charges on the aggregate principal amount of (a) all Bonds
to be Outstanding under this Indenture immediately after the authentication and
delivery of the Bonds applied for (excepting any of such Bonds for the payment,
purchase or redemption of which the necessary funds shall have been deposited in
trust with the Trustee hereunder, together with irrevocable instructions to
apply such funds to the payment, purchase or redemption of such Bonds), and (b)
all Indebtedness secured by a Lien or Liens prior to the Lien of this Indenture
on any New or Additional Property acquired by the Company on or after the
Closing Date.

     Such certificate shall set forth the amount of such net earnings, and shall
show the method of calculation of the same to be as follows:

     From the total of the operating and non-operating revenues of the
Company there shall be deducted all operating expenses of the Company,
including therein rentals, repairs, maintenance, insurance, any current
reserves for renewals, replacements or depreciation, and taxes (except
excess or other profits taxes and income taxes which are imposed on income
after payment of interest); provided, however, that of the net earnings
stated in any such certificate not more than 15% in total amount shall be
derived from the following sources: (1) non-operating income of the Company,
(2) properties in which the Company has a leasehold estate only, (3) any
operations of the Company other than the businesses of supplying water for
domestic and industrial use, distributing gas (whether artificial or natural
gas) for domestic and industrial use, producing and distributing electricity
and furnishing telephone service and (4) income from property not subject to
the Lien of this Indenture.

     In case the Company shall have acquired any property within or after the
period for which the calculation of earnings is made, the Company in computing
its net earnings shall be entitled to include, to the extent that the
same may not have been otherwise included, the net earnings of such property for
the whole of such period. The net earnings of any property so acquired for the
period preceding acquisition shall be ascertained and computed as if such
property had been owned by the Company during such period. In case the Company
shall have disposed of any property within or after the period for which the
calculation of earnings is made, the Company in computing its net earnings shall
exclude the net earnings of such property for such period. If the Net Earnings
Certificate provided for in this Section 2.02(B) shall be signed by such
officers of a Successor Corporation it shall contain a statement to the effect
that such net earnings do not include the earnings of any property of such
Successor Corporation excepted from the Lien hereof under the provisions of
Section 9.03.

26

 

     If the twelve-month period in respect of which the net earnings are being
calculated is a period with respect to which an annual report is required to be
filed by Parent pursuant to Section 11.02, the Net Earnings Certificate shall be
signed by an accountant, who may be an officer or employee of the Company,
except that if such Net Earnings Certificate is being filed with the Trustee in
connection with an application for the authentication and delivery of Bonds and
if the aggregate principal amount of all Bonds then being applied for and of all
other Bonds authenticated and delivered under this Indenture since the
commencement of the then current calendar year (other than Bonds with respect to
which a certificate of an accountant is not required, or with respect to which a
certificate of an independent public accountant has previously been furnished)
is ten percent (10%) or more of the Outstanding Bonds, such certificate shall be
signed by an independent public accountant reasonably acceptable to the Trustee.
If the twelve-month period in respect of which the net earnings are being
calculated is a period with respect to which an annual report is not required to
be filed, the Net Earnings Certificate shall be required to be signed only by
the President or a Vice-President and the Treasurer or an Assistant Treasurer of
the Company.

     2. An Officers’ Certificate, dated not more than 60 calendar days prior to the
application for the authentication and delivery of Bonds, which shall comply with the
provisions of Section 15.01 and shall state in substance as follows:

          (a) that (i) the Company has constructed or acquired certain New or Additional
Property and that the Company or a predecessor or predecessors in title has or have
constructed or acquired certain Permanent Improvements, Extensions or Additions (to
be briefly described in the certificate); (ii) in the case of any such New or
Additional Property, the same was constructed or acquired by the Company on or after
the Closing Date; (iii) in the case of any such Permanent Improvements, Extensions
or Additions, if the same were to Mortgaged Properties in existence as of the
Closing Date, they were constructed or acquired on or after the Closing Date, or
that if the same were to New or Additional Property acquired
by the Company on or after the Closing Date, they were constructed or acquired
subsequent to the acquisition of such New or Additional Property; (iv) the items of
property so described constitute New or Additional Property or Permanent
Improvements, Extensions or Additions as defined in this Section 2.02 and are
desirable in the proper conduct of the business of the Company; and stating whether
or not such New or Additional Property or Permanent Improvements, Extensions or
Additions include any property which, within six months prior to the date of
acquisition thereof by the Company, has been used or operated by a Person or Persons
other than the Company, in a business similar to that in which it has been or is to
be used or operated by the Company; and (v) whether or not since the later of the
Closing Date and the date of the last issuance of Bonds pursuant to this Section
2.02, any Mortgaged Property has been condemned or sold and released from the Lien
of this Indenture for which the Company received as consideration a sum in cash,
obligations or property having a Fair Value aggregating less than the book value of
the property so condemned or sold and, if

27

 

there have been any such condemnations or
sales, stating (1) the amount, character and Fair Value of the consideration
received on each such condemnation or sale and delivered to the Trustee, (2) the
book loss resulting from each such condemnation or sale and (3) the total amount in
cash received as the entire consideration for any such condemnation or sale and
applied to the purchase and cancellation or redemption of Bonds within one year
after the respective dates on which said cash consideration was deposited with the
Trustee;

     (b) (i) the cash cost thereof; (ii) that such cash cost was computed as
required by the provisions of this Section 2.02 and of Section 2.03; (iii) to what
extent the cash cost so computed consists of cash expended or securities issued or
delivered in payment for said property and the principal amount of Indebtedness
secured by Liens required to be included in computing such cash cost by the
provisions of Section 2.03; (iii) what, in the opinion of the signers, is the Fair
Value to the Company of such New or Additional Property and Permanent Improvements,
Extensions or Additions; and (iv) if any of such New or Additional Property or
Permanent Improvements, Extensions or Additions include any property which, within
six months prior to the date of acquisition thereof by the Company has been used or
operated by a Person or Persons other than the Company, in a business similar to
that in which it has been or is to be used or operated by the Company, stating
separately the Fair Value to the Company of any such property and whether or not
such Fair Value is less than Twenty-five Thousand Dollars ($25,000) and less than
one percent (1%) of the aggregate principal amount of the Bonds at the time
Outstanding. Such cash cost may include such allowance for interest during
construction, engineering and other items of overhead as in the opinion of the
signers is proper;

     (c) that there are on record, undischarged, no Liens upon or against such New
or Additional Property or Permanent Improvements, Extensions or Additions other than
Permitted Liens;

     (d) that no part of such New or Additional Property or Permanent Improvements,
Extensions or Additions, specified in such certificate, (i) has in any preceding
certificate, been made the basis of any other issue of Bonds hereunder (other than
with respect to any issuance of Bonds for which there exists Additions Credit, if
then permitted by the terms of this Section 2.02), the basis of the withdrawal of
any money held by the Trustee hereunder or by any trustee under any instrument of
Lien prior to the Lien of this Indenture; (ii) includes the portion of the value of
Substituted Property equal to the original cost of the property replaced by such
Substituted Property, or has been constructed or acquired or restored to the Company
out of any insurance moneys or from any insurance reserve of the Company or the
proceeds of any property taken by eminent domain or the proceeds of the sale of any
property, or has been used to provide any increase required by the provisions of
clauses (2) or (3) of Section 2.03; or (iii) has been used as a credit against any
sinking fund provided for in any instrument of Lien prior to the Lien of this
Indenture;

28

 

     (e) that such New or Additional Property or Permanent Improvements, Extensions
or Additions was or were not constructed or acquired in whole or in part through the
issue or delivery of securities in payment therefor; or if such property was
constructed or acquired in whole or in part through the issue or delivery of
securities in payment therefor, such certificate shall state the amount and
character of the securities so issued or delivered;

     (f) that, to the knowledge of the signers, no Default or Event of Default has
occurred and is continuing; and

     (g) if then permitted by the terms of this Section 2.02, whether there is any
unused Additions Credit which the Company desires to use, in whole or in part, as a
basis for the authentication and delivery of such Bonds and, if so, a statement of
the entire amount of such Additional Credit which the Company desires to use.

     3. In case any Permanent Improvements, Extensions or Additions or any New or Additional
Property shall have been constructed or acquired in whole or in part through the issue or
delivery of securities, a certificate of an appraiser or other competent Person or firm, who
may be an officer or in the employ of the Company, reasonably acceptable to the Trustee,
stating the Fair Value of such securities at the time of the issue or delivery thereof in
payment for such Permanent Improvements, Extensions or Additions or such New or Additional
Property.

     4. An Opinion of Counsel, substantially in the form of Exhibit C-1 attached hereto,
with respect to the Lien of the Indenture on the Permanent Improvements, Extensions or
Additions or any New or Additional Property that are all or a portion of the basis for the
authentication and delivery of such Bonds, with such additions, omissions or modifications
thereof (i) as may be necessary to make the same applicable or (ii) as may
be beneficial to the interests of the Holders. Copies of any documents relied upon by
such Opinion of Counsel shall be provided to the Trustee in connection with the delivery of
such Opinion of Counsel to the extent not previously delivered to the Trustee.

     5. An Opinion of Counsel, to the effect that the Company has title to such Permanent
Improvements, Extensions or Additions or any New or Additional Property forming the basis of
the application for the authentication and delivery of Bonds pursuant to this Section 2.02,
subject to no Lien other than Permitted Liens. Such Opinion of Counsel may rely (a) with
respect to real property interests included as New or Additional Property, upon one or more
policies of title insurance that are issued after recordation with respect to such New or
Additional Property of this Indenture or a Memorandum of this Indenture (or that show the
Lien of this Indenture or a Memorandum of this Indenture as an encumbrance on such New or
Additional Property), (b) with respect to interests in personal property, upon a UCC search
performed by a recognized and reputable entity engaged in such business in the State of
California, or upon one or more policies of title insurance that are issued after filing
with the Secretary of State of California of appropriate financing statements (or
substantially simultaneously therewith) and (c) upon one or more certificates of the chief
financial officer of the

29

 

Company stating that the Company has title to such Permanent
Improvements, Extensions or Additions or any New or Additional Property forming the basis of
the application for the authentication and delivery of Bonds pursuant to this Section 2.02,
subject to no Lien other than Permitted Liens.

     6. A certificate of an engineer, appraiser or other expert, who may be an individual,
engineering firm, corporation or other Person and, except as hereinafter in this clause (6)
provided, may be an engineer, appraiser or other expert in the employ of the Company
reasonably acceptable to the Trustee, as to the Fair Value to the Company of any New or
Additional Property or Permanent Improvements, Extensions or Additions which are the basis
for the applicable issuance of Bonds under this Section 2.02. If such New or Additional
Property or Permanent Improvements, Extensions or Additions include any property which,
within six months prior to the date of acquisition thereof by the Company, has been used or
operated by a Person or Persons other than the Company in a business similar to that in
which it has been or is to be used or operated by the Company, and the Fair Value to the
Company of such property is not less than Twenty-five Thousand Dollars ($25,000) and not
less than one percent (1%) of the aggregate principal amount of the Bonds at the time
Outstanding, such certificate shall be made by an independent engineer, appraiser or other
expert reasonably acceptable to the Trustee, and if being furnished in connection with an
application for the authentication and delivery of Bonds, shall also cover the Fair Value to
the Company of any property so used or operated which, since the commencement of the then
current calendar year, has been subjected to the Lien of this Indenture and which has been
or is to be made the basis for the authentication and delivery of Bonds, the withdrawal of
cash constituting a part of the trust estate or the release of property or securities
subject to the Lien of this Indenture and as to which a certificate of an independent
engineer, appraiser or other expert has not previously been furnished.

     In the event that the Opinion of Counsel required by the aforesaid clause (5) this Section
2.02(B) shall specify any Lien or Liens on such property prior to the Lien of this Indenture
(except for Permitted Liens), then and in that event the Bonds then applied for shall be
authenticated and delivered by the Trustee subject to the conditions and limitations contained in
Section 2.03.

     SECTION 2.03. Conditions and Limitations on Authentication and Delivery of Bonds under Section 2.02
in Case of Prior Liens Against Property Additions.
In the event that any New or Additional Property or Permanent Improvements,
Extensions or Additions made the basis of an application for the authentication and
delivery of Bonds under the provisions of Section 2.02 is encumbered by a Lien or Liens prior to the Lien of
this Indenture, the principal amount of the Indebtedness secured by such Lien or Liens, subject, however, to the provisions
of Section 3.04, shall be included in computing the cash cost of the New or Additional Property or Permanent Improvements,
Extensions or Additions made the basis of such application unless previously included in any certificate furnished under this
Indenture. Subject as aforesaid, the Company may upon such application execute and the Trustee shall authenticate and deliver
such principal amount of Bonds as shall equal 662/3% of the cash cost of such New or Additional Property or Permanent Improvements,
Extensions or Additions, calculated as provided in Sections 2.02 and 2.03, or 662/3% of the Fair Value to the Company of such New or
Additional

30

 

Property or Permanent Improvements, Extensions or Additions, should such Fair Value be less than such cash cost, less
a principal amount of Bonds equal to the principal amount of the Indebtedness secured by such Lien or Liens unless the principal
amount of such Indebtedness has been previously deducted in any certificate furnished under this Indenture; provided, however, that
in the event that there shall exist against any such New or Additional Property any bonds or other Indebtedness, secured by any such
Lien as aforesaid, of an aggregate principal amount in excess of 662/3% of the cash cost, calculated as provided in Sections 2.02 and 2.03,
or of the Fair Value to the Company, should such Fair Value be less than such cash cost, of such New or Additional Property or Permanent
Improvements, Extensions or Additions, then and in that event no Bonds shall be issued under this Indenture for or on account of such New
or Additional Property or Permanent Improvements, Extensions or Additions, unless and until

     (1) the principal amount of such Indebtedness shall by payment, cancellation or
retirement of a portion thereof be reduced to a principal amount less than 662/3% of the cash
cost or Fair Value to the Company, whichever shall be less, of such New or Additional
Property or Permanent Improvements, Extensions or Additions;

     (2) the cash cost or Fair Value to the Company, whichever shall be less, of such New or
Additional Property or Permanent Improvements, Extensions or Additions shall by Permanent
Improvements, Extensions or Additions made thereto be increased to such extent that the
principal amount of such Indebtedness outstanding shall be less than 662/3% of such cash cost
or Fair Value, whichever shall be less, of such New or Additional Property or Permanent
Improvements, Extensions or Additions; or

     (3) the cash cost or Fair Value to the Company of Permanent Improvements, Extensions or
Additions to the other plants and properties of the Company, or of New or
Additional Property acquired by the Company, otherwise constituting a proper basis for
the issuance of Bonds under the terms of this Indenture but on account of which no Bonds
have been or shall be issued hereunder shall equal the amount of the increase required under
the provisions of clause (2) of this Section 2.03.

     In case the Company shall use any Permanent Improvements, Extensions or Additions to or about
its plants or properties, or any New or Additional Property acquired or constructed by it or any of
its predecessors in title, to provide any increase required by the provisions of clause (2) or
clause (3) of this Section 2.03, the Company shall furnish the Trustee with the instruments
provided for in clauses (2), (3), (4), (5) and (6) of Section 2.02(B), with such additions,
omissions and modifications thereof as may be necessary to make the same applicable.

     In the event that the cash cost, or the Fair Value to the Company, should such Fair Value be
less than such cash cost, of any Permanent Improvements, Extensions or Additions or of any New or
Additional Property used by the Company to provide any increase required by the provisions of
clause (2) or clause (3) of this Section 2.03, shall exceed the amount of the increase required by
said clause (2) or said clause (3), then and in that event Bonds may be issued under the provisions
of Section 2.02 for or on account of such Permanent Improvements, Extensions or Additions or such
New or Additional Property for a principal amount equal to 662/3% of the difference between such cash
cost or Fair Value to the Company, whichever shall be less, of such

31

 

Permanent Improvements,
Extensions or Additions or of such New or Additional Property and the amount of any increase
required by said clause (2) or said clause (3).

     Whenever any New or Additional Property or Permanent Improvements, Extensions or Additions
made the basis of any increase pursuant to the provisions of clause (3) of this Section 2.03 shall
be subject to any Lien or Liens prior to the Lien of this Indenture, there shall be deducted from
the cash cost or Fair Value to the Company, whichever shall be less, 150% of the aggregate
principal amount of the Indebtedness secured by such prior Liens, in order to determine whether
such cash cost or Fair Value, as the case may be, shall equal the amount of the increase required
by said clause (3).

     SECTION 2.04. Reservation of Additional Bonds and Delivery Thereof upon Compliance with Net
Earnings Requirements.
Upon any application by the Company for the authentication and delivery of Bonds under any of
the provisions of this Article II, the Company may execute and deliver to the Trustee the full
aggregate principal amount of Bonds to which it is entitled under the provisions of the section
under which application is made, without regard to the net earnings of the Company as evidenced by
the Net Earnings Certificate required to be submitted by the provisions of such section. The
Trustee shall thereupon authenticate said Bonds and shall deliver only such principal amount of
Bonds to the delivery of which the Company is entitled by the net earnings as evidenced by such Net
Earnings Certificate. The remaining Bonds shall be reserved by the Trustee and shall from time to
time thereafter in whole or in part be delivered upon receipt by the Trustee of a Net Earnings
Certificate in the form required by the provisions of the section under which said Bonds were
authenticated, evidencing net earnings sufficient to entitle the Company to the authentication and
delivery of the Bonds then applied for.

     SECTION 2.05. Reliance of Trustee upon Documents; Right and Duty to Make Independent
Investigation.
Subject to the provisions of Sections 10.01 and 10.03, the resolutions, certificates and other
instruments provided for in this Article II may be accepted by the Trustee as satisfactory and
conclusive evidence as to the statements therein contained and shall be full authority to the
Trustee for the authentication and delivery of Bonds; but before authenticating and delivering
Bonds applied for under any provision of this Article II the Trustee shall, if requested in writing
so to do by the Holders of not less than a majority in aggregate principal amount of the
Outstanding Bonds and furnished with security and indemnity satisfactory to it, cause to be made
such independent investigation as it may see fit, and, in that event, may decline to authenticate
or deliver such Bonds unless satisfied by such investigation of the truth and accuracy of the
matters so investigated. The expense of such investigation shall be paid by the Company, or if paid
by the Trustee shall be repaid by the Company promptly after demand with interest at the rate of
two percent (2%) per annum.

     SECTION 2.06. Authentication and Delivery of Bonds on or about the Closing Date.
Upon compliance with the provisions of Section 2.01(B) with respect to each such series of
Bonds, the Company may execute and the Trustee shall authenticate the following series of Bonds on
or about the Closing Date: (i) 9.86% First Mortgage Bonds due 2020, Series CC, in an aggregate
principal amount not to exceed $17,800,000, (ii) Series 6.94% First Mortgage Bonds due 2012, Series
KK, in an aggregate principal amount not to exceed $2,900,000, (iii) 5.875% First Mortgage Bonds
due 2019, Series LL, in an aggregate
principal amount not to exceed $100,000,000, (iv) 7.28% First
Mortgage Bonds due 2025, Series AAA, in an aggregate

32

 

principal amount not to exceed $20,000,000,
(v) 6.77% First Mortgage Bonds due 2028, Series BBB, in an aggregate amount not to exceed
$20,000,000, (vi) 8.15% First Mortgage Bonds due 2030, Series CCC, in an aggregate amount not to
exceed $20,000,000, (vii) 7.13% First
Mortgage Bonds due 2031, Series DDD, in an aggregate amount not to exceed $20,000,000, (viii)
7.11% First Mortgage Bonds due 2032, Series EEE, in an aggregate amount not to exceed $20,000,000,
(ix) 5.90% First Mortgage Bonds due 2017, Series FFF, in an aggregate amount not to exceed
$20,000,000, (x) 5.29% First Mortgage Bonds due 2022, Series GGG, in an aggregate amount not to
exceed $20,000,000, (xi) 5.29% First Mortgage Bonds due 2022, Series HHH, in an aggregate amount
not to exceed $20,000,000, (xii) 5.54% First Mortgage Bonds due 2023, Series III, in an aggregate
amount not to exceed $10,000,000, (xiii) 5.44% First Mortgage Bonds due 2018, Series JJJ, in an
aggregate amount not to exceed $9,091,000, (xiv) 4.58% First Mortgage Bonds due 2010, Series KKK,
in an aggregate amount not to exceed $10,000,000, (xv) 5.48% First Mortgage Bonds due 2018, Series
LLL, in an aggregate amount not to exceed $10,000,000, (xvi) 5.52% First Mortgage Bonds due 2013,
Series MMM, in an aggregate amount not to exceed $20,000,000, (xvii) 5.55% First Mortgage Bonds due
2013, Series NNN, in an aggregate amount not to exceed $20,000,000 and (xviii) 6.02% First Mortgage
Bonds due 2031, Series OOO, in an aggregate amount not to exceed $20,000,000.

     SECTION 2.07. Authentication and Delivery of Bonds Against Deposit of Cash; Application of
Cash Deposited.
Upon compliance by the Company with the provisions of Section 2.01(B), the Company may execute
and the Trustee shall from time to time authenticate and deliver additional Bonds hereunder upon
deposit with the Trustee of cash equal to the amount of the principal of the Bonds so requested to
be authenticated and delivered and upon receipt by the Trustee of a Net Earnings Certificate as
defined in clause (1) of Section 2.02(B). Such cash so deposited shall be held by the Trustee as
part of the trust estate and whenever the Company shall become entitled to the delivery of Bonds
under any of the provisions of this Article II then, upon compliance by the Company with the
provisions of the section under which it has become entitled to the delivery of Bonds, the Trustee
shall pay over in accordance with the order or orders of the Company, signed by its President or a
Vice-President and its Treasurer or an Assistant Treasurer, in lieu of each Bond to the delivery of
which the Company may then be so entitled a sum in cash equal to the principal amount of such Bond;
provided, however, that the Net Earnings Certificate provided for in any such section and the
resolutions, certificates and instruments required under the provisions of clauses (1), (2), (3)
and (4) of Section 2.01(B) shall not be required in connection with the payment to the Company or
upon its order of cash under this Section 2.07 and the Officers’ Certificate and Opinion of Counsel
required by clauses (5) and (6) of such Section 2.01(B) shall contain such additions, omissions and
modifications as may be necessary to make the same applicable to the payment of cash. If within a
period of two years after its deposit any cash so deposited shall not be withdrawn in lieu of
Bonds, or notice shall not have been given in writing signed by the President or a Vice-President
of the Company of its intention to apply for its withdrawal on the basis of specified New or
Additional Property or Permanent Improvements, Extensions or Additions then in process of
acquisition or construction, then such cash, upon Company Request, may be returned to the Company
or applied by the Trustee to the purchase or redemption of Bonds in the manner provided in Section
6.03 or in Article IV, as the case may be, of this Indenture. Until withdrawn, such cash shall draw
interest at such rate, if any, as the Trustee shall at the time allow on similar deposits, and (so
long as a Default known to the
Trustee shall not have occurred and be continuing), such interest shall be

33

 

paid by the Trustee
to or upon the order of the Treasurer or an Assistant Treasurer of the Company.

     SECTION 2.08. Authentication and Delivery of Bonds to Refund Outstanding Bonds under this
Indenture and Indebtedness Secured by Prior Liens on Property Additions.
From time to time hereafter the Company, upon compliance with the provisions of Section
2.01(B), may execute and the Trustee shall authenticate and deliver Bonds hereunder for the purpose
of paying, redeeming or refunding (a) any Indebtedness secured by any Lien or Liens prior to the
Lien of this Indenture upon any New or Additional Property acquired by the Company or upon any
Permanent Improvements, Extensions or Additions constructed by the Company, on or after the Closing
Date, and subject to which Lien or Liens the Company shall have acquired such New or Additional
Property, or constructed such Permanent Improvements, Extensions or Additions, if and whenever the
aggregate principal amount of Indebtedness secured by such Lien or Liens shall not exceed
662/3% of the cash cost, calculated as provided in Sections 2.02 and 2.03, or
the Fair Value, should such Fair Value be less than such cash cost, of such New or Additional
Property or Permanent Improvements, Extensions or Additions or shall, pursuant to the provisions of
clauses (1), (2) or (3) of Section 2.03, have been reduced to 662/3% of the
cash cost or Fair Value, whichever shall be less, of such New or Additional Property or Permanent
Improvements, Extensions or Additions; or (b) any Bonds theretofore issued under any of the
provisions of this Indenture; provided that no Bonds shall be authenticated and delivered under the
provisions of this Section 2.08 in excess of the principal amount of the Bonds, notes or other
Indebtedness so paid, redeemed or refunded (plus all accrued interest on such Indebtedness and the
amount of all expenses and premiums incurred in connection with such payment, redemption or
refund); provided further that after the repayment in full or other satisfaction in full of amounts
owing in respect of the Series CC Bonds, the Series KK Bonds, the Series GGG Bonds and the Series
HHH Bonds, unless otherwise agreed to by Holders holding a majority in aggregate principal amount
of each of the Series CC Bonds, the Series KK Bonds, the Series GGG Bonds and the Series HHH Bonds,
Bonds issued under this Section 2.08 may be issued after the payment, redemption or refunding with
cash on hand or other available funds of Indebtedness described in clause (a) above or Bonds
theretofore issued described in clause (b) above; and provided further that in no event shall any
such Bonds be authenticated and delivered under this Section 2.08 unless and until there shall have
been furnished the Trustee, in addition to the instruments provided for in Section 2.01(B), the
following:

     (A) Board Resolutions specifying the Indebtedness or Bonds theretofore paid, redeemed or
refunded, or simultaneously with the authentication and delivery of such additional Bonds, to
be paid or called for redemption, or redeemed, or authorizing the payment or redemption of
such Indebtedness or Bonds.

     (B) Evidence reasonably satisfactory to the Trustee of the payment, redemption, refund
or cancellation of such Indebtedness secured by a Lien or Liens prior to the Lien of this
Indenture or Bonds theretofore issued and Outstanding under this Indenture, in principal
amount equal to the principal amount of Bonds authentication
whereof is desired; provided that in lieu of Bonds theretofore issued there may be
deposited with the Trustee an amount of cash either

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     (1) equal to the principal amount, with interest thereon to the date fixed for
redemption, and the redemption premium thereon, if any, of all Bonds in substitution for
and in place of which such new Bonds are to be authenticated and delivered, of which
notice of redemption shall have been duly given or provision satisfactory to the Trustee
shall have been made for the giving of such notice, or

     (2) equal to the principal amount, with interest thereon to maturity, of all Bonds
theretofore issued in substitution for or in place of which such new Bonds are to be
authenticated and delivered.

     (C) An Officers’ Certificate stating in substance

     (1) if applicable, that the Indebtedness to be paid, redeemed or refunded (or, if then
permitted by this Section 2.08, theretofore paid, redeemed or refunded) is (or was) secured
by a Lien or Liens prior to the Lien of this Indenture upon New or Additional Property
acquired or Permanent Improvements, Extensions or Additions constructed by the Company on or
after the Closing Date, and subject to which Lien or Liens the Company acquired such
property (the certificate shall not be required to contain this statement in the case of
Bonds theretofore issued and Outstanding under this Indenture);

     (2) as applicable, that none of such Indebtedness or Bonds heretofore issued was
redeemed or paid by or through the operation of any insurance or partial release
provision hereof, or of the mortgage or other instrument securing the same, or with the
proceeds of the sale of or insurance upon any Mortgaged Property or to the Lien of such
mortgage or other instrument or through the operation of any sinking fund or any special
trust fund or any fund established hereby or pursuant to the provisions hereof or of any
such mortgage or other instrument securing such Indebtedness or purchased for
cancellation or redeemed pursuant to the provisions of Article VI of this Indenture;

     (3) that no Bonds have been theretofore authenticated and delivered or cash
withdrawn or credit taken under any of the terms of this Indenture or of any indenture
prior in Lien to the Lien hereof on any part of the Mortgaged Property on account of the
redemption or payment of such Indebtedness or Bonds heretofore issued; and

     (4) that no Default exists, to the knowledge of the signers.

     (D) In the event that any Bonds are to be authenticated and delivered to pay, redeem, or
refund any Bonds theretofore issued and Outstanding under this Indenture (or are to be
authenticated and delivered in respect of any Bonds theretofore issued and Outstanding under
this Indenture that were paid, redeemed or refunded with cash on hand or other available
funds, if then permitted by this Section 2.08) more than five years prior to the maturity of
the Bonds to be so paid, redeemed or refunded (or previously paid,
redeemed or refunded with cash on hand or other available funds, if then permitted by
this Section 2.08) and if the Bonds to be authenticated and delivered are to bear a higher
rate of interest than the Bonds to be paid, redeemed or refunded (or previously paid,
redeemed or refunded with cash on hand or other available funds, if then permitted by this
Section 2.08), the Net Earnings Certificate required by clause (1) of Section 2.02(B).

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     In the event that the certificate required by this Section 2.08(C) shall contain the
statements referred to in paragraph (1) of said Section 2.08(C) and the New or Additional Property
or Permanent Improvements, Extensions or Additions mentioned therein shall have theretofore been
made the basis of the authentication and delivery of Bonds under Sections 2.02 and 2.03 or the
withdrawal of funds hereunder, the certificate required by Section 2.08(C) shall further

     (a) identify the property and the cash cost thereof by reference to the papers
submitted at the time of such authentication and delivery of Bonds or withdrawal of funds;
and

     (b) state what, in the opinion of the signers, is the Fair Value to the Company of such
New or Additional Property and Permanent Improvements, Extensions or Additions.

In the event that such property shall not have been theretofore made the basis of the
authentication and delivery of Bonds under Sections 2.02 and 2.03, or the withdrawal of funds
hereunder, the Trustee shall be furnished with the instruments provided for in clauses (2), (3),
(4), (5) and (6) of Section 2.02(B), with such additions, omissions and modifications thereof as
may be necessary to make the same applicable.

     In the event of the deposit with the Trustee of cash under the foregoing provisions of this
Section 2.08, the Company shall, from time to time, upon delivery to the Trustee for cancellation
of any of the Bonds against which such deposit shall have been made, be entitled to receive from
the Trustee the cash held against or in respect of the Bonds so delivered to the Trustee. All cash
deposited with the Trustee under the provisions of this Section 2.08 shall, unless repaid to the
Company under the foregoing provisions of this Section 2.08, be applied by the Trustee to the
redemption on the redemption date or to the payment at Maturity of the Bonds against or in respect
of which such cash was deposited.

     SECTION 2.09. Reserved.

     SECTION 2.10. Form and Dating.

     (A) General. The Bonds and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A hereto, or in such other form as shall be established
by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities exchange or
Depositary therefor or as may, consistently herewith, be determined by the officers
executing such Bonds, as evidenced by their execution thereof. If the form of Bonds of any
series is established by action taken pursuant to a Board Resolution, such Board Resolution
shall be delivered to the Trustee at or prior to the delivery of the Authentication Order
contemplated by Section 2.11 for the authentication and delivery of such Bonds. If all of
the Bonds of any series established by action taken pursuant to a Board Resolution are not
to be issued at one time, it shall not be necessary

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to deliver a Board Resolution at the
time of issuance of each Bond of such series, but a Board Resolution shall be delivered at
or before the time of issuance of the first Bond of such series. The Bonds may have
notations, legends or endorsements required by law, stock exchange rule, usage or this
Indenture. Each Bond shall be dated the date of its authentication. The Bonds shall be in
denominations of $1,000 and integral multiples thereof.

     The terms and provisions contained in the Bonds shall constitute, and are hereby
expressly made, a part of this Indenture and the Company and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Bond conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and be
controlling.

     (B) Global Bonds. Subject to Section 2.10(A), the Bonds issued in global form shall be
substantially in the form of Exhibit A attached hereto or in the form otherwise established
by or pursuant to a Board Resolution or in one or more indentures supplemental hereto
(including the Global Bond Legend thereon and the “Schedule of Exchanges of Interests in the
Global Bond” attached thereto). Each Global Bond shall represent such of the Outstanding
Bonds as shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of Outstanding Bonds from time to time endorsed thereon and that
the aggregate principal amount of Outstanding Bonds represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges, redemptions or transfers
of beneficial interests from one Global Bond to another Global Bond. Any endorsement of a
Global Bond to reflect the amount of any increase or decrease in the aggregate principal
amount of Outstanding Bonds represented thereby shall be made by the Trustee or the Bond
Custodian, at the direction of the Trustee, in accordance with instructions given by the
Holder or beneficial owner thereof as required by Section 2.15.

     (C) Definitive Bonds; Form of Bonds Generally. Subject to Section 2.10(A), the Bonds
issued in definitive form shall be substantially in the form of Exhibit A attached hereto or
in the form established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto (but without the Global Bond Legend
thereon and without the “Schedule of Exchanges of Interests in the Global Bond”
attached thereto). Unless otherwise specified in accordance with Section 2.01, Bonds issued
under this Indenture shall be in definitive form.

     SECTION 2.11. Execution and Authentication.

     The Bonds shall be executed on behalf of the Company by the Chief Executive Officer, the
President, the Chief Financial Officer, one of its Vice Presidents or its Treasurer, and attested
by its Secretary or one of its Assistant Secretaries. The signature of any of these officers may
be manual or facsimile.

     If an officer whose signature is on a Bond no longer holds that office at the time a Bond is
authenticated, the Bond shall nevertheless be valid. A Bond shall not be valid until

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authenticated
by the manual signature of the Trustee. The signature shall be conclusive evidence that the Bond
has been authenticated under this Indenture. The Trustee shall, upon a written order of the
Company signed by an Officer (an “Authentication Order”), authenticate and, if requested therein,
deliver the Bonds for original issuance up to the aggregate principal amount stated in such
Authentication Order in such form as may be provided therein or in this Indenture. The Trustee may
appoint an Authenticating Agent acceptable to the Company to authenticate Bonds in accordance with
the provisions of Section 10.15 hereof.

     SECTION 2.12. Registrar, Paying Agent and Depositary.

     The Company shall maintain an office or agency in any of the Borough of Manhattan, the City of
New York or the City of San Francisco, San Jose or Los Angeles, State of California, where Bonds
may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency
where Bonds may be presented for payment (“Paying Agent”). Until otherwise designated by the
Company, the Company’s office or agency in referred to in the prior sentence shall be the office of
the Trustee maintained for such purpose. The Registrar shall keep a register of the Bonds and of
their transfer and exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying
Agent” includes any additional paying agent. The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent or other Agent not a party to this Indenture, which
shall incorporate the mandatory terms of the TIA not otherwise excluded hereunder. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Registrar or Paying Agent
may resign at any time upon not less than 10 Business Days’ prior written notice to the Company;
provided however that the Trustee may resign as Paying Agent or Registrar only if the Trustee also
resigns as Trustee in accordance with Section 10.10.

     The Company shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar
or Paying Agent, the Trustee shall act as such. The Company may act as Paying Agent or Registrar.

     The Company initially appoints the Trustee to act as the Registrar and Paying Agent with
respect to the Bonds. The Company shall cause the Bond Register to be kept at the Corporate Trust
Office of the Trustee acting in its capacity as Registrar.

     The Company initially appoints The Depository Trust Company to act as Depositary with respect
to the Global Bonds.

     SECTION 2.13. Paying Agent To Hold Money In Trust.

     Prior to 10:00 a.m. on each due date of the principal and interest on any Bond, the Company
shall deposit with the Paying Agent (or if the Company is acting as Paying Agent, segregate and
hold in trust for the benefit of the Persons entitled thereto) by wire transfer a sum sufficient to
pay such principal and interest when so becoming due. The Company shall require each Paying Agent
other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the

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payment of principal,
premium or interest on the Bonds, and shall notify the Trustee in writing of any Event of Default
by the Company in making any such payment. While any such Event of Default continues, the Trustee
may require a Paying Agent, and in such event any such Paying Agent shall have the obligation, to
pay all money 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 payment over to the Trustee, the Paying Agent (if other
than the Company) shall have no further liability for such money. If the Company acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to
the Company, the Trustee shall serve as Paying Agent for the Bonds.

     Any money deposited with any Paying Agent, or then held by the Company in trust, for the
payment of principal or interest on any Bond and remaining unclaimed for two years after such
principal and interest has become due and payable shall be paid to the Company upon Company
Request, or, if then held by the Company, shall be discharged from such trust; and the Holders
shall thereafter, as general unsecured creditors, look only to the Company for payment thereof, and
all liability of the Paying Agent with respect to such money, and all liability of the Company as
trustee thereof, shall thereupon cease.

     SECTION 2.14. Holder 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 all Holders and shall otherwise comply with TIA
§ 312(a). If the Trustee is not the Registrar, the Company shall furnish, or shall cause the
Registrar (if other than the Company) to furnish, to the Trustee at least seven Business Days
before each interest payment date and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders and, to the extent applicable, the Company shall otherwise comply with TIA
§ 312(a).

     SECTION 2.15. Transfer and Exchange.

     (A) Transfer and Exchange of Global Bonds. A Global Bond may not be transferred as a
whole except by the Depositary to a nominee of the Depositary, by a nominee of the
Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary
or any such nominee to a successor Depositary or a nominee of such successor Depositary.
All Global Bonds shall be exchanged by the Company for Definitive Bonds if (1) the Company
notifies the Trustee in writing that the Depositary is no longer willing or able to act as a
depositary or ceases to be registered as a clearing agency under the Exchange Act and a
successor Depositary is not appointed within 90 days of such notice or cessation or (2) the
Company in its sole discretion determines that the Global Bonds (in whole but not in part)
should be exchanged for Definitive Bonds and delivers a written notice to such effect to the
Trustee. Upon the occurrence of any of the preceding events in (1) or (2) above, Definitive
Bonds shall be issued in such names as the Depositary shall instruct the Trustee. Global
Bonds also may be exchanged or replaced, in whole or in part, as provided in Sections 2.16
and 2.18. Every Bond authenticated and delivered in exchange for, or in lieu of, a Global
Bond or any portion

39

 

thereof, pursuant to this Section 2.15, Section 2.16 or 2.18, shall be
authenticated and delivered in the form of, and shall be, a Global Bond. A Global Bond may
not be exchanged for another Bond other than as provided in this Section 2.15(A); however,
beneficial interests in a Global Bond may be transferred and exchanged as provided in
Section 2.15(B) or (C) or pursuant to Section 2.01.

     (B) Transfer and Exchange of Beneficial Interests in the Global Bonds. The transfer and
exchange of beneficial interests in the Global Bonds shall be effected through the
Depositary, in accordance with the provisions of this Indenture and the Applicable
Procedures. Transfers and exchanges of beneficial interests in the Global Bonds also shall
require compliance with either clauses (1) or (2) below, as applicable, as well as one or
more of the other following clauses, as applicable:

     (1) Transfer of Beneficial Interests in the Same Global Bond. Beneficial
interests in any Global Bond may be transferred to Persons who take delivery thereof
in the form of a beneficial interest in the same Global Bond. No
written orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section 2.15(B)(1).

     (2) All Other Transfers and Exchanges of Beneficial Interests in Global Bonds.
In connection with all transfers and exchanges of beneficial interests that are not
subject to Section 2.15(B)(1), the transferor of such beneficial interest must
deliver to the Registrar either (a) (i) an order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable Procedures
directing the Depositary to credit or cause to be credited a beneficial interest in
another Global Bond in an amount equal to the beneficial interest to be transferred
or exchanged and (ii) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be credited
with such increase or (b) (i) an order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Bond in an amount equal to the
beneficial interest to be transferred or exchanged and (ii) instructions given by
the Depositary to the Registrar containing information regarding the Person in whose
name such Definitive Bond shall be registered to effect the transfer or exchange
referred to in (b)(i) above. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Bonds contained in this
Indenture and the Bonds or otherwise applicable under the Securities Act, the
Trustee or Bond Custodian shall adjust the principal amount of the relevant Global
Bond(s) pursuant to Section 2.15(G).

     (C) Transfer or Exchange of Beneficial Interests in Global Bonds for Definitive Bonds.
If any Holder of a beneficial interest in a Global Bond proposes to exchange such beneficial
interest for a Definitive Bond or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Bond, then, upon satisfaction of the conditions
set forth in Section 2.15(B)(2), the Trustee shall cause the aggregate principal amount of
the applicable Global Bond to be reduced accordingly pursuant to Section 2.15(G), and the
Company shall execute and, upon receipt of an

40

 

Authentication Order pursuant to Section 2.11,
the Trustee shall authenticate and deliver to the Person designated in the instructions a
Definitive Bond in the appropriate principal amount. Any Definitive Bond issued in exchange
for a beneficial interest pursuant to this Section 2.15(C) shall be registered in such name
or names and in such authorized denomination or denominations as the Holder of such
beneficial interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such Definitive
Bonds to the Persons in whose names such Bonds are so registered.

     (D) Transfer and Exchange of Definitive Bonds for Beneficial Interests in Global Bonds.
A Holder of a Definitive Bond may exchange such Bond for a beneficial interest in a Global
Bond or transfer such Definitive Bonds to a Person who takes delivery thereof in the form of
a beneficial interest in a Global Bond at any time. Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the
applicable Definitive Bond and increase or cause to be increased the aggregate
principal amount of the applicable Global Bond.

     (E) Transfer and Exchange of Definitive Bonds for Definitive Bonds. Upon request by a
Holder of Definitive Bonds and such Holder’s compliance with the provisions of this Section
2.15(E), the Registrar shall register the transfer or exchange of Definitive Bonds. Prior
to such registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Bonds duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by such Holder
or by its attorney, duly authorized in writing. A Holder of Definitive Bonds may transfer
such Bonds to a Person who takes delivery thereof in the form of a Definitive Bond. Upon
receipt of a request to register such a transfer, the Registrar shall register the
Definitive Bonds pursuant to the instructions from the Holder thereof.

     (F) Global Bond Legend. Each Global Bond shall bear a legend in substantially the
following form (unless otherwise specified by the Depositary):

     “THIS BOND IS A GLOBAL BOND WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS BOND MAY NOT BE
TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR BONDS REGISTERED IN THE NAME OF, ANY PERSON
OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY BOND AUTHENTICATED AND
DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS BOND
SHALL BE A GLOBAL BOND SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.”

     (G) Cancellation or Adjustment of Global Bonds. At such time as all beneficial
interests in a particular Global Bond have been exchanged for Definitive Bonds or a
particular Global Bond has been redeemed, repurchased or cancelled in whole

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and not in part,
each such Global Bond shall be returned to or retained and cancelled by the Trustee in
accordance with Section 2.19. At any time prior to such cancellation, if any beneficial
interest in a Global Bond is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Bond or for Definitive Bonds,
the principal amount of Bonds represented by such Global Bond shall be reduced accordingly
and an endorsement shall be made on such Global Bond by the Trustee or by the Depositary at
the direction of the Trustee to reflect such reduction; and if the beneficial interest is
being exchanged for or transferred to a Person who will take delivery thereof in the form of
a beneficial interest in another Global Bond, the principal amount of Bonds represented by
such other Global Bond shall be increased accordingly and an endorsement shall be made on
such Global Bond by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.

     (H) General Provisions Relating to Transfers and Exchanges.

     (1) The Bonds shall be transferable only upon the surrender of a Bond for
registration of transfer and in compliance with this Section 2.15. When a Bond is
presented to the Registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401 of the
California Commercial Code and this Section 2.15 are met. When Bonds are presented
to the Registrar with a request to exchange them for an equal principal amount of
Bonds of other denominations, the Registrar shall make the exchange as requested if
the same requirements are met.

     (2) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Bonds and Definitive Bonds upon
receipt of an Authentication Order.

     (3) No service charge shall be made to a Holder of a beneficial interest in a
Global Bond or to a Holder of a Definitive Bond for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith (other
than any such transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.18 and 4.07).

     (4) The Registrar shall retain copies of all certificates, notices and other
written communications received pursuant to this Section 2.15. The Company shall
have the right to inspect and make copies of all such certificates, notices or other
written communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.

     (5) All Global Bonds and Definitive Bonds issued upon any registration of
transfer or exchange of Global Bonds or Definitive Bonds shall be the valid
obligations of the Company, evidencing the same Indebtedness, and entitled to the
same benefits under this Indenture, as the Global Bonds or Definitive Bonds
surrendered upon such registration of transfer or exchange.

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     (6) The Company, Trustee and Registrar shall not be required (a) to issue, to
register the transfer of or to exchange any Bonds during a period beginning at the
opening of business 15 calendar days before the day of any selection of Bonds for
redemption under Section 4.03 and ending at the close of business on the day of
selection, (b) to register the transfer of or to exchange any Bond so selected for
redemption in whole or in part, except the unredeemed portion of any Bond being
redeemed in part or (c) to register the transfer of or to exchange a Bond between a
record date and the next succeeding interest payment date.

     (7) Prior to due presentment for the registration of a transfer of any Bond,
the Trustee, any Agent and the Company may deem and treat the Person in whose name
any Bond is registered as the absolute owner of such Bond for the purpose of
receiving payment of principal of, premium, if any, and interest on such Bonds,
payment of the redemption price of the Bonds and for all other purposes, and none of
the Trustee, any Agent or the Company shall be affected by notice to the contrary.

     (8) The Trustee shall authenticate Global Bonds and Definitive Bonds in
accordance with the provisions of Section 2.10.

     (9) All certifications and certificates required to be submitted to the
Registrar pursuant to this Section 2.15 to effect a registration of transfer or
exchange may be submitted by facsimile, with an original of such document to be sent
promptly thereafter.

     SECTION 2.16. Replacement Bonds.

     If a mutilated Bond is surrendered to the Registrar or if the Holder of a Bond claims that the
Bond has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Bond if the requirements of Section 8-405 of the California Commercial
Code are met, such that the Holder (A) satisfies the Company or the Trustee within a reasonable
time after he has notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (B) makes such request to the Company or
the Trustee prior to the Bond being acquired by a protected purchaser as defined in Section 8-303
of the California Commercial Code (a “protected purchaser”) and (C) satisfies any other reasonable
requirements of the Trustee and the Company including evidence of the destruction, loss or theft of
the Bond. Such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee to
protect the Company, any guarantor, the Trustee, the Paying Agent, and the Registrar from any loss
that any of them may suffer if a Bond is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Bond including the payment of a sum sufficient to cover
any tax or other governmental charge that may be required. In the event any such mutilated, lost,
destroyed or wrongfully taken Bond has become or is about to become due and payable, the Company in
its discretion may pay such Bond instead of issuing a new Bond in replacement thereof.

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     Every replacement Bond is an additional obligation of the Company and shall be entitled to all
of the benefits of this Indenture equally and proportionally with all other Bonds duly issued
hereunder.

     The provisions of this Section 2.16 are exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of mutilated, lost,
destroyed or wrongfully taken Bonds.

     SECTION 2.17. Outstanding Debt Securities.

     “Outstanding Bonds”, or “Outstanding” when used with respect to Bonds, means, as of the date
of determination, all Bonds theretofore authenticated and delivered under this Indenture, except:

     (A) Bonds theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation, including Bonds tendered and exchanged for other securities of the Company;

     (B) Bonds of any series for which payment or redemption money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent (other than the Company)
in trust or set aside and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of the Bonds of such series; provided, however, that
if such Bonds are to be redeemed, then notice of redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been made and the date
for such redemption has passed;

     (C) Bonds of any series, except to the extent provided in Section 14.04, with respect
to which the Company has effected defeasance as provided in Article XIV; and

     (D) Bonds paid pursuant to Section 2.16 and Bonds in exchange for or in lieu of which
other Bonds have been authenticated and delivered pursuant to this Indenture, other than any
such Bonds in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Bonds are held by a bona fide purchaser in whose hands such
Bonds are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite principal amount of
Bonds Outstanding of any series have performed any Act hereunder, (1) the principal amount of Bonds
issued with original issue discount, if any, which shall be deemed to be Outstanding shall be the
amount of the principal thereof which would be due and payable as of such date upon acceleration of
the maturity thereof to such date pursuant to Section 7.01 and (2) Bonds of such series owned by
the Company or any other obligor upon the Bonds or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding (provided, that in connection with
any offer by the Company or any obligor to purchase or exchange Bonds, Bonds tendered by a Holder
shall be Outstanding until the date of purchase or exchange), except that, in determining whether
the Trustee shall be protected in relying upon any such Act, only Bonds which a Responsible Officer
actually knows to be so owned shall be so disregarded. Bonds so owned which have been pledged in
good faith may be regarded as

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Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee’s right to act with respect to such Bonds and that the pledgee is not the
Company or any other obligor upon the Bonds or any Affiliate of the Company or of such other
obligor.

     SECTION 2.18. Temporary Bonds.

     Until certificates representing Definitive Bonds are ready for delivery, the Company may
prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary
Bonds. Temporary Bonds shall be substantially in the form of Definitive Bonds but may have
variations that the Company considers appropriate for temporary Bonds and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate Definitive Bonds in exchange for temporary Bonds. Holders of temporary Bonds
shall be entitled to all of the benefits of this Indenture.

     SECTION 2.19. Cancellation.

     All Bonds surrendered for payment, redemption, transfer or exchange shall, if surrendered to
any Person other than the Trustee, be delivered to the Trustee at its Corporate Trust Office. All
Bonds so delivered shall be promptly cancelled by the Trustee. The Company may at any time deliver
to the Trustee for cancellation any Bonds previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Bonds previously authenticated
hereunder which the Company has not issued, and all Bonds so delivered shall be promptly cancelled
by the Trustee. No Bonds shall be authenticated in lieu of or in exchange for any Bonds cancelled
as provided in this Section, except as permitted by this Indenture. All cancelled Bonds held by
the Trustee shall be delivered to the Company upon Company Request. The acquisition of any Bonds
by the Company shall not operate as a redemption or satisfaction of the Indebtedness represented
thereby unless and until such Bonds are surrendered to the Trustee for cancellation. The Bonds
shall not be disposed of until exchanged in full for Definitive Bonds or until payment thereon is
made in full.

     SECTION 2.20. Payment of Interest; Defaulted Interest.

     (A) Except as otherwise provided as contemplated by Section 2.01 with respect to any
series of Bonds, interest on any Bond which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date will be paid to the Person in whose name that
Bond (or one or more Predecessor Bonds) is registered at the close of business on the
Regular Record Date for such interest.

     (B) Any interest on any Bond which is payable but is not punctually paid or duly
provided for on any Interest Payment Date (herein called “Defaulted Interest”) shall
forthwith cease to be payable to the registered Holder on the relevant Regular Record Date
by virtue of his having been such registered Holder, and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in clause (1) or
(2) below:

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     (1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names such Bonds (or their respective Predecessor Bond) are
registered at the close of business on a special record date (the “Special Record
Date”) for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each such Bond and the date of the
proposed payment, and at the same time the Company shall deposit with the Trustee
prior to 10:00 a.m., New York City time, an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the benefit of
the Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to the Holders of such Bonds at
their addresses as they appear in the Bond Register, not less than 15 calendar days
prior to such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names such Bonds (or their
respective Predecessor Bond) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause (2).

     (2) The Company may make payment of any Defaulted Interest on Bonds in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which such Bonds may be listed, and upon such notice as may be required
by such exchange, if, after notice is given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.

     (C) Subject to the foregoing provisions of this Section, each Bond delivered under this
Indenture upon transfer of, in exchange for, or in lieu of, any other Bond shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond.

     SECTION 2.21. CUSIP, ISIN or Common Code Numbers.

     The Company in issuing the Bonds may use “CUSIP,” “ISIN” or “Common Code” numbers (if then
generally in use) and, if so, the Trustee shall use such numbers in notices of redemption or
repurchase as a convenience to Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed on the Bonds or as
contained in any notice of a redemption or repurchase and that reliance may be placed only on the
other identification numbers printed on the Bonds, and any such redemption or repurchase shall not
be affected by any defect in or omission of such numbers.

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The Company shall promptly notify the
Trustee of any change in “CUSIP,” “ISIN” or “Common Code” numbers.

ARTICLE III.

Particular Covenants of the Company

     The Company hereby covenants and agrees:

     SECTION 3.01. Title to Property; Authority to Mortgage; Prior Liens.
That, except as to After-Acquired Property, it is lawfully seized and possessed of all the
Mortgaged Property except for any defects that would not materially adversely affect the value of
the Mortgaged Property, taken as a whole, and that it has good right and lawful authority to
assign, transfer, mortgage and pledge the same, as provided in and by this Indenture except for any
defects that would not materially adversely affect the value of the Mortgaged Property, taken as a
whole, and that said Mortgaged Property is free and clear of any Lien thereon, except for Permitted
Liens.

     SECTION 3.02. Payment of Principal and Interest.
That it will promptly pay or cause to be paid the principal and interest of all the Bonds duly
issued hereunder according to the terms thereof. Subject to Section 2.13 hereof, any moneys which
are deposited by the Company or on its behalf with the Trustee or any Paying Agent, for the purpose
of paying any of the Bonds which shall have become due and payable, whether at maturity or upon
call for redemption, or for the purpose of paying any interest on any of the Bonds, shall be and
are hereby assigned, transferred and set over to the Trustee or such Paying Agent, to be held in
trust for the Holders for the purpose of paying which said moneys have been deposited. Subject to
Section 2.13 hereof, interest, if any, accruing on such moneys during such period shall remain on
deposit and shall belong to the Company, payable thereto upon a Company Request.

     SECTION 3.03. Maintenance of Office or Agency; Money for Bonds; Payments to be Held in Trust.

     (A) That it will maintain an office or agency in any of the Borough of Manhattan, the
City of New York or the City of San Francisco, San Jose or Los Angeles, State of California,
while any of said Bonds are Outstanding, where notices, presentations
and demands to or upon it in respect of this Indenture or said Bonds or their coupons
may be given or made; that it will maintain an office or agency for the payment of the
principal of and interest on any Bonds at the time Outstanding in any place or places where
such principal and interest shall be payable; that, if the same shall by their terms be
registrable, it will keep books at an office or agency in any place in which the principal
of any Bonds at the time Outstanding shall be payable for the registration and transfer of
the principal of any Bonds payable at any office or agency in such place; and that it will
lodge from time to time with the Trustee notice of designation and of any change of any such
offices or agencies. In the event that the Company shall at any time fail to designate and
maintain an office or agency for any of these purposes required to be maintained in any of
the Borough of Manhattan, the City of New York or the City of San Francisco, San Jose or Los
Angeles, State of California, the principal office of the Trustee in any

47

 

such locality shall
be conclusively deemed to be the agency of the Company in such locality for such purposes.

     (B) If the Company shall at any time act as its own Paying Agent with respect to Bonds
of any series, it shall, on or before each due date of the principal of or interest on any
of the Bonds of that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and shall promptly notify the Trustee of its action or failure so to act.

     Whenever the Company shall have one or more Paying Agents with respect to the Bonds of
any series, it shall, by or on each due date of the principal (and premium, if any) or
interest on any Bonds of that series, deposit with any such Paying Agent a sum sufficient to
pay the principal (and premium, if any) or interest so becoming due (in same day funds and,
if a Global Bond is Outstanding, by 10:00 a.m., New York City time, in order for the Trustee
to make payment to the Depositary for the Bonds of such series in accordance with rules of
such Depositary), such sum to be held in trust for the benefit of the Persons entitled
thereto, and (unless any such Paying Agent is the Trustee) the Company shall promptly notify
the Trustee of its action or failure so to act.

     The Company shall cause each Paying Agent with respect to the Bonds of any series other
than the Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section, that such
Paying Agent shall:

     (1) hold all sums held by it for the payment of the principal of or interest on
Bonds of that series in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein provided;

     (2) give the Trustee notice of any Default by the Company (or any other obligor
upon the Bonds of that series) in the making of any payment of principal or interest
on the Bonds of that series; and

     (3) at any time during the continuance of any such Default, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held in trust by
such Paying Agent.

     The Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Request direct any
Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon which such
sums were held by the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.

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     Any money deposited with the Trustee or any Paying Agent, or then held by the Company,
in trust for the payment of the principal of (and premium, if any) or interest on any Debt
Security of any series and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the Company upon
Company Request, or (if then held by the Company) shall be discharged from such trust; and
the Holder of such Bond shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, shall at the expense of the Company cause to be
transmitted in the manner and to the extent provided by Section 15.05, notice that such
money remains unclaimed and that, after a date specified therein, which shall not be less
than 30 calendar days from the date of such notification, any unclaimed balance of such
money then remaining will be repaid to the Company upon Company Request.

     SECTION 3.04. Preservation of Corporate Existence, Franchises, etc; Payment of Taxes,
Assessments and Charges; Compliance with Requirements of Governmental Authorities and Covenants,
Terms and Conditions; Other Liens.
That, except as herein otherwise provided or permitted, either expressly or by implication, it
will at all times do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence (subject to Article IX) and its rights, permits and franchises
necessary for the Mortgaged Property, taken as a whole, to be operated in accordance with good
industry practice as determined by the good faith judgment of the Company; and that it will duly
pay and discharge or cause to be paid and discharged, prior to the time the same would become
delinquent if unpaid, all real estate and personal property taxes, assessments and governmental and
other charges lawfully levied and imposed upon the property, franchises, earnings and business of
the Company, and will duly observe and conform to or cause to be
observed and conformed to all valid requirements of any governmental authority relative to any
of the property or rights at any time covered hereby except for those taxes, assessments or
governmental or other charges (A) that are immaterial and would not lead to an imposition of any
Lien on the Mortgaged Property (other than a Permitted Lien) or (B) which are being contested in
good faith by appropriate proceedings and all covenants, terms and conditions upon or under which
any material property, rights or franchises covered hereby are held; and that it will not suffer
any Lien on the Mortgaged Property other than Permitted Liens.

     Anything in this Article III or elsewhere in this Indenture to the contrary notwithstanding,
the Company covenants and agrees that the aggregate principal amount of all Indebtedness secured by
Liens prior to the Lien of this Indenture on any property at any time subject to the Lien hereof
(excluding taxes for the then current year and taxes and assessments not yet delinquent) shall
never exceed twenty-five percent (25%) of the aggregate principal amount of (a) all Bonds then
Outstanding hereunder, (b) all Bonds for the authentication and delivery of which application is
then being made hereunder and (c) all Indebtedness secured by such prior Lien or Liens.

     SECTION 3.05. Insurance.
That until the Bonds have been paid in full, the Company or Parent shall maintain insurance
with respect to the Mortgaged Property with carriers

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against such risks, in such amounts and with
such deductibles as the Company or Parent determines to be reasonably prudent (as determined by the
Company in good faith) and shall name the Trustee as additional insured or, with respect to
casualty insurance, loss payee, as the case may be. The proceeds of any insurance on any part of
the Mortgaged Property which may be received by such Trustee shall be held, released and applied by
the Trustee or the Company as hereafter provided in Article VI of this Indenture. The Company
shall, however, be at liberty to appropriate, set aside and maintain out of its earnings or surplus
an insurance reserve fund, in such amount as from time to time shall be determined by the Company,
to be held and applied by it to making casualty losses, and such reserve fund shall be deemed for
the purposes of this Section 3.05 the equivalent of policies of casualty insurance aggregating an
amount equal to the principal of the fund.

     SECTION 3.06. Maintenance, Repairs, Replacements and Depreciation Reserve.
That it will at all times maintain, preserve and keep or cause to be maintained, preserved and
kept the Mortgaged Property, and every part thereof, with the appurtenances and every part and
parcel thereof, in good repair, working order and condition (other than wear and tear occurring in
the ordinary course of business), and from time to time make or cause to be made all needful and
proper repairs and renewals, replacements and substitutions, and will make adequate provision for
replacement by proper and reasonable credits to its reserve for depreciation, so that at all times
the value and efficiency of the Mortgaged Property, taken as a whole, shall be preserved and
maintained in accordance with common industry practice as determined in the good faith judgment of
the Company; provided that nothing in this Section 3.06 shall prevent the Company from selling,
transferring or otherwise disposing of, or causing the sale, transfer or
other disposition of, any portion of the Mortgaged Property so long as any such sale, transfer
or other disposition is permitted by, and conducted in accordance with, the terms of this
Indenture; provided, further, that the Company shall at all times comply with the rules and
regulations of the PUC with respect to maintenance and depreciation.

     SECTION 3.07. Advances by Trustee to Perform Covenants; Reimbursement and Lien for Advances.
That if it shall fail to perform or cause to be performed any of the covenants contained in
Sections 3.04, 3.05 and 3.06, the Trustee, or any receiver appointed hereunder, may (but shall not
be obligated to) make advances to perform the same in its behalf; and it hereby agrees to repay all
sums so advanced in its behalf, promptly after demand, with interest at the rate of two percent
(2%) per annum, and all sums so advanced with interest as aforesaid shall be secured hereby, having
the benefit of the Lien hereby created in priority to the Indebtedness evidenced by the Bonds; but
no such advance shall be deemed to relieve the Company from any Event of Default hereunder.

     SECTION 3.08. Recording.
That it will cause this Indenture and all indentures supplemental hereto at all times to be
kept recorded, registered or filed in such manner and in such places as may be required by law in
order to fully preserve and protect the security of the Holders and all rights of the Trustee with
respect to the Mortgaged Property; provided that this Section 3.08 shall not require the
recordation, registration or filing with respect to Mortgaged Property the fair market value of
which is less than the cost of such recordation, registration or filing.

     That it will deliver to the Trustee:

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     (1) Promptly after the execution and delivery of each subsequent supplemental indenture other
than any supplemental indenture the sole purpose of which is to issue another series of Bonds and
which does not provide for additional or more restrictive covenants or events of default,
additional collateral or additional obligors for such additional series of Bonds, an Opinion of
Counsel substantially in the form of Exhibit C-2 attached hereto, with such additions, omissions or
modifications thereof (i) as may be necessary to make the same applicable or (ii) as may be
beneficial to the interests of the Holders. Copies of any documents relied upon by such Opinion of
Counsel shall be provided to the Trustee in connection with the delivery of such Opinion of Counsel
to the extent not previously delivered to the Trustee.

     (2) Annually after the Closing Date an Opinion of Counsel, either stating that in the opinion
of such counsel such action has been taken with respect to the recording, filing, re-recording and
re-filing of this Indenture, of each indenture supplement thereto, and such other instrument as is
necessary to maintain the Lien thereof with respect to the Mortgaged Property, and reciting the
details of such action, or stating that in the opinion of such counsel no such action is necessary
to maintain such Lien. Such opinion shall be delivered to the Trustee within three months after
each anniversary of the Closing Date.

     SECTION 3.09. Further Assurance.
That it will, upon reasonable request, execute and deliver such further instruments and do
such further acts as may be necessary or proper to carry out more effectually the purposes of this
Indenture, especially to make subject to the Lien hereof any Mortgaged Property, to transfer to any
successor trustee or trustees the estate, powers, instruments and funds held in trust hereunder and
to confirm the Lien of this Indenture with respect to any series of Bonds issued or to be issued
hereunder.

     The Company shall file or cause to be filed any financing statements (or amendments thereto)
necessary to maintain a perfected security interest in favor of the Trustee in the Mortgaged
Property if (i) the Company changes its name, (ii) the Company changes its jurisdiction of
incorporation to a state other than the State of California or (iii) any Mortgaged Property
consisting of goods of the types covered by Section 9301 of the California Commercial Code is
removed from the State of California.

     The Company hereby irrevocably authorizes the Trustee at any time and from time to time to
file any financing statements, amendments thereto and continuation statements as authorized by
applicable law, in any jurisdiction and with any filing offices as the Trustee may determine, in
its sole discretion as are necessary or advisable to establish or maintain the validity, perfection
and priority of the security interest granted by this Indenture. The foregoing authorization
includes the Company’s irrevocable authorization for the Trustee at any time and from time to time
to file any financing statements and amendments thereto that describe the collateral (a) as “all
assets” of the Company or words of similar effect, regardless of whether any particular asset
comprised in the Mortgaged Property falls within the scope of the CUCC or the uniform commercial
code of the jurisdiction where such financing statement or amendment is filed, or (b) as being of
an equal or lesser scope or with greater detail.

     SECTION 3.10. Examination of Books and Records by Trustee; Furnishing of Financial Statements.
That the Company will upon the prior written request of the Trustee during normal business
hours, at the Company’s own expense (A) once per year prior to the

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occurrence and continuation of
an Event of Default and (B) at any time after the occurrence and continuation of an Event of
Default permit the Trustee and its agents and attorneys to examine all the Company’s books of
account, records, reports and other papers, and to take copies and extracts therefrom.

     The Trustee is, however, under no duty to make any such examination unless requested to do so
by the Holders of not less than a majority in aggregate principal amount of the Outstanding Bonds
and furnished with indemnity satisfactory to it, covering such examination.

     SECTION 3.11. Compliance with Indenture in Issuance of Bonds; General Covenant to Perform and
Observe Terms and Conditions of Indenture.
That it will not issue, or permit to be issued, any Bonds hereunder in any manner other than
in accordance with the provisions of this Indenture and any indenture supplemental hereto and the
agreements in that behalf herein and therein contained, and will not suffer or permit any default
to occur under this Indenture, but will faithfully observe and perform or cause to be observed and
performed all the conditions, covenants and requirements hereof.

     SECTION 3.12. Covenant Against Indebtedness Secured by Prior Liens.
Other than with respect to bonds or other evidences of Indebtedness set forth in the
definition of Permitted Liens or incurred in connection with Excepted Property, that no further
bonds or other evidences of Indebtedness shall or will be issued under any mortgage or other
instrument of Lien, prior to the Lien of this Indenture, on any property of the Company hereafter
acquired, except in place of, or in substitution for, any bonds or other evidences of Indebtedness
issued thereunder which may have been lost, stolen, mutilated or destroyed. Notwithstanding the
foregoing, if and when any bonds or other evidences of Indebtedness which are issued under any
mortgage or other instrument of Lien which is prior to the Lien of this Indenture (“Prior Lien
Debt”), by their terms shall respectively become payable, the Company shall pay or cause to be paid
the principal and interest of all Prior Lien Debt.

     SECTION 3.13. Covenant with Respect to Notice of Defaults.
Promptly after any officer of the Company obtains knowledge of a Default under this Indenture,
the Company shall deliver a certificate signed by the President or a Vice President and the
Treasurer or Assistant Treasurer of the Company describing such event in reasonable detail, with a
statement of the Company’s action with respect thereto taken or proposed.

ARTICLE IV.

Redemption of Bonds

     SECTION 4.01. Optional Redemption.
Bonds of any series which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and in accordance with this Article.

     SECTION 4.02. Election to Redeem; Notice to Trustee.
The election of the Company to redeem Bonds of any series shall be evidenced by a Board
Resolution (except for redemptions made out of cash deposited in any sinking fund provided for in
respect of any series of Bonds). The Company shall (except in respect of redemptions made out of
cash deposited in any sinking fund provided for by the terms of any series of Bonds), not less than
35 (unless a

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shorter notice period is acceptable to the Trustee) nor more than 60 calendar days
before the Redemption Date fixed by the Company, notify the Trustee of such Redemption Date, the
series of Bonds to be redeemed, the Redemption Price, the CUSIP numbers and the principal amount of
Bonds of such series to be redeemed.

     SECTION 4.03. Selection by Trustee of Bonds to be Redeemed.
If less than all of the Bonds of any series are to be redeemed at the election of the Company,
the particular Bonds of such series to be redeemed shall be selected on a pro rata basis unless
otherwise required by law or applicable stock exchange requirements not more than 60 calendar days
prior to the Redemption Date by the Trustee from the Outstanding Bonds of such series not
previously called for redemption. In any case when more than one Bond is registered in the same
name, the Trustee, in its discretion, may treat the aggregate principal amount so registered as if
it were represented by one Bond.

     The Trustee shall promptly notify the Company and the Depositary for the applicable series of
Bonds (if other than itself) in writing of the Bonds of such series selected for redemption and, in
the case of Bonds of any such series selected for partial redemption, the principal amount thereof
to be redeemed.

     For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Bonds shall relate, in the case of any Bond redeemed or to be
redeemed only in part, to the portion of the principal amount of such Bond which has been or is to
be redeemed.

     SECTION 4.04. Notice of Redemption.
Notice of redemption shall be given by the Company, or upon Company Request, by the Trustee in
the name and at the expense of the Company, not less than 30 calendar days and not more than 60
calendar days prior to the Redemption Date to the Holders of the Bonds of the series to be redeemed
pursuant to this Article IV, in the manner provided in Section 15.05. Failure to give such notice,
or any defect in such notice to the Holder of any Bond, in whole or in part, shall not affect the
sufficiency of any notice of redemption with respect to the Holder of any other Bond.

     All notices of redemption shall identify the series of Bonds to be redeemed (including CUSIP
number) and shall state:

     (A) the Redemption Date,

     (B) the Redemption Price,

     (C) that the Bonds of such series are being redeemed by the Company pursuant to provisions
contained in this Indenture or the terms of such Bonds, together with a brief statement of the
facts permitting such redemption,

     (D) that (1) all Outstanding Bonds of such series are to be redeemed or (2) if less than all
Outstanding Securities of such series are to be redeemed, the identification (and, in the case of
partial redemption, the principal amount) of the particular Bonds to be redeemed,

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     (E) in the case of Bonds of any series that are to be redeemed in part only, that on or after
the Redemption Date, upon surrender of such Bonds, the Holders of such Bonds will
receive, without charge, new Bonds of such series in authorized denominations for the
principal amount thereof remaining unredeemed,

     (F) that on the Redemption Date the Redemption Price will become due and payable upon each
such Bond to be redeemed, and that interest thereon, if any, shall cease to accrue on and after
said date, and

     (G) the place or places of payment where such Bonds are to be surrendered for payment of the
Redemption Price.

     SECTION 4.05. Deposit of Redemption Price.
On or prior to 10:00 a.m., New York City time, on the Redemption Date for the Bonds of any
series so to be redeemed, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust) an amount of money in
the currency in which such Bonds are denominated sufficient to pay the Redemption Price of such
Bonds which are to be redeemed on that date.

     SECTION 4.06. Bonds Payable on Redemption Date.
Notice of redemption having been given as aforesaid, any Bonds of any series so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price in the currency in
which such Bonds are payable, and from and after such date (unless the Company shall default in the
payment of the Redemption Price) such Bonds shall cease to bear interest. Upon surrender of any
such Bond of any such series for redemption in accordance with said notice, such Bond shall be paid
by the Company at the Redemption Price; provided, however, that installments of interest on Bonds
which have a Stated Maturity on or prior to the Redemption Date for such Bonds shall be payable
according to the terms of such Bonds and the provisions of Section 2.20.

     If any Bond called for redemption shall not be so paid upon surrender thereof for redemption,
the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at
the rate prescribed therefor in such Bond.

     SECTION 4.07. Bonds Redeemed in Part.
Any Bond of a series which is to be redeemed only in part shall be surrendered at the
Corporate Trust Office with, if the Company, the Depositary for such Bonds or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form satisfactory to the
Company, the Depositary for such Bonds and the Trustee duly executed by, the Holder thereof or such
Holder’s attorney duly authorized in writing, and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Bond without service charge, a new Bond or Bonds of
the same series, of like tenor and form, of any authorized denomination as requested by such Holder
in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal
of the Bond so surrendered. In the case of a Bond providing appropriate space for such notation,
at the option of the Holder thereof, the Trustee, in lieu of
delivering a new Bond or Bonds as aforesaid, may make a notation on such Bond of the payment
of the redeemed portion thereof.

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ARTICLE V.

Possession, Use and Release of Property

     SECTION 5.01. Possession, Use and Disposition of Property.
Until the occurrence of an Event of Default and receipt of written notice to the Company from
either the Trustee or the Holders of not less than a majority in aggregate principal amount of the
Outstanding Bonds that such rights are suspended, the Company shall be suffered and permitted to
possess, use and enjoy all the Mortgaged Property, and to receive and use the rents, issues,
income, product and profits thereof, with power in the ordinary course of business, freely and
without let or hindrance on the part of the Trustee or of Holders, to use and consume materials and
supplies, and, except as herein otherwise expressly provided to the contrary, to deal with choses
in action, leases and leasehold interests, and contracts, and exercise the rights and powers
conferred upon it thereby; and to alter, repair and remove its buildings and structures, to change
the position of its pipes, mains, conduits or other property whatsoever and to replace and renew
any of its equipment, machinery or other property.

     SECTION 5.02. Additional Rights and Powers with Respect to Property.
Until the occurrence of an Event of Default and receipt of written notice to the Company from
either the Trustee or the Holders of not less than a majority in aggregate principal amount of the
Outstanding Bonds that such rights are suspended, the Company may at any time and from time to
time, without any release by the Trustee,

     (1) sell or otherwise dispose of, free from the Lien of this Indenture, any machinery,
equipment, tools or implements or other property, upon replacing the same with or
substituting for the same other machinery, equipment, tools, implements or other property
with an aggregate value at least equal to the aggregate original value of such property
disposed of (“Substituted Property”) so long as such Substituted Property becomes Mortgaged
Property, provided that the Company may dispose of damaged, worn-out or obsolete equipment
that is immaterial in the ordinary course of business without replacing the same, and grant
or convey, with or without consideration, free from the Lien of this Indenture, rights of
way and easements for private access, private utilities, public roads or highways, sewers,
power lines, telephone lines, telecommunications facilities, solar and wind energy
facilities, pipe lines, conduits or other utility lines, facilities, equipment, or
structures, over, across, through, under or along any of the real property subject to the
Lien of this Indenture, which in the good faith judgment of the Company may be granted or
conveyed without impairing in any material manner the usefulness of the trust estate in the
business of the Company;

     (2) surrender or assent to the modification of any franchise, license or permit which
it may hold subject to Section 3.04 hereof;

     (3) cancel or make changes or alterations in or substitutions for any and all Permitted
Liens, easements, servitudes, rights-of-way and similar rights or interests which are
subject to the lien hereof; and

          (4) grant any Lien that is a Permitted Lien hereunder or take title to New or Additional
Property subject to any Lien that is a Permitted Lien hereunder.

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     SECTION 5.03. General Provisions for Release of Property.
The Company may sell, exchange or otherwise dispose of any Mortgaged Property at any time
covered hereby (including any separate system of properties as a whole or substantially as a
whole), and the Trustee shall have full power and authority to release and shall release the same
from the Lien hereof upon receipt by it of:

     (1) To the extent that the Fair Value of the Mortgaged Property to be disposed of
exceeds $1,000,000, a Board Resolution requesting such release and specifying in reasonable
detail the property to be released and, to the extent the Mortgaged Property to be disposed
of is equal to or less than $1,000,000, an Officers’ Certificate requesting such release and
specifying in reasonable detail the property to be released.

     (2) A certificate of an engineer, appraiser or other expert who may be an individual,
engineering firm, corporation or other Person and, except as provided in this clause (2),
may be an engineer, appraiser or other expert in the employ of the Company reasonably
acceptable to the Trustee, stating (a) the Fair Value, in the opinion of the signer, of the
property to be released, and (b) that such release, in the opinion of the signer, will not
impair the security under this Indenture in contravention of the provisions hereof. The
certificate required by this clause (2) shall be made by an independent engineer, appraiser
or other expert reasonably acceptable to the Trustee if the Fair Value of the property to be
released and of all other property and securities released since the commencement of the
then current calendar year, as set forth in the certificate required pursuant to this clause
(2) and in similar certificates theretofore delivered pursuant to this clause (2) and any
other Sections of this Article V, is ten percent (10%) or more of the aggregate principal
amount of the Bonds at the time Outstanding, unless the Fair Value of the property to be
released, as set forth in said certificate, is less than Twenty-five Thousand Dollars
($25,000) or less than one percent (1%) of the aggregate principal amount of the Bonds at
the time Outstanding.

     (3) If property (other than securities) is included in the consideration for any such
property so to be released, a certificate of an engineer, appraiser or other expert who may
be an individual, engineering firm, corporation or other Person and, except as provided in
this clause (3), may be an engineer, appraiser or other expert in the employ of the Company
reasonably acceptable to the Trustee, as to the Fair Value to the Company of any property
included in the consideration to be received for the property to be released. The
certificate required by this clause (3) shall be made by an independent engineer, appraiser
or other expert reasonably acceptable to the Trustee, if the property
included in the consideration to be received for the property to be released shall
include any property which, within six months prior to the date of acquisition thereof by
the Company, has been used or operated by a Person or Persons other than the Company in a
business similar to that in which it has been or is to be used or operated by the Company,
and the Fair Value to the Company of such property, as set forth in such certificate, is not
less than Twenty-five Thousand Dollars ($25,000) and not less than one percent (1%) of the
aggregate principal amount of the Bonds at the time Outstanding.

     (4) If securities are included in the consideration for any such property so to be
released, a certificate of an engineer, appraiser or other expert who, except as provided

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in this clause (4), may be an engineer, appraiser or other expert in the employ of the Company
reasonably acceptable to the Trustee, as to the Fair Value to the Company of any securities
included in the consideration to be received for the property to be released. The
certificate required by this clause (4) shall be made by an independent engineer, appraiser
or other expert reasonably acceptable to the Trustee, if the Fair Value to the Company of
such securities and of all other securities which shall have been made the basis of the
authentication and delivery of Bonds, the withdrawal of cash constituting a part of the
trust estate or the release of property or securities subject to the Lien of this Indenture
since the commencement of the then current calendar year, as set forth in certificates or
opinions furnished pursuant to the provisions of this Indenture, is ten percent (10%) or
more of the aggregate principal amount of Bonds at the time Outstanding; provided, however,
that such a certificate of an independent appraiser or other independent expert shall not be
required with respect to any securities if the Fair Value thereof to the Company, as set
forth in the certificate or opinion furnished pursuant to the provisions of this Section, is
less than Twenty-five Thousand Dollars ($25,000) or less than one percent (1%) of the
aggregate principal amount of the Bonds at the time Outstanding.

     (5) If real estate or other property (other than Excepted Property) is included in the
consideration for any such property so to be released, such deeds, Memoranda of Indenture or
other instruments of conveyance, assignment or transfer, if any, as are sufficient in the
Opinion of Counsel to subject the same to the Lien of this Indenture.

     (6) If real estate or other property is included in the consideration for any such
property so to be released, such property is not subject to any Lien other than Permitted
Liens.

     (7) An Officers’ Certificate stating that

     (a) such release is desirable in the conduct of the business of the Company,
and that the security hereby afforded will not be impaired by such release;

     (b) the Company has sold or exchanged, or contracted to sell or exchange, the
Mortgaged Property so to be disposed of for a consideration
representing, in the opinion of the signers (which opinion may be based on the
certificate described in clause (3) above), its full value to the Company, which
consideration may be any one or more of the following: (i) cash, (ii) obligations
secured by purchase money Lien upon the Mortgaged Property so to be released, (iii)
any other property which could be made the basis of the issue of Bonds under Section
2.02; such consideration to be set out in reasonable detail in such Officers’
Certificate, and, if the consideration includes any property described in clause
(iii), such Officers’ Certificate shall further state that such property constitutes
New or Additional Property and/or Permanent Improvements, Extensions or Additions;
and shall also state whether or not such property includes any property which,
within six months prior to the date of acquisition thereof by the Company, has been
used or operated by a person or persons other

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than the Company, in a business
similar to that in which it has been or is to be used or operated by the Company;
and

     (c) no Default or Event of Default has occurred and is continuing.

     (8) An Officers’ Certificate complying with the provisions of Section 15.01, and
stating that all conditions precedent provided for in this Indenture which relate to the
release or the release and substitution of property subject to the Lien of this Indenture
have been complied with.

     (9) An Opinion of Counsel complying with the provisions of Section 15.01, and stating
that in his or their opinion all conditions precedent provided for in this Indenture which
relate to the release or the release and substitution of property subject to the Lien of
this Indenture have been complied with.

     (10) Either (i) any money or obligations secured by a purchase money Lien stated in the
Officers’ Certificate required by clause (7) above in consideration for any such property so
to be released net of usual and customary closing costs or (ii) proof reasonably
satisfactory to the Trustee that such money or obligations are held by a licensed escrow
holder for the benefit of the Trustee on behalf of the Holders.

     SECTION 5.04. Reliance by Trustee on Documents; Right and Duty to Investigate.
Subject to the provisions of Sections 10.01 and 10.03, the resolutions and certificates and
the instruments and opinions in this Article V provided for, shall be full warrant and authority to
the Trustee for making any such release; but before making any such release the Trustee may, in its
discretion, and shall, if requested in writing so to do by the Holders of not less than a majority
in aggregate principal amount of the Outstanding Bonds, and furnished with security and indemnity
satisfactory to it, cause to be made such independent investigation as it may see fit, and, in that
event, may decline to take action unless satisfied by such investigation of the truth and accuracy
of the matters so investigated. The expense of any such investigation
shall be paid by the Company, or if paid by the Trustee, shall be repaid by the Company
promptly after demand, with interest at the rate of two percent (2%) per annum.

     SECTION 5.05. Subjection to Lien of Property Acquired.
The Company shall take all necessary actions to subject to the Lien of this Indenture any new
property acquired by the Company in exchange or purchase for any Mortgaged Property released
hereunder.

     SECTION 5.06. Release of Property Taken by Eminent Domain, etc.
Should any of the Mortgaged Property be taken by exercise of the power of eminent domain (the
exercise of such power being herein sometimes referred to as “condemnation”), or should any
municipality or other public body or agency at any time exercise any right which it may have to
purchase, or designate a purchaser of, or to order the sale of, any part of the Mortgaged Property,
the Trustee may accept any award or consideration payable therefor and shall release the property
so taken, purchased or sold upon receipt of:

     (1) an Officers’ Certificate certifying that such property has been taken by exercise
of the power of eminent domain, or purchased or sold as a result of the exercise of a right
which a municipality or other public body or agency had to purchase or order

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the sale of the
same, complying with the provisions of Section 15.01 and stating that all conditions
precedent provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) which relate to such release have been complied with;

     (2) an Opinion of Counsel complying with the provisions of Section 15.01, and stating
that in his or their opinion all conditions precedent provided for in this Indenture
(including any covenant compliance with which constitutes a condition precedent) which
relate to such release have been complied with; and

     (3) A certificate of an engineer, appraiser or other expert who may be an individual,
engineering firm, corporation or other Person and, except as provided in this clause (3),
may be an engineer, appraiser or other expert in the employ of the Company reasonably
acceptable to the Trustee, stating (i) the Fair Value, in the opinion of the signer, of the
property to be taken or sold and (ii) that taking or sale, in the opinion of the signer,
will not impair the security under this Indenture in contravention of the provisions hereof.
The certificate required by this clause (3) shall be made by an independent engineer,
appraiser or other expert reasonably acceptable to the Trustee if the Fair Value of the
property to be released and of all other property and securities released since the
commencement of the then current calendar year, as set forth in the certificate required
pursuant to this clause (3) and in similar certificates theretofore delivered pursuant to
this clause (3) and any other Sections of this Article V, is ten percent (10%) or more of
the aggregate principal amount of the Bonds at the time Outstanding, unless the Fair Value
of the property to be released, as set forth in said certificate, is less than Twenty-five
Thousand Dollars ($25,000) or less than one percent (1%) of the aggregate principal
amount of the Bonds at the time Outstanding.

     In any such proceedings the Trustee may be represented by counsel who may be of counsel to the
Company. The proceeds or price of all such property so taken or purchased with a Fair Value of
$1,000,000 or greater shall be paid over to the Trustee hereunder and held and applied by it as
provided in Article VI hereof.

     SECTION 5.07. Non-Liability of Purchasers of Property; Execution of Releases.
In no event shall any purchaser or purchasers in good faith of any property purporting to be
released hereunder be bound to ascertain the authority of the Trustee to execute the release, or to
inquire as to any facts required by the provisions hereof for the exercise of such authority, or be
bound to see to the application of the purchase moneys; nor shall any purchaser of machinery or
equipment or tools or implements or materials or supplies or merchandise from the Company be under
obligation to ascertain or inquire into the occurrence of the event on which any such sale is
hereby authorized. The execution of any release under the provisions of this Article V by the
Trustee shall be effective and binding.

     SECTION 5.08. Releases if Receiver, Trustee or Assignee or Indenture Trustee in Possession.
In case the Mortgaged Property or any part thereof shall be in the possession of a receiver
lawfully appointed or of a trustee in bankruptcy or in reorganization proceedings or of an assignee
for the benefit of creditors, the powers in and by this Article V conferred upon the Company may be
exercised by such receiver, trustee or assignee, with respect to such part of the

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Mortgaged
Property as may then be in his or its possession, and if the Trustee shall be in possession of the
Mortgaged Property or any part thereof under any provision of this Indenture after the occurrence
and during the continuation of an Event of Default then all the powers by this Article V conferred
upon the Company may be exercised by the Trustee in its discretion with respect to such part of the
Mortgaged Property as may then be in its or their possession.

     SECTION 5.09. Release upon Discharge of Indenture or Defeasance.

     The Company shall be entitled to obtain a full release of all of the Mortgaged Property from
the Liens of this Indenture upon delivery by the Company to the Trustee of an Officers’ Certificate
and an Opinion of Counsel, each to the effect that the conditions precedent set forth in Article
XIV for satisfaction and discharge of this Indenture or for Legal Defeasance or Covenant Defeasance
with respect to all Outstanding Bonds, as applicable, have been complied with.

ARTICLE VI.

Application of Moneys Received by the Trustee

     SECTION 6.01. Custody and Collection of Obligations Received for Released Property.
All obligations received by the Trustee under the provisions of Section 5.03, unless released
pursuant to the provisions of said Section 5.03, shall be held and collected by the Trustee, but,
subject to the provisions of Sections 10.01 and 10.03, the Trustee shall be under no liability or
accountability whatever for the collection thereof. Interest as received thereon, if any, shall be
paid over to the Company, unless a Responsible Officer has actual knowledge of an Event of Default.

     SECTION 6.02. Release of Cash to Reimburse for Property Additions and Replace Damaged or
Destroyed Property.
Any moneys received by the Trustee (a) as principal of obligations received under the
provisions of Section 5.03, (b) as proceeds of released property or of property taken by the power
of eminent domain, or purchased or sold as a result of the exercise of a right which a municipality
or other public body or agency had to purchase or order the sale of the same, in each case as
required by Sections 5.03 or 5.06 to be delivered to the Trustee or (c) as proceeds of any
insurance against loss or damage with respect to the Mortgaged Property, shall be held by the
Trustee as a part of the trust estate and as security for the Bonds issued and Outstanding
hereunder, and shall be paid over from time to time by the Trustee to reimburse the Company for
cash expended (whether such expenditure was prior or subsequent to the receipt of such money by the
Trustee, or the release or taking or purchasing or selling of property) (1) for the construction or
acquisition of New or Additional Property or Permanent Improvements, Extensions or Additions which
could otherwise have been made the basis of the issue of Bonds under the provisions of Section
2.02, or (2) for the replacement or repair of the Mortgaged Property destroyed.

     Such payments shall be made by the Trustee upon receipt by it of the instruments provided for
in clauses 2, 4 and 5 of Section 2.02(B) and in clauses (5) and (6) of Section 2.01(B), with such
additions, omissions and modifications as may be necessary to recognize that the action being taken
is the release of cash for expenditures described in the prior paragraph

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rather than the
authentication and delivery of Bonds as a result of New or Additional Property or Permanent
Improvements, Extensions or Additions.

     Subject to the provisions of Sections 10.01 and 10.03, the instruments hereinbefore in this
Section 6.02 provided for shall be full warrant and authority to the Trustee for the payment of any
moneys as requested therein; but before making any such payment the Trustee may, in its discretion,
and shall, if requested in writing so to do by the Holders of not less than a majority in aggregate
principal amount of the Outstanding Bonds, and furnished with security and indemnity satisfactory
to it, cause to be made such independent investigation as it may see fit, and may decline to take
action unless satisfied by such investigation of the truth and accuracy of the matters so
investigated. The expense of any such investigation shall be paid by the Company, or, if paid by
the Trustee, shall be repaid by the Company promptly after demand, with interest at the rate of two
percent (2%) per annum.

     SECTION 6.03. Application of Moneys to Purchase or Redemption of Bonds.
Any such moneys in the hands of the Trustee, and not theretofore paid over or requested to be
paid over to the Company as provided in Section 6.02 shall, on the election and in accordance with
a Company Request, evidenced by a Board Resolution, be applied by the Trustee to the purchase or
redemption of Bonds of such series as may be specified in such Company Request. Any redemption of
Bonds under this Section 6.03 shall comply with the provisions of Article IV hereof.

     SECTION 6.04. Investment of Moneys.
Any moneys hereafter deposited with the Trustee to be held under any of the provisions of this
Indenture or any indenture supplemental hereto, except any sinking fund cash, shall be invested by
the Trustee upon Company Request in Cash Equivalents unless and until a Responsible Officer has
actual knowledge of an Event of Default. At any time after a Responsible Officer has actual
knowledge of an Event of Default, any such moneys shall be held in cash or shall be invested by the
Trustee at the instruction of the Holders of a majority in aggregate principal amount of
Outstanding Bonds. The Trustee may sell or liquidate such investment at any time if the proceeds
thereof are required for any disbursements permitted or required under this Indenture. As and when
such disbursements are permitted or required under this Indenture, the Trustee shall cause Cash
Equivalents to be converted into cash in accordance with its customary procedures and shall not be
liable for any loss of principal or income in connection therewith. The Trustee shall not be
liable for any loss of principal or income due to the choice of Cash Equivalents in which the
Company directs investment or in the choice of Cash Equivalents converted into cash pursuant to
this Section 6.04.

     SECTION 6.05. No Purchase or Redemption in Case of Default.
Notwithstanding anything hereinbefore in this Article VI provided, the Trustee shall not use
moneys as hereinabove in this Article VI provided to purchase or redeem any Bonds if to the
knowledge of the Trustee a Default shall have occurred and be continuing and, upon the occurrence
and continuation of an Event of Default, such moneys shall form a part of the trust estate for the
equal protection of all Outstanding series of Bonds as above provided for any part of the trust
estate.

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ARTICLE VII.

Remedies Upon Default

     SECTION 7.01. Events of Default; Acceleration of Maturity and Annulment Thereof.
“Event of Default” wherever used herein with respect to the Bonds of any series means any one
of the following events:

     (a) default shall be made in the payment of principal of any Bond of that series when
and as the same shall be payable, whether at maturity or by declaration or otherwise, as
therein or herein provided;

     (b) default shall be made in the payment of any interest on any Bond of that series and
such default shall continue for 30 calendar days;

     (c) default under any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness (or the payment of which is
guaranteed by the Company), including default with respect to another series of Bonds,
whether such Indebtedness now exists, or is created after the Closing Date, if that default:
(i) is caused by a failure to pay principal of, or interest or premium, if any, on, such
Indebtedness prior to the expiration of the grace period provided in such Indebtedness on
the date of such default (a “Payment Default”); or (ii) results in the acceleration of such
Indebtedness prior to its Stated Maturity, and, in the case of each of (i) and (ii), the
principal amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity of which has
been so accelerated, aggregates $10,000,000 or more;

     (d) default shall be made hereunder by the Company in the observance or performance of
any other of the covenants, agreements or conditions on its part contained in this Indenture
and applicable to such series of Bonds and such Event of Default shall continue for 90
calendar days after written notice to the Company by the Trustee or by the Holders of
twenty-five percent (25%) in principal amount of the Outstanding Bonds of all series under
which such default occurred;

     (e) the entry of a decree or order for relief in respect of the Company by a court
having jurisdiction in the premises in an involuntary case under the federal Bankruptcy
Laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under any applicable federal or
state law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 90 consecutive calendar days; or

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     (f) the commencement by the Company of a voluntary case under the federal Bankruptcy
Laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or the consent by it to the entry of an order for relief in
an involuntary case under any such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the Company or of
any substantial part of its property, or the making by it of an assignment for the benefit
of its creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due.

     then and in every such case other than an Event of Default described in clause (e) or (f) of
this Section 7.01, either the Trustee, upon the direction of Holders of not less than twenty-five
percent (25%) in principal amount of the Outstanding Bonds, or the Holders of not less than
twenty-five percent (25%) in principal amount of the Outstanding Bonds may, by notice in writing
delivered to the Company (and to the Trustee if given by the Holders), declare the entire principal
amount of Outstanding Bonds, premium, if any, and the interest accrued thereon immediately due and
payable, and said entire principal, premium, if any, and interest shall thereupon become and be
immediately due and payable. If an Event of Default described in clause (e) or (f) of Section 7.01
occurs, the entire principal amount of Outstanding Bonds and the interest accrued thereon shall be
due and payable immediately without any further action or notice.

     If at any time after the principal of the Outstanding Bonds shall have been accelerated
pursuant to this Section 7.01, all interest in arrears upon such Bonds with interest on the overdue
installments of interest at the same rate borne by the Bonds to which they respectively appertain,
together with the reasonable charges and expenses of the Trustee, its agents and attorneys, and all
other sums which may be due hereunder, except the principal of the Bonds, shall either be paid by
the Company or collected out of the trust estate, and all other Defaults then existing under such
Bonds shall have been cured, or provision deemed by the Trustee to be adequate shall be made
therefor, or shall have been waived as in Section 7.20 provided, then and in every such case the
Holders of not less than a majority in aggregate principal amount of the Outstanding Bonds by
written notice to the Company and to the Trustee, may rescind and annul such acceleration and its
consequences.

     SECTION 7.02. Notice of Defaults to Be Given by the Trustee to Holders.
The Trustee shall, within 90 calendar days after the occurrence thereof, give to the Holders
in the manner provided in Section 11.03 notice of all such Defaults known to it, unless such
Defaults shall have been cured before the giving of such notice; provided that, except in the case
of Default in the payment of the principal of or interest on any of the Bonds, or in the payment of
any sinking fund installment, the Trustee may and shall be protected in withholding such notice if
and so long as the Responsible Officers in good faith determine that the withholding of such notice
is in the interests of the Holders.

     SECTION 7.03. Right of Entry.
Upon the occurrence and during the continuation of an Event of Default, the Company, upon
demand of the Trustee, shall forthwith surrender to the Trustee the actual possession of, and it
shall be lawful for the Trustee, by such officer or agent as they may appoint, to enter upon and
take possession of all the Mortgaged Property (with the books, papers and accounts of the Company),
and to hold, operate and manage the same, and

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from time to time make all needful repairs, and such
alterations, additions and improvements as to them shall seem wise; and to receive the rents,
income, issues and profits thereof, and out of the same to pay all proper costs and expenses of so
taking, holding and managing the same, including reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any charges of the Trustee hereunder, and
any taxes and assessments and other charges prior to the Lien of these presents which the
Trustee may deem it wise to pay, and all expenses of such repairs, alterations, additions and
improvements, and to apply the remainder of the moneys so received by them, first, to the payment
of the interest installments, which are due and unpaid, in the order of their maturity, with
interest after maturity at the same rate borne by the Bonds to which they respectively appertain,
and thereafter, if the principal of said Bonds or any of them is due, to the payment of said
principal and accrued interest pro rata without any preference or priority whatever. Whenever all
that is due upon such interest installments and upon the principal of such Bonds, and under any of
the terms of this Indenture, shall have been paid and all Defaults cured or waived pursuant to the
terms of this Indenture, the Trustee shall surrender possession to the Company, its successors or
assigns. The same right of entry, however, shall exist upon any subsequent occurrence and
continuation of an Event of Default.

     SECTION 7.04. Power of Sale.
Upon the occurrence and during the continuation of an Event of Default, Trustee shall have all
of the rights and may exercise all of the powers set forth in the applicable laws of the State of
California, including, but not limited to, those powers set forth in Section 2924 et seq. and
Section 2938 of the California Civil Code or any successor provisions of law. Upon the occurrence
and during the continuation of an Event of Default, it shall be lawful for the Trustee, acting
jointly by such officer or agent as it may appoint, with or without entry, to sell the Mortgaged
Property as an entirety, or in such parcels as the Holders of not less than a majority in aggregate
principal amount of the Outstanding Bonds shall, in writing, request, or in the absence of such
request, as the Trustee may determine, in its sole discretion, at public auction, at some
convenient place in the City and County of San Francisco, or in the City of San Jose, State of
California, or in such other place or places as may be required by law, having first given notice
of such sale to the Company at least ten Business Days prior to the date of such sale (which the
Company and the Trustee agree shall constitute reasonable notice), and any other notice which may
be required by law, and from time to time to adjourn such sale in its discretion by announcement at
the time and place appointed for such sale or for such adjourned sale or sales without further
notice except such as may be required by law, and upon such sale to make and deliver to the
purchaser or purchasers a good and sufficient deed or deeds for the same, which sale, as likewise
any sale made under this Indenture by virtue of any judicial proceedings, shall be a perpetual bar,
both in law and in equity, against the Company and all Persons and corporations lawfully claiming
or to claim by, through or under it. The Trustee, and its successor or successors, are further
hereby irrevocably appointed upon the occurrence and during the continuation of an Event of Default
the true and lawful attorney or attorneys of the Company, in its name and stead, for such purpose
to execute all necessary bills of sale, assignments and transfers, and to substitute one or more
Persons or corporations with like power, the Company hereby ratifying and confirming all that its
said attorney or attorneys, or such substitute or substitutes, shall lawfully do by virtue hereof.
Nevertheless, if so requested by the Trustee or by any purchaser, the Company shall ratify and
confirm any such sale or transfer by executing and delivering to the Trustee or to such purchaser
or purchasers all proper conveyances, assignments, instruments of transfer and releases as may be
designated in any such request.

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     SECTION 7.05. Rights of the Trustee to Take Judicial Proceedings.
Upon the occurrence and during the continuation of an Event of Default, the Trustee shall have
the right and power to take appropriate judicial proceedings for the protection and enforcement of
its rights and the rights of the Holders hereunder. Upon the occurrence and during the continuation
of an Event of Default, the Trustee may, either after entry as hereinbefore provided, or other
entry, or without entry, proceed by suit or suits at law or in equity or by any other appropriate
remedy, to enforce payment of the Bonds hereby secured and to foreclose this Indenture and to sell
the Mortgaged Property under the judgment or decree of a court or courts of competent jurisdiction.

     SECTION 7.06. Limitations on Holders’ Rights to Sue.
No Holder of any Bond of any series shall have the right to institute any suit, action or
proceeding in equity or at law for the foreclosure of this Indenture, or for the execution of any
trust or power hereof, or for the appointment of a receiver, or for the enforcement of any other
remedy under or upon this Indenture, unless:

     (1) such Holder shall previously have given to the Trustee written notice of an
existing Default under the Bonds of such series, as hereinbefore provided;

     (2) the Holders of not less than twenty-five percent (25%) in principal amount of the
Bonds at the time Outstanding, after the right to exercise such powers, or right of action,
as the case may be, shall have accrued, shall have requested the Trustee in writing to act;

     (3) such Holder or Holders shall have offered to the Trustee security and indemnity
satisfactory to them against the costs, expenses and liabilities to be incurred therein or
thereby; and

     (4) the Trustee shall have refused or neglected to comply with such request for a
period of 60 calendar days.

     Notwithstanding any other provision of this Indenture, the right of the Holder of any Bond to
receive payment of the principal of and interest on such Bond, on or after the respective due dates
expressed in such Bond, or to institute suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of such Holder, except
that no Holder may institute any such suit, action or proceeding if and to the extent that the
institution or prosecution thereof or the entry of a judgment or a decree therein would, under
applicable law, result in the surrender, impairment, waiver or loss of the Lien of this Indenture
upon the Mortgaged Property.

     SECTION 7.07. Remedies Cumulative; Rights of the Trustee Under the California Commercial Code.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder or now or hereafter
existing at law or in equity or by statute.

     Upon the occurrence and during the continuation of an Event of Default, the Trustee shall
have, in addition to all other rights and remedies that the Trustee may have under applicable law

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or in equity or under this Indenture, all rights and remedies of a secured party under the
California Commercial Code.

     SECTION 7.08. Right of Holders to Control Proceedings by the Trustee; Bonds Excluded in
Determining Required Percentage.
Anything in this Indenture to the contrary notwithstanding, the Holders of not less than a
majority in aggregate principal amount of the Outstanding Bonds, from time to time, shall have the
right, by an instrument in writing executed and delivered to the Trustee, to direct the time,
method and place of conducting all proceedings to be taken for any sale of the Mortgaged Property,
for the foreclosure of this Indenture, for the appointment of a receiver, for any other proceedings
for any remedy available to the Trustee, or for exercising any trust or power conferred upon the
Trustee under this Indenture; provided that such directions shall not be otherwise than in
accordance with the provisions of law and this Indenture, and, subject to the provisions of
Sections 10.01 and 10.03, the Trustee shall have the right to decline to follow any such direction
if the Trustee shall be advised by counsel that the action or proceeding so directed may not be
lawfully taken or if the Responsible Officers in good faith shall determine that the action or
proceeding so directed would subject the Trustee to personal liability or is unjustifiably
prejudicial to the non-assenting Holders or that it will not be sufficiently indemnified for any
expenditures in any action or proceeding so directed.

     SECTION 7.09. Appointment of Receiver.
Upon the occurrence and during the continuation of an Event of Default, and upon the filing of
a bill in equity or other commencement of judicial proceedings to enforce the rights of the Trustee
and of the Holders, the Trustee, as a matter of right, shall be entitled to the appointment of a
receiver or receivers of the Mortgaged Property, and of the income, rents, issues and profits
thereof, pending such proceedings, with such powers as the court making such appointment shall
confer.

     SECTION 7.10. Acceleration of Maturity of Bonds Upon Sale.
Upon any sale being made either under the power of sale hereby given or under judgment or
decree in any judicial proceedings for foreclosure or otherwise for the enforcement of this
Indenture, the principal and interest of all Outstanding Bonds, if not previously due, shall at
once become and be immediately due and payable.

     SECTION 7.11. Right of the Trustee and Holders to Purchase Property; Application of Bonds on
Purchase Price.
Upon any such sale, whether made under the power of sale hereby given or under judgment or
decree of court or otherwise, any Holder or the Trustee in their or either of their individual
capacity or capacities may bid for and purchase the property sold, and upon compliance with the
terms of sale, may hold, retain and possess and dispose of such property in their or its own
absolute right without further accountability; and any purchaser at any such sale may, in paying
the purchase money, turn in any of said Bonds hereby secured in lieu of cash to the amount which
shall, upon distribution of the net proceeds of such sale, be payable thereon. Said Bonds, if
Definitive Bonds, in case the amount so payable thereon shall be less than the amount due thereon,
shall be returned to the Holders thereof after being properly modified to show partial payment.

     SECTION 7.12. Non-Liability of Purchaser for Application of Purchase Money.
Upon any such sale, whether made under the power of sale hereby given or under judgment or
decree of court or otherwise, the receipt of the Trustee or of the officer making a sale under

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judicial proceedings shall be a sufficient discharge to the purchaser or purchasers at any sale for
his or their purchase money, and such purchaser or purchasers, his or their assigns or personal
representatives, shall not, after paying such purchase money and receiving such receipt of the
Trustee or of such officer therefor, be obliged to see to the application of such purchase money,
or be in anywise answerable for any loss, misapplication or non-application thereof.

     SECTION 7.13. Application of Proceeds of Sale.
The proceeds of any such sale, whether made under the power of sale hereby conferred upon the
Trustee or under judgment or decree of court or otherwise, together with any other sums which may
then be held by the Trustee under any of the provisions of this Indenture as part of the Mortgaged
Property, or the proceeds thereof, shall be applied as follows:

     First: To the payment of all taxes, assessments or Liens prior to the Lien of
this Indenture, except those subject to which such sale shall have been made, and of
all costs and expenses of such sale, including reasonable compensation to the
Trustee, and each of its agents, attorneys and counsel, and of all other sums
payable to the Trustee hereunder by reason of any expenses or liabilities incurred
in good faith and without negligence or advances made by them or either of them in
connection with the management or administration of the trusts hereby created;

     Second: To the payment of the whole amount then owing and unpaid upon the
Outstanding Bonds for principal, interest and premium, if any, with interest on the
overdue installments of interest at the same rate borne by the Bonds to which they
respectively appertain; and in case such proceeds shall be insufficient to pay in
full the whole amount so due and unpaid, then to the payment of such principal and
interest ratably, without preference or priority of
principal over interest, or of interest over principal, or of any installment of
interest over any other installment of interest, or of any series of the Bonds over
any other series of the Bonds; and

     Third: Any surplus then remaining to the Company, its successors or assigns,
or, upon Company Request, to whosoever may be lawfully entitled to receive the same.

     SECTION 7.14. Waiver of Stay, Extension or Redemption Laws, etc.
Neither the Company nor any one claiming through or under it shall or will set up, claim or
seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or
hereafter in force in any locality where any property subject to the Lien hereof may be situated,
in order to prevent or hinder the enforcement or foreclosure of this Indenture, or the absolute
sale of the property hereby conveyed, or the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers thereat, and the Company, for itself and all who may
claim through or under it, hereby waives the benefit of all such laws, and further waives any and
all right to have the estates comprised in the security intended to be created hereby marshaled
upon any foreclosure of the Lien hereof and agrees that the Trustee or any court having
jurisdiction to foreclose such Lien may sell the Mortgaged Property as an entirety. The Company,
for itself and all who may claim through or under it, further hereby expressly waives the benefit
and effect of

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Section 694 of the California Code of Civil Procedure requiring, in the case of
personal property, capable of manual delivery, that such property be sold within view of those who
attend the sale.

     SECTION 7.15. Waiver of Default Not to Extend to Other Defaults.
No waiver of any Default or Event of Default hereunder, whether by the Trustee or the Holders,
shall extend to or shall affect any subsequent or any other then existing Default or Event of
Default or shall impair any rights or remedies consequent thereon.

     SECTION 7.16. Effect of Discontinuance or Abandonment of Proceedings.
In case the Trustee shall have proceeded to enforce any right under this Indenture by
foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for
any reason, or shall have been determined adversely to the Trustee, or in the event that an Event
of Default shall have occurred and shall have been duly cured, removed or waived, then and in every
such case the Company and the Trustee shall be restored to their former positions and rights
hereunder with respect to the trust estate, and all rights, remedies and powers of the Trustee
shall continue as if no such proceedings had been taken or no such Default had occurred.

     SECTION 7.17. Recovery of Judgment by the Trustee; Filing Proofs of Debt, etc; Application of
Moneys Collected.
Upon an Event of Default under clauses (a) and (b) of Section 7.01 and acceleration of the
principal amount of the Outstanding Bonds pursuant to the terms thereof, the Trustee in its
own name and as trustee of an express trust, shall be entitled to sue for and recover judgment
against the Company or against any other obligor upon the Bonds for the whole amount so due and
unpaid.

     The Trustee in its own name and as trustee of an express trust, or as attorney in fact for the
bearers or registered Holders, may file such proofs of Indebtedness and proofs of claims and
amendments thereto, petitions or other documents as may be necessary in order to have the claims of
the Trustee and of the bearers or registered Holders allowed in any equity receivership,
insolvency, liquidation, bankruptcy or other proceedings relative to the Company or any other
obligor upon the Bonds or its or their creditors or its or their property.

     The Trustee is hereby appointed (and the successive respective bearers or registered Holders,
by taking and holding the Bonds, shall be conclusively deemed to have so appointed the Trustee) the
true and lawful attorneys in fact of the respective bearers and registered Holders and coupons
issued hereunder, with authority to make and file, in any judicial proceeding, either in the
respective names of the bearers and registered Holders or on behalf of all bearers and registered
Holders as a class, any proof of Indebtedness or proof of claim, amendment to proof of Indebtedness
or proof of claim, petition or other document; to receive payment of any sums, or delivery of any
securities or property becoming distributable on account thereof; and to execute any other papers
and documents and to do and perform any and all such acts and things, as may be necessary or
advisable, in the opinion of the Trustee, in order to have the respective claims of the bearers and
registered Holders against the Company allowed in any equity receivership, insolvency, liquidation,
bankruptcy or other proceedings to which the Company shall be a party. The Trustee shall have full
power of substitution and delegation in respect of any such powers.

     Nothing herein shall be deemed, however, to give power to the Trustee to vote the claims of
the Holders in any such proceedings, or to accept or consent to any plan of reorganization,

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readjustment, arrangement or composition or other like plan, or by other action of any character in
any such proceedings to waive or change any right of any Holder.

     The Trustee shall be entitled to sue and recover judgment and make or file proof of
Indebtedness or proof of claim as aforesaid either before or after or during the pendency of any
proceedings for the enforcement of the Lien of this Indenture upon the Mortgaged Property, and in
case of a sale of any of the Mortgaged Property, and of the application of the proceeds of sale to
the payment of the Indebtedness hereby secured, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to enforce payment of and to receive all amounts then remaining
due and unpaid upon any and all of the Outstanding Bonds hereunder, for the benefit of the Holders
thereof, and the Trustee shall be entitled to recover judgment for any portion of the Indebtedness
remaining unpaid, with interest, No recovery of any such judgment by the Trustee and no levy of any
execution upon any such judgment upon any of the Mortgaged Property or upon any other property,
shall in any manner or to any extent affect the Lien of this Indenture upon the Mortgaged Property
or any part thereof or any rights, powers or remedies of the Trustee hereunder, or any Lien,
rights, powers or remedies of the Holders, but such Lien, rights, powers and remedies of the
Trustee and of the Holders shall continue unimpaired as before.

     Any moneys thus collected or received by the Trustee under this Section 7.17 shall be applied
by the Trustee, first, to the payment of the expenses, disbursements and compensation of the
Trustee, and its agents, attorneys and counsel, and, second, toward payment of the amounts then due
and unpaid upon such Bonds in respect of which such moneys shall have been collected, ratably and
without any preference or priority of any kind, according to the amounts due and payable upon such
Bonds, at the date fixed by the Trustee for the distribution of such moneys.

     SECTION 7.18. Rights of Action Enforceable by the Trustee Without Bonds.
All rights of action under this Indenture or any of the Bonds Outstanding hereunder,
enforceable by the Trustee, may be enforced by the Trustee without the possession of any of such
Bonds or the production thereof on the trial or other proceedings relative thereto, and any such
suit or proceedings instituted by the Trustee shall be brought in its own name for the ratable
benefit of the Holders of said Bonds, subject to the provisions of this Indenture.

     SECTION 7.19. Delay or Omission Not Waiver of Default; Repeated Exercise of Powers and
Remedies.
No delay or omission of the Trustee, or of any Holder, to exercise any right or power accruing
upon any Event of Default shall exhaust or impair any such right or power or shall be construed to
be a waiver of any such Event of Default, or acquiescence therein; and every power and remedy given
by this Indenture to the Trustee or to the Holders may be exercised from time to time and as often
as may be deemed expedient by the Trustee or by the Holders.

     SECTION 7.20. Waiver of Certain Defaults by Holders.
Anything elsewhere in this Indenture to the contrary notwithstanding, the Holders of sixty-six
and two-thirds percent (66-2/3%) or more of principal amount of the Outstanding Bonds of all such
series under which an Event of Default shall have occurred may, by a written instrument or
instruments signed by such Holders and delivered to the Trustee and to the Company, waive any past
Default or Event

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of Default under such series of Bonds and its consequences except (a) an Event of
Default in the payment of the principal of, premium, if any, or interest on any of the Bonds as and
when the same shall become due by the terms of such Bonds or (b) in respect of any covenant or
provision hereof which under Section 12.02 cannot be modified or amended without the consent of the
Holder of each outstanding Bond affected thereby, and upon such waiver such Default or Event of
Default shall be deemed not to exist for any purpose of this Indenture or such series of Bonds.

     SECTION 7.21. Provisions of Article VII Subject to Mandatory Provisions of Applicable Law.
All of the rights, remedies and powers provided for in this Article VII may be exercised only
to the extent that the exercise thereof does not violate any applicable provisions of law in the
premises, and all of the provisions of this Article VII are intended to be subject to all
applicable mandatory provisions of law not validly waived that may be controlling in the
premises and to be limited to the extent necessary in order that they will not render this
Indenture invalid or unenforceable in whole or in part or prevent the recording or filing hereof
under the provisions of any applicable law.

ARTICLE VIII.

Evidence of Rights of Holders

     SECTION 8.01. Proof of Execution of Requests, etc. by Holders and of Holding and Ownership of
Bonds.
Any request, consent or other instrument which this Indenture may require or permit to be
signed or executed by Holders may be in any number of concurrent instruments of substantially
similar tenor, and may be signed or executed by such Holders in person or by agents duly appointed
in writing. Proof of the execution of any such request or other instrument or of a writing
appointing any such agent, or of the holding by any Person of Bonds transferable by delivery, shall
be sufficient for any purpose of this Indenture if made in the following manner:

     (a) The fact and date of the execution by any Person of such request, consent
or other instrument or writing may be proved by the certificate of any notary public
or other officer authorized to take acknowledgments of deeds to be recorded in the
place where such acknowledgment is taken, that the Person signing such request,
consent or other instrument acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution duly sworn to before any such notary public
or other officer.

     (b) The amount of Bonds transferable by delivery held by any Person executing
such request or other instrument as a Holder, and the issue numbers and series
thereof held by such Person, and the date of his holding the same, may be proved,
unless herein otherwise provided, by a certificate executed by any trust company,
bank, bankers or other depositary, wheresoever situated, if such certificate shall
be deemed by the Trustee to whom such certificate is presented to be satisfactory,
showing that at the date therein mentioned such Person had on deposit with such
depositary the Bonds described in such certificate.

     (c) The ownership of Bonds registered as to principal shall be proved by the
Register.

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     The Trustee may nevertheless in its discretion require further proof in cases where they or it
deem further proof desirable, and may require the production of any Bond or Bonds, and shall not be
bound to recognize any Person as a Holder unless and until his title to the Bonds held by him is
proved in the manner in this Article VIII provided.

     SECTION 8.02. Effect of Holder’s Action on Subsequent Holders.
Any request or consent of the Holder of any Bond shall bind all future Holders of the same
Bond, and of any Bond or Bonds issued in lieu of or in exchange therefor, in respect of anything
done, omitted or suffered by the Trustee pursuant thereto.

ARTICLE IX.

Merger, Consolidation, Lease or Sale

     SECTION 9.01. Conditions Under Which Merger, Consolidation, Sale or Lease Permitted.
Nothing in this Indenture contained shall prevent any consolidation or merger of the Company
with or into, or any conveyance or transfer, subject to this Indenture, of the Mortgaged Property,
as an entirety or substantially as an entirety, or any lease of all or any part of the Mortgaged
Property, to any corporation lawfully entitled to acquire or lease and operate the same; provided,
however, and the Company covenants and agrees, that (a) any such consolidation, merger, conveyance,
transfer or lease shall be upon such terms as in no respect to impair the Lien of this Indenture,
or any of the rights or powers of the Trustee or the Holders hereunder, and (b) any such lease
shall be made expressly subject to immediate termination by the Company or by the Trustee at any
time during the continuance of an Event of Default hereunder and also by the purchaser of the
property so leased at any sale thereof hereunder whether such sale be made under the power of sale
hereby conferred or under judicial proceedings, and (c) upon any such consolidation, merger,
conveyance or transfer, the due and punctual payment of the principal and interest of all said
Bonds according to their tenor, and the due and punctual performance and observance of all the
terms, covenants and conditions of this Indenture and of all indentures supplemental hereto to be
kept or performed by the Company, shall be expressly assumed by the corporation formed by such
consolidation or into which such merger shall have been made, or acquiring all or substantially all
of the Mortgaged Property, as aforesaid.

     SECTION 9.02. Substitution of Successor Corporation for Company Under Indenture; Contents of
Indenture to Be Executed by Successor Corporation.
In case the Company, pursuant to Section 9.01, shall be consolidated with or merged into any
other corporation, or shall convey or transfer, subject to the Lien of this Indenture, the
Mortgaged Property, as an entirety or substantially as an entirety, the corporation resulting from
such consolidation, or into which the Company shall have been merged, or which shall have received
a conveyance or transfer, as aforesaid (such corporation being hereinafter called the “Successor
Corporation”), upon executing and causing to be recorded an indenture with the Trustee whereby the
Successor Corporation shall assume and agree to pay the principal and interest of the Bonds issued
hereunder in accordance with the provisions of said Bonds and this Indenture, and shall agree to
perform and fulfill all the terms, covenants and conditions of this Indenture shall succeed to and
be substituted for the Company, with the same effect as if it had been named herein as the
“Company,” and such Successor Corporation thereupon may cause to be signed, issued and delivered,
either in its own name or in the name of California Water Service

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Company, any or all of such Bonds
which shall not theretofore have been signed by the
Company and authenticated by the Trustee; and upon the order of such Successor Corporation in
lieu of the Company, and subject to all the terms, conditions and restrictions in this Indenture,
touching the authentication and issuance of Bonds, the Trustee shall authenticate and deliver any
of such Bonds which shall have been previously signed and delivered by the Officers of the Company
to the Trustee for authentication, and any of such Bonds which such Successor Corporation shall
thereafter cause to be signed and delivered to the Trustee for such purpose. All the Bonds so
issued shall in all respects have the same legal rank and security as the Bonds theretofore or
thereafter issued in accordance with the terms of this Indenture as though all of said Bonds had
been issued at the date of the execution hereof.

     Provided, however, that as a condition precedent to the execution by the Successor Corporation
and the authentication by the Trustee of any such additional Bonds in respect of the construction
or acquisition by the Successor Corporation of New or Additional Property, or the making by the
Successor Corporation of any Permanent Improvements, Extensions or Additions to or about its plants
or property, the indenture with the Trustee to be executed and caused to be recorded by the
Successor Corporation as in this Section 9.02 provided, shall contain a conveyance or transfer,
assignment and pledge in terms sufficient to include such Properties and Permanent Improvements,
Extensions or Additions; and provided, further, that the Lien created thereby shall have similar
force, effect and standing as the Lien of this Indenture would have if the Company should not be
consolidated with or merged into such other corporation or should not convey or transfer, subject
to this Indenture, the Mortgaged Property, as an entirety or substantially as an entirety, as
aforesaid, to the Successor Corporation, and should itself construct or acquire said New or
Additional Property or make Permanent Improvements, Extensions or Additions, and request the
authentication and delivery of Bonds under the provisions of this Indenture in respect thereof.

     Subject to the provisions of Sections 10.01 and 10.03, the Trustee may receive an Opinion of
Counsel as conclusive evidence that any such indenture complies with the foregoing conditions and
provisions of this Section 9.02, and that any such corporation is lawfully entitled to acquire the
Mortgaged Property, as an entirety or substantially as an entirety, and operate the same.

     SECTION 9.03. Properties of Successor Corporation Excluded from Lien of Indenture; Earnings of
Successor Corporation Excluded in Net Earnings Certificate.
In case the Company, pursuant to Section 9.01, shall be consolidated with or merged into any
other corporation, or shall convey or transfer, subject to this Indenture, the Mortgaged Property,
as an entirety or substantially as an entirety, as aforesaid, neither this Indenture nor the
indenture with the Trustee to be executed and recorded by the Successor Corporation as in Section
9.02 provided, shall become or be a Lien upon any of the properties or franchises of the Successor
Corporation except those acquired by it from the Company, and Permanent Improvements, Extensions or
Additions appurtenant thereto, and the New or Additional Property, Permanent Improvements,
Extensions and Additions to or about the plant and properties of the Successor Corporation, made
and used by it as the basis for the issue of Bonds or the payment of money under this Indenture,
property received in exchange for property
released from the Lien hereof, all as herein provided, and such franchises, replacements and
additional property as may be acquired by the Successor Corporation pursuant to the covenants
herein contained to maintain,

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preserve and renew the franchises covered by this Indenture and to
keep and maintain the property covered by this Indenture in good repair, working order and
condition, or pursuant to some other covenant or agreement hereof to be kept or performed by the
Company, but in case of any such merger, consolidation or transfer, the accounts of the Successor
Corporation shall be so kept that the Mortgaged Property and the earnings thereof may be at all
times distinguished, and all covenants herein contained affecting the Mortgaged Property be fully
performed.

     Any Net Earnings Certificate executed on behalf of such Successor Corporation shall, however,
not include the earnings of any properties of such Successor Corporation excepted from the Lien of
this Indenture under the provisions of this Section 9.03, and such earnings shall not be deemed to
be earnings of such Successor Corporation for any purposes of this Indenture.

     SECTION 9.04. “Company” to Include Successor Corporation.
The word “Company” wherever used in this Indenture shall include any such Successor
Corporation, and any order, request, Company Request, certificate or other instrument of any
officer or officers of the Company, provided for in this Indenture, may be made by like officials
of a Successor Corporation, and any resolution provided to be adopted by the Board of Directors may
be adopted by the board of directors of a Successor Corporation.

     SECTION 9.05. Surrender of Powers Reserved Under Article IX.
At any time prior to the exercise of any power by this Article IX reserved to the Company or
to a Successor Corporation, the Company may surrender any power so reserved to the Company or to
such Successor Corporation by delivering to the Trustee, accompanied by a certification of its
Secretary or an Assistant Secretary, that the execution of such instrument was duly authorized by
the Board of Directors given at a meeting duly called and held, and thereupon the power so
surrendered shall cease.

     SECTION 9.06. Liability of Predecessor Company.
No such conveyance, transfer or lease of substantially all of the assets of the Company
permitted under Section 9.01 shall have the effect of releasing the Company or any successor
corporation or limited liability company that shall therefore have become such a successor in the
manner prescribed in this Article IX from its liability under this Indenture or the Bonds.

ARTICLE X.

The Trustee

     SECTION 10.01. Certain Duties and Responsibilities.

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

     (i) 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

     (ii) 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

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certificates or opinions which by any provisions 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.

     (b) In case an Event of Default shall have occurred and be 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 such person’s 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 or its own bad faith, except that:

     (i) this subsection shall not be construed to limit the effect of subsection
(a) of this Section;

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

     (iii) 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 aggregate principal amount of the Outstanding Bonds, as
provided herein, 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; and

     (iv) 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, if it
shall have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

     (d) 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.

     SECTION 10.02. Notice of Defaults.

     The Trustee shall comply with Section 7.02 with respect to the provision of notices of
Defaults to the Holders.

     Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or
inquire as to the performance or observance of any of the terms, conditions, covenants or
agreements herein or of any of the documents executed in connection with Bonds issued hereunder, or
as to the existence of a default or Event of Default hereunder.

     SECTION 10.03. Certain Rights of Trustee

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     Subject to the provisions of Section 10.01 and to the applicable provisions of the TIA:

     (a) the Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, Company Request, direction, consent, order, bond, debenture, note,
other evidence of Indebtedness or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;

     (b) any request or direction of the Company mentioned herein shall be sufficiently
evidenced by a Company Request, or as otherwise expressly provided herein, and any
resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

     (c) whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence is specifically prescribed herein) may,
in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate;

     (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel 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;

     (e) the Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any Holder pursuant to this
Indenture, unless such Holder shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;

     (f) the Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, Company Request, direction, consent, order, bond, debenture, note, other evidence
of Indebtedness or other paper or document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it shall (subject
to applicable legal requirements) be entitled to examine, during normal business hours, the
books, records and premises of the Company, personally or by agent or attorney;

     (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;

     (h) the Trustee shall not be personally liable, in case of entry by it upon the
Mortgaged Property, for debts contracted or liabilities or damages incurred in the prudent
management or operation of the Mortgaged Property.

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     SECTION 10.04. Not Responsible For Recitals or Issuance of Bonds or Application of Proceeds.
The recitals contained herein and in the Bonds (except the Trustee’s certificate of
authentication on the Bonds) shall be taken as the statements of the Company, and neither the
Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee
makes no representations as to the value or condition of the Mortgaged Property or any part
thereof, or as to the title of the Company thereto or as to the security afforded thereby or
hereby, or as to the validity or genuineness of any securities at any time pledged and deposited
with the Trustee hereunder, or as to the validity or sufficiency of this Indenture or of the Bonds.
The Trustee shall not be accountable for the use or application by the Company of the Bonds or the
proceeds thereof or of any money paid to the Company or upon Company Request under any provision
hereof. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Bonds or the proceeds thereof. Except with respect to the filing and
refiling of financing statements and any continuation statements or amendments relating thereto, as
may be necessary to perfect or maintain the perfection of the Lien hereof on that portion of the
Mortgaged Property which constitutes personal property or fixtures, the Trustee shall have no
responsibility to make or to see to the making of any recording, filing or registration of any
instrument or notice (including any tax or securities form) (or any rerecording, refiling or
reregistration of any thereof) at any time in any public office or elsewhere for the purpose of
perfecting, maintaining the perfection of or otherwise making effective the Lien of this Indenture
or for any other purpose and shall have no responsibility for seeing to the insurance on the
Mortgaged Property or for paying any taxes relating to the Mortgaged Property or for otherwise
maintaining the Mortgaged Property, including, but not limited to, attending to any environmental
matters in respect thereof or disposing of any hazardous or other wastes located thereon.

     SECTION 10.05. May Hold Bonds.
Each of the Trustee, any Authenticating Agent, any Paying Agent, any Bond Registrar or any
other agent of the Company or the Trustee, in its individual or any other capacity, may become the
owner or pledgee of Bonds and, subject to Sections 10.08 and 10.13, may otherwise deal with the
Company with the same rights it would have if it were not such Trustee, Authenticating Agent,
Paying Agent, Bond Registrar or other agent.

     SECTION 10.06. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds, except
to the extent required by law or as otherwise provided in the Indenture. The Trustee shall be under
no liability for interest on or investment of any money received by it hereunder (provided that the
Trustee has invested such money in accordance with a Company Request pursuant to Section 6.04
hereof) except as expressly provided herein or otherwise agreed with, and for the sole benefit of,
the Company.

     SECTION 10.07. Compensation and Reimbursement.

     The Company agrees

     (a) to pay to the Trustee from time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);

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     (b) except as otherwise expressly provided herein, to reimburse the Trustee promptly
after its request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel), except to the
extent that any such expense, disbursement or advance may be attributable to its negligence,
willful misconduct or bad faith; and

     (c) to indemnify the Trustee (which for purposes of this Section shall include its
officers, directors, employees and agents) and hold it harmless from and against any loss,
liability or expense reasonably incurred without negligence, willful misconduct or bad faith
on its part, arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder or the exercise or performance of its duties hereunder, including
the costs and expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder. “Trustee” for purposes
of this Section shall include any predecessor Trustee; provided, however, that the
negligence, willful misconduct or bad faith of any Trustee hereunder shall not affect the
rights of any other Trustee hereunder. In addition and without prejudice to the rights
provided to the Trustee under any of the provisions of this Indenture, when the Trustee
incurs expenses or renders services in connection with an
Event of Default specified in Section 7.01(e) or Section 7.01(f), 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. The provisions of this Section shall
survive the termination of this Indenture and the resignation or removal of the Trustee.

     SECTION 10.08. Disqualification; Conflicting Interests.
If the Trustee shall have or acquire any conflicting interest within the meaning of the TIA,
it shall either eliminate such conflicting interest or resign to the extent, in the manner and with
the effect, and subject to the conditions, provided in the TIA and this Indenture. For purposes of
Section 310(b)(1) of the TIA and to the extent permitted thereby, the Trustee, in its capacity as
trustee in respect of the Bonds of any series, shall not be deemed to have a conflicting interest
arising from its capacity as trustee in respect of the Bonds of any other series.

     SECTION 10.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be:

     (i) a corporation organized and doing business under the laws of the United States, any
state or territory thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state authority, or

     (ii) if and to the extent permitted by the Commission by rule, regulation or order upon
application, a corporation or other Person organized and doing business under the laws of a
foreign government, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of such supervising
or examining authority, then for the purposes of this

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Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.

     The foregoing notwithstanding, no obligor with respect to the Bonds or any Affiliate of such
obligor shall serve as Trustee hereunder. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.

     SECTION 10.10. Resignation and Removal; Appointment of Successor.

     (a) No resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable requirements of
Section 10.11.

     (b) The Trustee may resign at any time by giving written notice thereof to the Company.
If the instrument of acceptance by a successor Trustee required by Section 10.11 shall not
have been delivered to the Trustee within 30 calendar days after the giving of such notice
of resignation, the resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor Trustee.

     (c) The Trustee may be removed at any time by Act of the Holders of a majority in
aggregate principal amount of the Outstanding Bonds delivered to the Trustee and to the
Company.

     (d) If at any time:

     (i) the Trustee shall fail to comply with Section 10.08 after written request
therefor by the Company or by any Holder who has been a bona fide Holder for at
least six months, or

     (ii) the Trustee shall cease to be eligible under Section 10.09 or § 310(a) of
the TIA and shall fail to resign after written request therefor by the Company or by
any such Holder, or

     (iii) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (x) the Company by a Board Resolution may
remove the Trustee or (y) subject to Section 15.02, any Holder who has been a bona
fide Holder for at least six months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee or Trustees.

     (e) If the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause (other than as contemplated in

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(d)(iii)(y) of this Section), the Company, by a Board Resolution, shall take prompt steps to
appoint a successor Trustee or Trustees and shall comply with the applicable requirements of
Section 10.11. If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of
a majority in aggregate principal amount of the Outstanding Bonds delivered to the Company
and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements of Section
10.11, become the successor Trustee and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed by the
Company or the Holders and accepted appointment in the
manner required by Section 10.11, the Holders of at least 10% in aggregate principal
amount of the then Outstanding Bonds may petition any court of competent jurisdiction for
the appointment of a successor Trustee.

     (f) So long as no event which is, or after notice or lapse of time, or both, would
become, an Event of Default shall have occurred and be continuing, if the Company shall have
delivered to the Trustee (i) a Board Resolution appointing a successor Trustee, effective as
of a date specified therein, and (ii) an instrument of acceptance of such appointment,
effective as of such date, by such successor Trustee in accordance with Section 10.11, the
Trustee shall be deemed to have resigned as contemplated in Section 10.10(b), the successor
Trustee shall be deemed to have been appointed pursuant to Section 10.10(e) and such
appointment shall be deemed to have been accepted as contemplated in Section 10.11, all as
of such date, and all other provisions of this Section and Section 10.11 shall be applicable
to such resignation, appointment and acceptance except to the extent inconsistent with this
Section 10.10(f).

     (g) The Company shall give notice of each resignation and each removal of the Trustee
and each appointment of a successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders as their names and addresses appear in the
Bond Register. Each notice shall include the name of the successor Trustee and the address
of its Corporate Trust Office.

     SECTION 10.11. Acceptance of Appointment By Successor.

     (a) In case of the appointment hereunder of a successor Trustee, every such successor
Trustee so appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee. Such retiring Trustee shall execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.

     (b) Upon request of any such successor Trustee, the Company shall execute any
instruments which fully vest in and confirm to such successor Trustee all rights, powers and
trusts referred to in Section 10.11(a).

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     (c) No successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this Article.

     SECTION 10.12. Merger, Conversion, Consolidation Or Succession To Business.
Any corporation into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the parties hereto. In
case any Bonds shall have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Bonds so authenticated with the same effect as if such successor
Trustee had itself authenticated such Bonds.

     SECTION 10.13. Preferential Collection of Claims Against Company.
If the Trustee shall be or become a creditor of the Company or any other obligor upon the
Bonds (other than by reason of a relationship described in § 311(b) of the TIA), the Trustee shall
be subject to any and all applicable provisions of the TIA regarding the collection of claims
against the Company or such other obligor.

     SECTION 10.14. Co-Trustees and Separate Trustees.

     At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in
which any of the Mortgaged Property may at the time be located, the Company and the Trustee shall
have power to appoint, and, upon the written request of the Trustee or of the Holders of at least
thirty-three percent (33%) in principal amount of the Outstanding Bonds, the Company shall for such
purpose join with the Trustee in the execution and delivery of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Trustee and, if no Event of
Default shall have occurred and be continuing, by the Company either to act as co-trustee, jointly
with the Trustee, of all or any part of the Mortgaged Property, or to act as separate trustee of
any such property, in either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons, in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other provisions of this Section. If
the Company does not join in such appointment within 15 calendar days after the receipt by it of a
request so to do, or if an Event of Default shall have occurred and be continuing, the Trustee
alone shall have power to make such appointment.

     Should any written instrument or instruments from the Company be required by any co-trustee or
separate trustee so appointed to more fully confirm to such co-trustee or separate trustee such
property, title, right or power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by the Company.

     Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent
only, be appointed subject to the following conditions:

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     (i) the Bonds shall be authenticated and delivered, and all rights, powers, duties and
obligations hereunder in respect of the custody of securities, cash and other personal
property held by, or required to be deposited or pledged with, the Trustee hereunder, shall
be exercised solely, by the Trustee;

     (ii) the rights, powers, duties and obligations hereby conferred or imposed upon the
Trustee in respect of any property covered by such appointment shall be conferred or imposed
upon and exercised or performed either by the Trustee or by the Trustee and such co-trustee
or separate trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any jurisdiction
in which any particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and obligations
shall be exercised and performed by such co-trustee or separate trustee;

     (iii) the Trustee at any time, by an instrument in writing executed by it, with the
concurrence of the Company, may accept the resignation of or remove any co-trustee or
separate trustee appointed under this Section, and, if an Event of Default shall have
occurred and be continuing, the Trustee shall have power to accept the resignation of, or
remove, any such co-trustee or separate trustee without the concurrence of the Company. Upon
the written request of the Trustee, the Company shall join with the Trustee in the execution
and delivery of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section;

     (iv) neither the Trustee nor any co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of any other trustee hereunder; and

     (v) any Act of Holders delivered to the Trustee shall be deemed to have been delivered
to each such co-trustee and separate trustee.

     SECTION 10.15. Appointment Of Authenticating Agent.

     The Trustee may appoint an Authenticating Agent or Agents with respect to the Bonds of one or
more series which shall be authorized to act on behalf of the Trustee to authenticate Bonds of such
series issued upon original issuance, exchange, registration of transfer or partial redemption
thereof or pursuant to Section 2.16, and Bonds so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery
of Bonds by the Trustee or the Trustee’s certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent.
An Authenticating Agent has the same rights as an Agent to deal with the
Holders or an Affiliate of the Company. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business under the laws of the
United States, any state or territory thereof or the District of Columbia or the Commonwealth of
Puerto Rico, authorized under such laws to act as Authenticating Agent, having a combined

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capital
and surplus of not less than $50,000,000 and subject to supervision or examination by federal or
state authority. If such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, such Authenticating Agent shall resign immediately in the manner
and with the effect specified in this Section. Any corporation into which an Authenticating Agent
may be merged or converted or with which it may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any
corporation succeeding to all or substantially all of the corporate agency or corporate trust
business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such
corporation shall be otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.

     An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee
and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may
appoint a successor Authenticating Agent which shall be acceptable to the Company. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under
the provisions of this Section.

     The Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section.

     The provisions of Sections 10.04 and 10.05 shall be applicable to each Authenticating Agent.

     If an appointment with respect to the Bonds of one or more series shall be made pursuant to
this Section, the Bonds of such series may have endorsed thereon, in addition to the Trustee’s
certificate of authentication, an alternate certificate of authentication substantially in the
following form:

     This is one of the Bonds of the series designated therein referred to in the within-mentioned
Indenture.

Dated: ,

As Trustee

By                                                             

Authorized Signatory

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     If all of the Bonds of a series may not be originally issued at one time, and if the Trustee
does not have an office capable of authenticating Bonds upon original issuance located in a Place
of Payment where the Company wishes to have Bonds of such series authenticated upon original
issuance, the Trustee, if so requested by the Company in writing (which writing need not comply
with Section 15.01 and need not be accompanied by an Opinion of Counsel), shall appoint, in
accordance with this Section and in accordance with such procedures as shall be acceptable to the
Trustee, an Authenticating Agent having an office in the place of payment designated by the Company
with respect to such series of Bonds.

     SECTION 10.16. Subordination, Non-Disturbance and Attornment Agreement Notice.
In the event that the Trustee upon Company Request executes a Subordination, Non-Disturbance
and Attornment Agreement as set forth in Exhibit B, and the Trustee receives a notice from the
tenant party thereto of the default of the Company in respect of the underlying lease, the
Trustee’s sole duty thereafter will be to forward such notice to the registered Holders of the
Bonds.

ARTICLE XI.

Reports by the Company and the Trustee

     SECTION 11.01. Communication by Holders with Other Holders.
Holders may communicate in a manner consistent with § 312(b) of the TIA with other Holders
with respect to their rights under this Indenture. The Company, the Trustee, the Registrar and
anyone else shall have the protection of § 312(c) of the TIA.

     Upon the written request of a Holder, the Company shall promptly provide such Holder with a
list of all other Holders of Bonds issued under the Indenture dated as of a recent date.

     SECTION 11.02. Filing of Reports and Information with Trustee.
The Company covenants and agrees to file with the Trustee as soon as available and in any
event within 10 calendar days after Parent is required to file the same with the Commission or any
successor agency or any securities exchange, a copy of each of Parent’s reports on Form 10-K, Form
10-Q and Form 8-K, and each other regular or periodic report and any notice, proxy statement,
registration statement, prospectus or written communication (other than transmittal letters), as
filed with the Commission or any successor agency or any securities exchange; if Parent ceases to
be a reporting company under either Section 13(a) or 15(d) of the Exchange Act (a “1934 Act
Reporting Company”), the Company covenants and agrees to file with the Trustee
annual and quarterly reports comparable in form and scope to those filed on Forms 10-K and
10-Q by 1934 Act Reporting Companies within 10 calendar days after a 1934 Act Reporting Company
would be required to file such reports with the Commission. In addition, the Company covenants and
agrees to comply with §312(a) of the TIA.

     SECTION 11.03. Reports by the Trustee to Holders.
Within 60 calendar days after May 15 of each year commencing with May 15, 2009, the Trustee
shall transmit by mail to all Holders, in the manner and to the extent provided in §313(c) of the
TIA, a brief report dated as of such May 15 in accordance with and with respect to the matters
required by §313(a) of the TIA. The Trustee shall also transmit by mail to all Holders, in the
manner and to the extent

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provided in §313(c) of the TIA, (i) information in accordance with and
with respect to the matters required by §312(b) of the TIA and (ii) a brief report in accordance
with and with respect to the matters required by §313(b) of the TIA.

     A copy of each report transmitted to Holders pursuant to this Section 11.03 shall, at the time
of such transmission, be mailed to the Company and filed with each stock exchange, if any, upon
which the Bonds of any series are listed and also with the Commission. The Company will notify the
Trustee promptly if the Bonds of any series are listed on any stock exchange or of any delisting
thereof.

     Reports sent pursuant to this Section 11.03 shall be transmitted by mail:

     1. to all registered holders of Outstanding Bonds, as the names and
addresses of such holders appear upon the registration books of the Company;

     2. to such holders of Outstanding Bonds as have, within two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose; and

     3. except in the case of reports pursuant to Section 11.03(b), to each
Bondholder whose name and address is preserved at the time by the Trustee,
as provided in Section 11.02(a).

     (b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by said Trustee with each stock exchange upon which the Bonds are
listed and also with the Securities and Exchange Commission.

     (c) For the purpose of this Section, all Bonds which have been authenticated
and delivered and not returned to the Trustee and cancelled, shall be deemed to be
Outstanding, except Bonds which, pursuant to Section 14.03, have ceased to be
entitled to the Lien of this Indenture.

ARTICLE XII.

Supplemental Indenture

     SECTION 12.01. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to
the Trustee, for any of the following purposes:

     (a) to evidence the succession of another corporation to the rights of the Company and
the assumption by such successor of the covenants and obligations of the Company contained
herein and in the Bonds;

     (b) to add to the covenants of the Company, for the benefit of the Holders of the Bonds
of all or any series (and if such covenants are to be for the benefit of the Holders of less
than all series of Bonds, stating that such covenants are expressly being

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included solely for the benefit of such Holders), or to surrender any right or power herein conferred upon
the Company;

          (c) to add any additional Events of Default in respect of the Bonds of all or any
series (and if such additional Events of Default are to be for the benefit of the Holders of
less than all series of Bonds, stating that such additional Events of Default are expressly
being included solely for the benefit of such Holders);

          (d) to supplement any of the provisions of this Indenture to such extent as shall be
necessary to permit or facilitate the defeasance and discharge of Bonds of any series
pursuant to Article XIV, provided that any such action shall not adversely affect the
interests of the Holders of such Bonds or Holders of Bonds of any other series in any
material respect or to release any Mortgaged Property from the Lien of this Indenture
pursuant to Article V;

          (e) to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Bonds of one or more series, and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee;

     (f) to comply with the requirements of the Commission in connection with the
qualification of this Indenture under the TIA;

     (g) to cure any ambiguity;

     (h) to correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein or therein;

     (i) to eliminate any conflict between the terms of this Indenture, the Bonds of any
series and the TIA;

          (j) to make any other provisions with respect to matters or questions arising under
this Indenture which shall not be inconsistent with any provision of this Indenture;
provided such other provisions shall not adversely affect in any material respect the
interests of the Holders of Outstanding Bonds of any series;

     (k) to add guarantees for the benefit of any series; or

     (l) to establish the form or terms of Bonds of any series as permitted by Section 2.01.

     SECTION 12.02. Supplemental Indentures with Consent of Holders.
With the written consent of the Holders of a majority in aggregate principal amount of the
Bonds the terms of which or the rights of the Holders of which are to be modified by the proposed
supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company and the Trustee may enter into the proposed supplemental indenture; provided, however, that
no such supplemental indenture shall, without the consent of the Holder of each Outstanding Bond
affected thereby,

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     (a) change the Stated Maturity of the principal of, or any installment of principal of
or interest on, any Bond, or reduce the principal amount thereof or the rate (or extend the
time for payment) of interest thereon or any premium payable upon redemption thereof, or
change the currency in which the principal of or interest on such Bond is denominated or
payable, or impair the right to institute suit for the enforcement of any payment on or
after the Stated Maturity thereof (including, in the case of redemption, on or after the
Redemption Date), or alter any redemption provisions in a manner adverse to the Holders of
Bonds or release any guarantor (except in accordance with the terms of this Indenture or any
related guarantee) or collateral, if any, securing the Bonds (except in accordance with the
terms of this Indenture or the documents governing such collateral, if any);

     (b) reduce the percentage in principal amount of the Outstanding Bonds of any series,
the consent of whose Holders is required for any supplemental indenture or amendment, or the
consent of whose Holders is required for any waiver of compliance with respect to the Bonds
of any such series or with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;

     (c) modify any of the provisions of this Section, Section 3.03(B) or Section 7.20,
except to increase any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each Outstanding
Bond affected thereby; provided, however, that this clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to “the Trustee” and
concomitant changes in this Section, or the deletion of this proviso, in accordance with the
requirements of Sections 10.10 and 12.01(e); and

     (d) release all or substantially all of the Mortgaged Property from the Lien of this
Indenture or change Section 2.01(A) so that the Lien granted to all applicable series of
Bonds are not equal and ratable.

     It shall not be necessary for any Act of Holders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.

     A supplemental indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of the Holders of Bonds of one
or more particular series, or which modifies the rights of the Holders of such Bonds with respect
to such covenant or other provision, shall be deemed not to affect the rights under this Indenture
of the Holders of Bonds of any other series.

     SECTION 12.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Sections 10.01 and 10.03) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such

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supplemental indenture which adversely affects the Trustee’s own
rights, duties or immunities under this Indenture or otherwise in a material way.

     SECTION 12.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Bonds affected thereby theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.

     SECTION 12.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall conform to the
requirements of the TIA.

     SECTION 12.06. Reference in Bonds to Supplemental Indentures.
Bonds of any series authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article and affected thereby may, and shall, if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Bonds of any series so modified as to conform,
in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Bonds of such series.

ARTICLE XIII.

Guarantees

     SECTION 13.01. Guarantee.

          (a) Notwithstanding any provision of this Indenture to the contrary, the provisions of this
Article XIII shall be applicable only to, and inure solely to the benefit of, the Bonds of any
series designated pursuant to Section 2.01 as entitled to the benefits of the Guarantee of a
guarantor (the “Guarantor”). If specified pursuant to Section 2.01, the payment of principal of,
and premium, if any, and interest, if any, on the Bonds of that series is to be guaranteed
(“Guarantee”) by the Guarantor, the Guarantor shall execute and deliver a guarantee agreement
substantially in the form attached hereto as Exhibit D (the “Guarantee Agreement”), the terms and
conditions of which are incorporated in this Article XIII by reference and made a part hereof.

          (b) An Event of Default under the Bonds of that series shall constitute an event of default
under the Guarantee Agreement, and shall entitle the Holders of such Bonds or the Trustee (acting
at the written direction of the Holders) to accelerate the obligations of the Guarantor under this
Indenture and the Guarantee Agreement in the same manner and to the same extent as the obligations
of the Company under the Indenture.

          (c) The Guarantee shall be a guarantee of payment and not of collection.

          (d) The Guarantor hereby agrees to pay, in addition to the amount stated above, any and all
costs and expenses (including the reasonable compensation, expenses and disbursements of its agents
and counsel) incurred by the Trustee under this Indenture or by any Holder in enforcing any rights
under this Section 13.01.

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     SECTION 13.02. Execution and Delivery of Guarantee Agreement.

          (a) To further evidence the Guarantee set forth in Section 13.01, the Guarantor shall execute
by either manual or facsimile signature of a duly authorized officer of the Guarantor a Guarantee
Agreement.

          (b) If the duly authorized officer of the Guarantor whose signature is on this Indenture or
the Guarantee Agreement no longer holds that office at the time the Trustee authenticates the Bonds
entitled to the benefits of the Guarantee or at any time thereafter, the Guarantee of such series
of Bonds pursuant to this Indenture shall be valid nevertheless.

     SECTION 13.03. Withholding Taxes.
All payments to be made by the Guarantor pursuant to any Guarantee Agreement shall be made
without withholding or deduction for or on account of any present or future taxes, assessments or
other governmental charges unless the Guarantor is compelled by law to deduct or withhold such
taxes, assessments or charges. In that event, the Guarantor shall pay to the Holders of the series
of Bonds entitled to such Guarantee such additional amounts as may be
necessary in order that the net amounts received after such withholding or deduction shall
equal the amounts that would have been received if no withholding or deduction had been made.

ARTICLE XIV.

Discharge and Defeasance

     SECTION 14.01. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of the Bonds herein expressly provided for
and rights to receive payments of principal, interest and premium, if any, on the Bonds) and the
Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction
and discharge of this Indenture, when:

     (a) either

     (1) all Bonds theretofore authenticated and delivered, except lost, stolen or
destroyed Bonds which have been replaced or paid and Bonds for whose payment money
has theretofore been deposited in trust, have been delivered to the Trustee for
cancellation; or

     (2) all Bonds not theretofore delivered to the Trustee for cancellation have
become due and payable by reason of the making of a notice of redemption or
otherwise, will become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at the expense, of
the Company and the Company has irrevocably deposited or caused to be deposited with
the Trustee as trust funds in trust solely for the benefit of the Holders, cash,
Government Securities, or a combination thereof, in such amounts as will be
sufficient without consideration of any reinvestment of interest to pay and
discharge the entire Indebtedness on the Bonds not theretofore delivered to

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the Trustee for cancellation for principal, premium, if any, and accrued interest to the
date of maturity or redemption;

     (b) no Default (other than that resulting from borrowing funds to be applied to make
such deposit or any similar or simultaneous deposit relating to other Indebtedness) with
respect to this Indenture or the Bonds shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit and such deposit will not result in
a breach or violation of, or constitute a default under any material agreement or instrument
(other than this Indenture) to which the Company is a party or by which the Company is bound
(other than resulting from any borrowing of funds to be applied to make such deposit and any
similar deposit relating to other Indebtedness and the granting of liens in connection
therewith);

     (c) the Company has paid or caused to be paid all sums payable by it under this
Indenture;

     (d) the Company has delivered irrevocable instructions to the Trustee to apply the
deposited money toward the payment of the Bonds at maturity or the Redemption Date, as the
case may be; and

     (e) the Company has delivered an Officers’ Certificate and an Opinion of Counsel to the
Trustee stating that all conditions precedent to satisfaction and discharge have been
satisfied.

     SECTION 14.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 2.13, all money deposited with the
Trustee pursuant to Section 14.01 shall be held in trust and applied by it, in accordance with the
provisions of the Bonds, and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal, interest and premium, if any, for whose payment such
money has been deposited with the Trustee.

     SECTION 14.03. Applicability of Article.
Except as otherwise provided in Section 14.04, the Company may terminate its obligations under
the Bonds and this Indenture as set forth in Section 14.04.

     SECTION 14.04. Legal Defeasance and Covenant Defeasance.

     (a) The Company may, at the option of its Board of Directors evidenced by a Board
Resolution set forth in an Officers’ Certificate, at any time, elect to have either Section
14.04(b) or 14.04(c) be applied to all Outstanding Bonds of any series upon compliance with
the conditions set forth below in this Article XIV.

     (b) Upon the Company’s exercise under Section 14.04(a) of the option applicable to this
Section 14.04(b), the Company shall, subject to the satisfaction of the conditions set forth
in Section 14.05, be deemed to have been discharged from their obligations with respect to
the Bonds of any series on the date the conditions set forth below are satisfied with
respect to such series (hereinafter, “Legal Defeasance”). For

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this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the Outstanding Bonds of any series, which Bonds shall
thereafter be deemed to be Outstanding only for the purposes of Section 14.04 and the other
Sections of this Indenture referred to in (i) and (ii) below, and to have satisfied all their other
obligations under the Bonds of such series and this Indenture (and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or discharged hereunder:
(i) the rights of Holders to receive payments in respect of the principal of, premium, if any, and
interest on the Bonds of such series when such payments are due solely out of the trust described
in this Article XIV, (ii) the Company’s obligations with respect to the Bonds of such series
concerning issuing temporary Bonds, registration of such Bonds, mutilated, destroyed, lost or
stolen Bonds and the maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the
Company’s obligations in connection therewith and (iv) Section 14.04 and Section 14.05. Subject to
compliance with this Article XIV, the Company may exercise its Legal Defeasance option with respect
to Bonds of any series notwithstanding the prior exercise of its Covenant Defeasance option with
respect to Bonds of such series.

     (c) Upon the Company’s exercise under Section 14.04(a) of the option applicable to this
Section 14.04(c) subject to the satisfaction of the conditions set forth in Section 14.05,
the Company shall be released from its obligations under Sections 3.01, 3.04, 3.05, 3.06,
3.07, 3.10, Article IX and Section 11.02 with respect to the Outstanding Bonds of any series
on and after the date the conditions set forth below are satisfied with respect to such
series (hereinafter, “Covenant Defeasance”), and the Bonds shall thereafter be deemed not
Outstanding for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such Sections, but shall
continue to be deemed Outstanding for all the other purposes hereunder. For this purpose,
Covenant Defeasance means that, with respect of any term, condition or limitation set forth
in any such Section with respect to Bonds of any series, whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or by reason of any reference
in any such Section to any other provision herein or in any other document and such omission
to comply shall not constitute an Event of Default, but, except as specified above, the
remainder of this Indenture and the Bonds of such series shall be unaffected thereby. In
addition, upon the Company’s exercise of its Covenant Defeasance option, subject to the
satisfaction of the conditions set forth in Section 14.05, clauses (c) and (d) (with respect
to Sections 3.01, 3.04, 3.05, 3.06, 3.07, 3.10, Article IX and Section 11.02) of Section
7.01 shall not constitute Events of Default with respect to the Bonds of such series.

     SECTION 14.05. Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance with respect to Bonds of
any series:

     (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of Bonds of such series, cash, Government Securities, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally

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recognized firm of independent public accountants, to pay the principal of, premium, if
any, and interest due on the Bonds at the Stated Maturity or on the Redemption Date, as the
case may be, of such principal, premium, if any, or interest on the Bonds of such series and
the Company must specify whether the Bonds of such series are being defeased to Stated
Maturity or to a particular Redemption Date;

     (b) in the case of Legal Defeasance with respect to Bonds of such series, the Company
shall have delivered to the Trustee an Opinion of Counsel confirming that, subject to
customary assumptions and exclusions, (i) the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling, or (ii) since the
issuance of the Bonds of such series, there has been a change in the applicable U.S. federal
income tax law, in either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, subject to customary assumptions and exclusions, the Holders of Bonds of
such series will not recognize income, gain or loss for U.S. federal income tax purposes, as
applicable, as a result of such Legal Defeasance of such series and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same times as would
have been the case if such Legal Defeasance had not occurred;

     (c) in the case of Covenant Defeasance with respect to Bonds of such series, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United States,
reasonably acceptable to the Trustee confirming, subject to customary assumptions and
exclusions, that the Holders of the Outstanding Bonds of such series will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of such Covenant
Defeasance of such series and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;

     (d) no Default (other than that resulting from borrowing funds to be applied to make
the deposit required to effect such Legal Defeasance or Covenant Defeasance and any similar
and simultaneous deposit relating to other Indebtedness and, in each case, the granting of
Liens in connection therewith) shall have occurred and be continuing on the date of such
deposit with respect to the Bonds of such series;

     (e) such Legal Defeasance or Covenant Defeasance with respect to Bonds of such series
shall not result in a breach or violation of, or constitute a default under any material
agreement or instrument (other than this Indenture) to which the Company is a party or by
which the Company is bound (other than that resulting with respect to any Indebtedness being
defeased from any borrowing of funds to be applied to make the deposit required to effect
such Legal Defeasance or Covenant Defeasance and any similar and simultaneous deposit
relating to such Indebtedness, and the granting of Liens in connection therewith);

     (f) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that, as of the date of such opinion and subject to customary assumptions and exclusions
following the deposit, the trust funds with respect to Bonds of such series will not be
subject to the effect of Section 547 of Title 11 of the United States Code;

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     (g) the Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Company with the intent of defeating, hindering,
delaying or defrauding any creditors of the Company or others; and

     (h) the Company shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance, as the case may be, with respect to Bonds of such
series have been complied with.

     SECTION 14.06. Deposited Moneys and Government Securities to be Held in Trust.

     All moneys and Government Securities deposited with the Trustee pursuant to Section 14.05 in
respect of the Bonds of any series shall be held in trust and applied by it, in accordance with the
provisions of the Bonds of such series and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Bonds, of all sums due and to become due thereon for principal
(and premium, if any) and interest, if any, but such money need not be segregated from other funds
except to the extent required by law.

     The Company shall indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the Government Securities deposited pursuant to Section 14.05 or the principal,
interest and premium, if any, received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding Bonds of such series.

     SECTION 14.07. Repayment to Company

     The Trustee and any Paying Agent shall promptly pay or return to the Company upon Company
Request any moneys or Government Securities held by them at any time that are not required for the
payment of the principal of and interest on, and premium, if any, on, the Bonds for which money or
Government Securities have been deposited pursuant to Section 14.05.

     The provisions of the last paragraph of Section 2.13 shall apply to any money held by the
Trustee or any Paying Agent under this Article that remains unclaimed for two years after the
Maturity of the Bonds of any series for which money or Government Securities have been deposited
pursuant to Section 14.05.

ARTICLE XV.

Miscellaneous Provisions

     SECTION 15.01. Contents of Certificates and Opinions.
Each Officers’ Certificate or Opinion of Counsel provided for in this Indenture, delivered to
the Trustee with respect to compliance with a condition or covenant herein contained shall include
(1) a statement that the Person executing such Officers’ Certificate or Opinion of Counsel 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

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based; (3) 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 15.02. Consent to Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Bond by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against the Trustee, for
any action taken or omitted by it as such Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee,
to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten
percent (10%) in principal amount of the Bonds Outstanding, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of or interest on any Bond, on or after the
respective due dates expressed in such Bond.

     SECTION 15.03. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts with another provision
hereof which is required or deemed to be included in this Indenture by any provision of the TIA,
the provision required or deemed to be included by the TIA shall control; and if any provision
hereof otherwise conflicts with the TIA, or limits, qualifies or conflicts with the duties imposed
by §318(c) of the TIA, the TIA, including the duties imposed by §318(c) of the TIA, shall control.

     SECTION 15.04. Governing Law.
This Indenture and the Bonds of each series shall be governed by, and construed and enforced
in accordance with, the laws of the State of California without regard to the principles of
conflicts of laws thereunder, except to the extent that the TIA shall be applicable.

     SECTION 15.05. Notices.
Any notice or communication shall be in writing and shall be hand delivered or mailed by first
class mail (registered or certified, return receipt requested) or sent by facsimile, to the
following addresses:

     if to the Company:

California Water Service Company

1720 North First Street

San Jose, CA 95112

Telecopier no.: (408) 367-8430

Attention of: Chief Financial Officer

     if to the Trustee:

U.S. BANK NATIONAL ASSOCIATION

One California Street, Suite 2100

Mail Code SF – CA – SF

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San Francisco, CA 94111

Telecopier no.: (415) 273-4590

Attention of: Corporate Trust Administration (California Water Service Co.)

     The Company or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications. Any notice or communication to the Company or
the Trustee shall be deemed to have been given or made as of the date delivered if personally
delivered; when receipt is acknowledged, if telecopied; and five calendar days after mailing if
sent by registered or certified mail, postage prepaid (except that a notice of change of address
shall not be deemed to have been given until actually received by the addressee). Notices given by
publication will be deemed given on the first date on which publication is made.

     Any notice or communication mailed to a Holder shall be made in compliance with §313(c) of the
TIA and mailed to the Holder at the Holder’s address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed.

     Failure to mail a notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.

     SECTION 15.06. Holders and Parties Exclusive Beneficiaries.
Nothing in this Indenture or in the Bonds issued hereunder, expressed or implied, is intended
or shall be construed to confer upon or give to any Person or corporation other than the parties
hereto and the Holders, any legal or equitable right, remedy or claim under or in respect of this
Indenture or under any covenant, condition or provision herein or therein contained; and all
covenants, conditions and provisions in this Indenture and in any and all indentures supplemental
hereto contained are and shall be for the sole and exclusive benefit of the parties hereto, their
successors and assigns, and of the Holders.

     SECTION 15.07. Separability of Invalid Provisions.
If any one or more of the covenants or agreements provided in this Indenture on the part of
the Company or the Trustee, or either of them, to be performed should be contrary to any express
provision of law, or contrary to the policy of express law, to such an extent as to be
unenforceable in any court of competent jurisdiction, then such covenant or covenants, agreement or
agreements shall be null and void and shall be deemed separable from the remaining covenants and
agreements and shall in nowise affect the validity of this Indenture.

     SECTION 15.08. Effect on Successors and Assigns of Parties.
Whenever in this Indenture either of the parties hereto is named or referred to, the
successors and assigns of such party (subject, however, to the provisions of Article IX hereof, as
to successors and assigns of the Company) shall be deemed to be included, and, subject as
aforesaid, all the covenants, promises and agreements in this Indenture contained by or on behalf
of the Company, or by or on behalf of the Trustee, shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed or not.

     SECTION 15.09. Titles Not Part of Indenture.
The titles of Articles and the headings of Sections are inserted for convenience only and are
not a part of this Indenture.

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     SECTION 15.10. No Recourse Against Others.
No director, officer, employee, incorporator or stockholder of the Company or Parent shall
have any liability for any obligations of the Company under this Indenture or the Bonds of any
series or for any claim based on, in respect of, or by reason of such obligations or their
creation. Each Holder by accepting the Bonds waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Bonds. Such waiver may not be
effective to waive liabilities of directors, officers or persons controlling the Company under the
federal securities laws and it is the view of the Commission that such waiver is against public
policy and is therefore unenforceable.

     SECTION 15.11. Fixture Filing.
This Indenture shall be effective as a financing statement filed as a fixture filing with
respect to all fixtures included within the Mortgaged Property and is to be filed for record in the
real estate records of each county where any part of the Mortgaged Property (including such
fixtures) is situated.

PART III

MISCELLANEOUS PROVISIONS WITH RESPECT TO SUPPLEMENTAL INDENTURE

     Section 1. The Trustee. The Trustee hereby accepts the trusts under this Supplemental
Indenture and agrees to perform the same on the terms and conditions set forth in the Original
Indenture, as amended by this Supplemental Indenture. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture
or the due execution hereof by the Company nor for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely.

     Section 2. Destruction of Bonds. The Trustee shall forthwith cancel and destroy all bonds
transferred, exchanged or redeemed and delivered to the Trustee and the Trustee shall deliver a
certificate of such destruction to the Company.

     Section 3. Separability of Invalid Provisions. If any one or more of the covenants or
agreements provided in this Supplemental Indenture on the part of the Company or the Trustee to be
performed should be contrary to any express provision of law, or contrary to the policy of express
law, to such an extent as to be unenforceable in any court of competent jurisdiction, then such
covenant or covenants, agreement or agreements, shall be null and void, and shall be deemed
separable from the remaining covenants and agreements and shall in no wise affect or impair the
validity of this Supplemental Indenture.

     Section 4. Effect on Successors and Assigns of Parties. Whenever in this Supplemental
Indenture either of the parties hereto is named or referred to, the successors and assigns of such
party (subject, however, to the provisions of Article IX of the Original Indenture, as amended by
the Eighth Supplemental Indenture, and as further amended by this Supplemental Indenture, as to the
successors and assigns of the Company) shall be deemed to be included, and, subject as aforesaid,
all the covenants, promises and agreements in this Supplemental Indenture contained, by or on
behalf of the Company or by or on behalf of the Trustee, shall bind and inure to the benefit of
their respective successors and assigns, whether so expressed or not.

95

 

     Section 5. Titles Not Part of Supplemental Indenture. The titles of Parts and Articles and
headings of Sections are inserted for convenience only and are not a part of this Supplemental
Indenture.

     Section 6. Counterparts. This Supplemental Indenture may be simultaneously executed in any
number of counterparts and all such counterparts executed and delivered, each as an original, shall
constitute but one and the same instrument.

     Section 7. Title to Property; Authority to Mortgage; Prior Liens. The Company covenants and
agrees that the statements contained in Section 3.01 of Part II of this Supplemental Indenture
shall also apply to all properties acquired subsequent to the date of this Supplemental Indenture
and not heretofore released from the lien of the Indenture pursuant to the provisions of Article V
of Part II of this Supplemental Indenture.

     Section 8. Trustee and Supplemental Indenture. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture
or for or in respect of the recitals contained herein, all of which recitals are made solely by the
Company.

96

 

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

	 	 	 	 	 
	 	CALIFORNIA WATER SERVICE COMPANY

 	 
	 	By:  	/s/ Martin Kropelnicki	 
	 	 	Name:  	Martin Kropelnicki	 
	 	 	Title:  	Vice President, Chief Financial Officer	 
	 
	 	 	 
	 	By:  	                                              /s/ Calvin L. Breed
 	 
	 	 	Name:  	Calvin L. Breed	 
	 	 	Title:  	Assistant Secretary	 
	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION, as Trustee

 	 
	 	By:  	/s/ Claude Acoba	 
	 	 	Name:  	Claude Acoba	 
	 	 	Title:  	Vice President	 
	 

SIGNATURE PAGE TO THIRTY-NINTH SUPPLEMENTAL INDENTURE

 

 

State of California                           )

County of
Santa Clara
                  
 )

On
4-15-09 before me, Rose Shea, a Notary Public, personally
appeared Martin Kropelnicki, who proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/ Rose Shea                                                     (Seal)

State of California                   
        )

County of
Santa Clara                      )

On 15
Apr. 09
before me, John B. Sorci, a Notary Public, personally
appeared Calvin L. Breed, who proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.

WITNESS my hand and official seal.

Signature
/s/ John B. Sorci                                                   (Seal)

 

 

State of California                           )

County of
Santa Clara                     )

On
15 Apr. 09 before me, John B. Sorci, a Notary Public, personally
appeared Claude Acoba, who proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.

WITNESS my hand and official seal.

Signature
/s/ John B. Sorci                                                        (Seal)

 

 

SCHEDULE A

     The resignations of Wells Fargo Bank, National Association and Security Pacific National Bank,
as trustees, and the acceptance of Bank of America National Trust and Savings Association as
successor trustee have been recorded in the offices of the Recorders of the following counties and
city and county of the State of California on the respective dates and in the respective books of
record and/or as the respective document numbers hereinafter set forth as follows:

	 	 	 	 	 	 	 
	County or Page	 	 	 	 	 	Book and
	City and County	 	Date of Recordation	 	Document No.	 	(Reel-Image)
	Alameda
	 	August 1, 1983	 	83-137410	 	 
	Butte
	 	August 1, 1983	 	83-25375	 	2851-200
	Fresno
	 	August 2, 1983	 	83069489	 	 
	Glenn
	 	August 1, 1983	 	3329	 	729-170
	Kern
	 	August 2, 1983	 	12487	 	5576-522
	Los Angeles
	 	August 2, 1983	 	83-887733	 	 
	Monterey
	 	August 1, 1983	 	Pg. 34173	 	1655-830
	City and County of
San Francisco
	 	August 1, 1983	 	D 376552	 	D559-205
	San Joaquin
	 	August 10, 1983	 	83058347	 	 
	San Mateo
	 	August 1, 1983	 	83080322	 	 
	Santa Clara
	 	August 1, 1983	 	7766085	 	H770-413
	Solano
	 	August 1, 1983	 	32353	 	Pg. 61300
	Sonoma
	 	August 1, 1983	 	83-50597	 	83-50597
	Tulare
	 	August 1, 1983	 	35981	 	4093-763
	Ventura
	 	November 15, 1983	 	 	 	130201
	Yuba
	 	August 1, 1983	 	1056	 	805-423

A-1

 

     On December 15, 1995, Bank of America National Trust and Savings Association, transferred
substantially all of its corporate trust business to First Trust of California, National
Association. On March 30, 1998, First Trust of California, National Association changed its name
to U.S. Bank Trust National Association, San Francisco. On January 10, 2002, U.S. Bank Trust
National Association, San Francisco, merged with and into U.S. Bank National Association as
successor trustee. Evidence of the above and U.S. Bank National Association’s status as successor
trustee have been recorded in the offices of the Recorders of the following counties of the State
of California on the respective dates and in the respective books of record and/or as the
respective document numbers hereinafter set forth as follows:

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Book and
	County	 	Date of Recordation	 	Document No.	 	(Reel-Image)
	Fresno
	 	March 9, 2009	 	2009-0032066	 	 
	Lake
	 	March 10, 2009	 	2009003530	 	 
	Los Angeles
	 	March 9, 2009	 	2009-03216507	 	 
	Monterey
	 	March 9, 2009	 	2009013888	 	 
	San Joaquin
	 	March 9, 2009	 	2009-038049	 	 
	San Mateo
	 	March 18, 2009	 	2009-030163	 	 
	Solano
	 	March 12, 2009	 	200900018231	 	 
	Sonoma
	 	March 9, 2009	 	2009019936	 	 
	Tulare
	 	March 9, 2009	 	2009-0013707	 	 
	Ventura
	 	March 9, 2009	 	20090309-00035462-0	 	 

A-2

 

SCHEDULE B

     The First through Thirty-eighth Supplemental Indentures (and in the case of Marin County, a
Memorandum of Indenture referencing the Original Base Indenture and the First through Thirty-eighth
Supplemental Indentures) have been recorded in the offices of the Recorders of the following
counties and city and county of the State of California on the respective dates and in the
respective books of record and/or as the respective document numbers hereinafter set forth, as
follows:

First Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Volume of	 	Page at Which	 	 
	Date of Recordation	 	Official Records	 	Record Commences	 	County
	January 7, 1929
	 	 	40	 	 	 	432	 	 	Kings
	January 7, 1929
	 	 	157	 	 	 	256	 	 	Contra Costa

Second Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Kings
	 	August 20, 1929	 	 	48	 	 	 	442	 
	Butte
	 	August 20, 1929	 	 	116	 	 	 	389	 
	Glenn
	 	August 20, 1929	 	 	17	 	 	 	179	 
	Alameda
	 	August 20, 1929	 	 	2173	 	 	 	334	 
	Tulare
	 	August 20, 1929	 	 	337	 	 	 	88	 
	Kern
	 	August 21, 1929	 	 	320	 	 	 	95	 
	Contra Costa
	 	August 20, 1929	 	 	208	 	 	 	198	 

Third Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Yuba
	 	February 28, 1930	 	 	9	 	 	 	 	 
	City and County of
San Francisco
	 	February 28, 1930	 	 	1985	 	 	 	257	 

Fourth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	San Mateo
	 	July 17, 1931	 	 	537	 	 	 	1	 
	City and County of
San Francisco
	 	July 20, 1931	 	 	2232	 	 	 	284	 
	Santa Clara
	 	July 17, 1931	 	 	576	 	 	 	175	 

B-1

 

Fifth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	City and County of
San Francisco
	 	March 31, 1932	 	 	2359	 	 	 	17	 
	Yuba
	 	April 6, 1932	 	 	12	 	 	 	469	 
	Sonoma
	 	April 6, 1932	 	 	320	 	 	 	39	 
	Alameda
	 	April 6, 1932	 	 	2808	 	 	 	77	 
	Tulare
	 	April 6, 1932	 	 	466	 	 	 	381	 
	Los Angeles
	 	April 6, 1932	 	 	11543	 	 	 	85	 
	San Joaquin
	 	April 6, 1932	 	 	397	 	 	 	375	 
	Santa Clara
	 	April 6, 1932	 	 	606	 	 	 	464	 
	San Mateo
	 	April 6, 1932	 	 	553	 	 	 	492	 
	Butte
	 	April 6, 1932	 	 	83	 	 	 	489	 
	Kings
	 	April 6, 1932	 	 	87	 	 	 	292	 
	Glenn
	 	April 6, 1932	 	 	43	 	 	 	123	 
	Shasta
	 	April 6, 1932	 	 	74	 	 	 	10	 
	Contra Costa
	 	April 6, 1932	 	 	299	 	 	 	449	 
	Kern
	 	April 6, 1932	 	 	428	 	 	 	473	 
	Solano
	 	April 6, 1932	 	 	89	 	 	 	66	 

Sixth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	June 15, 1936	 	 	3314	 	 	 	406	 
	Butte
	 	June 15, 1936	 	 	167	 	 	 	1	 
	Contra Costa
	 	June 15, 1936	 	 	418	 	 	 	12	 
	Glenn
	 	June 15, 1936	 	 	82	 	 	 	73	 
	Kern
	 	June 15, 1936	 	 	643	 	 	 	64	 
	Kings
	 	June 15, 1936	 	 	151	 	 	 	241	 
	Los Angeles
	 	June 15, 1936	 	 	14153	 	 	 	291	 
	City and County of
San Francisco
	 	June 15, 1936	 	 	2972	 	 	 	1	 
	San Joaquin
	 	June 15, 1936	 	 	542	 	 	 	53	 
	San Mateo
	 	June 15, 1936	 	 	703	 	 	 	1	 
	Santa Clara
	 	June 15, 1936	 	 	777	 	 	 	137	 
	Shasta
	 	June 15, 1936	 	 	108	 	 	 	134	 
	Solano
	 	June 15, 1936	 	 	161	 	 	 	1	 
	Sonoma
	 	June 15, 1936	 	 	412	 	 	 	160	 
	Tulare
	 	June 15, 1936	 	 	682	 	 	 	1	 
	Yuba
	 	June 15, 1936	 	 	35	 	 	 	25	 

B-2

 

Seventh Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Los Angeles
	 	May 1, 1939	 	 	16572	 	 	 	206	 
	City and County of
San Francisco
	 	May 2, 1939	 	 	3450	 	 	 	93	 
	San Mateo
	 	May 2, 1939	 	 	840	 	 	 	94	 
	Sonoma
	 	May 2, 1939	 	 	477	 	 	 	108	 
	Kern
	 	May 2, 1939	 	 	869	 	 	 	12	 

Eighth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	November 3, 1945	 	 	4780	 	 	 	134	 
	Butte
	 	November 2, 1945	 	 	380	 	 	 	1	 
	Contra Costa
	 	November 3, 1945	 	 	874	 	 	 	1	 
	Fresno
	 	February 21, 1962	 	 	4681	 	 	 	226	 
	Glenn
	 	November 2, 1945	 	 	191	 	 	 	1	 
	Kern
	 	November 2, 1945	 	 	1292	 	 	 	1	 
	Kings
	 	November 1, 1945	 	 	342	 	 	 	21	 
	Los Angeles
	 	November 2, 1945	 	 	22396	 	 	 	251	 
	Monterey
	 	February 21, 1962	 	Reel 23	 	 	 	1	 
	City and County of
San Francisco
	 	November 2, 1945	 	 	4346	 	 	 	103	 
	San Joaquin
	 	November 3, 1945	 	 	960	 	 	 	21	 
	San Mateo
	 	November 3, 1945	 	 	1231	 	 	 	1	 
	Santa Clara
	 	November 1, 1945	 	 	1267	 	 	 	583	 
	Solano
	 	November 3, 1945	 	 	344	 	 	 	6	 
	Sonoma
	 	November 3, 1945	 	 	665	 	 	 	21	 
	Tulare
	 	November 3, 1945	 	 	1141	 	 	 	382	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130177
	 	 	 	 
	Yuba
	 	November 3, 1945	 	 	94	 	 	 	23	 

B-3

 

Ninth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	August 31, 1951	 	 	6525	 	 	 	237	 
	Butte
	 	August 30, 1951	 	 	603	 	 	 	1	 
	Contra Costa
	 	August 30, 1951	 	 	1814	 	 	 	508	 
	Fresno
	 	February 21, 1962	 	 	4681	 	 	 	437	 
	Glenn
	 	August 30, 1951	 	 	266	 	 	 	63	 
	Kern
	 	August 29, 1951	 	 	1840	 	 	 	373	 
	Kings
	 	August 30, 1951	 	 	502	 	 	 	228	 
	Los Angeles
	 	August 29, 1951	 	 	37102	 	 	 	345	 
	Monterey
	 	February 21, 1962	 	Reel 23	 	 	 	207	 
	City and County of
San Francisco
	 	August 30, 1951	 	 	5773	 	 	 	355	 
	San Joaquin
	 	August 30, 1951	 	 	1372	 	 	 	123	 
	San Mateo
	 	August 30, 1951	 	 	2150	 	 	 	298	 
	Santa Clara
	 	August 30, 1951	 	 	2275	 	 	 	295	 
	Solano
	 	August 31, 1951	 	 	592	 	 	 	136	 
	Sonoma
	 	August 31, 1951	 	 	1072	 	 	 	420	 
	Tulare
	 	August 30, 1951	 	 	1539	 	 	 	528	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130178
	 	 	 	 
	Yuba
	 	August 31, 1951	 	 	155	 	 	 	177	 

Tenth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	July 10, 1953	 	 	7078	 	 	 	451	 
	Butte
	 	July 9, 1953	 	 	679	 	 	 	45	 
	Contra Costa
	 	July 9, 1953	 	 	2157	 	 	 	453	 
	Fresno
	 	February 21, 1962	 	 	4681	 	 	 	540	 
	Glenn
	 	July 9, 1953	 	 	297	 	 	 	139	 
	Kern
	 	July 8, 1953	 	 	2102	 	 	 	215	 
	Kings
	 	July 9, 1953	 	 	561	 	 	 	249	 
	Los Angeles
	 	July 8, 1953	 	 	42134	 	 	 	371	 
	Monterey
	 	February 21, 1962	 	Reel 23	 	 	 	314	 
	City and County of
San Francisco
	 	July 9, 1953	 	 	6190	 	 	 	21	 
	San Joaquin
	 	July 9, 1953	 	 	1540	 	 	 	523	 
	San Mateo
	 	July 10, 1953	 	 	2443	 	 	 	248	 
	Santa Clara
	 	July 9, 1953	 	 	2680	 	 	 	50	 
	Solano
	 	July 9, 1953	 	 	677	 	 	 	4	 
	Sonoma
	 	July 10, 1953	 	 	1218	 	 	 	348	 
	Tulare
	 	July 9, 1953	 	 	1686	 	 	 	314	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130179	 	 	 	 
	Yuba
	 	July 10, 1953	 	 	181	 	 	 	1	 

B-4

 

Eleventh Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	August 20, 1954	 	 	7404	 	 	 	181	 
	Butte
	 	August 20, 1954	 	 	732	 	 	 	496	 
	Contra Costa
	 	August 20, 1954	 	 	2368	 	 	 	164	 
	Fresno
	 	February 21, 1962	 	 	4681	 	 	 	604	 
	Glenn
	 	August 20, 1954	 	 	314	 	 	 	369	 
	Kern
	 	August 20, 1954	 	 	2278	 	 	 	74	 
	Kings
	 	August 20, 1954	 	 	594	 	 	 	449	 
	Los Angeles
	 	August 19, 1954	 	 	45365	 	 	 	64	 
	Monterey
	 	February 21, 1962	 	Reel 23	 	 	 	377	 
	City and County of
San Francisco
	 	August 20, 1954	 	 	6435	 	 	 	421	 
	San Joaquin
	 	August 20, 1954	 	 	1662	 	 	 	316	 
	San Mateo
	 	August 19, 1954	 	 	2636	 	 	 	330	 
	Santa Clara
	 	August 20, 1954	 	 	2942	 	 	 	331	 
	Solano
	 	August 19, 1954	 	 	728	 	 	 	10	 
	Sonoma
	 	August 20, 1954	 	 	1290	 	 	 	234	 
	Tulare
	 	August 20, 1954	 	 	1772	 	 	 	388	 
	Ventura
	 	November 15, 1983	 	Document No. 130180
	 	 	 	 
	Yuba
	 	August 20, 1954	 	 	195	 	 	 	490	 

Twelfth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	October 7, 1955	 	 	7806	 	 	 	501	 
	Butte
	 	October 7, 1955	 	 	794	 	 	 	9	 
	Contra Costa
	 	October 7, 1955	 	 	2625	 	 	 	417	 
	Fresno
	 	February 21, 1962	 	 	4681	 	 	 	665	 
	Glenn
	 	October 7, 1955	 	 	331	 	 	 	350	 
	Kern
	 	October 6, 1955	 	 	2498	 	 	 	171	 
	Kings
	 	October 7, 1955	 	 	628	 	 	 	1	 
	Los Angeles
	 	October 6, 1955	 	 	49158	 	 	 	316	 
	Monterey
	 	February 21, 1962	 	Reel 23	 	 	 	439	 
	City and County of
San Francisco
	 	October 7, 1955	 	 	6711	 	 	 	525	 
	San Joaquin
	 	October 7, 1955	 	 	1797	 	 	 	300	 
	San Mateo
	 	October 7, 1955	 	 	2890	 	 	 	480	 
	Santa Clara
	 	October 7, 1955	 	 	3299	 	 	 	406	 

B-5

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Solano
	 	October 7, 1955	 	 	792	 	 	 	422	 
	Sonoma
	 	October 7, 1955	 	 	1384	 	 	 	2	 
	Tulare
	 	October 7, 1955	 	 	1864	 	 	 	548	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130181
	 	 	 	 
	Yuba
	 	October 7, 1955	 	 	213	 	 	 	593	 

Thirteenth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	December 7, 1956	 	 	8226	 	 	 	15	 
	Butte
	 	December 7, 1956	 	 	859	 	 	 	117	 
	Contra Costa
	 	December 7, 1956	 	 	2894	 	 	 	20	 
	Fresno
	 	February 21, 1962	 	 	4681	 	 	 	729	 
	Glenn
	 	December 7, 1956	 	 	348	 	 	 	217	 
	Kern
	 	December 6, 1956	 	 	2699	 	 	 	390	 
	Kings
	 	December 7, 1956	 	 	666	 	 	 	316	 
	Los Angeles
	 	December 6, 1956	 	 	53054	 	 	 	61	 
	Monterey
	 	February 21, 1962	 	Reel 23	 	 	 	503	 
	City and County of
San Francisco
	 	December 10, 1956	 	 	6970	 	 	 	41	 
	San Joaquin
	 	December 7, 1956	 	 	1925	 	 	 	1	 
	San Mateo
	 	December 7, 1956	 	 	3140	 	 	 	258	 
	Santa Clara
	 	December 7, 1956	 	 	3680	 	 	 	1	 
	Solano
	 	December 7, 1956	 	 	860	 	 	 	189	 
	Sonoma
	 	December 7, 1956	 	 	1489	 	 	 	28	 
	Tulare
	 	December 7, 1956	 	 	1961	 	 	 	551	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130182
	 	 	 	 
	Yuba
	 	December 7, 1956	 	 	233	 	 	 	65	 

Fourteenth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	March 20, 1964	 	Reel 1155	 	 	Image 2	 
	Butte
	 	March 20, 1964	 	 	1303	 	 	 	8	 
	Contra Costa
	 	March 20, 1964	 	 	4578	 	 	 	360	 
	Fresno
	 	March 20, 1964	 	 	4980	 	 	 	337	 
	Glenn
	 	March 20, 1964	 	 	463	 	 	 	1	 
	Kern
	 	March 19, 1964	 	 	3706	 	 	 	1	 
	Los Angeles
	 	March 19, 1964	 	 	D2401	 	 	 	6	 
	Monterey
	 	March 20, 1964	 	Reel 299	 	 	 	230	 
	City and County of
San Francisco
	 	March 20, 1964	 	 	A734	 	 	 	966	 
	San Joaquin
	 	March 20, 1964	 	 	2801	 	 	 	126	 

B-6

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	San Mateo
	 	March 19, 1964	 	 	4670	 	 	 	563	 
	Santa Clara
	 	March 20, 1964	 	 	6432	 	 	 	567	 
	Solano
	 	March 20, 1964	 	 	1259	 	 	 	331	 
	Sonoma
	 	March 19, 1964	 	 	2030	 	 	 	757	 
	Tulare
	 	March 20, 1964	 	 	2491	 	 	 	437	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130183
	 	 	 	 
	Yuba
	 	March 20, 1964	 	 	389	 	 	 	535	 

Fifteenth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	November 4, 1965	 	 	1635	 	 	 	610	 
	Butte
	 	November 4, 1965	 	 	1398	 	 	 	67	 
	Contra Costa
	 	November 4, 1965	 	 	4987	 	 	 	469	 
	Fresno
	 	November 4, 1965	 	 	5236	 	 	 	699	 
	Glenn
	 	November 4, 1965	 	 	483	 	 	 	194	 
	Kern
	 	November 3, 1965	 	 	3889	 	 	 	476	 
	Los Angeles
	 	November 3, 1965	 	 	D3104	 	 	 	7	 
	Monterey
	 	November 4, 1965	 	 	432	 	 	 	526	 
	City and County of
San Francisco
	 	November 4, 1965	 	 	A983	 	 	 	431	 
	San Joaquin
	 	November 4, 1965	 	 	2996	 	 	 	13	 
	San Mateo
	 	November 4, 1965	 	 	5056	 	 	 	588	 
	Santa Clara
	 	November 4, 1965	 	 	7166	 	 	 	234	 
	Solano
	 	November 3, 1965	 	 	1366	 	 	 	547	 
	Sonoma
	 	November 3, 1965	 	 	2167	 	 	 	261	 
	Tulare
	 	November 4, 1965	 	 	2619	 	 	 	12	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130184
	 	 	 	 
	Yuba
	 	November 4, 1965	 	 	422	 	 	 	562	 

Sixteenth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	December 2, 1966	 	 	1881	 	 	 	788	 
	Butte
	 	December 2, 1966	 	 	1452	 	 	 	13	 
	Contra Costa
	 	December 2, 1966	 	 	5256	 	 	 	298	 
	Fresno
	 	December 2, 1966	 	 	5383	 	 	 	432	 
	Glenn
	 	December 2, 1966	 	 	495	 	 	 	555	 
	Kern
	 	December 1, 1966	 	 	3999	 	 	 	845	 
	Los Angeles
	 	December 1, 1966	 	 	D3496	 	 	 	236	 
	Monterey
	 	December 2, 1966	 	 	485	 	 	 	472	 
	City and County of
San Francisco
	 	December 2, 1966	 	 	B101	 	 	 	10	 

B-7

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	San Joaquin
	 	December 2, 1966	 	 	3090	 	 	 	511	 
	San Mateo
	 	December 2, 1966	 	 	5244	 	 	 	411	 
	Santa Clara
	 	December 2, 1966	 	 	7579	 	 	 	440	 
	Solano
	 	December 1, 1966	 	 	1429	 	 	 	482	 
	Sonoma
	 	December 1, 1966	 	 	2243	 	 	 	434	 
	Tulare
	 	December 2, 1966	 	 	2686	 	 	 	249	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130185
	 	 	 	 
	Yuba
	 	December 2, 1966	 	 	443	 	 	 	434	 

Seventeenth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	April 2, 1968	 	 	2154	 	 	 	273	 
	Butte
	 	April 2, 1968	 	 	1511	 	 	 	632	 
	Contra Costa
	 	April 2, 1968	 	 	5593	 	 	 	177	 
	Fresno
	 	April 3, 1968	 	 	5554	 	 	 	654	 
	Glenn
	 	April 2, 1968	 	 	507	 	 	 	326	 
	Kern
	 	April 3, 1968	 	 	4147	 	 	 	264	 
	Los Angeles
	 	April 2, 1968	 	 	D3959	 	 	 	10	 
	Monterey
	 	April 2, 1968	 	 	551	 	 	 	580	 
	City and County of
San Francisco
	 	April 2, 1968	 	 	B230	 	 	 	362	 
	San Joaquin
	 	April 2, 1968	 	 	3199	 	 	 	132	 
	San Mateo
	 	April 2, 1968	 	 	5453	 	 	 	1	 
	Santa Clara
	 	April 2, 1968	 	 	8076	 	 	 	99	 
	Solano
	 	April 1, 1968	 	 	1501	 	 	 	35	 
	Sonoma
	 	April 3, 1968	 	 	2323	 	 	 	446	 
	Tulare
	 	April 3, 1968	 	 	2773	 	 	 	415	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130186	 	 	 	 
	Yuba
	 	April 2, 1968	 	 	465	 	 	 	122	 

Eighteenth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	April 3, 1970	 	 	2592	 	 	 	708	 
	Butte
	 	April 6, 1970	 	 	1608	 	 	 	505	 
	Contra Costa
	 	April 3, 1970	 	 	6099	 	 	 	58	 
	Fresno
	 	April 3, 1970	 	 	5775	 	 	 	371	 
	Glenn
	 	April 6, 1970	 	 	524	 	 	 	168	 
	Kern
	 	April 3, 1970	 	 	4384	 	 	 	72	 
	Los Angeles
	 	April 6, 1970	 	 	D4677	 	 	 	518	 
	Monterey
	 	April 6, 1970	 	 	645	 	 	 	921	 

B-8

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	City and County of
San Francisco
	 	April 6, 1970	 	 	B414	 	 	 	258	 
	San Joaquin
	 	April 3, 1970	 	 	3381	 	 	 	569	 
	San Mateo
	 	April 3, 1970	 	 	5766	 	 	 	1	 
	Santa Clara
	 	April 3, 1970	 	 	8878	 	 	 	585	 
	Solano
	 	April 3, 1970	 	 	1618	 	 	 	477	 
	Sonoma
	 	April 3, 1970	 	 	2453	 	 	 	531	 
	Tulare
	 	April 3, 1970	 	 	2889	 	 	 	894	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130187
	 	 	 	 
	Yuba
	 	April 6, 1970	 	 	497	 	 	 	84	 

Nineteenth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	June 10, 1970	 	 	2632	 	 	 	835	 
	Butte
	 	June 11, 1970	 	 	1618	 	 	 	2	 
	Contra Costa
	 	June 10, 1970	 	 	6146	 	 	 	1	 
	Fresno
	 	June 10, 1970	 	 	5793	 	 	 	233	 
	Glenn
	 	June 11, 1970	 	 	526	 	 	 	170	 
	Kern
	 	June 9, 1970	 	 	4405	 	 	 	724	 
	Los Angeles
	 	June 10, 1970	 	 	D4736	 	 	 	731	 
	Monterey
	 	June 10, 1970	 	 	653	 	 	 	890	 
	City and County of
San Francisco
	 	June 11, 1970	 	 	B430	 	 	 	928	 
	San Joaquin
	 	June 10, 1970	 	 	3402	 	 	 	124	 
	San Mateo
	 	June 10, 1970	 	 	5792	 	 	 	57	 
	Santa Clara
	 	June 11, 1970	 	 	8949	 	 	 	586	 
	Solano
	 	June 10, 1970	 	 	1629	 	 	 	158	 
	Sonoma
	 	June 10, 1970	 	 	2465	 	 	 	923	 
	Tulare
	 	June 10, 1970	 	 	2898	 	 	 	231	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130188
	 	 	 	 
	Yuba
	 	June 11, 1970	 	 	500	 	 	 	77	 

Twentieth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	April 2, 1971	 	 	2820	 	 	 	92	 
	Butte
	 	April 2, 1971	 	 	1667	 	 	 	102	 
	Contra Costa
	 	April 2, 1971	 	 	6351	 	 	 	138	 
	Fresno
	 	April 2, 1971	 	 	5880	 	 	 	820	 
	Glenn
	 	April 2, 1971	 	 	533	 	 	 	530	 
	Kern
	 	April 1, 1971	 	 	4509	 	 	 	30	 
	Los Angeles
	 	April 1, 1971	 	 	D5014	 	 	 	368	 
	Monterey
	 	April 2, 1971	 	 	695	 	 	 	719	 

B-9

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	City and County of
San Francisco
	 	April 5, 1971	 	 	B507	 	 	 	812	 
	San Joaquin
	 	April 5, 1971	 	 	3509	 	 	 	305	 
	San Mateo
	 	April 2, 1971	 	 	5919	 	 	 	363	 
	Santa Clara
	 	April 2, 1971	 	 	9278	 	 	 	182	 
	Solano
	 	April 5, 1971	 	 	1677	 	 	 	384	 
	Sonoma
	 	April 2, 1971	 	 	2524	 	 	 	671	 
	Tulare
	 	April 2, 1971	 	 	2959	 	 	 	373	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130189
	 	 	 	 
	Yuba
	 	April 2, 1971	 	 	513	 	 	 	81	 

Twenty-first Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	December 14, 1972	 	 	3298	 	 	 	449	 
	Butte
	 	December 14, 1972	 	 	1805	 	 	 	96	 
	Contra Costa
	 	December 14, 1972	 	 	6821	 	 	 	129	 
	Fresno
	 	December 14, 1972	 	 	6104	 	 	 	2	 
	Glenn
	 	December 14, 1972	 	 	554	 	 	 	371	 
	Kern
	 	December 15, 1972	 	 	4757	 	 	 	356	 
	Los Angeles
	 	December 14, 1972	 	 	D5698	 	 	 	815	 
	Monterey
	 	December 14, 1972	 	 	815	 	 	 	838	 
	City and County of
San Francisco
	 	December 14, 1972	 	 	B708	 	 	 	675	 
	San Joaquin
	 	December 14, 1972	 	 	3718	 	 	 	161	 
	San Mateo
	 	December 14, 1972	 	 	6289	 	 	 	367	 
	Santa Clara
	 	December 14, 1972	 	 	0154	 	 	 	435	 
	Solano
	 	December 15, 1972	 	 	1795	 	 	 	147	 
	Sonoma
	 	December 14, 1972	 	 	2719	 	 	 	547	 
	Tulare
	 	December 14, 1972	 	 	3075	 	 	 	674	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130190
	 	 	 	 
	Yuba
	 	December 14, 1972	 	 	546	 	 	 	360	 

Twenty-second Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	December 27, 1972	 	 	3306	 	 	 	930	 
	Butte
	 	December 27, 1972	 	 	1807	 	 	 	385	 
	Contra Costa
	 	December 27, 1972	 	 	6829	 	 	 	150	 
	Fresno
	 	December 27, 1972	 	 	6108	 	 	 	355	 
	Glenn
	 	December 27, 1972	 	 	555	 	 	 	69	 
	Kern
	 	December 29, 1972	 	 	4762	 	 	 	140	 
	Los Angeles
	 	December 27, 1972	 	 	D5710	 	 	 	690	 

B-10

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Monterey
	 	December 27, 1972	 	 	818	 	 	 	40	 
	City and County of
San Francisco
	 	December 27, 1972	 	 	B712	 	 	 	707	 
	San Joaquin
	 	December 27, 1972	 	 	3721	 	 	 	317	 
	San Mateo
	 	December 27, 1972	 	 	6296	 	 	 	114	 
	Santa Clara
	 	December 27, 1972	 	 	0171	 	 	 	29	 
	Solano
	 	December 29, 1972	 	 	1797	 	 	 	530	 
	Sonoma
	 	December 27, 1972	 	 	2722	 	 	 	782	 
	Tulare
	 	December 27, 1972	 	 	3078	 	 	 	118	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130191
	 	 	 	 
	Yuba
	 	December 27, 1972	 	 	547	 	 	 	158	 

Twenty-third Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	December 27, 1972	 	 	3307	 	 	 	1	 
	Butte
	 	December 27, 1972	 	 	1807	 	 	 	433	 
	Contra Costa
	 	December 27, 1972	 	 	6829	 	 	 	197	 
	Fresno
	 	December 27, 1972	 	 	6108	 	 	 	307	 
	Glenn
	 	December 27, 1972	 	 	555	 	 	 	116	 
	Kern
	 	December 27, 1972	 	 	4762	 	 	 	187	 
	Los Angeles
	 	December 27, 1972	 	 	D5710	 	 	 	737	 
	Monterey
	 	December 27, 1972	 	 	818	 	 	 	87	 
	City and County of
San Francisco
	 	December 27, 1972	 	 	B712	 	 	 	733	 
	San Joaquin
	 	December 27, 1972	 	 	3721	 	 	 	269	 
	San Mateo
	 	December 27, 1972	 	 	6296	 	 	 	161	 
	Santa Clara
	 	December 27, 1972	 	 	0171	 	 	 	76	 
	Solano
	 	December 27, 1972	 	 	1797	 	 	 	577	 
	Sonoma
	 	December 27, 1972	 	 	2722	 	 	 	830	 
	Tulare
	 	December 27, 1972	 	 	3078	 	 	 	165	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130192
	 	 	 	 
	Yuba
	 	December 27, 1972	 	 	547	 	 	 	205	 

Twenty-fourth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	March 22, 1974	 	 	3635	 	 	 	156	 
	Butte
	 	March 22, 1974	 	 	1896	 	 	 	665	 
	Contra Costa
	 	March 22, 1974	 	 	7183	 	 	 	54	 
	Fresno
	 	March 22, 1974	 	 	6279	 	 	 	513	 
	Glenn
	 	March 22, 1974	 	 	570	 	 	 	163	 
	Kern
	 	March 22, 1974	 	 	4832	 	 	 	519	 

B-11

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Los Angeles
	 	March 22, 1974	 	 	D6209	 	 	 	133	 
	Monterey
	 	March 22, 1974	 	 	902	 	 	 	1	 
	City and County of
San Francisco
	 	March 22, 1974	 	 	B866	 	 	 	907	 
	San Joaquin
	 	March 22, 1974	 	 	3856	 	 	 	1	 
	San Mateo
	 	March 22, 1974	 	 	6574	 	 	 	611	 
	Santa Clara
	 	March 22, 1974	 	 	815	 	 	 	125	 
	Solano
	 	March 22, 1974	 	 	1974	 	 	 	11482	 
	Sonoma
	 	March 22, 1974	 	 	2847	 	 	 	542	 
	Tulare
	 	March 22, 1974	 	 	3166	 	 	 	315	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130193
	 	 	 	 
	Yuba
	 	March 22, 1974	 	 	571	 	 	 	423	 

Twenty-fifth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	June 20, 1975	 	 	4007	 	 	 	676	 
	Butte
	 	June 20, 1975	 	 	1995	 	 	 	455	 
	Contra Costa
	 	June 20, 1975	 	 	7543	 	 	 	54	 
	Fresno
	 	June 20, 1975	 	 	6447	 	 	 	21	 
	Glenn
	 	June 20, 1975	 	 	587	 	 	 	128	 
	Kern
	 	June 20, 1975	 	 	4901	 	 	 	154	 
	Los Angeles
	 	June 20, 1975	 	 	D6698	 	 	 	184	 
	Monterey
	 	June 20, 1975	 	 	985	 	 	 	335	 
	City and County of
San Francisco
	 	June 20, 1975	 	 	C30	 	 	 	188	 
	San Joaquin
	 	June 20, 1975	 	 	3996	 	 	 	258	 
	San Mateo
	 	June 20, 1975	 	 	6872	 	 	 	1	 
	Santa Clara
	 	June 20, 1975	 	 	B474	 	 	 	219	 
	Solano
	 	June 20, 1975	 	 	1975	 	 	 	25377	 
	Sonoma
	 	June 20, 1975	 	 	2970	 	 	 	761	 
	Tulare
	 	June 20, 1975	 	 	3249	 	 	 	11	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130195	 	 	 	 
	Yuba
	 	June 20, 1975	 	 	595	 	 	 	695	 

Twenty-sixth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	June 10, 1976	 	 	4397	 	 	 	342	 
	Butte
	 	June 10, 1976	 	 	2077	 	 	 	441	 
	Contra Costa
	 	June 10, 1976	 	 	7896	 	 	 	746	 
	Fresno
	 	June 11, 1976	 	 	6608	 	 	 	364	 
	Glenn
	 	June 10, 1976	 	 	600	 	 	 	137	 

B-12

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Kern
	 	June 11, 1976	 	 	4960	 	 	 	1166	 
	Los Angeles
	 	June 10, 1976	 	 	10257	 	 	 	734	 
	Monterey
	 	June 10, 1976	 	 	1060	 	 	 	798	 
	City and County of
San Francisco
	 	June 10, 1976	 	 	C184	 	 	 	1	 
	San Joaquin
	 	June 10, 1976	 	 	4136	 	 	 	42	 
	San Mateo
	 	June 10, 1976	 	 	7151	 	 	 	667	 
	Santa Clara
	 	June 10, 1976	 	 	C073	 	 	 	688	 
	Solano
	 	June 10, 1976	 	 	1976	 	 	 	31463	 
	Sonoma
	 	June 10, 1976	 	 	3089	 	 	 	913	 
	Tulare
	 	June 10, 1976	 	 	3326	 	 	 	626	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130195
	 	 	 	 
	Yuba
	 	June 10, 1976	 	 	616	 	 	 	512	 

Twenty-seventh Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	March 24, 1978	 	 	5312	 	 	 	57	 
	Butte
	 	March 24, 1978	 	 	2268	 	 	 	279	 
	Fresno
	 	March 27, 1978	 	 	6997	 	 	 	25	 
	Glenn
	 	March 24, 1978	 	 	626	 	 	 	594	 
	Kern
	 	March 24, 1978	 	 	5098	 	 	 	1124	 
	Los Angeles
	 	March 24, 1978	 	Doc. No. 78-310554
	 	 	 	 
	Monterey
	 	March 24, 1978	 	 	1227	 	 	 	755	 
	City and County of
San Francisco
	 	March 24, 1978	 	 	C538	 	 	 	664	 
	San Joaquin
	 	March 27, 1978	 	 	4377	 	 	 	286	 
	San Mateo
	 	March 24, 1978	 	 	7728	 	 	 	715	 
	Santa Clara
	 	March 24, 1978	 	 	D549	 	 	 	102	 
	Solano
	 	March 24, 1978	 	 	21803	 	 	 	73	 
	Sonoma
	 	March 24, 1978	 	 	3371	 	 	 	634	 
	Tulare
	 	March 27, 1978	 	 	3315	 	 	 	618	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130196
	 	 	 	 
	Yuba
	 	March 24, 1978	 	 	662	 	 	 	589	 

Twenty-eighth Supplemental Indenture

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	August 28, 1978	 	 	5551	 	 	 	62	 
	Butte
	 	August 28, 1978	 	 	2318	 	 	 	170	 
	Fresno
	 	August 28, 1978	 	 	7107	 	 	 	2	 
	Glenn
	 	August 28, 1978	 	 	633	 	 	 	666	 
	Kern
	 	August 28, 1978	 	 	5135	 	 	 	674	 

B-13

 

	 	 	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Los Angeles
	 	August 28, 1978	 	Doc. No. 78-951209
	 	 	 	 
	Monterey
	 	August 28, 1978	 	 	1270	 	 	 	1030	 
	City and County of
San Francisco
	 	August 28, 1978	 	 	C631	 	 	 	740	 
	San Joaquin
	 	August 28, 1978	 	 	4442	 	 	 	141	 
	San Mateo
	 	August 28, 1978	 	 	7774	 	 	 	1709	 
	Santa Clara
	 	August 28, 1978	 	 	D914	 	 	 	715	 
	Solano
	 	August 28, 1978	 	 	71420	 	 	 	 	 
	Sonoma
	 	August 28, 1978	 	 	3445	 	 	 	337	 
	Tulare
	 	August 28, 1978	 	 	3566	 	 	 	14	 
	Ventura
	 	November 15, 1983	 	Doc. No. 130197
	 	 	 	 
	Yuba
	 	August 28, 1978	 	 	675	 	 	 	331	 

Twenty-ninth Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Volume of	 	Pages At Which
	City and County	 	Date of Recordation	 	Official Records	 	Record Commences
	Alameda
	 	March 28, 1980	 	80-055698	 	 
	Butte
	 	March 28, 1980	 	2500	 	503
	Fresno
	 	March 31, 1980	 	7494	 	230
	Glenn
	 	March 31, 1980	 	663	 	509
	Kern
	 	March 28, 1980	 	5275	 	818
	Los Angeles
	 	March 31, 1980	 	Doc. No. 80-318971	 	 
	Monterey
	 	March 31, 1980	 	1399	 	636
	City and County of
San Francisco
	 	March 28, 1980	 	C970	 	327
	San Joaquin
	 	March 31, 1980	 	80020795	 	 
	San Mateo
	 	March 28, 1980	 	7948	 	1952
	Santa Clara
	 	March 28, 1980	 	F233	 	366
	Solano
	 	March 28, 1980	 	23159	 	 
	Sonoma
	 	March 28, 1980	 	80-18782	 	 
	Tulare
	 	March 31, 1980	 	3753	 	500
	Ventura
	 	November 15, 1983	 	Doc. No. 130198	 	 
	Yuba
	 	March 28, 1980	 	722	 	625

Thirtieth Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	January 2, 1981	 	81-000002	 	 
	Butte
	 	January 2, 1981	 	81-113	 	2583-250
	Fresno
	 	January 2, 1981	 	401	 	7651-362
	Glenn
	 	January 2, 1981	 	0023	 	678-226
	Kern
	 	January 5, 1981	 	000286	 	5342-1512
	Los Angeles
	 	January 2, 1981	 	81-2293	 	 

B-14

 

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Monterey
	 	January 2, 1981	 	G00066	 	1456-551
	City and County of
San Francisco
	 	December 31, 1980	 	D044298	 	D127-551
	San Joaquin
	 	January 2, 1981	 	81000191	 	 
	San Mateo
	 	January 2, 1981	 	0507AS	 	 
	Santa Clara
	 	January 2, 1981	 	6941984	 	F825-269
	Solano
	 	January 2, 1981	 	60 Pg. 90-156	 	 
	Sonoma
	 	January 2, 1981	 	81-000131	 	 
	Tulare
	 	January 2, 1981	 	189	 	3828-412
	Ventura
	 	November 15, 1983	 	130199	 	 
	Yuba
	 	January 2, 1981	 	7644	 	743-99

Thirty-first Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	May 4, 1982	 	82-064230	 	 
	Butte
	 	May 4, 1982	 	82-12318	 	2715-529
	Fresno
	 	May 3, 1982	 	37212	 	7901-572
	Glenn
	 	May 4, 1982	 	1908	 	704-299
	Kern
	 	May 3, 1982	 	40614	 	5456-1478
	Los Angeles
	 	May 3, 1982	 	82-445736	 	 
	Monterey
	 	May 3, 1982	 	G17137	 	1549-234
	City and County of
San Francisco
	 	May 3, 1982	 	D198127	 	D392-276
	San Joaquin
	 	May 4, 1982	 	82022803	 	 
	San Mateo
	 	May 3, 1982	 	82035410	 	 
	Santa Clara
	 	May 3, 1982	 	7353398	 	 
	Solano
	 	May 3, 1982	 	15522	 	Pg. 26792
	Sonoma
	 	May 3, 1982	 	82-23083	 	 
	Tulare
	 	May 3, 1982	 	19242	 	3961-163
	Ventura
	 	November 15, 1983	 	130200	 	 
	Yuba
	 	May 3, 1982	 	10984	 	775-263

Thirty-second Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	October 13, 1983	 	83-191597	 	 
	Butte
	 	October 13, 1983	 	83-34081	 	2874-684
	Fresno
	 	October 13, 1983	 	83095135	 	 
	Glenn
	 	October 13, 1983	 	4435	 	733-446
	Kern
	 	October 13, 1983	 	041161	 	5597-658
	Los Angeles
	 	October 13, 1983	 	83-1208172	 	 
	Monterey
	 	October 13, 1983	 	G46236	 	1674-1194

B-15

 

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	City and County of
San Francisco
	 	October 13, 1983	 	D408975	 	 
	San Joaquin
	 	October 13, 1983	 	83074718	 	 
	San Mateo
	 	October 13, 1983	 	83112077	 	 
	Santa Clara
	 	October 13, 1983	 	780561	 	H980-717
	Solano
	 	October 13, 1983	 	45171	 	Pg 85369
	Sonoma
	 	October 13, 1983	 	83069362	 	 
	Tulare
	 	October 13, 1983	 	51515	 	4120-726
	Ventura
	 	October 13, 1983	 	117059	 	 
	Ventura            re-recorded
	 	November 15, 1983	 	130202	 	 
	Yuba
	 	October 13, 1983	 	3764	 	810-614

Thirty-third Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	September 13, 1988	 	88-232083	 	 
	Butte
	 	September 13, 1988	 	88-031123	 	 
	Fresno
	 	September 13, 1988	 	88101543	 	 
	Glenn
	 	September 13, 1988	 	88-4023	 	 
	Kern
	 	September 13, 1988	 	31355	 	6162-1754
	Los Angeles
	 	September 13, 1988	 	88-1464893	 	 
	Monterey
	 	September 13, 1988	 	47561	 	2273-660
	City and County of
San Francisco
	 	September 13, 1988	 	E243818	 	 
	San Joaquin
	 	September 13, 1988	 	88077190	 	 
	San Mateo
	 	September 13, 1988	 	88120443	 	 
	Santa Clara
	 	September 13, 1988	 	9833944	 	 
	Solano
	 	September 13, 1988	 	54422	 	1988-117737
	Sonoma
	 	September 13, 1988	 	88-77182	 	 
	Tulare
	 	September 13, 1988	 	58120	 	4745-662
	Ventura
	 	September 13, 1988	 	88-133327	 	 
	Yuba
	 	September 13, 1988	 	2818	 	 

Thirty-fourth Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	December 20, 1990	 	90-332019	 	 
	Butte
	 	December 20, 1990	 	90-054231	 	 
	Fresno
	 	December 20, 1990	 	90155101	 	 
	Glenn
	 	December 20, 1990	 	90-6395	 	 
	Kern
	 	December 20, 1990	 	85807	 	6468-709
	Los Angeles
	 	December 20, 1990	 	90-2094360	 	
	Monterey
	 	December 20, 1990	 	73725	 	2589-678
	City and County of
San Francisco
	 	December 20, 1990	 	E836831	 	F276-480
	San Joaquin
	 	December 20, 1990	 	90122496	 	 
	San Mateo
	 	December 20, 1990	 	90165083	 	 
	Santa Clara
	 	December 21, 1990	 	10758142	 	 
	Solano
	 	December 20, 1990	 	99015	 	1990
	Sonoma
	 	December 20, 1990	 	90-122784	 	 
	Tulare
	 	December 20, 1990	 	83069	 	 
	Ventura
	 	December 20, 1990	 	90-187399	 	 
	Yuba
	 	December 20, 1990	 	90-14553	 	 

B-16

 

Thirty-fifth Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	November 3, 1992	 	92-358477	 	 
	Butte
	 	November 3, 1992	 	92-050443	 	 
	Fresno
	 	November 3, 1992	 	92167544	 	 
	Glenn
	 	November 3, 1992	 	92-5920	 	 
	Kern
	 	November 3, 1992	 	167635	 	6757-1488
	Los Angeles
	 	November 3, 1992	 	92-2022769	 	 
	Monterey
	 	November 3, 1992	 	78604	 	2867-956
	City and County of
San Francisco
	 	November 3, 1992	 	F237077	 	 
	San Joaquin
	 	November 2, 1992	 	92127961	 	 
	San Mateo
	 	November 3, 1992	 	92180648	 	 
	Santa Clara
	 	November 3, 1992	 	11617179	 	 
	Solano
	 	November 3, 1992	 	101527	 	 
	Sonoma
	 	November 3, 1992	 	1992-137370	 	 
	Tulare
	 	November 3, 1992	 	92-081425	 	 
	Ventura
	 	November 3, 1992	 	92-198950	 	 
	Yuba
	 	November 3, 1992	 	92-13796	 	 

Thirty-sixth Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	June 9, 1993	 	93-203153	 	 
	Butte
	 	June 9, 1993	 	93-023408	 	 
	Fresno
	 	June 9, 1993	 	93086809	 	 
	Glenn
	 	June 10, 1993	 	93-2925	 	 
	Kern
	 	June 9, 1993	 	82236	 	6859-1043
	Los Angeles
	 	June 9, 1993	 	93-1098735	 	 
	Monterey
	 	June 9, 1993	 	38484	 	 

B-17

 

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	City and County of
San Francisco
	 	June 9, 1993	 	F371252	 	F896-0727
	San Joaquin
	 	June 9, 1993	 	93067318	 	 
	San Mateo
	 	June 9, 1993	 	93094357	 	 
	Santa Clara
	 	June 9, 1993	 	11944269	 	 
	Solano
	 	June 9, 1993	 	93-51895	 	 
	Sonoma
	 	June 9, 1993	 	93-71358	 	 
	Tulare
	 	June 9, 1993	 	93-040396	 	 
	Ventura
	 	June 9, 1993	 	93-104242	 	 
	Yuba
	 	June 9, 1993	 	93-06640	 	 

Thirty-seventh Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	September 28, 1993	 	93342967	 	 
	Butte
	 	September 28, 1993	 	93-041800	 	 
	Fresno
	 	September 28, 1993	 	93148269	 	 
	Glenn
	 	September 28, 1993	 	93-5140	 	 
	Kern
	 	September 28, 1993	 	140436	 	6915-188
	Los Angeles
	 	September 28, 1993	 	93-1891500	 	 
	Monterey
	 	September 28, 1993	 	66464	 	 
	City and County of
San Francisco
	 	September 28, 1993	 	F456929	 	F973-511
	San Joaquin
	 	September 28, 1993	 	93111959	 	 
	San Mateo
	 	September 28, 1993	 	93164391	 	 
	Santa Clara
	 	September 28, 1993	 	12128051	 	 
	Solano
	 	September 28, 1993	 	93-88880	 	1993
	Sonoma
	 	September 28, 1993	 	93-121864	 	 
	Tulare
	 	September 28, 1993	 	93-069108A	 	 
	Ventura
	 	September 28, 1993	 	93-181168	 	 
	Yuba
	 	September 28, 1993	 	93-11284	 	 

Thirty-eighth Supplemental Indenture

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	Alameda
	 	November 2, 1993	 	93390873	 	 
	Butte
	 	November 2, 1993	 	93-048806	 	 
	Fresno
	 	November 2, 1993	 	93170561	 	 
	Glenn
	 	November 2, 1993	 	93-5825	 	 
	Kern
	 	November 2, 1993	 	162046	 	6935-2210
	Lake
	 	March 19, 2009	 	2009004258	 	 
	Los Angeles
	 	November 2, 1993	 	93-2143052	 	 
	Monterey
	 	November 2, 1993	 	77734	 	 

B-18

 

	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)
	City and County of
San Francisco
	 	November 2, 1993	 	F477371	 	F997-0471
	San Joaquin
	 	November 2, 1993	 	93129084	 	 
	San Mateo
	 	November 2, 1993	 	93188734	 	 
	Santa Clara
	 	November 2, 1993	 	12188841	 	 
	Solano
	 	November 2, 1993	 	1993-104293	 	1993
	Sonoma
	 	November 2, 1993	 	93-140937	 	 
	Tulare
	 	November 2, 1993	 	93-078948A	 	 
	Ventura
	 	November 2, 1993	 	92-208807	 	 
	Yuba
	 	November 2, 1993	 	93-12958	 	 

Memorandum of Indenture referencing the First through Thirty-eighth Supplemental Indentures

	 	 	 	 	 	 	 	 	 
	County or	 	 	 	Book and Page	 	 	 
	City and County	 	Date of Recordation	 	Document No.	 	(Reel Image)	 
	Marin
	 	March 30, 2009	 	2009-0015722	 	 	 	 

B-19

 

EXHIBIT A

FORM OF SERIES [     ] BOND

     [THIS BOND IS A GLOBAL BOND WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS BOND MAY NOT BE TRANSFERRED TO,
OR REGISTERED OR EXCHANGED FOR BONDS REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE
DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY BOND AUTHENTICATED AND DELIVERED UPON REGISTRATION
OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS BOND SHALL BE A GLOBAL BOND SUBJECT TO THE
FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.] [Insert for Global Bonds]

     [THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM UNDER
THE ACT, THE RULES AND REGULATIONS THEREUNDER AND APPLICABLE STATE LAWS. THE TRANSFER OF THIS NOTE
IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE INDENTURE DATED AS OF APRIL 1, 1928 BETWEEN
CALIFORNIA WATER SERVICE COMPANY AND U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, AS SUCH INDENTURE
MAY BE AMENDED, MODIFIED AND SUPPLEMENTED FROM TIME TO TIME.] [Insert, if applicable.]

CALIFORNIA WATER SERVICE COMPANY

[     ]% First Mortgage Bonds due [     ], Series [     ]

			
	 	 	 
	No. ___
	 	$[       ]

     CALIFORNIA WATER SERVICE COMPANY, a California corporation (the “Company”), promises to pay to
[          ], or its registered assigns, the principal sum of $[          ] in U.S. Dollars on [          ].

	 	 	 	 	 
	 

	 	Interest Payment Dates:
	 	[                              ]
	 
	 	 	 	 
	 

	 	Record Dates:
	 	[                              ]

     Additional provisions of this Series [          ] Bond are set forth on the other side of this
Series [          ] Bond.

Exhibit A to Base Indenture

A-1

 

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

	 	 	 	 	 	 	 
	 	 	CALIFORNIA WATER SERVICE COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	 
 

	 	 
	 

	 	Title:	 	 	 	 

Attest:

	 	 	 
	 

	 	 
	Name:
	 	 
	Title:
	 	 

[Authentication Page to Follow]

Exhibit A to Base Indenture

A-2

 

 

CERTIFICATE OF AUTHENTICATION

     This is one of the Bonds of the series designated therein referred to in the within-mentioned
Indenture.

	 	 	 	 	 
	Dated:                   	U.S. BANK NATIONAL
ASSOCIATION,
As Trustee

 	 
	 	By  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

Exhibit A to Base Indenture

A-3

 

 

[FORM OF REVERSE SIDE OF BOND]

[ ]% First Mortgage Bonds due [ ], Series [ ]

1. INTEREST

     CALIFORNIA WATER SERVICE COMPANY, a California corporation (the “Company”), promises to pay
interest on the principal amount of this Series [ ] Bond at the rate per annum shown above.

     The Company shall pay interest semi-annually in arrears on [ ] and [ ] of
each year. Interest on the Series [ ] Bonds will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Closing Date. Interest shall be
computed on the basis of a 360-day year comprised of twelve 30-day months.

2. METHOD OF PAYMENT

     The Company shall pay interest on the Series [ ] Bonds to the Persons who are registered
Holders of Series [ ] Bonds at the close of business on the [ ] or [ ]
immediately preceding the Interest Payment Date even if Series [ ] Bonds are canceled after
the Record Date and on or before the Interest Payment Date. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal tender for payment of
public and private debts. However, all payments in respect of this Series [ ] Bond
(including principal, premium, if any, and interest) must be made by wire transfer of immediately
available funds to the accounts specified by the Holder hereof. Payment shall be without the
presentation or surrender of the Series [ ] Bonds or the making of any notation thereon,
except that upon written request of the Company or Trustee made concurrently with or reasonably
promptly after payment or redemption in full of any Series [ ] Bond, the Holder thereof shall
surrender such Series [ ] Bond for cancellation, reasonably promptly after any such request,
to the Company at its principal executive office or to the Trustee at its principal corporate trust
office.

3. PAYING AGENT AND REGISTRAR

     Initially, U.S. Bank National Association (the “Trustee”) shall act as Paying Agent and
Registrar. The Company may appoint and change any Paying Agent or Registrar without notice to the
Holders. The Company may act as Paying Agent or Registrar.

4. INDENTURE

     The Company issued the Series [ ] Bonds under an Indenture from California Water Service
Company to American Trust Company and Los Angeles-First National Trust & Savings Bank, as Trustees,
dated as of the 1st day of April, 1928, as therefore supplemented, amended and modified by the
First through Thirty-ninth Supplemental Indentures thereto (the “Base Indenture”), as further
supplemented by the [ ] Supplemental Indenture dated as of the date of this Series [
] Bond between the Company and U.S. Bank National Association (as ultimate successor to American
Trust Company and Los Angeles-First National Trust & Savings Bank), as Trustee (the “Supplemental
Indenture”; the Base Indenture, as supplemented by the Supplemental Indenture, and as further
amended, the “Indenture”), between the Company and the Trustee. The terms of the Series [ ]
Bonds include those stated in the Indenture and those made part of the Indenture by reference to
the TIA. Terms defined in the Indenture and not defined herein have the meanings ascribed thereto
in the Indenture. The Series [  ]

Exhibit A to Base Indenture

A-4

 

Bonds are subject to all such terms, and Holders are referred to the Indenture and the TIA
for a statement of those terms.

     The Series [ ] Bonds are secured obligations of the Company known generally as First
Mortgage Bonds.

5. [OPTIONAL REDEMPTION WITH PREMIUM

     Upon compliance with the notice provisions set forth in Article IV of the Base Indenture, the
Company shall have the privilege, at any time and from time to time, of redeeming the Outstanding
Series [ ] Bonds, either in whole or in part (but if in part then in a minimum principal
amount of $100,000) by redemption of the principal amount of the Series [ ] Bonds, or portion
thereof to be redeemed, and accrued interest thereon to the Redemption Date, together with a
premium equal to the Make-Whole Amount, determined as of five Business Days prior to the Redemption
Date pursuant to this Section 3.01.] [Insert if applicable.]

     6. [NOTICES OF REDEMPTION

     Notices of redemption shall (except in respect of redemptions made out of cash deposited in
the sinking fund described in Section 7 below) be provided in accordance with Article IV of the
Base Indenture. If less than all of the Series [ ] Bonds are to be redeemed at any time, the
particular Series [ ] Bonds to be redeemed shall be selected in accordance with Article IV of
the Base Indenture. On and after the Redemption Date, interest shall cease to accrue on Series [
] Bonds or portions of them called for redemption.] [Insert if applicable.]

7. DENOMINATIONS; TRANSFER; EXCHANGE

     The Series [ ] Bonds are in registered form without coupons in denominations of $1,000
and whole multiples of $1,000. A Holder may transfer or exchange Series [ ] Bonds in
accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Registrar shall not be required (A) to
issue, to register the transfer of or to exchange any Series [ ] Bonds during a period
beginning at the opening of business calendar 15 days before the day of any selection of Series [
] Bonds for redemption and ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Series [ ] Bond so selected for redemption in
whole or in part, except the unredeemed portion of any Series [ ] Bond being redeemed in part
or (C) to register the transfer of or to exchange a Series [ ] Bond between a record date and
the next succeeding Interest Payment Date.

8. PERSONS DEEMED OWNERS

     The registered Holder of this Series [ ] Bond may be treated as the owner of it for all
purposes.

9. UNCLAIMED MONEY

     If money for the payment of principal or interest remains unclaimed for two years, the Paying
Agent shall pay the money back to the Company at its request, or if then held by the Company, shall
be discharged from such trust (unless an abandoned property law designates another Person for
payment thereof). After any such payment, Holders entitled to the money must look only to the
Company for

Exhibit A to Base Indenture

A-5

 

payment thereof, and all liability of the Paying Agent with respect to such money, and all
liability of the Company or such permitted Subsidiary as trustee thereof, shall thereupon cease.

10. DISCHARGE AND DEFEASANCE

     Subject to certain conditions set forth in the Indenture, the Company at any time may
terminate some or all of its obligations under the Indenture with respect to the Series [ ]
Bonds if, among other things, the Company deposits with the Trustee funds for the payment of
principal and interest on the Series [ ] Bonds to redemption or maturity, as the case may be.

11. AMENDMENT, WAIVER

     The Indenture permits, subject to certain exceptions set forth therein, that the Indenture and
the terms of the Bonds of a series, which include the Series [ ] Bonds, and the rights of the
Holders of the Bonds of a series, which may include the Holders of the Series [ ] Bonds, in
each case may be modified, with the written consent of the Holders of a majority in aggregate
principal amount of the Outstanding Bonds, the terms of such Bonds or the rights of the Holders of
such Bonds which are to be modified. The Indenture also permits certain other amendments,
modifications or waivers thereof only with the consent of each Outstanding Bond affected thereby,
while certain other amendments or modifications may be made without the consent of any Holders of
Bonds.

     The Indenture also provides the Holders of sixty-six and two-thirds percent (66-2/3%) or more
of principal amount of the Bonds then Outstanding of all such series under which an Event of
Default shall have occurred, which may include the Series [ ] Bonds, may, by a written
instrument or instruments signed by such Holders and delivered to the Trustee and to the Company,
waive any past Default or Event of Default under such series of Bonds and its consequences except
an Event of Default in the payment of the principal of, premium, if any, or interest on any of the
Bonds as and when the same shall become due by the terms of such Bonds, and upon such waiver such
Default or Event of Default shall be deemed not to exist for any purpose of this Indenture or such
series of Bonds.

     Any such consent or waiver by the Holder of this Series [ ] Bond shall be conclusive and
binding upon such Holder and upon all future Holders of this Series [ ] Bond and of any
Series [ ] Bond issued in lieu of or exchange, in respect of anything done, omitted or
suffered by the Trustee in pursuance thereof.

12. DEFAULTS AND REMEDIES

     Events of Default are set forth in the Indenture. If an Event of Default shall have occurred
and be continuing, the Trustee upon the direction of Holders of not less than twenty-five percent
(25%) aggregate principal amount of the Outstanding Bonds or the Holders of not less than
twenty-five percent (25%) aggregate principal amount of the Outstanding Bonds, may, by notice in
writing delivered to the Company (and to the Trustee if given by the Holders), declare the entire
principal amount of Outstanding Bonds, premium, if any, and the interest accrued thereon
immediately due and payable, and said entire principal, premium, if any, and interest shall
thereupon become and be immediately due and payable.

     Holders may not enforce the Indenture or the Series [ ] Bonds except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Series [ ] Bonds unless it
receives indemnity or security reasonably satisfactory to it. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Outstanding Bonds may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders notice of any Default
(except a Default in payment of principal or interest on any Bond, or in the payment of any sinking
fund installment) if and so long as

Exhibit A to Base Indenture

A-6

 

Responsible Officers of the Trustee in good faith determine that withholding notice is in the
interest of the Holders.

13. TRUSTEE DEALINGS WITH THE COMPANY

     Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of the Series [ ] Bonds and
may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would have if it were not
Trustee.

14. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS

     No director, officer, employee, incorporator or stockholder of the Company or Parent shall
have any liability for any obligations of the Company under this Indenture or the Series [ ]
Bonds or for any claim based on, in respect of, or by reason of such obligations or their creation.
Each Holder by accepting the Series [ ] Bonds waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Series [ ] Bonds.
Such waiver may not be effective to waive liabilities of directors, officers or persons controlling
the Company under the federal securities laws and it is the view of the Commission that such waiver
is against public policy and is therefore unenforceable.

15. GOVERNING LAW

     The Series [ ] Bonds shall be governed by, and construed and enforced in accordance
with, the laws of the State of California without regard to the principles of conflicts of laws
thereunder, except to the extent that the TIA shall be applicable.

16. AUTHENTICATION

     This Series [ ] Bond shall not be valid until an authorized signatory of the Trustee (or
an Authenticating Agent) manually signs the certificate of authentication on the other side of this
Series [ ] Bond.

17. ABBREVIATIONS

     Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM
(=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

18. SECURITY INTEREST

     The Series [ ] Bonds shall be secured to the extent and in the manner provided by the
Indenture.

Exhibit A to Base Indenture

A-7

 

     The Company shall furnish to any Holder upon written request and without charge to the Holder
a copy of the Indenture. Requests may be made to:

CALIFORNIA WATER SERVICE COMPANY

1720 North First Street

San Jose, CA 95112

Attention: Corporate Secretary

Exhibit A to Base Indenture

A-8

 

ASSIGNMENT FORM

To assign this Series [ ] Bond, fill in the form below:

I or we assign and transfer this Series [ ] Bond to

______________________________

     (Print or type assignee’s name, address and zip code)

______________________________

     (Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                                                              agent to
transfer this Series [ ] Bond on the
books of the Company. The agent may substitute another to act for him.

Date:                                                              Your Signature:      
                                                       

Signature Guarantee:___
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)

____________________________________________________________

Sign exactly as your name appears on the other side of this Series [ ] Bond.

Exhibit A to Base Indenture

A-9

 

[SCHEDULE OF EXCHANGES OF INTEREST IN GLOBAL BOND

The following increases or decreases in this Global Bond have been made:

	 	 	 	 	 	 	 	 	 
	Date of Exchange

	 	Amount of decrease
in Principal
Amount of this
Global Bond
	 	Amount of increase
in Principal Amount
of this Global Bond
	 	Principal amount of
this Global Bond
following such
decrease or
increase
	 	Signature of
authorized
signatory of
Trustee or Notes
Custodian]

[Insert for Global Bond.]

Exhibit A to Base Indenture

A-10

 

EXHIBIT B

RECORDED AT THE REQUEST OF

AND AFTER RECORDING RETURN TO:

	 	 	 
	 

	 	 
	 

	 	 
	 

	 	 
	 

	 	 

 

SUBORDINATION, NON-DISTURBANCE AND

ATTORNMENT AGREEMENT

			
	NOTICE:	 	THIS SUBORDINATION AGREEMENT RESULTS IN YOUR LEASE BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF THE INDENTURE (DEFINED BELOW).

     THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) is made as of
                                                            , 200___, by and between U. S. BANK NATIONAL ASSOCIATION, having an address at One
California Street, Suite 2100, San Francisco, California 94111 (“Trustee”) and
                                                                               
                                         , a                                     
                                            , having an address at
                                                                               
                                                                              
                        (“Tenant”).

RECITALS:

     A. Tenant is the holder of a leasehold estate in a portion of the premises located in the
County of                                                                              
   , State of California, described on Exhibit A attached hereto and
made a part hereof (the “Property”) under and pursuant to the provisions of a certain lease dated
                                                             between California Water Service Company, a California corporation, as landlord
(“Landlord”), and Tenant, as tenant (the “Lease”).

     B. Landlord is, or is about to become, the owner in fee simple of the Property and the
landlord under the Lease.

     C. Landlord, sometimes referred to herein as the “Company” and the predecessors of the
Trustee, American Trust Company and Los Angeles-First National Trust & Savings Bank, entered into
that certain indenture dated as of April 1, 1928, as amended by that Eighth Supplemental Indenture
dated as of November 1, 1945, and as further amended by that Thirty-Ninth Supplemental Indenture
dated as of [ ] (as further amended, modified, amended and restated or replaced, the
“Indenture”), which Indenture was recorded in the County of                                                                   
               on
                                                                              
   as
                                                                              of
Official Records of said County.

Exhibit B to Base Indenture

B-1

 

     D. Tenant has agreed to subordinate the Lease to the Indenture and to the lien thereof and
Trustee has agreed to grant non-disturbance to Tenant under the Lease on the terms and conditions
hereinafter set forth.

AGREEMENT:

     For good and valuable consideration, Tenant and Trustee agree as follows:

     1. Subordination. Tenant hereby unconditionally subordinates the Lease, all of the
terms, covenants and provisions thereof and all rights, title, interest, remedies and options of
Tenant thereunder and in and to the Property to the lien of the Indenture and the terms, covenants
and provisions thereof, to all of Trustee’s rights thereunder, including any and all renewals,
increases, modifications, spreaders, consolidations, replacements, supplements and extensions
thereof, and to all sums secured thereby and advances made thereunder. Tenant agrees that the
Indenture and the terms, covenants and provisions of any and all renewals, increases,
modifications, spreaders, consolidations, replacements, supplements and extensions thereof, and all
sums secured thereby and advances made thereunder, are and shall unconditionally be and at all
times remain a lien on the Property prior and superior to the Lease, all of the terms, covenants
and provisions thereof and all rights, title, interest, remedies and options of Tenant thereunder
and in and to the Property, all with the same force and effect as if the Indenture had been
executed, delivered and recorded prior to the execution and delivery of the Lease.

     2. Non-Disturbance. Trustee agrees that if any action or proceeding is commenced by
Trustee for the foreclosure of the Indenture or the sale of the Property, so long as Tenant is not,
at the time of the commencement of any such action or proceeding or at the time of any such sale or
exercise of any such other rights, in default of any of the terms, covenants or conditions of the
Lease or this Agreement on Tenant’s part to be observed or performed (beyond any applicable notice
or grace period), Tenant shall not be named as a party in such action or proceeding unless such
joinder is required by law; provided, however, that in no event shall any such such joinder result
in the termination of the Lease or disturb the Tenant’s possession or use of the premises demised
under the Lease (the “Premises”), and the sale of the Property in any such action or proceeding and
the exercise by Trustee of any of its other rights under the Indenture shall be made subject to all
rights of Tenant under the Lease.

     3. Attornment. If Trustee or any other subsequent purchaser of the Property becomes
the owner of the Property by reason of the foreclosure of the Indenture or the acceptance of a deed
or assignment in lieu of foreclosure or by reason of any other enforcement of the Indenture
(Trustee or such other purchaser being hereinafter referred as “Purchaser”), and Tenant is not, at
the time Purchaser becomes owner of the Property, in default of any of the terms, covenants or
conditions of the Lease or this Agreement on Tenant’s part to be observed or performed (beyond any
applicable notice or grace period), the Lease shall not be terminated or affected thereby but shall
continue in full force and effect as a direct lease between Purchaser and Tenant upon all of the
terms, covenants and conditions set forth in the Lease; and in that event, Tenant agrees to attorn
to Purchaser, and Purchaser by virtue of such acquisition of the Property shall be deemed to have
agreed to accept such attornment, whereupon, subject to the observance and performance by Tenant of
all the terms, covenants and conditions of the Lease on the part of Tenant to be observed and
performed, Purchaser shall recognize the leasehold

Exhibit B to Base Indenture

B-2

 

estate of Tenant under all of the terms, covenants and conditions of the Lease for the
remaining balance of the term of the Lease with the same force and effect as if Purchaser were the
landlord under the Lease; provided, however, that Purchaser shall not be:

     (a) subject to any offsets, defenses, abatements or counterclaims which has accrued in
favor of Tenant against any prior landlord (any such prior landlord, including Landlord and
any successor landlord, being hereinafter referred to herein as a “Prior Landlord”) prior to
the date upon which Purchaser becomes the owner of the Property;

     (b) liable for the return of rental security deposits, if any, paid by Tenant to any
Prior Landlord in accordance with the Lease unless such sums are actually received by
Purchaser;

     (c) bound by any payment of rents, additional rents or other sums which Tenant may have
paid more than one (1) payment period set forth in the Lease in advance to any Prior
Landlord unless (i) such sums are actually received by Purchaser or (ii) such prepayment
have been expressly approved of in writing by Purchaser;

     (d) liable for the failure of any Prior Landlord to perform any of its obligations
under the Lease which have accrued prior to the date on which Purchaser becomes the owner of
the Property, provided that the foregoing shall not limit Purchaser’s obligations under the
Lease to correct any conditions as to which Purchaser has received written notice and has
had a reasonable opportunity to cure in accordance with the terms and conditions of the
Lease and which (i) exist as of the date Purchaser becomes the owner of the Property, and
(ii) violate Purchaser’s obligations as landlord under the Lease; or

     (e) responsible for the making of repairs in or to the Property in the case of damage
or destruction to the Property or any part thereof due to fire or other casualty or by
reason of condemnation unless Purchaser is obligated under the Lease to make such repairs
and Purchaser receives insurance proceeds or condemnation awards sufficient to finance the
completion of such repairs.

     If Purchaser becomes liable pursuant to this Agreement, such liability shall be limited and
restricted to Purchaser’s interest in the Property and shall in no event exceed such interest.

     4. Notice to Tenant. In the event written notice is given to Tenant by Trustee that
Landlord is in default under the Indenture and that the rentals under the Lease should be paid to
Trustee pursuant to the rights and remedies granted to the Trustee pursuant to the Indenture, or
any assignment of leases or rents or other security document entered into in connection with the
Indenture, Tenant shall thereafter pay to Trustee or as directed by the Trustee, all rentals and
all other monies due or to become due to Landlord under the Lease and Landlord hereby expressly
authorizes Tenant to make such payments to Trustee and hereby releases and discharges Tenant from
any liability to Landlord on account of any such payments.

     5. Notice to Trustee and Right to Cure. Tenant agrees to notify Trustee by certified
mail, return receipt requested, with postage prepaid, of any default on the part of Landlord under
the Lease which would entitle Tenant to cancel or terminate the Lease or to abate or reduce the

Exhibit B to Base Indenture

B-3

 

rent payable thereunder, and Tenant further agrees that, notwithstanding any provisions of the
Lease, no cancellation or termination of the Lease and no abatement or reduction of the rent
payable thereunder shall be effective unless Trustee has received notice of the same and has failed
within thirty (30) days after both Trustee’s receipt of said notice and expiration of the time
within which Landlord has the right to remedy the same, to commence to cure the default which gave
rise to the cancellation or termination of the Lease or abatement or reduction of the rent payable
thereunder and thereafter diligently prosecutes such cure to completion. Notwithstanding the
foregoing, Trustee shall have no obligation to cure any default by Landlord except as provided in
Section 3 if Trustee becomes the owner of the Property by reason of the foreclosure of the
Indenture or the acceptance of a deed or assignment in lieu of foreclosure or by reason of any
other enforcement of the Indenture. In addition, Tenant from and after the date hereof shall send
a copy of any other notice or statement under the Lease to Trustee at the same time such notice or
statement is sent to Landlord under the Lease.

     6. Notices. Any notice, demand, request or other communication which any party hereto
may be required or may desire to give hereunder shall be in writing, shall be given in one of the
following manners, and shall be deemed to have been properly given (a) if hand delivered, when
delivered, (b) if mailed by United States Certified Mail (postage prepaid, return receipt
requested), three (3) Business Days after mailing, or (c) if by Federal Express or other reliable
overnight courier service, on the next Business Day after delivered to such courier service,
addressed as follows:

	 	 	 	 	 	 	 	 	 
	 

	 	If to Tenant:
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Attention:
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	If to Trustee:
	 	U.S. Bank National Association
	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 

	 	 	 	Corporate Trust Services	 	 	 	 
	 

	 	 	 	One California Street, Suite 2100	 	 	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 	 	 
	 	 	 	 	Attention: California Water Service Company First

Mortgage Bond Indenture

Any party may, by notice to the others given in accordance with this Section 6, designate
additional or different addresses for subsequent notices or communications. For purposes of this
Section 6, the term “Business Day” shall mean a day on which commercial banks are
not authorized or required by law to close in the state in which the Property is located.

     7. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of Trustee, Tenant and Purchaser and their respective successors and assigns.

     8. Governing Law. This Agreement shall be deemed to be a contract entered into
pursuant to the laws of the State of California and shall in all respects be governed, construed,
applied and enforced in accordance with the laws of the State of California.

Exhibit B to Base Indenture

B-4

 

     9. Counterparts. This Agreement may be executed in any number of counterparts and by
different signatories hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one and the same
instrument, for the same effect as if all signatories hereto had signed the same signature page.
Any signature page of this Agreement may be detached from any counterpart of this Agreement without
impairing the legal effect of any signatures thereon and may be attached to another counterpart of
this Agreement identical in form hereto but having attached to it one or more additional signature
pages.

     10. Attorneys’ Fees. If any party hereto fails to perform any of its obligations
under this Agreement, or if any dispute arises between the parties concerning the meaning or
interpretation of any provision hereof, then the non-prevailing party in any proceeding in
connection with such dispute shall pay the costs and expenses incurred by the prevailing party on
account thereof and in enforcing or establishing its rights hereunder, including, but without
limitation, court costs and reasonable attorneys’ fees and disbursements.

     11. Miscellaneous. This Agreement may not be modified in any manner or terminated
except by an instrument in writing executed by the parties hereto. If any term, covenant or
condition of this Agreement is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such provision. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.

     IN WITNESS WHEREOF, Trustee and Tenant have duly executed this Agreement as of the date first
above written.

	 	 	 	 	 	 	 	 	 
	 	 	TRUSTEE:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	U. S. BANK NATIONAL ASSOCIATION	 	 
	 	 	a national banking association	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 
	 

	 	TENANT:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	,	 
	 	 	 	 	 
	 

	 	a	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 

	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:
	 	 	 	 
	 

	 	 	 	 

	 	 

Exhibit B to Base Indenture

B-5

 

			
	NOTICE:	 	THIS SUBORDINATION AGREEMENT RESULTS IN YOUR LEASE BECOMING
SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF THE INDENTURE
(DEFINED ABOVE).

IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT,
THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO.

The undersigned hereby joins in the execution of this Agreement in order to evidence its acceptance
of, and agreement to, the provisions of Section 4 hereof.

	 	 	 	 	 	 	 
	 	 	LANDLORD:  
	 
	 	 	 	 	 	 
	 	 	CALIFORNIA WATER SERVICE COMPANY,  
	 	 	a California corporation  
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:
	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:
	 	 	 	 
	 

	 	 	 	 

	 	 

Exhibit B to Base Indenture

B-6

 

EXHIBIT A

Legal Description of the Property

Exhibit B to Base Indenture

B-7

 

State of California )

County of                                          )

On                                                                     
                                                     before me, (here insert name and title of the
officer), personally appeared                                         , who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature 
                    
                    
                   

              

(Seal)

Exhibit B to Base Indenture

B-8

 

State of California )

County of                                          )

On                                                                     
                                 before me, (here insert name and title of the
officer), personally appeared                                         , who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature                                                                   
              

(Seal)

Exhibit B to Base Indenture

B-9

 

State of California)

County of                                          )

On                                                                    
                                  before me, (here insert name and title of the
officer), personally appeared                                         , who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature                                                                   
                                  

(Seal)

Exhibit B
to Base Indenture

B-10

 

Exhibit C-1

[LETTERHEAD]

[___, 20___]

[U.S. Bank National Association

Once California Street, Suite 2100

San Francisco, CA 94111]

	 	Re:	 	 Thirty-Ninth Supplemental Indenture, made by and between California Water Service
Company, a California corporation (the “Company”), and U.S. Bank National
Association, as Trustee (the “Trustee”), and dated as of April ___, 2009 (the
“Supplemental Indenture”).

Ladies and Gentlemen:

     I am [___] to the Company. All initially capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Indenture referred to below.

     In rendering the opinions expressed below, I (or others at my direction) have examined copies
or forms of the documents set forth below and such other certificates, documents and materials as I
have deemed necessary as a basis for such opinions. All of the following documents, except where
noted, are dated as of the date hereof:

	 	1.	 	Indenture, made by and among the Company and American Trust Company and
Los Angeles-First National Trust & Savings Bank (predecessor to U.S. Bank National
Association), as Trustees, and dated as of April 1, 1928 (as amended, modified and
supplemented prior to the execution and delivery of the Supplemental Indenture, the
“Original Indenture” and, as amended by the Supplemental Indenture, the
“Indenture”);
	 
	 	2.	 	Supplemental Indenture;

Exhibit C to Base Indenture

C-1

 

 

	 	3.	 	[Each of the [title policies] [and][or] [preliminary title reports]
referenced on Schedule A attached hereto (each, individually, a “Title Document”
and, collectively, the “Title Documents”), issued by the title companies and/or
authorized agents set forth opposite each such Title Document (each, individually,
a “Title Company” and, collectively, the “Title Companies”) for the benefit of the
Company (or its predecessors in interest as “owner”) on the date set forth opposite
each such Title Document, in respect of the applicable real property(ies)
(constituting Permanent Improvements, Extensions or Additions or New or Additional
Property with respect to which the Company is authenticating and delivering Bonds
pursuant to Section 2.02 of the Supplemental Indenture) set forth opposite each
such Title Document (each, individually, an “Individual Property” and,
collectively, the “Real Property”) each indicating that the lien of the Original
Indenture encumbers such Real Property;] [Insert if all or a portion of the
Permanent Improvements, Extensions or Additions or New or Additional Property is in
the form of real property (“Real Property”).]
	 
	 	4.	 	[The financing statements on Form UCC1 naming the Company as debtor, and
the Trustee as secured party, filed in the governmental offices listed on Schedule
B hereto (the “Financing Statements”);] [Insert if all or a portion of the
Permanent Improvements, Extensions or Additions or New or Additional Property is in
the form of personal property (“UCC Collateral”).]
	 
	 	5.	 	[The UCC search reports indicating that the Financing Statements have been
filed in the respective offices and in the respective states listed on Schedule B,
which reports state that they reflect filings in such offices through the “as of”
dates listed on Schedule B (the “Search Reports”)];[Insert if UCC Collateral]
	 
	 	6.	 	[INSERT ADDITIONAL DOCUMENTS/PUBLIC UTILITY COMMISSION DECISIONS/OPINIONS].

[The Company’s right, title and interest in the personal property and fixtures
collateral (constituting Permanent Improvements, Extensions or Additions or New or
Additional Property with respect to which the Company is authenticating and delivering
Bonds in connection with the Supplemental Indenture) described on Schedule C hereto is
referred to herein collectively as the “UCC Collateral.” The Uniform Commercial Code as
enacted and in effect in the State of California is referred to herein as the “CUCC.”
All terms defined in the CUCC are used herein as defined therein.] [Insert if UCC
Collateral.]

I have assumed, with your permission, but without independent investigation or analysis, that:

	 	a)	 	The signatures on all documents examined by me are genuine, all
individuals executing such documents had all requisite legal capacity and
competency and were duly authorized, the documents submitted to me as originals
are authentic and the documents submitted to me as certified or reproduction
copies conform to the originals;
	 
	 	b)	 	Each of the parties to the Indenture (i) is, or was at the time
of the execution of such documents, duly formed, validly existing and in good
standing both in its state of

Exhibit C to Base Indenture

C-2

 

 

	 	 	 	incorporation or formation, as applicable, and in all other jurisdictions in
which it either conducts business or is required to qualify to do business, and
(ii) has, or had at the time of the execution of such documents, all requisite
power and corporate, partnership or limited liability company authority to
execute, deliver and perform its respective obligations under the Indenture.
Each of the parties to the Indenture has duly executed and delivered the
Indenture. The individual executing the Indenture on behalf of each party
thereto was duly authorized, on behalf of such party, to execute the Indenture
and did in fact duly execute and deliver the Indenture. The execution and
delivery of the Indenture by each party and the performance by such party of
its obligations thereunder have been duly authorized by all necessary corporate,
partnership, limited liability company or other action and do not violate any
law, regulation, order, judgment or decree applicable to such party;
	 
	 	c)	 	Except with respect to the opinions I am giving, the Indenture
constitutes the legal, valid and binding obligation of the parties thereto,
enforceable against each such party in accordance with its respective terms;
	 
	 	d)	 	[The Supplemental Indenture will be properly recorded, in the
official records (the “Official Records”) of each county in which the Real
Property is situated (each, a “County”) in accordance with applicable law;]
[Insert if Real Property.]
	 
	 	e)	 	All applicable recording, stamp or similar taxes will be paid
in respect of the Supplemental Indenture;
	 
	 	f)	 	[The Company has, and will have at all times relevant to this
opinion, rights in the UCC Collateral within the meaning of Section 9203(b)(2)
of the CUCC;] [Insert if UCC Collateral.] and
	 
	 	g)	 	[The Financing Statements have been filed effectively in the
respective filing offices and in the respective states listed on Schedule B
hereto, as indicated in the Search Reports that I have reviewed in connection
with the preparation of this opinion; and the Financing Statements have not
been terminated or amended since the respective “as of” dates listed on
Schedule B.] [Insert if UCC Collateral.]

     I express no opinion with respect to any personal property (other than the UCC Collateral) or
real property (other than the Real Property) referenced in the Indenture. No examination of title
covering rights-of-way or easements in connection with distribution and water facilities has been
made inasmuch as the Company has been advised that the expense incident to the obtaining of
policies of title insurance and of examinations of title in respect thereto would be in excess of
the cost of reacquiring by condemnation or purchase, possession and use of such parts of such
rights-of-way or easements as might be held under defective titles, and accordingly, this opinion
does not cover such rights-of-way or easements.

     In rendering this opinion, I have made such inquiries and examined, among other things,
originals or copies, certified or otherwise identified to my satisfaction, of such records,
agreements, certificates, instruments and other documents as I have considered necessary or
appropriate for purposes of this opinion. As to certain factual matters, I have relied to the
extent I deemed appropriate, and without independent investigation, upon the representations and
warranties of the parties in the Indenture, certificates of officers of such parties, or
certificates obtained from public officials and others.

Exhibit C to Base Indenture

C-3

 

 

     Based on the foregoing and in reliance thereon, and subject to the assumptions, exceptions,
qualifications and limitations set forth herein, I am of the opinion that:

     1. [Upon proper recordation of the Supplemental Indenture in the Official Records of
each County (the “Recordation”), the Indenture will constitute a valid and perfected
security interest in, and the perfected lien upon, the Real Property (the “Security
Interest”).] [Insert if Real Property.]

     2. Upon the Recordation, the Security Interest shall be subject to no liens, charges or
other encumbrances prior to or on a parity with the lien of the Indenture except for, (a)
certain possible claims of a trustee in bankruptcy and any possible claims, taxes and/or
assessments of any governmental or quasi-governmental agency having jurisdiction over any
portion of the Real Property, (b) any Permitted Lien, as defined in the Indenture, or other
permitted encumbrance otherwise described in the Indenture, and/or (c) such exceptions,
defects and qualifications as in my opinion do not materially affect the security for the
Indenture or the Company’s title to or its right to use such properties in the conduct of
its business (“Permitted Encumbrances”). [Insert if Real Property.]

     3. [Upon the Recordation, the Indenture will have been duly recorded or filed of record
in all places required by law in order to perfect the lien upon the Real Property described
in the Indenture.] [Insert if Real Property.]

     4. [The Company has granted a valid security interest (the “UCC Security Interest”) in
favor of the Trustee in the UCC Collateral described in the Indenture securing the
performance of the obligations purported to be secured thereby, to the extent a security
interest can be created therein under Division 9 of the CUCC. Such security interest in
the UCC Collateral of the Company listed on Schedule C is perfected to the extent security
interests therein can be perfected by the filing of UCC1 financing statements under Division
9 of the CUCC.] [Insert if UCC Collateral.]

     The foregoing opinions are subject to the following exceptions, qualifications and
limitations:

     A. I render no opinion herein as to matters involving the laws of any jurisdiction
other than the State of California and the United States of America. This opinion is
limited to the effect of the present state of the laws of the State of California and the
United States of America and the facts as they currently exist. I assume no obligation to
revise or supplement this opinion in the event of future changes in such laws or the
interpretations thereof or such facts.

     B. The opinions above are further subject to (i) the effect of any bankruptcy,
insolvency, reorganization, moratorium, arrangement or similar laws affecting the rights and
remedies of creditors generally (including, without limitation, the effect of statutory or
other laws regarding fraudulent transfers or preferential transfers), (ii) general
principles of equity, including without limitation concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific performance,
injunctive relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law and (iii) the qualification that certain
default remedies provided in the Indenture may not be enforceable.

     C. I express no opinion with respect to (i) the Company’s corporate power and authority
to execute and deliver the Indenture or to perform its obligations thereunder, (ii) the due
authorization, execution, and delivery by the Company of the Indenture, or (iii) the
legality, validity, binding nature or enforceability of the Indenture.

Exhibit C to Base Indenture

C-4

 

 

     D. [I have not made or undertaken to make any investigation concerning the factual and
technical aspects of any portion of the Real Property and/or any improvements thereon or the
obtaining or necessity of obtaining any licenses or permits therefor, whether in the event
of sale or disposition of such real property by the trustee under any deed of trust or
otherwise.] [Insert if Real Property.]

     E. [I have not made or undertaken to make any investigation concerning, and express no
opinion with respect to, compliance by any portion of the Real Property with the
requirements of the California Subdivision Map Act, as in effect from time to time, or the
compliance by any portion of the Real Property with the requirements of federal, State of
California, or local governmental agencies for specific uses of such portions of the Real
Property.] [Insert if Real Property.]

     F. I express no opinion as to the applicability to, or the effect of noncompliance by,
Trustee with any state or federal laws applicable to the transactions contemplated by the
Indenture because of the nature of the business of the Trustee.

     G. This opinion is subject to the effect of Section 552 of the United States Bankruptcy
Code (limiting security interests in property acquired after the commencement of a case
under the United States Bankruptcy Code). [I call to your attention that under the
provisions of the CUCC certain third parties, such as buyers and lessees of goods in the
ordinary course of business, protected purchasers of securities or certain purchasers of
security entitlements or financial assets, could acquire an interest in the UCC Collateral
free of the security interests of the Trustee, even though such security interests are
perfected.] [Insert if UCC Collateral.]

     H. [I express no opinion with respect to (i) the existence, non-existence or value of
any UCC Collateral, and (ii) any part of the UCC Collateral that is or may be such that a
security interest therein is not covered by Division 9 of the CUCC by virtue of Section 9109
and (iii) the perfection of the Security Interests in any portion of the UCC Collateral, and
money, to the extent that filing of a financing statement is not or may not be sufficient to
perfect a security interest therein.] [Insert if UCC Collateral.]

     I. [I express no opinion with respect to (i) the sufficiency of the descriptions of the
UCC Collateral contained in the Indenture, in the Financing Statements or in any document
prepared in connection therewith except for the legal adequacy of descriptions of UCC
Collateral (A) to the extent that such descriptions consist of the collateral types defined
in the CUCC (other than commercial tort claims) and (B) contained in Financing Statements to
the extent such descriptions consist of “all assets” or “all personal property,” (ii) the
enforceability or perfection of any security interest in the proceeds of any UCC Collateral
other than pursuant to Section 9315 of the CUCC, (iii) any security interest in consumer
goods or commercial tort claims or (iv) perfection (or the law governing perfection) of any
security interest in timber to be cut or as-extracted collateral (including oil, gas and
other minerals).] [Insert if UCC Collateral.]

     J. [I express no opinion with respect to the priority (and therefore no opinion as to
the respective rights of any creditor, encumbrancer or other third party as against the
rights of the Trustee) of any security interest in the UCC Collateral.] [Insert if UCC
Collateral.]

     K. [Perfection of the Security Interests generally will be terminated under the
circumstances described in Sections 9316, 9507, 9508 and 9515 of the CUCC, unless
appropriate action is taken as provided therein. Without limitation, (i) all the financing
statements filed must be continued at prescribed intervals by the timely filing of
continuation statements and (ii) a new

Exhibit C to Base Indenture

C-5

 

 

or amended financing statement may be required to be filed to retain any perfected UCC
Security Interest in the event the Company changes its name, identity or location (as
determined under the CUCC).] [Insert if UCC Collateral.]

     This opinion is rendered to you pursuant to Section 2.02(B)(4) of the Supplemental Indenture
and may not be relied upon by any person in any other context. You may not furnish this opinion or
copies hereof to any other person except: (i) regulatory authorities should they so request in
connection with their normal examinations, (ii) to your independent auditors and attorneys, (iii)
pursuant to order or legal process of any court or governmental agency or (iv) in connection with
any legal action to which you are a party arising out of the transactions contemplated by the
Supplemental Indenture. This opinion may not be quoted without my prior written consent.

     Very truly yours,

                         

Exhibit C to Base Indenture

C-6

 

 

SCHEDULE A

[See Attached Title Document/Real Property Matrix]

Exhibit C to Base Indenture

C-7

 

 

SCHEDULE B — FINANCING STATEMENTS & SEARCH REPORTS

	 	 	 	 	 	 	 
	Company
	 	Perfection State
	 	Filing Office
	 	Search Report as of
	 	 	 	 	 	 	 
	California
Water Service Company
	 	California
	 	California Secretary
of State
	 	[                    ]
	
	 	 	 		 	 

Exhibit C to Base Indenture

C-8

 

 

SCHEDULE C -

Exhibit C to Base Indenture

C-9

 

 

Exhibit C-2

[LETTERHEAD]

[                    , 20__]

[U.S. Bank National Association

Once California Street, Suite 2100

San Francisco, CA 94111]

			
	     Re:	 	Thirty-Ninth Supplemental Indenture, made by and between California Water Service
Company, a California corporation (the “Company”) and U.S. Bank National Association,
as Trustee (the “Trustee”) and dated as of April __, 2009 (the “Supplemental
Indenture”).

Ladies and Gentlemen:

     I am [                    ] to the Company. All initially capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Indenture referred to below.

     In rendering the opinions expressed below, I (or others at my direction) have examined copies
or forms of the documents set forth below and such other certificates, documents and materials as I
have deemed necessary as a basis for such opinions. All of the following documents, except where
noted, are dated as of the date hereof:

	 	1.	 	Indenture, made by and among the Company and American Trust Company and
Los Angeles-First National Trust & Savings Bank (predecessor to U.S. Bank National
Association), as Trustees, and dated as of April 1, 1928 (as amended, modified and
supplemented prior to the execution and delivery of the Supplemental Indenture, the
“Original Indenture” and, as amended by the Supplemental Indenture, the
“Indenture”);

Exhibit C to Base Indenture

C-10

 

 

	 	2.	 	Supplemental Indenture;
	 
	 	3.	 	Each of the title policies and preliminary title reports referenced on
Schedule A attached hereto (each, individually, a “Title Document” and,
collectively, the “Title Documents”), issued by the title companies and/or
authorized agents set forth opposite each such Title Document (each, individually,
a “Title Company” and, collectively, the “Title Companies”) for the benefit of the
Company (or its predecessors in interest as “owner”) on the date set forth opposite
each such Title Document, in respect of the applicable real property(ies) set forth
opposite each such Title Document (each, individually, an “Individual Property”
and, collectively, the “Real Property”) each indicating that the lien of the
Original Indenture encumbers such Real Property;
	 
	 	4.	 	The financing statements on Form UCC1 naming the Company as debtor, and the
Trustee as secured party, filed in the governmental offices listed on Schedule B
hereto (the “Financing Statements”);
	 
	 	5.	 	The UCC search reports indicating that the Financing Statements have been
filed in the respective offices and in the respective states listed on Schedule B,
which reports state that they reflect filings in such offices through the “as of”
dates listed on Schedule B (the “Search Reports”); and
	 
	 	6.	 	[Additional Documents.]

The Company’s right, title and interest in the personal property and fixtures collateral
described in the Indenture is referred to herein collectively as the “UCC Collateral.”
The Uniform Commercial Code as enacted and in effect in the State of California is
referred to herein as the “CUCC.” All terms defined in the CUCC are used herein as
defined therein.

I have assumed, with your permission, but without independent investigation or analysis, that:

	 	a)	 	The signatures on all documents examined by me are genuine, all
individuals executing such documents had all requisite legal capacity and
competency and were duly authorized, the documents submitted to me as originals
are authentic and the documents submitted to me as certified or reproduction
copies conform to the originals;
	 
	 	b)	 	Each of the parties to the Indenture (i) is, or was at the time
of the execution of such documents, duly formed, validly existing and in good
standing both in its state of incorporation or formation, as applicable, and in
all other jurisdictions in which it either conducts business or is required to
qualify to do business, and (ii) has, or had at the time of the execution of
such documents, all requisite power and corporate, partnership or limited
liability company authority to execute, deliver and perform its respective
obligations under the Indenture. Each of the parties to the Indenture has duly
executed and delivered the Indenture. The individual executing the Indenture
on behalf of each party thereto was duly authorized, on behalf of such party,
to execute the Indenture and did in fact duly execute and deliver the
Indenture. The execution and delivery of the Indenture by each party and the
performance by such party of its obligations thereunder have been duly
authorized by all necessary corporate,

Exhibit C to Base Indenture

C-11

 

 

	 	 	 	partnership, limited liability company or other action and do not violate any
law, regulation, order, judgment or decree applicable to such party;
	 
	 	c)	 	Except with respect to the opinions I am giving, the Indenture
constitutes the legal, valid and binding obligation of the parties thereto,
enforceable against each such party in accordance with its respective terms;
	 
	 	d)	 	The Supplemental Indenture will be properly recorded, in the
official records (the “Official Records”) of each county in which the Real
Property is situated (each, a “County”) in accordance with applicable law;
	 
	 	e)	 	All applicable recording, stamp or similar taxes will be paid
in respect of the Supplemental Indenture;
	 
	 	f)	 	The Company has, and will have at all times relevant to this
opinion, rights in the UCC Collateral within the meaning of Section 9203(b)(2)
of the CUCC; and
	 
	 	g)	 	The Financing Statements have been filed effectively in the
respective filing offices and in the respective states listed on Schedule B
hereto, as indicated in the Search Reports that I have reviewed in connection
with the preparation of this opinion; and the Financing Statements have not
been terminated or amended since the respective “as of” dates listed on
Schedule B.

     I express no opinion with respect to any personal property (other than the UCC Collateral) or
real property (other than the Real Property) referenced in the Indenture. No examination of title
covering rights-of-way or easements in connection with distribution and water facilities has been
made inasmuch as the Company has been advised that the expense incident to the obtaining of
policies of title insurance and of examinations of title in respect thereto would be in excess of
the cost of reacquiring by condemnation or purchase, possession and use of such parts of such
rights-of-way or easements as might be held under defective titles, and accordingly, this opinion
does not cover such rights-of-way or easements.

     In rendering this opinion, I have made such inquiries and examined, among other things,
originals or copies, certified or otherwise identified to my satisfaction, of such records,
agreements, certificates, instruments and other documents as I have considered necessary or
appropriate for purposes of this opinion. As to certain factual matters, I have relied to the
extent I deemed appropriate, and without independent investigation, upon the representations and
warranties of the parties in the Indenture, certificates of officers of such parties, or
certificates obtained from public officials and others.

     Based on the foregoing and in reliance thereon, and subject to the assumptions, exceptions,
qualifications and limitations set forth herein, I am of the opinion that:

     1. The Indenture constitutes a valid and perfected security interest in, and lien upon,
the Real Property. (the “Security Interest”).

     2. The Security Interest is subject to no liens, charges or other encumbrances prior to
or on a parity with the lien of the Indenture except for, (a) certain possible claims of a
trustee in bankruptcy and any possible claims, taxes and/or assessments of any governmental
or quasi-governmental agency having jurisdiction over any portion of the Real Property, (b)
any Permitted Lien, as defined in the Indenture, or other permitted encumbrance otherwise
described in the Indenture, and/or (c) such exceptions, defects and qualifications as in my
opinion do not

Exhibit C to Base Indenture

C-12

 

 

materially affect the security for the Indenture or the Company’s title to or its right
to use such properties in the conduct of its business (“Permitted Encumbrances”). Real
Property hereafter acquired by the Company and located in counties in which the Indenture
shall be of record will, upon acquisition, become subject to the lien of the Indenture,
subject, however, to Permitted Encumbrances, any liens existing or placed thereon at
acquisition and any liens which might intervene prior to the filing or recording of the
instrument containing a sufficient legal description confirming of record that such property
is subject to the lien of the Indenture, except as the existence or validity of the lien of
the Indenture may be affected by the application of Sections 547 and/or 552 of the United
States Bankruptcy Code or by any analogous provisions of applicable state insolvency laws.

     3. The Indenture has been duly recorded or filed of record in each County where any
Real Property described in the Indenture is located and in all other places required by law
in order to perfect the lien upon the Real Property described in the Indenture.

     4. The Company has granted a valid security interest (the “UCC Security Interest”) in
favor of the Trustee in the UCC Collateral described in the Indenture securing the
performance of the obligations purported to be secured thereby, to the extent a security
interest can be created therein under Division 9 of the CUCC. Such security interest in
the UCC Collateral of the Company listed on Schedule B is perfected to the extent security
interests therein can be perfected by the filing of UCC1 financing statements under Division
9 of the CUCC.

     5. The UCC Collateral constitute all the personal property presently owned by the
Company described in the Granting Clauses of the Indenture as subject to the lien of the
Indenture.

     The foregoing opinions are subject to the following exceptions, qualifications and
limitations:

     A. I render no opinion herein as to matters involving the laws of any jurisdiction
other than the State of California and the United States of America. This opinion is
limited to the effect of the present state of the laws of the State of California and the
United States of America and the facts as they currently exist. I assume no obligation to
revise or supplement this opinion in the event of future changes in such laws or the
interpretations thereof or such facts.

     B. The opinions above are further subject to (i) the effect of any bankruptcy,
insolvency, reorganization, moratorium, arrangement or similar laws affecting the rights and
remedies of creditors generally (including, without limitation, the effect of statutory or
other laws regarding fraudulent transfers or preferential transfers), (ii) general
principles of equity, including without limitation concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific performance,
injunctive relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law and (iii) the qualification that certain
default remedies provided in the Indenture may not be enforceable.

     C. I express no opinion with respect to (i) the Company’s corporate power and authority
to execute and deliver the Indenture or to perform its obligations thereunder, (ii) the due
authorization, execution, and delivery by the Company of the Indenture, or (iii) the
legality, validity, binding nature or enforceability of the Indenture.

     D. I have not made or undertaken to make any investigation concerning the factual and
technical aspects of any portion of the Real Property and/or any improvements thereon or the

Exhibit C to Base Indenture

C-13

 

 

obtaining or necessity of obtaining any licenses or permits therefor, whether in the
event of sale or disposition of such real property by the trustee under any deed of trust or
otherwise.

     E. I have not made or undertaken to make any investigation concerning, and express no
opinion with respect to, compliance by any portion of the Real Property with the
requirements of the California Subdivision Map Act, as in effect from time to time, or the
compliance by any portion of the Real Property with the requirements of federal, State of
California, or local governmental agencies for specific uses of such portions of the Real
Property.

     F. I express no opinion as to the applicability to, or the effect of noncompliance by,
Trustee with any state or federal laws applicable to the transactions contemplated by the
Indenture because of the nature of the business of the Trustee.

     G. This opinion is subject to the effect of Section 552 of the United States Bankruptcy
Code (limiting security interests in property acquired after the commencement of a case
under the United States Bankruptcy Code). I call to your attention that under the
provisions of the CUCC certain third parties, such as buyers and lessees of goods in the
ordinary course of business, protected purchasers of securities or certain purchasers of
security entitlements or financial assets, could acquire an interest in the UCC Collateral
free of the security interests of the Trustee, even though such security interests are
perfected.

     H. I express no opinion with respect to (i) the existence, non-existence or value of
any UCC Collateral, and (ii) any part of the UCC Collateral that is or may be such that a
security interest therein is not covered by Division 9 of the CUCC by virtue of Section 9109
and (iii) the perfection of the Security Interests in any portion of the UCC Collateral, and
money, to the extent that filing of a financing statement is not or may not be sufficient to
perfect a security interest therein.

     I. I express no opinion with respect to (i) the sufficiency of the descriptions of the
UCC Collateral contained in the Indenture, in the Financing Statements or in any document
prepared in connection therewith except for the legal adequacy of descriptions of UCC
Collateral (A) to the extent that such descriptions consist of the collateral types defined
in the CUCC (other than commercial tort claims) and (B) contained in Financing Statements to
the extent such descriptions consist of “all assets” or “all personal property,” (ii) the
enforceability or perfection of any security interest in the proceeds of any UCC Collateral
other than pursuant to Section 9315 of the CUCC, (iii) any security interest in consumer
goods or commercial tort claims or (iv) perfection (or the law governing perfection) of any
security interest in timber to be cut or as-extracted collateral (including oil, gas and
other minerals).

     J. I express no opinion with respect to the priority (and therefore no opinion as to
the respective rights of any creditor, encumbrancer or other third party as against the
rights of the Trustee) of any security interest in the UCC Collateral.

     K. Perfection of the Security Interests generally will be terminated under the
circumstances described in Sections 9316, 9507, 9508 and 9515 of the CUCC, unless
appropriate action is taken as provided therein. Without limitation, (i) all the financing
statements filed must be continued at prescribed intervals by the timely filing of
continuation statements and (ii) a new or amended financing statement may be required to be
filed to retain any perfected UCC Security Interest in the event the Company changes its
name, identity or location (as determined under the CUCC).

Exhibit C to Base Indenture

C-14

 

 

     This opinion is rendered to you in connection with Section 3.08(1) of the Supplemental
Indenture and may not be relied upon by any person in any other context. You may not furnish this
opinion or copies hereof to any other person except: (i) regulatory authorities should they so
request in connection with their normal examinations, (ii) to your independent auditors and
attorneys, (iii) pursuant to order or legal process of any court or governmental agency or (iv) in
connection with any legal action to which you are a party arising out of the transactions
contemplated by the Supplemental Indenture. This opinion may not be quoted without my prior
written consent.

     Very truly yours,

                                             

     SCHEDULE A

Exhibit C to Base Indenture

C-15

 

 

[See Attached Title Document/Real Property Matrix]

Exhibit C to Base Indenture

C-16

 

 

SCHEDULE B — FINANCING STATEMENTS & SEARCH REPORTS

	 	 	 	 	 	 	 
	Company	 	Perfection State	 	Filing Office	 	Search Report as of
	 	 	 	 	 	 	 
	California Water
Service Company
	 	California
	 	California
Secretary of State
	 	[                    ]

Exhibit C to Base Indenture

C-17

 

 

EXHIBIT D

FORM OF GUARANTEE AGREEMENT

     GUARANTEE, dated as of (as amended from time to time, this
“Guarantee”), made by (the “Guarantor”), in favor of U.S. Bank
National Association, as trustee (“Trustee”) for the registered holders (the
“Holders”) of the      % First Mortgage Bonds due      , Series (collectively,
the “Bonds”) of California Water Service Company, a California corporation (the
“Issuer”).

WITNESSETH:

     SECTION 1. Guarantee. (a) The Guarantor hereby fully, absolutely, irrevocably and
unconditionally guarantees the due and punctual payment when due, whether at stated maturity, by
acceleration, by notice of prepayment or otherwise, of the principal of, premium, if any, and
interest on the Bonds (the “Obligations”), according to the terms of the Bonds and as more
fully described in the Indenture dated as of April 1, 1928 (as amended, modified or otherwise
supplemented from time to time, including the Thirty-ninth Supplemental Indenture and the Fortieth
Supplemental Indenture, the “Indenture”), between the Issuer and the Trustee, and any other
amounts payable by the Guarantor to the Holders under the Indenture. The Guarantor’s obligation to
make payment on the Obligations may be satisfied by direct payment of the required full and final
amounts by the Guarantor to the Holders or by causing the Issuer to pay such full and final amounts
to the Holders.

     (b) It is the intention of the Guarantor that this Guarantee not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to
this Guarantee. To effectuate the foregoing intention, the amount guaranteed by the Guarantor under
this Guarantee shall be limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of the Guarantor that are relevant under such
laws, result in the Obligations of the Guarantor under this Guarantee not constituting a fraudulent
transfer or conveyance. For purposes hereof, “Bankruptcy Law” means Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.

     (c) The Guarantor hereby covenants to comply with the provisions of Article XIII of the
Indenture.

     SECTION 2. Guarantee Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Indenture, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of
Holders of the Bonds with respect thereto. The Guarantor assents to all the terms, covenants and
conditions of the Bonds and the Indenture. The liability of the Guarantor under this Guarantee
shall be full, absolute, irrevocable and unconditional irrespective of:

     (a) any lack of validity, enforceability or genuineness of any provision of the
Indenture, the Bonds or any other agreement or instrument relating thereto;

     (b) any change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations, or any other amendment or waiver of or any consent to departure
from the Indenture;

Exhibit D to Base Indenture

D-1

 

     (c) any exchange, release or non-perfection of any collateral, or any release or
amendment or waiver of or consent to departure from any other guarantee, for all or any of the
Obligations;

     (d) the recovery of any judgment against the Issuer, or by the levy of any writ or
process of execution under such judgment, or by any action or proceedings taken by any Holder
under the Indenture, the Bonds or the Guarantee for the enforcement thereof or hereof;

     (e) the consolidation or merger of the Issuer with or into any other corporation or any
sale, lease or other disposition of the Issuer’s properties as an entirety or substantially as
an entirety to any other corporation;

     (f) the release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer of any express or implied agreement, covenant, term or condition
relating to the Bonds to be performed or observed by the Issuer;

     (g) the extension of time for the payment by the Issuer of any portion of the Obligations
(other than an extension of time for payment of Obligations that results from the extension of
any interest payment period on the Bonds as provided in the Indenture), or the extension of
time for the performance of any other obligation under, arising out of, or in connection with,
the Bonds;

     (h) any failure, omission, delay or lack of diligence on the part of the Holders to
enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders
pursuant to the terms of the Bonds, or any action on the part of the Issuer granting
indulgence or extension of any kind;

     (i) the voluntary or involuntary liquidation, dissolution, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition
or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;

     (j) any invalidity of, or defect or deficiency in, the Bonds;

     (k) the settlement or compromise of any obligation guaranteed hereby or hereby incurred;
or

     (l) any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor (other than payment of the underlying
obligation) and any other act or delay or failure to act, or by any other thing, which may or
might in any manner or to any extent vary the risk of the Guarantor, it being the intent of
this Section 2 that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.

     There shall be no obligation of the Holders to give notice to, or obtain the consent of, the
Guarantor with respect to the happening of any of the foregoing.

     SECTION 3. Subordination. The Guarantor covenants and agrees that its obligation to
make payments of the Obligations hereunder constitutes an unsecured obligation of the Guarantor
ranking (a) pari passu with all existing and future senior indebtedness of the Guarantor and
(b) senior in right of payment to all existing and future subordinated indebtedness of the
Guarantor.

Exhibit D to Base Indenture

D-2

 

     SECTION 4. Waiver; Subrogation. (a) The Guarantor hereby irrevocably waives
promptness, diligence, notice of acceptance, notice of nonpayment, notice of dishonor, notice of
redemption, notice of Event of Default and any other notice with respect to this Guarantee,
presentment, demand for payment or protest and all other demands and related notices, and any
requirement that the Trustee, or the Holders of any Bonds protect, secure, perfect or insure any
security interest or lien or any property subject thereto or exhaust any right or take any action
against the Issuer or any other Person or any collateral.

     (b) The Guarantor hereby irrevocably waives any claims or other rights that it may now or
hereafter acquire against the Issuer that arise from the existence, payment, performance or
enforcement of the Guarantor’s obligations under this Guarantee or the Indenture, including,
without limitation, any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Trustee, or the Holders
of any Bonds against the Issuer or any collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without limitation, the right
to take or receive from the Issuer, directly or indirectly, in cash or other property or by set-off
or in any other manner, payment or security on account of such claim, remedy or right. If any
amount shall be paid to the Guarantor in violation of the preceding sentence at any time prior to
the cash payment in full of the Obligations and all other amounts payable under this Guarantee,
such amount shall be held in trust for the benefit of the Trustee and the Holders of any Bonds and
shall forthwith be paid to the Trustee, to be credited and applied to the Obligations and all other
amounts payable under this Guarantee, whether matured or unmatured, in accordance with the terms of
the Indenture and this Guarantee, or be held as collateral for any Obligations or other amounts
payable under this Guarantee thereafter arising.

     (c) Guarantor further waives any and all rights and defenses that Guarantor may have because
Issuer’s debt is secured by real property; this means, among other things, that: (1) Guarantor
waives any such defenses that may arise out of an election of remedies by Trustee, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against the principal
by the operation of Section 580d of the California Code of Civil Procedure or otherwise; (2)
Trustee may collect from Guarantor without first foreclosing on any real or personal property
collateral pledged by Issuer; (3) if Trustee forecloses on any real property collateral pledged by
Issuer, then (A) the amount of the debt may be reduced only by the price for which that collateral
is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B)
Trustee may collect from Guarantor even if Trustee, by foreclosing on the real property collateral,
has destroyed any right Guarantor may have to collect from Issuer. The foregoing sentence is an
unconditional and irrevocable waiver of any rights and defenses Guarantor may have because Issuer’s
debt is secured by real property. These rights and defenses being waived by Guarantor include, but
are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the
California Code of Civil Procedure. Without limiting the generality of the foregoing or any other
provision hereof, Guarantor further expressly waives to the extent permitted by law any and all
rights and defenses, including without limitation any rights of subrogation, reimbursement,
indemnification and contribution, which might otherwise be available to Guarantor under California
Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433, or under California Code of Civil
Procedure Sections 580a, 580b, 580d and 726, or any of such sections.

Exhibit D to Base Indenture

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     (d) The Guarantor acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Indenture and this Guarantee and that the waiver set
forth in this Section 4 is knowingly made in contemplation of such benefits.

     SECTION 5. Rights of Holders. The Guarantor expressly acknowledges that: (i) this
Guarantee will be deposited with the Trustee to be held for the benefit of the Holders; (ii) the
Trustee has the right to enforce this Guarantee on behalf of the Holders; and (iii) the Holders of
a majority in principal amount of the Bonds have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee in respect of this Guarantee or
exercising any trust or power conferred upon the Trustee under this Guarantee.

     SECTION 6. Independent Obligations. The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the Bonds and that the
Guarantor shall be liable as principal and as debtor hereunder to pay the Obligations pursuant to
the terms of this Guarantee.

     SECTION 7. No Waiver; Remedies. No failure on the part of the Trustee or any Holder of
the Bonds to exercise, and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

     SECTION 8. Guarantee of Payment; Continuing Guarantee; Transfer of Interest. This
Guarantee creates a guarantee of payment. This Guarantee is a continuing guarantee and shall
(a) remain in full force and effect until the earliest to occur of (i) the date, if any, on which
the Guarantor shall consolidate with or merge into the Issuer or any successor thereto, (ii) the
date, if any, on which the Issuer or any successor thereto shall consolidate with or merge into the
Guarantor, and (iii) final payment in full of the Obligations, (b) be binding upon the Guarantor,
its successors and assigns, and (c) inure to the benefit of and be enforceable by any Holder of
Bonds, the Trustee, and by their respective successors, transferees, and assigns.

     SECTION 9. Reinstatement. This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded
or must otherwise be returned by any Holder of the Bonds or the Trustee upon the insolvency,
bankruptcy or reorganization of the Issuer or otherwise, all as though such payment had not been
made.

     SECTION 10. Amendment. The Guarantor may amend this Guarantee at any time for any
purpose without the consent of the Trustee or any Holder of the Bonds; provided, however, that if
such amendment adversely affects (a) the rights of the Trustee or (b) any Holder of the Bonds, the
prior written consent of the Trustee (in the case of (b), acting at the written direction of the
Holders of a majority in aggregate principal amount of Bonds) shall be required; provided, further,
however, that the Guarantor shall provide a copy of any such amendment to the Trustee.

     SECTION 11. Governing Law. This Guarantee shall be governed by, and construed and
enforced in accordance with, the laws of the State of California without regard to the principles
of conflicts of laws thereunder, except to the extent that the Trust Indenture Act of 1939, as
amended, shall be applicable.

Exhibit D to Base Indenture

D-4

 

     SECTION 12. Notices. Any notice or communication shall be in writing and shall be
hand delivered or mailed by first class mail (registered or certified, return receipt requested) or
sent by facsimile, to the Guarantor at the following address:

California Water Service Group

1720 North First Street

San Jose, CA 95112

Telecopier no.: (408) 367-8430

Attention of: Chief Financial Officer

     IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed and delivered
by its officer thereunto duly authorized as of the date first above written.

	 	 	 	 	 	 	 
	 

	 	 	 	as Guarantor	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

Exhibit D to Base Indenture

D-5

 

Exhibit D to Base Indenture

D-6

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