Document:

EXHIBIT 10.4

                    BLANKET ASSUMPTION ENDORSEMENT AGREEMENT

                                     Between

                            RANGER INSURANCE COMPANY
                                 Houston, Texas
                      (hereinafter referred to as "Ranger")

                                       and

                         ODYSSEY REINSURANCE CORPORATION
                               New York, New York
                     (hereinafter referred to as "Odyssey")

WHEREAS, Ranger is an insurance company with an A. M. Best Rating of B++; and,

WHEREAS, prospective policy holders and/or mortgagees of policy holders of
Ranger may from time to time request that, as additional security, assumption of
liability endorsements (hereinafter "Endorsements") from an A- (or better) rated
company, be attached to Ranger policies; and,

WHEREAS, Odyssey being an A rated company is willing to issue such Endorsements;
and,

WHEREAS, Odyssey and Ranger, being under the common control of Fairfax Financial
Holdings Limited ("Fairfax"), are aware of the mutual benefits of Ranger being
able to issue competitive policies.

NOW THEREFORE, the parties hereto agree as follows:

I. TERM AND CANCELLATION

This Agreement shall apply to all Endorsements issued during the currency of
this Agreement, which commences at 12:01 a.m. July 1, 1999 and shall remain in
force continuously until terminated.

This agreement shall terminate automatically upon the earliest of:

a)  Ranger receiving a Best Rating of A- or better; or

b)  Ranger ceasing to be under the control of Fairfax.

<PAGE>

Either party to this Agreement may terminate this Agreement by giving to the
other party 30 days prior written notice by certified or registered mail.

No Endorsements shall be issued after the effective date of termination. Odyssey
shall however remain liable for losses occurring prior to the effective time and
date of termination, pursuant to the terms of the Endorsements.

II. ENDORSEMENT ISSUANCE AND REPORTS

Odyssey hereby grants Ranger the right to attach an Endorsement to its policies
when needed without prior notice to Odyssey provided such Endorsement has been
duly signed by a representative of Odyssey. Ranger shall not change any
provisions contained in the Endorsements without the prior written approval of
Odyssey.

Ranger shall submit to Odyssey on a quarterly basis a report of all Endorsements
issued by Ranger on behalf of Odyssey indicating therein the insured's name and
address, the policy holders name and address, the mortgagee's name and address,
the policy number, the term of the policy, the policy limits and any other
information Odyssey may from time to time require with respect to the issuance
of Endorsements the subject matter hereof.

III. REINSURANCE

It is understood between the parties hereto that the terms of this Agreement
take precedence over any other Reinsurance Agreement, contract or arrangement
between them to the extent that Odyssey shall not be subject to duplicate
liability because of any payment or payments under the terms hereof.

Ranger agrees to use its best efforts to procure in its Reinsurance Program
terms providing that any payments made by Odyssey under any Endorsement the
subject matter hereof shall be deemed payments by Ranger for purposes of
recovery under such Reinsurance Program. Any such recoveries shall insure to the
benefit of Odyssey.

IV. WARRANTY

Attached hereto are copies of the subject matter Endorsements that both parties
hereto agree are true

                                       2
<PAGE>

copies. No changes shall be made to such Endorsements by Ranger without the
prior written consent of Odyssey, or by Odyssey without notice being given to
Ranger.

IN WITNESS WHEREOF, the parties hereto have executed, delivered and entered into
this Agreement as of the date first above written.

RANGER INSURANCE COMPANY

By: /s/
   -----------------------------
   CFO/SVP

ODYSSEY REINSURANCE CORPORATION

By: /s/ Michael G. Wacek
   -----------------------------

                                       3Exhibit 4.12
California  Water  Service  Company  $20,000,000  8.15%  Series  C  Senior  Note
Agreement,  maturing on November 1, 2030 as First  Supplement to Note  Agreement
dated as of October 1, 2000

================================================================================

                        CALIFORNIA WATER SERVICE COMPANY

                       FIRST SUPPLEMENT TO NOTE AGREEMENT

                           Dated as of October 1, 2000

                  Re: $20,000,000 8.15% Series C Senior Notes
                              Due November 1, 2030

================================================================================

<PAGE>

                       FIRST SUPPLEMENT TO NOTE AGREEMENT

                                                                    Dated as of
                                                                October 1, 2000
To the Purchasers named in
Schedule A hereto

Ladies and Gentlemen:

         This  First   Supplement  to  Note  Purchase   Agreement   (the  "First
Supplement") is between  California  Water Service Company (the "Company") whose
address  is  1720  North  First  Street,  San  Jose,  California  95112  and the
institutional investors named on Schedule A attached hereto (the "Purchasers").

         Reference  is hereby made to that certain  Note  Agreement  dated as of
March 1, 1999 (the "Note  Agreement")  between the  Company  and the  purchasers
listed on Schedule I thereto. All capitalized terms not otherwise defined herein
shall have the same  meaning as specified  in the Note  Agreement.  Reference is
further made to Section 4.3 thereof which requires  that,  prior to the delivery
of any Additional Notes, the Company and each Additional Purchaser shall execute
and deliver a Supplement.

         The Company  hereby  agrees with the  Purchaser(s)  named on Schedule A
hereto as follows:

         1. The  Company  has  authorized  the  issue  and  sale of  $20,000,000
aggregate  principal  amount of its 8.15%  Series C Senior Notes due November 1,
2030 (the  "Series C  Notes").  The Series C Notes,  together  with the Series B
Notes  initially  issued  pursuant  to the Note  Agreement  and each  Series  of
Additional  Notes  which  may  from  time  to  time be  issued  pursuant  to the
provisions of Section 1.4 of the Note Agreement, are collectively referred to as
the "Notes" (such term shall also include any such notes issued in  substitution
therefor  pursuant  to Section  9.2 of the Note  Agreement).  The Series C Notes
shall be substantially in the form set out in Exhibit 1 hereto with such changes
therefrom, if any, as may be approved by the Purchaser(s) and the Company.

         2. Subject to the terms and  conditions  hereof and as set forth in the
Note  Agreement  and  on  the  basis  of  the   representations  and  warranties
hereinafter  set forth,  the Company agrees to issue and sell to each Purchaser,
and each  Purchaser  agrees to purchase from the Company,  Series C Notes in the
principal  amount set forth opposite such  Purchaser's name on Schedule A hereto
at a price of 100% of the principal amount thereof on the closing date hereafter
mentioned.

                                     1
<PAGE>

         3. Delivery of the  $20,000,000  in aggregate  principal  amount of the
Series C Notes  will be made at the  offices  of Chapman  and  Cutler,  111 West
Monroe Street, Chicago,  Illinois 60603-4080 against payment therefor in Federal
Reserve or other funds current and immediately available at the principal office
of Bank of America,  ABA No. 121000358,  Account No. 14879-00161,  Account Name:
California  Water Service Company  Security Sales, in the amount of the purchase
price at 11:00 A.M., San Francisco, California time, on October 24, 2000 or such
later date (not later than October 31, 2000) as shall mutually be agreed upon by
the Company and the Purchasers of the Series C Notes (the "Closing Date").

         4. Prepayment of Notes.

         (a) Required  Prepayments.  No prepayments are required to be made with
respect to the Series C Notes prior to the expressed maturity date thereof other
than  prepayments  made in connection with an acceleration of the Series C Notes
pursuant to the provisions of Section 6.3 of the Note Agreement.

         (b) Optional Prepayment with Premium. Upon compliance with Section 4(d)
below the Company shall have the  privilege,  at any time and from time to time,
of prepaying  the  outstanding  Notes of any Series,  either in whole or in part
(but if in part then in a minimum  principal  amount of  $100,000) by payment of
the  principal  amount of the Notes of such  Series,  or  portion  thereof to be
prepaid,  and accrued interest thereon to the date of such prepayment,  together
with a premium equal to the  Make-Whole  Amount,  determined as of five Business
Days prior to the date of such prepayment pursuant to this Section 4(b).

         (c) Optional  Prepayment  at Par in the Event of  Condemnation.  In the
event a Material  Condemnation  shall have occurred with respect to any property
of the Company or a Restricted  Subsidiary,  then upon  compliance  with Section
4(d) below the Company  shall have the privilege of applying the proceeds of any
condemnation award received in connection with such Material Condemnation to the
prepayment of the principal amount of the Notes of any Series then  outstanding,
or any portion  thereof to the extent of such  proceeds,  together  with accrued
interest  thereon to the date of such prepayment.  Any optional  prepayment made
pursuant to this Section 4(c) shall be without premium.

         (d) Notice of Optional Prepayments. The Company will give notice of any
prepayment of the Notes pursuant to Section 4(b) or 4(c) to each Holder of Notes
to be prepaid  not less than 30 days nor more than 60 days before the date fixed
for such optional  prepayment  specifying (a) such date, (b) the Section of this
First  Supplement  under which the  prepayment is to be made,  (c) the principal
amount of the Holder's  Notes to be prepaid on such date,  (d) whether a premium
may be payable,  (e) the date when the premium, if any, will be calculated,  (f)
the estimated premium,  together with a reasonably detailed  computation of such
estimated  premium,  and (g) the accrued interest  applicable to the prepayment.
Such  notice of  prepayment  shall also  certify  all facts,  if any,  which are
conditions precedent to any such prepayment. Notice of prepayment having been so
given, the aggregate  principal  amount of the Notes to be prepaid  specified in
such notice,  together with accrued  interest  thereon and the premium,  if any,
payable with respect thereto shall become due and payable on the prepayment date
specified  in said  notice.  Not  later  than  two  Business  Days  prior to the
prepayment date

                                       -2-
<PAGE>

specified in such notice,  the Company shall provide each Holder of a Note to be
prepaid written notice of the premium,  if any,  payable in connection with such
prepayment  and,  whether or not any premium is payable,  a reasonably  detailed
computation of the Make-Whole Amount.

         (e) Application of Prepayments.  In the case of each partial prepayment
of the Notes  pursuant to the  provisions of Section 4(b) or 4(c), the principal
amount of the Notes of the Series to be prepaid shall be allocated  among all of
the Notes of such Series at the time  outstanding  in  proportion,  as nearly as
practicable, to the respective unpaid principal amounts thereof.

         (f) Direct Payment.  Notwithstanding anything to the contrary contained
in the Note  Agreement,  this First  Supplement or the Notes, in the case of any
Note owned by any Holder that is a Purchaser,  Additional Purchaser or any other
Institutional  Holder which has given written  notice to the Company  requesting
that  the  provisions  of this  Section  4(f)  shall  apply,  the  Company  will
punctually pay when due the principal thereof,  interest thereon and premium, if
any,  due with  respect to said  principal,  without  any  presentment  thereof,
directly to such Holder at its address set forth herein or such other address as
such Holder may from time to time  designate  in writing to the Company or, if a
bank account with a United  States bank is so  designated  for such Holder,  the
Company  will make such  payments in  immediately  available  funds to such bank
account,  marked for attention as indicated,  or in such other manner or to such
other  account in any United  States  bank as such  Holder may from time to time
direct in writing.

         (g) Make Whole  Amount.  The term  "Make-Whole  Amount" shall mean with
respect to the Series C Notes in connection with any prepayment or acceleration,
the following:  the excess, if any, of (a) the aggregate present value as of the
date of such prepayment of each dollar of principal being prepaid and the amount
of interest (exclusive of interest accrued to the date of prepayment) that would
have been  payable  in respect of such  dollar if such  prepayment  had not been
made,  determined by discounting such amounts at the Reinvestment  Rate from the
respective  dates on which they would  have been  payable,  over (b) 100% of the
principal  amount  of the  outstanding  Series  C Notes  being  prepaid.  If the
Reinvestment  Rate is equal to or higher than 8.15%, the Make-Whole Amount shall
be zero.  For purposes of any  determination  of the  Make-Whole  Amount for the
Series C Notes, the following terms have the following meanings:

                  "Reinvestment  Rate" shall mean (1) the sum of 0.50%, plus the
         yield  reported  on  page  "USD"  of the  Bloomberg  Financial  Markets
         Services Screen (or, if not available,  any other nationally recognized
         trading screen reporting  on-line intraday trading in the United States
         government  Securities) at 10:00 A.M. (Chicago,  Illinois time) for the
         United States  government  Securities  have a maturity  (rounded to the
         nearest month)  corresponding  to the Remaining Life to Maturity of the
         principal  of the  Notes  being  prepaid  or (2) in the  event  that no
         nationally recognized trading screen reporting on-line intraday trading
         in the United States government  Securities is available,  Reinvestment
         Rate shall mean 0.50%,  plus the arithmetic  mean of the yields for the
         two  columns  under  the  heading   "Week  Ending"   published  in  the
         Statistical  Release under the caption "Treasury  Constant  Maturities"
         for the maturity  (rounded to the nearest month)  corresponding  to the
         Remaining  Life to  Maturity  of the  principal  being  prepaid.  If no
         maturity exactly corresponds to such Remaining Life to Maturity, yields
         for the  published  maturity  next  longer than the  Remaining  Life to
         Maturity and for the published

                                       -3-
<PAGE>

         maturity  next shorter  than the  Remaining  Life to Maturity  shall be
         calculated  pursuant  to the  immediately  preceding  sentence  and the
         Reinvestment   Rate  shall  be  interpolated  from  such  yields  on  a
         straight-line  basis,  rounding in each of such relevant periods to the
         nearest month. For the purposes of calculating the  Reinvestment  Rate,
         the most  recent  Statistical  Release  published  prior to the date of
         determination of the Make-Whole Amount shall be used.

                  "Statistical  Release"  shall  mean  the  then  most  recently
         published  statistical release designated  "H.15(519)" or any successor
         publication which is published weekly by the Federal Reserve System and
         which establishes yields on actively traded U.S. Government  Securities
         adjusted to constant  maturities or, if such statistical release is not
         published at the time of any determination  hereunder,  then such other
         reasonably  comparable  index which shall be  designated by the Holders
         holding 66-2/3% in aggregate principal amount of the outstanding Series
         C Notes,  subject to approval of the Company which approval will not be
         unreasonably withheld.

                  "Remaining  Life to Maturity" of the  principal  amount of the
         Series  C  Notes  being  prepaid  shall  mean,  as of the  time  of any
         determination  thereof,  the number of years (calculated to the nearest
         one-twelfth)  which will elapse between the date of  determination  and
         the final maturity of the Series C Notes being prepaid.

         5. Closing Conditions.

         (a) Conditions. The obligation of each Purchaser to purchase the Series
C Notes on the Closing Date shall be subject to the  performance  by the Company
of its agreements  hereunder which by the terms hereof are to be performed at or
prior to the time of delivery of the Series C Notes and to the following further
conditions precedent:

                  (i) Closing  Certificate. Such Purchaser shall have received a
         certificate  dated the Closing Date,  signed by the President or a Vice
         President  of the  Company,  the truth and accuracy of which shall be a
         condition to such Purchaser's obligation to purchase the Series C Notes
         proposed  to be sold to such  Purchaser  and to the effect that (1) the
         representations  and  warranties  of the Company set forth in Exhibit 2
         hereto are true and correct on and with  respect to the  Closing  Date,
         (2) the Company has performed all of its  obligations  hereunder  which
         are to be performed on or prior to the Closing Date, and (3) no Default
         or Event of Default has occurred and is continuing.

                  (ii)  Compliance   Certificate.   Such  Purchaser  shall  have
         received a  certificate  dated the Closing  Date,  signed by the Senior
         Financial Officer of the Company stating that such officer has reviewed
         the  provisions  of the Note  Agreement and this First  Supplement  and
         setting for the  information  and  computation  (in sufficient  detail)
         required in order to  establish  whether  the Company is in  compliance
         with Section 5.6 of the Note Agreement on the Closing Date.

                                       -4-
<PAGE>

                  (iii) Legal  Opinions. Such Purchaser shall have received from
         McCutchen,  Doyle,  Brown & Enersen LLP,  counsel for the Company,  and
         Chapman and Cutler, special counsel for the Purchasers,  their opinions
         dated the Closing  Date,  in form and  substance  satisfactory  to such
         Purchaser,  and covering the matters set forth respectively in Exhibits
         3 and 4 hereto.

                  (iv) Regulatory Approval. Prior to the Closing Date, the issue
         and sale of the  Series C Notes  shall  have  been duly  authorized  or
         approved by appropriate order of the Public Utilities Commission of the
         State of California (the  "Commission").  Such order shall be final and
         in full  force and  effect  and not  subject  to any  appeal,  hearing,
         rehearing or contest.  All conditions contained in any such order which
         are to be  fulfilled  on or prior to the issuance of the Series C Notes
         shall have been  fulfilled.  The Company  shall have  delivered  to the
         Purchasers and their special counsel a certified copy of such order and
         the application therefor.

                  (v)  Related Transactions.  The Company shall have consummated
         the sale of the entire principal amount of the Series C Notes scheduled
         to be sold on the Closing Date pursuant to this First Supplement.

                  (vi)  Satisfactory  Proceedings.   All  proceedings  taken  in
         connection with the transactions contemplated by this First Supplement,
         and all  documents  necessary  to the  consummation  thereof,  shall be
         satisfactory   in  form  and  substance  to  such  Purchaser  and  such
         Purchaser's  special counsel,  and such Purchaser shall have received a
         copy  (executed  or  certified  as may  be  appropriate)  of all  legal
         documents or proceedings  taken in connection with the  consummation of
         said transactions.

                  (vii) Purchase  Permitted  By  Applicable  Law. On the Closing
         Date, the purchase of Series C Notes shall (a) be permitted by the laws
         and regulations of each jurisdiction to which any Purchaser is subject,
         without recourse to provisions  (such as Section  1405(a)(8) of the New
         York  Insurance  Law)  permitting  limited   investments  by  insurance
         companies  without  restriction  as to the character of the  particular
         investment,   (b)  not  violate  any   applicable   law  or  regulation
         (including,  without  limitation,  Regulation U, T or X of the Board of
         Governors  of the  Federal  Reserve  System)  and (c) not  subject  any
         Purchaser  to any tax,  penalty or  liability  under or pursuant to any
         applicable law or regulation, which law or regulation was not in effect
         on the date hereof. If requested by any Purchaser, such Purchaser shall
         have received an Officer's Certificate certifying as to such matters of
         fact as such Purchaser may reasonably  specify to enable such Purchaser
         to determine whether such purchase is so permitted.

                  (viii) Payment of Special Counsel Fees. The Company shall have
         paid,   on  or  before  the  Closing  Date,   the  fees,   charges  and
         disbursements  of the Purchasers'  special counsel referred to in (iii)
         above, to the extent  reflected in a statement of such counsel rendered
         to the Company at least one Business Day prior to the Closing Date.

                  (ix) Private  Placement  Number.  A Private  Placement  Number
         issued by Standard & Poor's CUSIP Service Bureau (in  cooperation  with
         the  Securities

                                       -5-
<PAGE>

         Valuation   Office   of   the   National   Association   of   Insurance
         Commissioners) shall have been obtained for the Series C Notes.

         (b) The  obligation  of the  Company  to  deliver  the  Series  C Notes
hereunder  is  subject  to the  conditions  that (i) the  Commission  shall have
authorized  the  issuance  and sale by the  Company of the Series C Notes at the
price herein provided and said  authorization  shall be in full force and effect
and (ii) the entire  principal amount of the Series C Notes scheduled to be sold
on the Closing Date pursuant to this First  Supplement  shall have been tendered
by the  Purchasers.  If the  condition  specified in this Section 5(b) shall not
have been fulfilled prior to or on the Closing Date,  this First  Supplement and
all the obligations of the Company hereunder,  except as provided in Section 9.4
of the Note Agreement, may be cancelled by the Company.

         (c) If on the Closing Date the Company fails to tender to any Purchaser
the  Series  C Notes  to be  issued  to any  Purchaser  on  such  date or if the
conditions specified in Section 5(a) have not been fulfilled, such Purchaser may
thereupon  elect to be  relieved  of all  further  obligations  under this First
Supplement.  Without  limiting the  foregoing,  if the  conditions  specified in
Section 5(a) have not been fulfilled, such Purchaser may waive compliance by the
Company with any such condition to such extent as such Purchaser may in its sole
discretion determine.  Nothing in this Section 5(c) shall operate to relieve the
Company of any of its obligations  hereunder or to waive any Purchaser's  rights
against the Company.

         6. Each Purchaser  represents and warrants that the representations and
warranties  set forth in Section 3.2 of the Note  Agreement are true and correct
on the  date  hereof  with  respect  to the  Series  C Notes  purchased  by such
Purchasers.

         7. The Company and each Purchaser  agree to be bound by and comply with
the terms and  provisions  of the Note  Agreement as if such  Purchaser  were an
original signatory to the Note Agreement.

                                       -6-
<PAGE>

         The execution  hereof shall  constitute a contract  between the Company
and the Purchaser(s)  for the uses and purposes  hereinabove set forth, and this
agreement  may  be  executed  in  any  number  of  counterparts,  each  executed
counterpart constituting an original but all together only one agreement.

                                       CALIFORNIA WATER SERVICE COMPANY

                                       By ______________________________________
                                        Name:  _________________________________
                                        Title:  ________________________________
Accepted as of  October 1, 2000

                                                          [VARIATION]

                                       By ______________________________________
                                        Name:  _________________________________
                                        Title:  ________________________________

                                       -7-

<PAGE>

                       INFORMATION RELATING TO PURCHASERS

                                                    PRINCIPAL AMOUNT OF SERIES C
NAME AND ADDRESS OF PURCHASER                           NOTES TO BE PURCHASED

SUN LIFE ASSURANCE COMPANY OF CANADA                         $5,000,000
One Sun Life Park
Wellesley Hills, Massachusetts  02481-5699
Attention:  Investment Department/Private Placements, SC #1303
Telecopier Number: (781) 446-2392

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal  or other  immediately  available  funds  (identifying  each  payment as
"California Water Service Company, 8.15% Senior Notes, Series C, due November 1,
2030 , PPN 130789 L@7, principal, premium or interest") to:

         Bank of New York
         P&I Department
         ABA #021-000-018
         Account #: IOC 566
         Re:  California Water Service Corporation
         For Further Credit:  IOC 566
         Account:  249061

Notices

All  notices of  mandatory  payment,  on or in respect of the Notes and  written
confirmation of each such payment and any audit confirmation to:

         Sun Life Assurance Company of Canada
         One Sun Life Park
         Wellesley Hills, Massachusetts  02481-5699
         Attention:  Manager, Investment Accounting SC #1395

All other notices and communications, including notices of optional prepayments,
to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  38-1082080

                                   SCHEDULE A
                                 (to Supplement)
<PAGE>

                                                    PRINCIPAL AMOUNT OF SERIES C
NAME AND ADDRESS OF PURCHASER                           NOTES TO BE PURCHASED

                                                    Three separate Notes in the
                                                       amount of $2,250,000,
SUN LIFE ASSURANCE COMPANY OF CANADA                        $500,000 and
One Sun Life Park                                      $500,000, respectively
Wellesley Hills, Massachusetts  02481-5699
Attention: Investment Department/Private Placements, SC #1303
Telecopier Number: (781) 446-2392

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal  or other  immediately  available  funds  (identifying  each  payment as
"California Water Service Company, 8.15% Senior Notes, Series C, due November 1,
2030, PPN 130789 L@7, principal, premium or interest") to:

         Citibank, N.A.
         Attention:  Gay Quitch
         ABA #021-000-089
         Account:  36112805
         For Further Credit:   Account No.:  199541

Notices

All  notices of  mandatory  payment,  on or in respect of the Notes and  written
confirmation of each such payment and any audit confirmation to:

         Sun Life Assurance Company of Canada
         One Sun Life Park
         Wellesley Hills, Massachusetts  02481-5699
         Attention:  Manager, Investment Accounting SC #1395

All other notices and communications, including notices of optional prepayments,
to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  38-1082080

                                      A-2

<PAGE>

                                                    PRINCIPAL AMOUNT OF SERIES C
                                                        NOTES TO BE PURCHASED
NAME AND ADDRESS OF PURCHASER

SUN LIFE OF CANADA (INTERNATIONAL) LIMITED                    $1,000,000
One Sun Life Park
Wellesley Hills, Massachusetts  02481-5699
Attention:  Investment Department/Private Placements, SC #1303
Telecopier Number: (781) 446-2392

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal  or other  immediately  available  funds  (identifying  each  payment as
"California Water Service Company, 8.15% Senior Notes, Series C, due November 1,
2030, PPN 130789 L@7, principal, premium or interest") to:

         Citibank, N.A.
         Attention:  Gay Quitch
         ABA #021-000-089
         Account:  36112805
         For Further Credit:  Account No.:  849141

Notices

All  notices of  mandatory  payment,  on or in respect of the Notes and  written
confirmation of each such payment and any audit confirmation to:

         Sun Life Assurance Company of Canada
         One Sun Life Park
         Wellesley Hills, Massachusetts  02481-5699
         Attention:  Manager, Investment Accounting SC #1395

All other notices and communications, including notices of optional prepayments,
to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  Sun Life of Canada
(International) Limited

Taxpayer I.D. Number:  38-1082080

                                      A-3

<PAGE>

                                                    PRINCIPAL AMOUNT OF SERIES C
NAME AND ADDRESS OF PURCHASER                           NOTES TO BE PURCHASED

SUN LIFE ASSURANCE COMPANY OF CANADA                           $750,000

One Sun Life Park
Wellesley Hills, Massachusetts  02481-5699
Attention:  Investment Department/Private Placements, SC #1303
Telecopier Number: (781) 446-2392

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal  or other  immediately  available  funds  (identifying  each  payment as
"California Water Service Company, 8.15% Senior Notes, Series C, due November 1,
2030, PPN 130789 L@7, principal, premium or interest") to:

         Bank of New York
         P&I Department
         ABA #021-000-018
         Account #: IOC 566
         Re:  California Water Service Corporation
         For Further Credit:  IOC 566
         Account:  275431

Notices

All  notices of  mandatory  payment,  on or in respect of the Notes and  written
confirmation of each such payment and any audit confirmation to:

         Sun Life Assurance Company of Canada
         One Sun Life Park
         Wellesley Hills, Massachusetts  02481-5699
         Attention:  Manager, Investment Accounting SC #1395

All other notices and communications, including notices of optional prepayments,
to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  38-1082080

                                      A-4

<PAGE>

           NAME AND ADDRESS                                 PRINCIPAL AMOUNT OF
             OF PURCHASER                                   SERIES C NOTES TO BE
                                                                 PURCHASED

CENTRE LIFE/UNUM LIFE INSURANCE TRUST                           $10,000,000
c/o Provident Investment Management, LLC
One Fountain Square
Chattanooga, Tennessee  37402
Attention:  Private Placements
Telefacsimile:  (423) 755-3351
Confirmation:  (423) 755-1172

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal or other immediately available funds to:

         Hare & Co.
         c/o The Bank of New York
         New York, New York
         ABA #021 000 018
         BNF:  10C566
         Attn:  PP P&I Department
         Ref:  A/C Name and Cusip
         Custodial Account Number 056904

         Please reference: Issuer:  California Water Service Company
                                    PPN:  130789 L@7
                                    Coupon:  8.15%
                                    Maturity:  November 1, 2030
                                    Principal=$__________
                                    Interest=$___________

Notices

All notices and  communications,  including notices with respect to payments and
written  confirmation  of each such payment,  to be addressed as first  provided
above.

Name of Nominee in which Notes are to be issued:  HARE & CO.

Taxpayer I.D. Number:  13-5160382

                                      A-5

<PAGE>

                             [FORM OF SERIES C NOTE]

THIS NOTE HAS NOT BEEN  REGISTERED  WITH THE SECURITIES AND EXCHANGE  COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,  PLEDGE OR
OTHER DISPOSITION THEREOF MAY BE MADE ONLY (1) IN A TRANSACTION REGISTERED UNDER
SAID ACT OR (2) IF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.

                        CALIFORNIA WATER SERVICE COMPANY

                           8.15% Series C Senior Note
                              Due November 1, 2030

                                 PPN: 130789 L@7

No.                                                            October __, 2000

$

         California  Water  Service  Company,  a  California   corporation  (the
"Company"), for value received, hereby promises to pay to

                              or registered assigns
                        on the first day of November, 2030
                             the principal amount of

                                                        DOLLARS ($____________)

and to pay interest  (computed  on the basis of a 360-day year of twelve  30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate  of  8.15%  per  annum  from  the  date  hereof  until  maturity,   payable
semiannually on the first day of each May and November in each year  (commencing
on the first of such dates after the date hereof) and at  maturity.  The Company
agrees to pay interest on overdue  principal  (including any overdue required or
optional  prepayment  of  principal)  and  premium,  if any,  and (to the extent
legally  enforceable)  on any overdue  installment  of interest,  at the rate of
10.15% per annum after the due date, whether by acceleration or otherwise, until
paid. Both the principal hereof and interest hereon are payable at the principal
office of the Company in San Jose,  California in coin or currency of the United
States of  America  which at the time of payment  shall be legal  tender for the
payment of public and private debts.

                                 EXHIBIT 1
                              (to Supplement)

<PAGE>

         This Note is one of a series of Notes (the "Notes")  issued pursuant to
a supplement  to the Note  Agreement  dated as of March 1, 1999 (as from time to
time amended and supplemented,  the "Note Agreement"),  between the Company, the
Purchasers  named therein and  Additional  Purchasers of Notes from time to time
issued  pursuant  to any  Supplement  to the Note  Agreement.  This Note and the
holder  hereof are  entitled  equally and ratably  with the holders of all other
Notes of all Series from time to time  outstanding  under the Note  Agreement to
all the  benefits  provided  for thereby or referred to therein.  Each holder of
this  Note  will  be  deemed,  by  its  acceptance  hereof,  to  have  made  the
representation  set forth in Section 3.2 of the Note  Agreement,  provided  that
such holder may (in reliance  upon  information  provided by the Company,  which
shall not be unreasonably withheld) make a representation to the effect that the
purchase by such holder of any Note will not constitute a non-exempt  prohibited
transaction under Section 406(a) of ERISA.

         This Note and the other Notes  outstanding under the Note Agreement may
be declared due prior to their expressed  maturity dates, all in the events,  on
the terms and in the manner and amounts as provided in the Note Agreement.

         The Notes are not subject to  prepayment or redemption at the option of
the Company  prior to their  expressed  maturity  dates  except on the terms and
conditions  and in the amounts and with the  premium,  if any,  set forth in the
Note Agreement.

         This Note is registered on the books of the Company and is transferable
only by surrender  thereof at the principal  office of the Company duly endorsed
or  accompanied  by a  written  instrument  of  transfer  duly  executed  by the
registered  holder of this Note or its  attorney  duly  authorized  in  writing.
Payment of or on account of  principal,  premium,  if any,  and interest on this
Note  shall be made  only to or upon  the  order in  writing  of the  registered
holder.

         This Note shall be construed and enforced in accordance  with,  and the
rights of the parties  shall be governed by, the law of the State of  California
excluding  choice-of-law  principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                                       CALIFORNIA WATER SERVICE COMPANY

                                       By
                                        Name:  _________________________________
                                        Title:  ________________________________

                                      E1-2

<PAGE>

                         REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to each Purchaser that:

          1. Corporate   Organization,   Subsidiaries.   The  Company  is  duly
organized and existing and in good  standing  under and by virtue of the laws of
the State of California and is duly  authorized and empowered to own and operate
its properties and to carry on its business, all as and in the places where such
properties  are now owned and  operated  and such  business  is  conducted.  The
Company has no Subsidiaries.

          2.  Corporate  Authority.  The  Company has full  corporate  power and
corporate  authority to sell and issue the Series C Notes. The issuance and sale
of the Series C Notes and the  execution  and  delivery of the First  Supplement
will have been duly  authorized  by the Board of Directors of the Company and by
the Public  Utilities  Commission of the State of California (the  "Commission")
prior to the Closing  Date,  and no other action is required to be taken by, and
no consents or approvals are required to be obtained from, the  shareholders  of
the Company or any public body or bodies,  and no other corporate  action of the
Company is requisite to such issue and sale.

          3.  Business  and  Property.   Each  Purchaser  has  heretofore   been
furnished with a copy of the Company  Information which generally sets forth the
principal  properties of the Company and the business  conducted and proposed to
be conducted by the Company.

          4. Indebtedness.  Annex A attached  hereto  correctly  describes  all
Current Debt, Funded Debt and Capitalized  Leases of the Company  outstanding on
October 1, 2000.

          5. Financial  Statements  and Reports. The Company has furnished each
Purchaser  with a copy of its  audited  financial  reports  for  1998  and  1999
hereinafter  called the "Company  Reports," and copies of the Annual Reports and
Forms 10-K filed by California Water Service Group ("CWSG")  hererinafter called
the "CWSG Reports" with the Securities  and Exchange  Commission for 1997,  1998
and 1999,  together  with all reports or documents  required to be filed by CWSG
pursuant to Sections 13(a) or 15(d) of the  Securities  Exchange Act of 1934, as
amended,  since the filing of the 1999 Form 10-K. The Company has also furnished
each Purchaser with an audited quarterly financial statement for the Company and
Forms 10-Q for CWSG for the fiscal  quarters  ended  March 31, 2000 and June 30,
2000 (the  "Quarterly  Reports").  The  financial  statements  contained  in the
foregoing Company Reports,  the CWSG Reports,  Forms 10-K, the Quarterly Reports
and such other reports and documents were prepared in accordance  with generally
accepted  accounting  principles  upon a  consistent  basis and are complete and
correct and the balance  sheets  included  therein  fairly present the financial
condition of the Company or CWSG, as the case may be, as at the respective dates
thereof and the Statements of Income, Common Shareholders' Equity and Cash Flows
included therein fairly present the results of the operations of the Company for
the periods  covered  thereby,  subject in the case of unaudited  statements  to
normal year-end adjustments.

          6. Material  Contracts.  The Company has no contracts or  commitments,
whether  contingent  or other,  which are material to the Company and which were
not made in the ordinary

                                    EXHIBIT 2
                                 (to Supplement)

<PAGE>

course of  business.  Certain  material  contracts  related to water  supply are
listed  in  Annex  B  hereto.  The  Company  has no  contracts  or  commitments,
contingent or other,  which materially and adversely affect or in the future may
(so far as the Company can foresee)  materially and adversely affect the Company
or its business, property, assets, operations or condition,  financial or other.
As at  December  31,  1999,  there were no material  liabilities  of the Company
(other than those under contracts entered into in the normal and ordinary course
of business),  actual,  contingent  or accrued,  which were not reflected in the
Company  Reports  and CWSG  Reports  except  for (i)  liability  in  respect  of
uncompleted  construction  work  under open  contracts  in  connection  with the
Company's  construction  program  and (ii) the  obligations  of the  Company  to
contribute  to a pension  plan,  an  employees'  savings  plan and a health  and
welfare plan.

          7. No  Material  Adverse  Change.  (a) There has been no change in the
condition of the Company,  financial or other,  from that set forth or reflected
in the Company  Information,  other than changes  which may have occurred in the
ordinary course of business or by reason of ordinary  dividends paid or declared
or outstanding  First Mortgage Bonds redeemed by the Company in accordance  with
their terms,  and no such changes in the ordinary  course of business  have been
material adverse changes.

         (b)  Since  December  31,  1999,  neither  the  business,   operations,
properties  nor  assets of the  Company  have  been  adversely  affected  in any
material way by any casualties such as fire, windstorm, riot, strike, explosion,
accident, flood, earthquake,  lockout, sabotage, activities of armed forces, act
of God or the public enemy or  condemnation  of  properties by the United States
government or any municipal governmental agency, authority or body.

          8. Title to  Properties.  The Company is engaged in the  business of a
public utility water company  serving all or a portion of the California  cities
and  communities  listed in the 1999 Company Report and paragraph 9 hereof.  The
Company  has  good  and  merchantable  title,  subject  only to the  lien of the
Mortgage  Indenture  and to current  tax and  assessment  liens,  rights-of-way,
easements  and certain  minor  liens,  encumbrances,  clouds or defects in title
which do not  materially  affect  the use  thereof,  to all the  material  water
distribution  facilities  (including,   without  limitation,   transmission  and
distribution  mains,  pump stations,  wells,  storage tanks and  reservoirs) and
other material units of property used in its business except as follows:

              (a) most of the  offices,  except  its  principal  office,  are in
leased  premises  and some  wells,  well  sites  and  other  minor  distribution
facilities are rented; and

              (b) several  wells are located on property  which the Company does
not own but in which it has an easement for the location of such wells;

and except as to easements and  rights-of-way  and certain  parcels of land (not
exceeding  for said  parcels of land an aggregate  book value of $250,000)  with
respect to which there is a possibility of reverter if the property ceases to be
used for public utility  purposes,  and,  except that the greater portion of its
transmission and distribution  systems is located in public highways and streets
and in  rights-of-way  owned by the Company over lands of others,  the Company's
title thereto is fee simple. Except for parcels of land having an aggregate book
value of not more than $250,000,  the Company has good and merchantable title to
all its other  property  and  assets

                                     E-2-2

<PAGE>

subject only to the lien of the Mortgage Indenture and the lien of the Dominguez
Mortgage  Indenture and to current tax and assessment  liens and minor liens and
encumbrances  which  do  not  materially  affect  the  use  thereof.  All of the
properties  of  the  Company  are  located  in  the  State  of  California   and
substantially  all of the properties of the Company used or useful in its public
utility business are subject to the Mortgage Indenture. As used herein, the term
"Dominguez  Mortgage  Indenture" means the Trust Indenture dated as of August 1,
1954,  as  supplemented  from time to time,  from the  Company,  as successor to
Dominguez  Water  Company  ("Dominguez")  and  Chase  Manhattan  Bank and  Trust
Company,  National Association,  as Trustee, which provides a lien on properties
owned by  Dominguez  immediately  prior to the merger  described  in paragraph 9
hereof which lien secures $9,000,000 in aggregate  principal amount of Dominguez
bonds which were assumed by the Company upon the merger.

          9. Franchises. The Company has, in its judgment,  adequate  franchises
and  permits  without  burdensome   restrictions  (other  than  those  typically
contained  in  franchises  and  permits  of this  type) to allow the  Company to
conduct the business in which it is engaged.

         The Company has two classes of  franchises to install and operate water
pipes and mains under public streets and highways:

              (a) so-called  "constitutional"  franchises  obtained by virtue of
the provisions of Article XI, Section 19, of the California Constitution,  as in
effect prior to 1911; and

              (b) franchises granted pursuant to statutory authority.

         The Company  believes,  based on the advice of counsel (which is itself
based upon the assumption of the accuracy of information obtained by the Company
from sources  believed to be reliable  that the  following  cities served by the
Company were all incorporated prior to 1911:

       Bakersfield            Marysville             South San Francisco
       Chico                  Oroville               Stockton
       Dixon                  Redondo Beach          Visalia
       Hermosa Beach          Salinas                Willows
       King City              San Mateo
       Livermore              Selma

that water  distribution  systems were constructed and service  furnished to the
inhabitants  of each by various  predecessors  of the Company prior to 1911, and
that there were no public water works owned or controlled by the municipality in
any of them prior to 1911), that the Company has a "constitutional" franchise in
each of the above cities and under such constitutional franchise has a perpetual
right which was not  repealed  by the repeal of Article  XI,  Section 19, of the
California  Constitution  to continue to occupy  public  streets of each of said
cities  with its pipes and mains and to lay down  additional  pipes and mains in
said streets for the supplying of water, subject to reasonable regulation by the
respective  municipalities.  The Company also  believes,  based on the advice of
counsel,  that this right is not limited to streets in which pipes or mains were
laid  prior  to  1911  but   extends  at  least  to  all  streets  in  the  said
municipalities  as they  existed  at the date of  repeal  of the  constitutional
provision in 1911 and probably also extends to

                                     E-2-3

<PAGE>

territory  incorporated  into each respective  city after such repeal,  although
this  latter  question  remains  somewhat  in  doubt in the  absence  of a final
decision of the courts  thereon.  The Company  holds either by  assignment or as
original grantee franchises granted under statutory authority by the Counties of
Kern,  Los  Angeles,  San  Joaquin,  Santa  Clara and  Monterey,  the  Cities of
Montebello,   Torrance,   Cupertino,   Sunnyvale,   Los  Altos,  Mountain  View,
Bakersfield,  Commerce, San Carlos, Rolling Hills Estates and Thousand Oaks, and
the Towns of Los Altos Hills and Atherton.  Following  incorporation of the City
of Rancho Palos Verdes in 1973, the Company made franchise  payments to the City
and the City accepted the same as successor in interest to the grantor's  rights
under the Company's  former  franchise from the County of Los Angeles;  the City
has  agreed  that the  Company  may  exercise  its  rights in the City under its
current  County  franchise  until the  expiration of that franchise in 2012. The
Company's  franchises  from the Cities of Palos Verdes  Estates,  Menlo Park and
Woodside  terminated  in 1977,  1993 and 1994,  respectively.  While none of the
Cities and the Company have executed a new franchise agreement,  the Company has
made and will  continue  to make  franchise  payments  to each of the  Cities in
accordance with the provisions of the prior franchise.  In other areas where the
Company has no franchise, the Company or its predecessors have distributed water
for many years and, to the Company's knowledge, no question has ever been raised
as to the right to make such  distribution  and to maintain  all pipes and mains
necessary therefor.

         On May 25,  2000,  Dominguez  Service  Corporation  was merged into the
Company and subsequently  Dominguez and its  subsidiaries  were also merged into
the Company (collectively,  the "merger"). The Company acquired in the Dominguez
merger  operations in the following  cities,  counties,  townships or localities
that Dominguez previously served:

         Bodfish                  Kernville                   Mountain Shadows
         Carson                   Lake Hughes                 Onyx
         Compton                  Lakeland                    Torrance
         Duncans Mills            Lancaster                   Squirrel Valley
         Fremont Valley           Leona Valley                Wofford Heights
         Guerneville              Long Beach                  Los Angeles County
         Harbor City              Lucerne                     Kern County

Water  distribution  systems  were  constructed  and  service  furnished  to the
inhabitants of the localities currently known as Carson,  Compton,  Harbor City,
Long Beach and Torrance by various predecessors of the Company prior to 1911 and
the Company  believes  that it has a prior  right to operate in these  locations
which right was not extinguished by the incorporation of these cities subsequent
to 1911.  Except as noted below,  Dominguez has no franchises  from these cities
and has made no franchise payments to them and, to the Company's  knowledge,  no
question has ever been raised as to the right to make water  distribution and to
maintain all pipes and mains necessary therefor.

         As  to  the  remaining  localities,   Dominguez  has  received  written
franchise  agreements  which  are in full  force  and  effect  and has  paid all
franchise  fees to date,  with the  exception  of Compton and the City of Carson
Revelopment  Project #2, as to which the franchises  expired without renewal in,
respectively,  1994 and 1998.  Dominguez  continued to provide water services to
Compton  and  the  City of  Carson  Revelopment  Project  #2  subsequent  to the
expiration

                                     E-2-4

<PAGE>

of the respective  franchises,  and to pay franchise  fees, and to the Company's
knowledge  no  question  has ever  been  raised  as to the  right  to make  such
distribution and to maintain all pipes and mains necessary therefor.

         10.  Condition  of Assets.  The  physical  assets of the Company are in
sound operating  condition,  there are no material arrears in the maintenance of
any such physical assets and the Company  believes that its sources of water are
adequate to meet its requirements for the foreseeable future.

         11. Pending Litigation, Proceedings. (a) There are no actions, suits or
proceedings  pending  at law or in equity or  before or by any  federal,  state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality,  domestic  or foreign,  or, to the  knowledge  of the  Company,
threatened  against or affecting the Company not adequately covered by insurance
or for  which  reserves  adequate  in  the  Company's  judgment  have  not  been
established  which  involve,  in  the  opinion  of  the  Company,  a  reasonable
possibility of judgments or liabilities  exceeding $500,000 in the aggregate net
of insurance, or which may, in the opinion of the Company result in any material
adverse change in the business or properties or in the  condition,  financial or
other, of the Company,  or the ability of the Company to perform its obligations
under the First Supplement or the Series C Notes.

         (b) There  are no  proceedings  pending  or,  to the  knowledge  of the
Company,  threatened  against the  Company  before or by any  federal,  state or
municipal commission, board or other administrative agency, which materially and
adversely affect the water rates of the Company presently in effect.

         (c) The  Company is not in  default  with  respect to any order,  writ,
injunction  or  decree  of  any  court,  or  any  federal,  state  or  municipal
commission,  board or other  administrative  agency and the Company has complied
with all applicable statutes and regulations of the United States of America and
of any state,  municipality or agency of any thereof,  in respect of the conduct
of its business known or believed by the Company to be applicable  thereto,  the
failure to comply  with which  could  reasonably  be expected to have a material
adverse effect on the Company or its properties.

         12. No  Condemnation  Proceedings.  Since January 1, 1995, no elections
have  been  held  or  other  actions  taken   authorizing  the  commencement  of
proceedings for  condemnation of any of the properties of the Company.  However,
from time to time  there are  expressions  of  interest  made by public  bodies,
elected or appointed municipal officials,  persons seeking political position or
citizens groups urging acquisition of the Company's facilities in one or more of
the  communities  served by the  Company.  The Company does not believe that any
acquisition  by a city or  municipality  of its  properties by  condemnation  or
threat thereof would be adverse to the holders of the Series C Notes.

         13. No  Burdensome  Restrictions.  The  Company  is not  subject to any
burdensome corporate  restrictions in its Articles of Incorporation,  By-Laws or
otherwise, which materially and

                                     E-2-5
<PAGE>

adversely  affect  or in the  future  may (so far as the  Company  can  foresee)
materially and adversely affect the Company or its business,  property,  assets,
operations or condition, financial or other.

         14. Regulatory  Status,  Approval.  (a) The Company is not a registered
holding company or a subsidiary of a registered  holding company and the Company
is not  required to register  under the Public  Utility  Holding  Company Act of
1935, as amended. The Company is subject to the jurisdiction of the Commission.

         (b) No consent of, approval or authorization by, filing or registration
with, or notice to any  governmental  or public  authority or agency is required
for the  issuance,  sale or  delivery  of the  Series C Notes or the  execution,
delivery or performance of the First Supplement, other than the authorization of
the Commission, which authorization has been duly obtained, is in full force and
effect and is not  subject to any appeal,  hearing,  rehearing  or contest.  All
conditions  contained in any such authorization which were to be fulfilled on or
prior to the issuance of the Series C Notes have been fulfilled. The Company has
furnished  to your special  counsel  true,  correct and complete  copies of said
authorization  and all  applications  heretofore  filed with or submitted to the
Commission in connection with its action to obtain said authorization.

         15. No Defaults,  Compliance with Other Instruments. The Company is not
in default under any outstanding  indentures,  contracts or agreements which are
material to the Company including,  without limitation,  the Mortgage Indenture;
and on the  Closing  Date there will not exist any  condition  which  would be a
default  under any such  indenture,  contract or  agreement.  The  execution and
delivery of the First Supplement,  the consummation of the transactions  therein
provided for and compliance with the provisions of the First  Supplement and the
Series C Notes by the  Company  will not  violate or result in any breach of the
terms,  conditions or provisions of, or constitute a default under, its Articles
of Incorporation,  By-Laws or any indenture,  mortgage, deed of trust, bank loan
or credit  agreement,  or other  material  agreement or  instrument to which the
Company  is a party or by which the  Company  may be  bound,  nor will such acts
result  in the  violation  of any  applicable  law,  rule,  regulation  or order
applicable  to the  Company  of  any  court  or  governmental  authority  having
jurisdiction  in the  premises  or in the  creation or  imposition  of any lien,
charge or encumbrance of any nature  whatsoever,  upon any property or assets of
the Company.

         16. Leases.  The Company has the right to, and does, enjoy peaceful and
undisturbed possession under all material leases to which it is a party or under
which it is operating.  All such leases are valid,  subsisting and in full force
and effect, and the Company is not in default under any thereof and no event has
occurred  and is  continuing,  and no  condition  exists  that,  after notice or
passage of time or both could become a material default under any such Lease.

         17. Use of Proceeds.  The Company will use the gross  proceeds  derived
from the sale of the  Series C Notes  under the First  Supplement  to  refinance
existing  Indebtedness  and  to  finance  a  portion  of the  Company's  general
construction  program.  None  of the  transactions  contemplated  in  the  First
Supplement (including,  without limitation thereof, the use of the proceeds from
the sale of the Series C Notes) will violate or result in a violation of Section
7 of the Securities  Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto,  including without  limitation,  Regulations U, T and X of the
Board of Governors of the Federal

                                     E-2-6
<PAGE>

Reserve  System,  12 C.F.R.,  Chapter II. The Company  does not own or intend to
carry or purchase any "margin  stock"  within the meaning of said  Regulation U,
including  margin stock  originally  issued by it. None of the proceeds from the
sale of the Series C Notes will be used to purchase or carry (or  refinance  any
borrowing  the  proceeds  of which  were used to  purchase  or carry) any margin
stock.

         18. ERISA.  (a) The fair market value of all assets under all "employee
pension  benefit  plans" (as such term is  defined  in  Section  3(2) of ERISA),
maintained  by the  Company,  as from  time to time in  effect,  exceeded  as of
December 31, 1999, the last annual  valuation date, the actuarial  present value
of all benefits vested under the Plans by more than $15,846,000.

         (b) Neither any of the Plans nor any of the trusts created  thereunder,
nor  any  trustee  or  administrator  thereof,  has  engaged  in  a  "prohibited
transaction,"  as such term is defined in Section  4975 of the Code which  could
subject  the  Plans  or  any  of  them,  any  such  trust,  or  any  trustee  or
administrator  thereof,  or any disqualified person with respect to the Plans to
the tax or penalty on  prohibited  transactions  imposed by said  Section  4975,
except  that,  with  respect to any  actions  or  omissions  of  administrators,
trustees,  other fiduciaries,  parties in interest or disqualified persons of or
in respect to the Plans (other than  employees of the Company),  the Company has
no knowledge  that any of such persons has  committed a prohibited  transaction,
nor has the Company participated knowingly in or knowingly undertaken to conceal
a prohibited  transaction with or by any of such persons nor enabled any of them
to commit a prohibited transaction.

         (c)  Neither  any of the  Plans  subject  to Title IV of ERISA  nor any
trusts  related  to such  plans  have been  terminated,  nor have there been any
Reportable Events, as that term is defined in Section 4043 of ERISA (as modified
by the  regulations  thereunder),  in respect of those plans since the effective
date of ERISA.

         (d)  Neither any of the Plans which are subject to Section 302 of ERISA
nor any trusts  related to such plans have  incurred  any  "accumulated  funding
deficiency,"  as such  term is  defined  in said  Section  302  (whether  or not
waived), since the effective date of ERISA.

         (e) The  consummation  of the  transactions  provided  for in the First
Supplement  and  compliance by the Company with the  provisions  thereof and the
Series C Notes issued  thereunder  will not involve any  prohibited  transaction
within the meaning of ERISA or Section 4975 of the Code.

         19. Taxes. All Federal,  state and local taxes and assessments due from
the Company have been (a) fully paid or adequately  provided for on the books of
the Company in accordance with generally accepted  accounting  principles or (b)
are being contested in good faith by the Company.  There has been no examination
of the Federal income tax returns of the Company by the Internal Revenue Service
subsequent to the examinations of the returns for tax years 1984-1991.

         20. Compliance with Laws. To the best of the Company's knowledge, after
due inquiry, the Company is in compliance with all applicable Federal, state, or
local laws, statutes, rules,

                                     E-2-7
<PAGE>

regulations or ordinances  relating to public heath,  safety or the environment,
including, without limitation,  relating to releases,  discharges,  emissions or
disposals to air,  water,  land or ground  water,  to the  withdrawal  or use of
ground  water,  to the use,  handling or disposal of  polychlorinated  biphenyls
(PCB's), asbestos or urea formaldehyde,  to the treatment,  storage, disposal or
management of hazardous substances  (including,  without limitation,  petroleum,
its  derivatives,  by-products  or  other  hydrocarbons),  and  to  exposure  to
hazardous  substances,  the  failure to comply with which  could  reasonably  be
expected to have a material adverse effect on the Company or its properties. The
Company does not know of any  liability of the Company  under the  Comprehensive
Environmental  Response,  Compensation  and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Section 9601
et seq.) with respect to any property now or  heretofore  owned or leased by the
Company.

         21. Full Disclosure.  The financial statements referred to in the First
Supplement do not, nor does the First Supplement, the Company Information or any
written statement  (including without limitation the 1999 Company Report and the
1999  CWSG  Report)  furnished  by the  Company  to you in  connection  with the
negotiation of the sale of the Series C Notes, contain any untrue statement of a
material fact or, taken  together,  omit a material  fact  necessary to make the
statements  contained  therein or herein not misleading.  There is no fact which
the  Company  has not  disclosed  to you in  writing  which  materially  affects
adversely  nor, so far as the Company can now foresee,  will  materially  affect
adversely the properties,  business,  prospects, profits or condition (financial
or  otherwise)  of the  Company  or the  ability of the  Company to perform  its
obligations  under the Note  Agreement,  the First  Supplement  or the  Series C
Notes.

         22. Private Offering.  Neither the Company, directly or indirectly, nor
any agent on its  behalf  has  offered  or will  offer the Series C Notes or any
similar Security or has solicited or will solicit an offer to acquire the Series
C Notes or any similar  Security from or has otherwise  approached or negotiated
or will  approach or  negotiate  in respect of the Series C Notes or any similar
Security  with any Person other than the  Purchasers  and not more than four (4)
other institutional investors,  each of whom was offered a portion of the Series
C Notes at  private  sale for  investment.  Neither  the  Company,  directly  or
indirectly,  nor any agent on its behalf has  offered or will offer the Series C
Notes or any  similar  Security  or has  solicited  or will  solicit an offer to
acquire  the  Series C Notes or any  similar  Security  from any Person so as to
cause the  issuance  and sale of the  Series C Notes  not to be exempt  from the
provisions of Section 5 of the Securities Act of 1933, as amended.

                                      E-2-8
<PAGE>

                CURRENT DEBT, FUNDED DEBT AND CAPITALIZED LEASES
                              AS OF OCTOBER 1, 2000

1.      Current Debt

        $18,000,000  borrowed  under the Company's bank line of credit with Bank
        of America.

2.      Funded Debt

        $116,345,000  outstanding  under the Company's  various  series of First
        Mortgage Bonds.

        $193,000  due to the City of Los Altos for the purchase of the North Los
        Altos Water System.

        $20,000,000 Series A Senior Notes due November 1, 2025.

        $20,000,000 Series B Senior Notes due November 1, 2028.

        $4,000,000  First Mortgage  Bonds,  Series J due 2023 of Dominguez Water
        Company ("Dominguez").*

        $5,000,000 First Mortgage Bonds, Series K due 2012 of Dominguez.*

        $3,236,000  California Department of Water Resources Loans due 2011-2032
        of Dominguez*.

3.      Capitalized Leases

        None.

__________________________
*   Assumed by the Company on October 12, 2000

                                     ANNEX A
                                 (to Exhibit 2)

<PAGE>

                         MATERIAL WATER SUPPLY CONTRACTS

1.       Water  Supply  Contract  between the Company and the  County  of  Butte
         relating to the  Company's  Oroville District.

2.       Water Supply Contract  between the Company and Kern County Water Agency
         relating to the Company's Bakersfield District.

3.       Water  Supply  Contract  between the Company  and  Stockton  East Water
         District relating to the Company's Stockton District.

4.       Second  Amended  Contract  between the Company and Stockton  East Water
         District relating to the Company's Stockton District.

5.       Settlement  Agreement and Master Water Sales Contract  between the City
         and County of San Francisco and Certain Suburban Purchasers.

6.       Supplement  to  Settlement  Agreement  and Master Water Sales  Contract
         between the Company and the City and County of San  Francisco  relating
         to the Company's Bear Gulch District.

7.       Supplement  to  Settlement  Agreement  and Master Water Sales  Contract
         between the Company and the City and County of San  Francisco  relating
         to the Company's San Carlos District.

8.       Supplement  to  Settlement  Agreement  and Master Water Sales  Contract
         between the Company and the City and County of San  Francisco  relating
         to the Company's San Mateo District.

9.       Supplement  to  Settlement  Agreement  and Master Water Sales  Contract
         between the Company and the City and County of San  Francisco  relating
         to the Company's South San Francisco District.

10.      Water Supply Contract  between the Company and Santa Clara Valley Water
         District relating to the Company's Los Altos District.

11.      Water Supply Contract  between the Company and Pacific Gas and Electric
         Company related to the Company's Oroville District.

12.      Water  Supply  Contract  between the Company and Alameda  County  Flood
         Control  and  Water  Conservation  District  related  to the  Company's
         Livermore District.

13.      Water Supply Contract  between the Company and Russell Valley Municipal
         Water District regarding the Company's Westlake District.

                                     ANNEX B
                                 (to Exhibit 2)

<PAGE>

14.      Water Supply Contract  between  Dominguez Water Company,  ARCO Products
         Company and West Basin  Municipal  Water District  relating to recycled
         water.*

__________________________
*   Assumed By The Company On October 12, 2000

                                     E-2-2

<PAGE>

                         DESCRIPTION OF CLOSING OPINION
                            OF COUNSEL TO THE COMPANY

         The closing opinion of McCutchen,  Doyle,  Brown & Enersen LLP, counsel
for  the  Company,  which  is  called  for by  Section  5(a)(iii)  of the  First
Supplement,  shall be dated the Closing Date and  addressed  to the  Purchasers,
shall be  satisfactory  in scope and form to the  Purchasers and shall be to the
effect that:

                    1. The Company is a corporation, duly incorporated,  validly
         existing  and  in  good  standing  under  the  laws  of  the  State  of
         California,  has the  corporate  power and the  corporate  authority to
         execute  and  perform  the First  Supplement  and to issue the Series C
         Notes and has the full corporate  power and the corporate  authority to
         conduct the activities in which it is now engaged.

                    2. The Note  Agreement  and the First  Supplement  have been
         duly  authorized by all necessary  corporate  action on the part of the
         Company,  have been duly  executed  and  delivered  by the  Company and
         constitute  the  legal,  valid  and  binding  contract  of the  Company
         enforceable  in  accordance  with its  terms,  subject  to  bankruptcy,
         insolvency, fraudulent conveyance and similar laws affecting creditors'
         rights  generally,  and general  principles  of equity  (regardless  of
         whether  the   application  of  such  principles  is  considered  in  a
         proceeding in equity or at law).

                    3. The  Series C Notes  have  been  duly  authorized  by all
         necessary  corporate action on the part of the Company,  have been duly
         executed and delivered by the Company and constitute  the legal,  valid
         and binding  obligations of the Company  enforceable in accordance with
         their terms, subject to bankruptcy,  insolvency,  fraudulent conveyance
         and similar laws affecting  creditors'  rights  generally,  and general
         principles of equity  (regardless  of whether the  application  of such
         principles is considered in a proceeding in equity or at law).

                    4. No approval,  consent or  withholding of objection on the
         part  of,  or  filing,   registration   or   qualification   with,  any
         governmental  body,  Federal or state,  is necessary in connection with
         the  execution  and  delivery of the First  Supplement  or the Series C
         Notes  other  than  the   authorization   of  the   Commission,   which
         authorization has been duly obtained, and is in full force and effect.

                    5.  The  issuance  and sale of the  Series  C Notes  and the
         execution,  delivery  and  performance  by the  Company  of  the  First
         Supplement  do  not  violate  or  result  in any  breach  of any of the
         provisions  of or  constitute a default under or result in the creation
         or  imposition  of any Lien  upon any of the  property  of the  Company
         pursuant to the provisions of the Articles of  Incorporation or By-laws
         of the  Company  or any  agreement  or  other  instrument  listed  as a
         material contract in the Company's most recent Annual Report.

                                    EXHIBIT 3
                                (to Supplement)

<PAGE>

                    6. Based upon the  representations set forth in Section 6 of
         the First Supplement,  the issuance,  sale and delivery of the Series C
         Notes under the  circumstances  contemplated by the First Supplement do
         not, under existing law, require the registration of the Series C Notes
         under the Securities Act of 1933, as amended,  or the  qualification of
         the First  Supplement or an indenture  under the Trust Indenture Act of
         1939, as amended.

                    7. Based upon the  assumption of the accuracy of information
         obtained by the Company from sources  believed to be reliable  that the
         following cities served by the Company were all  incorporated  prior to
         1911:

               Bakersfield           Marysville              South San Francisco
               Chico                 Oroville                Stockton
               Dixon                 Redondo Beach           Visalia
               Hermosa Beach         Salinas                 Willows
               King City             San Mateo
               Livermore             Selma

         that water distribution  systems were constructed and service furnished
         to the inhabitants of each by various predecessors of the Company prior
         to 1911,  and that there were no public water works owned or controlled
         by the  municipality  in any of them prior to 1911,  in the  opinion of
         such counsel,  the Company has a "constitutional"  franchise in each of
         the  above  cities  and  under  such  constitutional  franchise  has  a
         perpetual  right  which was not  repealed  by the repeal of Article XI,
         Section 19, of the California Constitution to continue to occupy public
         streets of each of said cities with its pipes and mains and to lay down
         additional  pipes and mains in said streets for the supplying of water,
         subject to reasonable  regulation by the respective  municipalities  as
         they existed at the date of repeal of the  constitutional  provision in
         1911 and  probably  also extends to  territory  incorporated  into each
         respective  city after  such  repeal,  although  this  latter  question
         remains  somewhat  in doubt in the  absence of a final  decision of the
         courts thereon.

         On May 25,  2000,  Dominguez  Service  Corporation  was merged into the
Company and subsequently  Dominguez and its  subsidiaries  were also merged into
the Company (collectively,  the "Merger"). The Company acquired in the Dominguez
merger  operations in the following  cities,  counties,  townships or localities
that Dominguez previously served:

         Bodfish                 Kernville                Mountain Shadows
         Carson                  Lake Hughes              Onyx
         Compton                 Lakeland                 Torrance
         Duncans Mills           Lancaster                Squirrel Valley
         Fremont Valley          Leona Valley             Wofford Heights
         Guerneville             Long Beach               Los Angeles County
         Harbor City             Lucerne                  Kern County

Water  distribution  systems  were  constructed  and  service  furnished  to the
inhabitants of the localities currently known as Carson,  Compton,  Harbor City,
Long Beach and Torrance by

                                      E3-2

<PAGE>

various  predecessors of the Company prior to 1911 and the Company believes that
it has a  prior  right  to  operate  in  these  locations  which  right  was not
extinguished by the  incorporation of these cities subsequent to 1911. Except as
noted  below,  Dominguez  has no  franchises  from these  cities and has made no
franchise payments to them and, to the Company's knowledge, no question has ever
been raised as to the right to make water distribution and to maintain all pipes
and mains necessary therefor.

         As  to  the  remaining  localities,   Dominguez  has  received  written
franchise  agreements  which  are in full  force  and  effect  and has  paid all
franchise  fees to date,  with the  exception  of Compton and the City of Carson
Revelopment  Project #2, as to which the franchises  expired without renewal in,
respectively,  1994 and 1998.  Dominguez  continued to provide water services to
Compton  and  the  City of  Carson  Revelopment  Project  #2  subsequent  to the
expiration of the respective  franchises,  and to pay franchise fees, and to the
Company's  knowledge  no  question  has ever been raised as to the right to make
such distribution and to maintain all pipes and mains necessary therefor.

         The opinion of McCutchen,  Doyle,  Brown & Enersen LLP shall cover such
other matters  relating to the sale of the Series C Notes as the  Purchasers may
reasonably  request.  With  respect to matters of fact on which such  opinion is
based,  such counsel shall be entitled to rely on  appropriate  certificates  of
public officials and officers of the Company.

                                      E3-3

<PAGE>

                DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION

         The  closing  opinion of Chapman  and  Cutler,  special  counsel to the
Purchasers,  called for by Section 5(a)(iii) of the First  Supplement,  shall be
dated the Closing Date and addressed to the Purchasers, shall be satisfactory in
form and substance to the Purchasers and shall be to the effect that:

                    1. The Company is a  corporation,  validly  existing  and in
         good  standing  under the laws of the State of  California  and has the
         corporate power and the corporate  authority to execute and deliver the
         First Supplement and to issue the Series C Notes.

                    2. The Note  Agreement  and the First  Supplement  have been
         duly  authorized by all necessary  corporate  action on the part of the
         Company,  have been duly  executed  and  delivered  by the  Company and
         constitute  the  legal,  valid  and  binding  contract  of the  Company
         enforceable  in  accordance  with its  terms,  subject  to  bankruptcy,
         insolvency, fraudulent conveyance and similar laws affecting creditors'
         rights  generally,  and general  principles  of equity  (regardless  of
         whether  the   application  of  such  principles  is  considered  in  a
         proceeding in equity or at law).

                    3. The  Series C Notes  have  been  duly  authorized  by all
         necessary  corporate action on the part of the Company,  have been duly
         executed and delivered by the Company and constitute  the legal,  valid
         and binding  obligations of the Company  enforceable in accordance with
         their terms, subject to bankruptcy,  insolvency,  fraudulent conveyance
         and similar laws affecting  creditors'  rights  generally,  and general
         principles of equity  (regardless  of whether the  application  of such
         principles is considered in a proceeding in equity or at law).

                    4. The  issuance,  sale and  delivery  of the Series C Notes
         under the  circumstances  contemplated by the First  Supplement do not,
         under  existing  law,  require the  registration  of the Series C Notes
         under the Securities Act of 1933, as amended,  or the  qualification of
         an indenture under the Trust Indenture Act of 1939, as amended.

         The  opinion  of  Chapman  and  Cutler  may rely  upon the  opinion  of
McCutchen,  Doyle,  Brown & Enersen  LLP, as to matters of  California  law. The
opinion of Chapman and Cutler  shall also state that the  opinion of  McCutchen,
Doyle,  Brown & Enersen  LLP, is  satisfactory  in scope and form to Chapman and
Cutler and that,  in their  opinion,  the  Purchasers  are  justified in relying
thereon.

         In rendering  the opinion set forth in  paragraph 1 above,  Chapman and
Cutler may rely,  as to matters  referred  to in  paragraph  1,  solely  upon an
examination of the Articles of Incorporation  certified by, and a certificate of
good  standing  of the  Company  from,  the  Secretary  of State of the State of
California,  the By-laws of the Company and the general business corporation law
of the State of California.

         With  respect to  matters  of fact upon  which  such  opinion is based,
Chapman and Cutler may rely on appropriate  certificates of public officials and
officers  of the  Company  and  upon  representations  of the  Company  and  the
Purchasers  delivered in  connection  with the issuance and sale of the Series C
Notes.

                                      E3-2

Exhibit 4.13      Thirteenth  Supplemental  Trust Indenture  whereby  California
                  Water Service  Company became the successor to Dominguez Water
                  Corporation  in the original  trust  indenture  for  Dominguez
                  Water  Corporation  dated August 1, 1954 (Exhibit 4.13 to Form
                  10-K dated December 31, 2000)

THIS  INSTRUMENT  CONSTITUTES,  AMONG OTHER  THINGS,  AN AMENDMENT TO A SECURITY
AGREEMENT WHICH CREATED A SECURITY INTEREST IN PERSONAL PROPERTY

                        CALIFORNIA WATER SERVICE COMPANY
                     (SUCCESSOR TO DOMINGUEZ WATER COMPANY)

                                       TO

                     CHASE MANHATTAN BANK AND TRUST COMPANY,
                              NATIONAL ASSOCIATION

                                     Trustee

                     THIRTEENTH SUPPLEMENTAL TRUST INDENTURE

                           Dated as of October 1, 2000

         Amending and Supplementing Indenture Dated as of August 1, 1954

                                      E3-3

<PAGE>

         THIS  THIRTEENTH   SUPPLEMENTAL   TRUST   INDENTURE  (the   "Thirteenth
Supplemental Trust Indenture"),  is made and entered into as of the first day of
October,  2000, by and between  California Water Service Company,  a corporation
organized  and  existing  under  the  laws  of  the  State  of  California  (the
"Corporation"),   the   successor   by  merger  to   Dominguez   Water   Company
("Dominguez"), and CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION,
with reference to the following recitals:

                                    RECITALS

         WHEREAS,  by that certain  Trust  Indenture  dated as of August 1, 1954
(hereinafter  referred to as the  "Original  Indenture")  between  Dominguez and
Title Insurance and Trust Company (the "Former Trustee"),  which was recorded in
the  Office  of the  County  Recorder  of the  County of Los  Angeles,  State of
California,  on October 8, 1954, in Book 45791, Page 1, Official Records of said
County,  Dominguez  created  its First  Mortgage  Series A 3-3/4%  Bonds of 1954
(hereinafter called the "Series A Bonds"),  and also granted,  bargained,  sold,
released, conveyed, confirmed, assigned, transferred,  pledged and set over unto
the Former Trustee certain of its properties, real and personal, in order, inter
alia,  to secure the  payment of the  principal  of,  and  premium  (if any) and
interest  on, all bonds at any time issued and  outstanding  under the  Original
Indenture and all indentures  supplemental  thereto (said Original Indenture and
all indentures  supplemental  thereto,  including this  Thirteenth  Supplemental
Trust Indenture, being hereinafter referred to collectively as the "Indenture"),
all upon the terms, conditions and trusts therein specified; and

         WHEREAS,  there was issued  under the  Original  Indenture  One Million
Dollars  ($1,000,000)  principal  amount  of  Series A  Bonds,  none of which is
outstanding on the date hereof; and

         WHEREAS, by that certain First Supplemental Trust Indenture dated as of
August  1,  1956  (hereinafter  referred  to as the  "First  Supplemental  Trust
Indenture"), between Dominguez and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on August 1, 1956,  in Book 51901,  Page 374,  Official  Records of said County,
Dominguez  modified and amended certain provisions of the Original Indenture and
created its First  Mortgage  Series B 4% Bonds of 1976  (hereinafter  called the
"Series B  Bonds"),  and there was  issued  under the First  Supplemental  Trust
Indenture Five Hundred Thousand Dollars ($500,000)  principal amount of Series B
Bonds, none of which is outstanding on the date hereof; and

         WHEREAS,  by that certain Second  Supplemental Trust Indenture dated as
of August 1, 1958  (hereinafter  referred to as the "Second  Supplemental  Trust
Indenture"), between the Dominguez and the Former Trustee, which was recorded in
the  Office  of the  County  Recorder  of the  County of Los  Angeles,  State of
California, on August 7, 1958, in Book D-179, Page 936, Official Records of said
County,  Dominguez  modified  and amended  certain  provisions  of the  Original
Indenture,  as theretofore modified,  amended and supplemented,  and created its
First  Mortgage  Series C 5% Bonds of 1978  (hereinafter  called  the  "Series C
Bonds"),  and there was issued  under the Second  Supplemental  Trust  Indenture
Seven Hundred  Thousand Dollars

<PAGE>

($700,000)  principal amount of Series C Bonds,  none of which is outstanding on
the date hereof; and

         WHEREAS, by that certain Third Supplemental Trust Indenture dated as of
May  1,  1961  (hereinafter   referred  to  as  the  "Third  Supplemental  Trust
Indenture"), between Dominguez and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on August 2, 1961,  in Book S-942,  Page 305,  Official  Records of said County,
Dominguez modified and amended certain provisions of the Original Indenture,  as
theretofore modified,  amended and supplemented,  and created its First Mortgage
Series D, 5-1/2% Bonds of 1981  (hereinafter  called the "Series D Bonds"),  and
there was issued under the Third  Supplemental Trust Indenture Seven Hundred and
Fifty Thousand Dollars  ($750,000)  principal amount of Series D Bonds,  none of
which is outstanding on the date hereof; and

         WHEREAS,  by that certain Fourth  Supplemental Trust Indenture dated as
of March 1, 1962  (hereinafter  referred  to as the "Fourth  Supplemental  Trust
Indenture"), between Dominguez and the Former Trustee, which was recorded in the
Office of the County  Recorder of the County of Los Angeles State of California,
on May 22, 1962,  in Book  D-1622,  Page 826,  Official  Records of said County,
Dominguez modified and amended certain provisions of the Original Indenture,  as
theretofore modified, amended and supplemented; and

         WHEREAS, by that certain Fifth Supplemental Trust Indenture dated as of
August  1,  1966  (hereinafter  referred  to as the  "Fifth  Supplemental  Trust
Indenture"), between Dominguez and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on October 17, 1966, as  Instrument  No. 160,  Official  Records of said County,
Dominguez modified and amended certain provisions of the Original Indenture,  as
theretofore modified,  amended and supplemented,  and created its First Mortgage
Series E 6-1/8%  Bonds of 1986  (hereinafter  called the "Series E Bonds"),  and
there was issued under the Fifth  Supplemental  Trust  Indenture One Million Two
Hundred Thousand Dollars  ($1,200,000)  principal amount of Series E Bonds, none
of which is outstanding on the date hereof; and

         WHEREAS, by that certain Sixth Supplemental Trust Indenture dated as of
May  1,  1972  (hereinafter   referred  to  as  the  "Sixth  Supplemental  Trust
Indenture"), between Dominguez and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on July 21,  1972,  as  Instrument  No. 856,  Official  Records of said  County,
Dominguez modified and amended certain provisions of the Original Indenture,  as
theretofore modified,  amended and supplemented,  and created its First Mortgage
Series F 8% Bonds of 1997 (hereinafter  called the "Series F Bonds"),  and there
was issued under the Sixth  Supplemental Trust Indenture One Million Two Hundred
Thousand Dollars ($1,200,000)  principal amount of Series F Bonds, none of which
is outstanding at the date hereof; and

         WHEREAS, by that certain Seventh  Supplemental Trust Indenture dated as
of November 1, 1975 (hereinafter  referred to as the "Seventh Supplemental Trust
Indenture"), between Dominguez and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on December 2, 1975 as  Instrument  No. 2557,  Official  Records of said County,
Dominguez modified and amended certain provisions of the Original Indenture,  as
theretofore modified,  amended and supplemented,  and created its First

                                      -2-

<PAGE>

Mortgage Series G 10% Bonds of 1995  (hereinafter  called the "Series G Bonds"),
and there was issued under the Seventh  Supplemental Trust Indenture One Million
Six Hundred  Thousand Dollars  ($1,600,000)  principal amount of Series G Bonds,
none of which is outstanding at the date hereof; and

         WHEREAS,  by that certain Eighth  Supplemental Trust Indenture dated as
of August 1, 1978  (hereinafter  referred to as the "Eighth  Supplemental  Trust
Indenture"), between Dominguez and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on August 31,  1978 as  Instrument  No.  78-  964382,  Official  Records of said
County,  Dominguez  modified  and amended  certain  provisions  of the  Original
Indenture,  as theretofore modified,  amended and supplemented,  and created its
First Mortgage Series H 9-3/8% Bonds of 1998  (hereinafter  called the "Series H
Bonds"),  and there was issued under the Eighth Supplemental Trust Indenture Two
Million Dollars  ($2,000,000)  principal amount of Series H Bonds, none of which
is outstanding at the date hereof; and

         WHEREAS, by that certain Ninth Supplemental Trust Indenture dated as of
September 20, 1982  (hereinafter  referred to as the "Ninth  Supplemental  Trust
Indenture"), between Dominguez and the Former Trustee, which was recorded in the
Office of the County Recorder of the County of Los Angeles, State of California,
on September 30, 1982 as  Instrument  No. 82- 988617,  Official  Records of said
County,  Dominguez  modified  and amended  certain  provisions  of the  Original
Indenture,  as theretofore modified,  amended and supplemented,  and created its
First Mortgage Series I 16-3/4% Bonds of 1992 (hereinafter  called the "Series I
Bonds"),  and there was issued under the Ninth  Supplemental Trust Indenture One
Million Five Hundred Thousand Dollars ($1,500,000)  principal amount of Series I
Bonds, none of which is outstanding on the date hereof; and

         WHEREAS, by that certain Tenth Supplemental Trust Indenture dated as of
March  9,  1990  (hereinafter  referred  to as  the  "Tenth  Supplemental  Trust
Indenture"),  between  Dominguez  and  Manufacturers  Hanover  Trust  Company of
California as trustee,  which was recorded in the Office of the County  Recorder
of the  County  of Los  Angeles,  State  of  California,  on  July  24,  1990 as
Instrument No. 90-1281215,  Official Records of said County,  Dominguez modified
and  amended  certain  provisions  of the  Original  Indenture,  as  theretofore
modified, amended and supplemented; and

         WHEREAS, by that certain Eleventh Supplemental Trust Indenture dated as
of December 8, 1992 (hereinafter referred to as the "Eleventh Supplemental Trust
Indenture"),  between  Dominguez and Chemical  Trust Company of  California,  as
successor  trustee,  which was recorded in the Office of the County  Recorder of
the  County  of Los  Angeles,  State  of  California,  on  December  9,  1992 as
Instrument No. 92-2313010,  Official Records of said County,  Dominguez modified
and  amended  certain  provisions  of the  Original  Indenture,  as  theretofore
modified, amended and supplemented and created its First Mortgage Series J 8.86%
Bonds of 2023  (hereinafter  called the  "Series J  Bonds"),  and there has been
issued under the Eleventh  Supplemental  Trust  Indenture  Four Million  Dollars
($4,000,000) principal amount of Series J Bonds, all of which are outstanding on
the date hereof; and

                                      -3-

<PAGE>

         WHEREAS, by that certain Twelfth  Supplemental Trust Indenture dated as
of December 1, 1997 (hereinafter  referred to as the "Twelfth Supplemental Trust
Indenture"),  between  Dominguez  and Chase  Manhattan  Bank and Trust  Company,
National  Association,  as successor and currently acting trustee  (hereinafter,
the  "Trustee"),  which was recorded in the Office of the County Recorder of the
County of Los Angeles,  State of California,  on December 15, 1997 as Instrument
No. 97-1966671,  Official Records of said County, Dominguez modified and amended
certain provisions of the Original Indenture,  as theretofore modified,  amended
and  supplemented  and created its First Mortgage  Series K 6.94% Bonds due 2012
(hereinafter  called the "Series K Bonds"),  and there has been issued under the
Twelfth Supplemental Trust Indenture Five Million Dollars ($5,000,000) principal
amount of Series K Bonds, all of which are outstanding on the date hereof; and

         WHEREAS, on May 25, 2000, Dominguez Services Corporation,  which is the
parent company (the "Parent") of Dominguez  (the "Holding  Company  Merger") was
merged into the Corporation  pursuant to an Agreement and Plan of Reorganization
dated  November 13, 1998 as amended by Amendment No. 1 dated March 22, 1999 (the
"Amended  Merger  Agreement")  among the Parent,  the Corporation and California
Water Service Group (which is the parent company of the  Corporation)  and on or
prior to October 31, 2000 (i) Dominguez is merging into the Corporation with the
Corporation  becoming the successor to Dominguez in all respects including under
the Indenture  (the "Merger" and the date of the merger being the "Merger Date")
and  (ii)  the  Corporation  desires  to  amend  the  Indenture  in  the  manner
hereinafter set forth; and

         WHEREAS,  in order  for the  Merger  to occur  in  accordance  with and
pursuant  to Section 1 of  Article IX of the  Indenture  the  requisite  consent
thereto in writing  signed by the holders of not less than  two-thirds  (2/3) of
the principal of all bonds  outstanding  under the Indenture (the Series J Bonds
and Series K Bonds being the only bonds  outstanding  under the  Indenture)  has
been  received  and filed with the  Trustee  authorizing  and  assenting  to the
Merger; and

         WHEREAS,  Section 3 of  Article X of the  Indenture  provides  that the
Corporation and the Trustee may enter into indentures  supplemental  thereto for
the purposes,  among other things,  of amending  provisions of the Indenture and
the supplemental indentures to the extent permitted in the Indenture; and

         WHEREAS,  the Board of Directors of the Corporation,  at a meeting duly
convened  and held,  has duly  authorized  the  execution  and  delivery of this
Thirteenth  Supplemental  Trust  Indenture  (hereinafter  sometimes  called  the
"Thirteenth Supplemental Indenture"); and

         WHEREAS,  all things  necessary  to make this  Thirteenth  Supplemental
Trust  Indenture a valid,  binding and legal  instrument in accordance  with its
terms, have been done and performed; and

         WHEREAS,  in accordance with and pursuant to Article XII,  Section 3 of
the  Indenture,  the requisite  consent in writing signed by holders of not less
than three-fourths  (3/4) of the principal amount of all bonds outstanding under
the  Indenture,  has been received and filed with the

                                      -4-

<PAGE>

Trustee,  authorizing and assenting to the  modification and amendments of those
certain provisions of the Indenture as hereinafter set forth;

                   NOW, THEREFORE, THIS INDENTURE WITNESSETH:

         In  consideration  of the premises and of the mutual  covenants  herein
contained,  and for other  valuable  considerations,  receipt  whereof is hereby
acknowledged,  it is hereby  covenanted,  declared and agreed by and between the
parties hereto as follows:

                                   ARTICLE ONE
                      SUBSTITUTION OF SUCCESSOR CORPORATION

         Section 1.01. Assumption of Indenture Obligations. Effective the Merger
Date, the Corporation,  as successor to Dominguez,  assumes the due and punctual
payment of the principal of (and premium,  if any) and interest on all the bonds
at any  time  outstanding  under  the  Indenture  and the  performance  of every
covenant  and  condition  of the  Indenture  to be  performed or observed by the
Corporation.

         Section 1.02. Mortgage of Property. The Corporation, in order to better
secure the principal of and interest  (and premium,  if any) on all bonds of the
Corporation at any time outstanding under the Indenture according to their tenor
and  effect  and the  performance  of and  compliance  with  the  covenants  and
conditions in the Indenture  contained,  does hereby  mortgage,  assign,  grant,
bargain,  sell and convey unto the Trustee, and to its successors in said trust,
forever,  all  of  the  property,  rights  and  franchises  owned  by  Dominguez
immediately  prior to the Merger  which is subject to the lien of the  Indenture
including the properties  described in Exhibit A attached hereto and made a part
hereof (collectively, the "mortgaged property") and no other property, rights or
franchises now owned or hereafter acquired by the Corporation, provided that the
Corporation does hereby mortgage,  assign,  grant, bargain, sell and convey unto
the  Trustee  and  its  successors  the  following  properties  acquired  by the
Corporation on or after the Merger Date, to wit:

                   (1) all  betterments,  extensions,  improvements,  additions,
         repairs,  renewals,  replacements,  substitutions  and  alterations to,
         upon,  for and of the property or franchises,  or both,  subject to the
         lien of the Indenture,  and all property constituting  appurtenances of
         the mortgaged property;

                   (2) all property acquired or constructed with the proceeds of
         any  insurance  on any  part of the  mortgaged  property  or  with  the
         proceeds of any part of the mortgaged  property  released from the lien
         of the  Indenture  or a prior  lien or  disposed  of free from any such
         lien, or taken by eminent domain,  or purchased by a public  authority;
         and

                   (3) all  property  acquired  in  pursuance  of the  covenants
         herein  contained  to  maintain  and  preserve  and keep the  mortgaged
         property in good  condition,  repair and working order, or in pursuance
         of any other covenant or agreement  herein contained to be performed by
         the Corporation;

                                      -5-

<PAGE>

in trust,  nevertheless,  for the same purposes and upon the same  conditions as
are set forth in the Original  Indenture,  any such acquired  property  which is
described in clauses (1),  (2) and (3) of this Section 1.02  becoming  mortgaged
property upon being so acquired.

                                   ARTICLE TWO
                      AMENDMENTS TO ARTICLES II, III AND V

         Section 2.01.  Amendment to Article II. In the second full paragraph of
Section  5(a)  of  Article  II  which  contains  the  definition  of  "Permanent
Additions"  the phrase in the first and second  lines  which  reads  `shall mean
additions  to  "Gross  Plant  Investments"  ' is  amended  to read  `shall  mean
additions subject to the lien of this indenture to "Gross Plant Investments".'

         Section  2.02.  Amendment  to Article  III.  Notwithstanding  any other
provisions of Article III to the  contrary,  effective on the Merger Date no new
series of bonds will be issued  under this  indenture,  provided  the  foregoing
limitation  will not prevent or restrict the  issuance of bonds to  transferees,
successors  or  assigns of holders of Series J and K Bonds from time to time and
for any other reasons  permitted  hereunder  other than in  connection  with the
issuance of a new series of bonds.

         Section  2.03.  Amendments  to Article V. (a) Section 6 of Article V is
amended by changing the phrase "real property" in the fifth line of Section 6 to
read "real property subject to the lien of this indenture".

         (b) Section 12 of Article V is amended (i) in the first full  paragraph
by changing the phrase "covering  property  worn-out," in the sixth line thereof
to read  "covering  property  subject  to the  lien of this  indenture  which is
worn-out,"  and (ii) in the third  paragraph  by (A)  changing the phrase in the
eighth  line  which  reads  "charges  for  depreciation"  to read  "charges  for
depreciation  for the  plant  subject  to the  lien of this  indenture"  and (B)
changing the phrase "in  depreciable  plant" in the tenth and eleventh  lines to
read "in depreciable plant subject to the lien of this indenture".

         (c) Section 13 of Article V is amended (i) in the second  paragraph  by
changing the phrase "cause an examination of its properties and operations to be
made by an engineer"  appearing in the sixth and seventh lines to read "cause an
examination  of its  properties  subject to the lien of this  indenture  and its
operations  relating  thereto  to be made by an  engineer"  and (ii) in the last
paragraph by adding the phrase "subject to the lien of this indenture" following
each of the two phrases contained therein which read "Corporation's  depreciable
properties".

         (d) Section 16 of Article V is hereby deleted.

         (e)  Section 18 of Article V is hereby  deleted and a new Section 18 is
added which reads as follows:

                  "Section 18. The  following  covenants  are for the benefit of
         both the Series J Bonds and the Series K Bonds which  covenants may not
         be  amended,  modified or waived  without  the  written  consent of the
         holders  of 66  2/3%  in  aggregate  principal

                                      -6-

<PAGE>

         amount of bonds  then  outstanding  of each such  series of bonds.  The
         Corporation covenants and agrees that from and after the Merger Date as
         follows (terms not otherwise  defined in Sections 18.1 through 18.7 are
         defined in Section 18.8):

                  Section 18.1. Nature of Business.  Neither the Corporation nor
         any Subsidiary will engage in any business if, as a result, the general
         nature of the business, taken on a consolidated basis, which would then
         be  engaged  in by  the  Corporation  and  its  Subsidiaries  would  be
         substantially  changed from the general nature of the business  engaged
         in by the Corporation on the Merger Date.

                  Section 18.2. Limitations on Current Debt and Funded Debt. (a)
         The Corporation will not, and will not permit any Restricted Subsidiary
         to,  create,  assume or incur or in any  manner be or become  liable in
         respect of any Current Debt or Funded Debt, except:

                            (1) The  following  Current  Debt and Funded Debt of
                  the Corporation and Funded Debt of its Restricted Subsidiaries
                  outstanding  as of  October  1, 2000 set forth on  Schedule  I
                  hereto (all such Funded Debt of the Restricted Subsidiaries is
                  assumed on the Merger Date by the Corporation);

                            (2)  Additional  Funded  Debt  of  the  Corporation,
                  provided that at the time of issuance thereof and after giving
                  effect thereto and to the application of the proceeds thereof:

                                     (i)  Consolidated  Funded  Debt  shall  not
                            exceed 66-2/3% of Consolidated Total Capitalization,
                            and

                                     (ii)  Net  Income  Available  for  Interest
                            Charges  for any period of 12  consecutive  calendar
                            months   during   the   immediately   preceding   14
                            consecutive calendar months prior to the issuance of
                            such  Funded  Debt  shall have been at least 175% of
                            Pro Forma Interest Charges for such 12-month period;

                            (3)  Additional   unsecured   Current  Debt  of  the
                  Corporation;

                            (4)  Current  Debt or  Funded  Debt of a  Restricted
                  Subsidiary  owed  to  the  Corporation  or  to a  Wholly-owned
                  Restricted Subsidiary; and

                            (5) Funded Debt of the Corporation  issued after the
                  Merger Date evidenced by First Mortgage  Bonds,  provided that
                  the Corporation  shall have complied with the  requirements of
                  Section 18.7 hereof.

                  (b)  Indebtedness  described  in  or  issued  or  incurred  in
         accordance with the  limitations of Section  18.2(a)(1) may be renewed,
         extended or refunded  without  regard to Section  18.2(a)(2),  provided
         that the principal amount thereof  remaining unpaid at the time of such
         renewal, extension or refunding shall not be increased.

                                      -7-

<PAGE>

                  (c) Any  corporation  which  becomes a  Restricted  Subsidiary
         after the Merger Date shall for all  purposes of this  Section  18.2 be
         deemed to have  created,  assumed or  incurred at the time it becomes a
         Restricted  Subsidiary  all Funded  Debt of such  corporation  existing
         immediately after it becomes a Restricted Subsidiary.

                  Section 18.3.  Limitation on Liens.  The Corporation will not,
         and will not permit any Restricted  Subsidiary to, create or incur,  or
         suffer to be incurred or to exist, any Lien on its or their property or
         assets,  whether now owned or hereafter acquired, or upon any income or
         profits  therefrom,  or  transfer  any  property  for  the  purpose  of
         subjecting  the same to the payment of  obligations  in priority to the
         payment  of its or their  general  creditors,  or  acquire  or agree to
         acquire, or permit any Restricted  Subsidiary to acquire,  any property
         or assets upon  conditional  sales  agreements or other title retention
         devices, except:

                  (a) Liens for property taxes and  assessments or  governmental
         charges or levies and Liens securing claims or demands of mechanics and
         materialmen,  provided that the payment thereof shall not be overdue or
         the  payment  is  overdue  but is  being  contested  in good  faith  by
         proceedings  which  will  prevent  the  sale of  material  property  or
         material  interference  with  the use  thereof  by the  Corporation  or
         Restricted  Subsidiary  owning the same and  adequate  reserves are set
         aside on its books;

                  (b)  Liens  of or  resulting  from  any  litigation  or  legal
         proceeding  which  are  currently  being  contested  in good  faith  by
         appropriate  proceedings  and for which the Corporation or the relevant
         Restricted  Subsidiary  shall  have set  aside on its  books,  reserves
         deemed by it to be adequate with respect  thereto,  unless the judgment
         they secure shall not have been stayed,  bonded or discharged within 60
         days of its entry;

                  (c)  Liens  incidental  to the  conduct  of the  Corporation's
         business or the ownership of properties and assets  (including Liens in
         connection with worker's compensation, unemployment insurance and other
         like laws, warehousemen's and attorneys' liens and statutory landlords'
         liens) and Liens to secure the  performance  of bids,  tenders or trade
         contracts,  or to secure statutory obligations,  surety or appeal bonds
         or other Liens of like general nature  incurred in the ordinary  course
         of business and not in connection with the borrowing of money; provided
         in each case, the obligation secured is not overdue or, if overdue,  is
         being contested in good faith by appropriate actions or proceedings;

                  (d) minor survey exceptions or minor encumbrances,  easements,
         licenses  or  reservations,  or  rights of  others  for  rights-of-way,
         utilities and other similar purposes,  or zoning or other  restrictions
         as to the use of real  properties,  which are necessary for the conduct
         of the activities of the Corporation and its Restricted Subsidiaries or
         which  customarily  exist on  properties  of  corporations  engaged  in
         similar activities and similarly situated and which do not in any event
         materially  impair  their use in the  operation  of the business of the
         Corporation and its Restricted Subsidiaries;

                                      -8-

<PAGE>

                  (e) Liens securing  Indebtedness of a Restricted Subsidiary to
         the Corporation or to another Restricted Subsidiary;

                  (f)  Leases  on  property  owned  by  the   Corporation  or  a
         Restricted  Subsidiary  wherein  the  Corporation  or  such  Restricted
         Subsidiary  is the lessor  thereunder,  provided  that (i) the  Rentals
         payable under any lease are for fair rental value and otherwise contain
         appropriate  provisions  to protect and preserve the  Corporation's  or
         such  Restricted  Subsidiary's  interest in such  property and (ii) any
         such lease will not interfere  with the ordinary  course of business of
         the Corporation or such Restricted Subsidiary;

                  (g) Liens  existing  as of the Merger  Date and  reflected  in
         Schedule II hereto;

                  (h) Liens  created or  incurred  after the  Merger  Date given
         pursuant to pollution control,  industrial revenue or other similar tax
         exempt  financings  of the  Corporation  to secure  the  payment of the
         purchase  price  incurred in connection  with the  acquisition of fixed
         assets  useful and  intended to be used in carrying on the  business of
         the Corporation or its Restricted  Subsidiaries,  provided that (i) the
         Liens shall attach  solely to the fixed assets  acquired or  purchased,
         (ii) at the time of acquisition of such fixed assets,  the Indebtedness
         secured by Liens thereon shall not exceed the total  purchase  price of
         such fixed  assets,  (iii) such  Indebtedness  shall have been incurred
         within the applicable limitations provided in Section 18.2(a), and (iv)
         the aggregate  principal  amount of all  Indebtedness  secured by Liens
         described  in this  clause  (h) shall not at any time  exceed an amount
         equal to 10% of Consolidated Total Assets;

                  (i) Liens  created or  incurred  on or after the  Merger  Date
         given to secure  Indebtedness  of the  Corporation  and its  Restricted
         Subsidiaries  in  addition  to the  Liens  permitted  by the  preceding
         clauses (a) through (h) hereof,  provided that all Indebtedness secured
         by such Liens shall have been incurred within the limitations  provided
         in Section 18.2(a)(5);

                  (j)  Liens  created  or  incurred  after  the  Merger  Date in
         addition to the Liens  permitted by the  preceding  clauses (a) through
         (i) hereof,  provided  that (i) the aggregate  principal  amount of all
         Indebtedness  secured  by such  Liens  shall not at any time  exceed an
         amount equal to 10% of Consolidated  Total  Capitalization and (ii) all
         such  Indebtedness  shall  have been  incurred  within  the  applicable
         limitations provided in Section 18.2; and

                  (k) any extension,  renewal or refunding of any Lien permitted
         by the preceding  clauses (a) through (i) hereof in respect of the same
         property  theretofore  subject  to such  Lien in  connection  with  the
         extension,  renewal or refunding of the  Indebtedness  secured thereby;
         provided that (i) such extension,  renewal or refunding of Indebtedness
         shall be without  increase in the principal  amount remaining unpaid as
         of the date of such extension, renewal or refunding, and (ii) such Lien
         shall attach solely to the same such property.

                                      -9-

<PAGE>

                  Section 18.4. Mergers, Consolidations and Sales of Assets. (a)
         The Corporation will not, and will not permit any Restricted Subsidiary
         to,  (i)  consolidate  with or be a party  to a merger  with any  other
         corporation  or (ii)  sell,  lease or  otherwise  dispose of all or any
         substantial  part (as defined in paragraph (d) of this Section 18.4) of
         the assets of the  Corporation and its Restricted  Subsidiaries  (other
         than sales in the  ordinary  course of business or sales of  properties
         sold pursuant to any Condemnation); provided, however, that:

                            (1)  any   Restricted   Subsidiary   may   merge  or
                  consolidate  with or into the Corporation or any  Wholly-owned
                  Restricted   Subsidiary   so   long  as  in  any   merger   or
                  consolidation involving the Corporation, the Corporation shall
                  be the surviving or continuing corporation;

                            (2) the Corporation may consolidate or merge with or
                  into, and may sell all or substantially all of its assets in a
                  single  transaction  to,  any  other  corporation  if (i)  the
                  corporation which results from such  consolidation,  merger or
                  sale (the  "surviving  entity") is organized under the laws of
                  any state of the United  States or the  District of  Columbia,
                  (ii) the due and  punctual  payment  of the  principal  of and
                  premium, if any, and interest on all of the Series J Bonds and
                  Series K Bonds,  according  to  their  tenor,  and the due and
                  punctual  performance  and observation of all of the covenants
                  in the Bonds and this indenture to be performed or observed by
                  the  Corporation  are  expressly  assumed  in  writing  by the
                  surviving entity and the surviving entity shall furnish to the
                  holders  of  the  Bonds  an  opinion  of  counsel   reasonably
                  satisfactory to such holders to the effect that the instrument
                  of assumption has been duly authorized, executed and delivered
                  and  constitutes  the legal,  valid and binding  contract  and
                  agreement of the surviving  entity  enforceable  in accordance
                  with its  terms,  except as  enforcement  of such terms may be
                  limited by bankruptcy, insolvency, reorganization,  moratorium
                  and similar  laws  affecting  the  enforcement  of  creditors'
                  rights  generally  and by general  equitable  principles,  and
                  (iii) at the time of such  consolidation,  merger  or sale and
                  immediately  after giving  effect  thereto,  (A) no Default or
                  Event of  Default  would  exist and (B) the  surviving  entity
                  would be permitted by the provisions of Section  18.2(a)(2) to
                  incur at least $1.00 of additional Funded Debt; and

                            (3) any  Restricted  Subsidiary  may sell,  lease or
                  otherwise dispose of all or any substantial part of its assets
                  to the Corporation or any Wholly-owned Restricted Subsidiary.

                  (b) The Corporation will not permit any Restricted  Subsidiary
         to issue any shares of stock of any class (including as "stock" for the
         purposes  of this  Section  18.4 any  warrants,  rights or  options  to
         purchase or otherwise  acquire stock or other  Securities  exchangeable
         for or  convertible  into stock) of such  Restricted  Subsidiary to any
         Person other than the  Corporation or a Restricted  Subsidiary,  unless
         immediately after the consummation of such transaction and after giving
         effect thereto,  such Restricted  Subsidiary  shall remain a Restricted
         Subsidiary of the Corporation.

                                      -10-

<PAGE>

                  (c) The  Corporation  will not  sell,  transfer  or  otherwise
         dispose  of any  shares of stock of any  Restricted  Subsidiary  or any
         Indebtedness  of any  Restricted  Subsidiary,  and will not  permit any
         Restricted Subsidiary to sell, transfer or otherwise dispose of (except
         to the  Corporation or a Restricted  Subsidiary) any shares of stock or
         any Indebtedness of any other Restricted Subsidiary, unless:

                            (1) the Board of Directors of the Corporation  shall
                  have determined,  as evidenced by a resolution  thereof,  that
                  the proposed  sale,  transfer or disposition of said shares of
                  stock  and  Indebtedness  is in  the  best  interests  of  the
                  Corporation;

                            (2) said shares of stock and  Indebtedness are sold,
                  transferred or otherwise  disposed of to a Person, for cash or
                  other property and on terms reasonably  deemed by the Board of
                  Directors to be adequate and satisfactory;

                            (3)  in  the  case  of  the   sale,   transfer,   or
                  disposition  of all  shares  of stock  and  Indebtedness  of a
                  Restricted  Subsidiary,  such Restricted  Subsidiary shall not
                  have any continuing investment in the Corporation or any other
                  Restricted Subsidiary not being simultaneously disposed of;

                            (4)  in  the  case  of  the   sale,   transfer,   or
                  disposition  of less  than  all of the  shares  of  stock of a
                  Restricted  Subsidiary,  immediately after the consummation of
                  the  transaction   and  after  giving  effect  thereto,   such
                  Restricted  Subsidiary shall remain a Restricted Subsidiary of
                  the Corporation; and

                            (5) such sale or other  disposition does not involve
                  a   substantial   part  (as   hereinafter   defined)   of  the
                  consolidated  assets  of the  Corporation  and its  Restricted
                  Subsidiaries.

                  (d) As used in this  Section  18.4,  a sale,  lease  or  other
         disposition of assets shall be deemed to be a "substantial part" of the
         assets of the Corporation  and its Restricted  Subsidiaries if the book
         value of such assets,  when added to the book value of all other assets
         sold,  leased  or  otherwise  disposed  of by the  Corporation  and its
         Restricted  Subsidiaries (other than in the ordinary course of business
         including   without   limitation   property   sold   pursuant   to  any
         Condemnation) during the immediately  preceding 12 months,  exceeds 10%
         of  Consolidated  Total  Assets,  determined  as  of  the  end  of  the
         immediately preceding fiscal year, provided, however, that for purposes
         of the  foregoing  calculation,  there shall not be  included  the book
         value attributable to assets the proceeds from the disposition of which
         were or are applied  within 180 days of the date of sale of such assets
         to either (1) the  acquisition of assets useful and intended to be used
         in the operation of the business of the  Corporation and its Restricted
         Subsidiaries  as  described  in Section  18.1 and having a fair  market
         value (as  determined  in good faith by the Board of  Directors  of the
         Corporation)  at least equal to the assets so  disposed  of, or (2) the
         prepayment at any applicable  prepayment  premium, on a pro rata basis,
         of  Funded  Debt of the  Corporation,  provided  that in the  event the
         assets  which  are the  subject  of any such  sale or  disposition  are
         subject to (A) the Lien of the Mortgage Indenture,  such proceeds shall
         be applied first to the  prepayment of the First  Mortgage Bonds as and
         to the extent

                                      -11-

<PAGE>

         required by the terms of the Mortgage Indenture or (B) the Lien of this
         indenture,  such proceeds  shall be applied first to the  redemption of
         the Series J Bonds and Series K Bonds  outstanding  hereunder as and to
         the extent  required by the terms of this  indenture.  It is understood
         and agreed by the  Corporation  that any such proceeds paid and applied
         to the  redemption  of the  Series J or  Series K Bonds as  hereinabove
         provided  shall  be  redeemed  as and to the  extent  provided  in this
         indenture.

                  Section 18.5.  Guaranties.  The Corporation will not, and will
         not permit any Restricted Subsidiary to, become or be liable in respect
         of any Guaranty except  Guaranties by the Corporation which are limited
         in amount  to a stated  maximum  dollar  exposure  or which  constitute
         Guaranties of  obligations  incurred by any  Restricted  Subsidiary and
         otherwise permitted by the provisions of this Agreement.

                  Section 18.6.  Transactions with Affiliates.  Except for water
         quality  testing and  analysis  services  performed  for San Jose Water
         Company,  the Corporation  will not, and will not permit any Restricted
         Subsidiary  to,  enter  into  or  be a  party  to  any  transaction  or
         arrangement  with any Affiliate  (including,  without  limitation,  the
         purchase  from,  sale to or exchange of property with, or the rendering
         of any service by or for, any Affiliate), except in the ordinary course
         of and pursuant to the reasonable  requirements of the Corporation's or
         such  Restricted  Subsidiary's  business  and upon fair and  reasonable
         terms  no  less  favorable  to  the   Corporation  or  such  Restricted
         Subsidiary than would obtain in a comparable  arm's-length  transaction
         with a Person other than an Affiliate.

                  Section 18.7.  Note  Exchange Upon Issuance of First  Mortgage
         Bonds.  (a) In the event that the  Corporation  shall issue  additional
         First Mortgage Bonds under and pursuant to the Mortgage Indenture, then
         the  Corporation   shall,   concurrently  with  the  issuance  of  such
         additional First Mortgage Bonds,  exchange all of the outstanding Notes
         of each Series issued by the Corporation  (excluding Series J Bonds and
         Series K Bonds issued under this  indenture for First Mortgage Bonds of
         a new series (the  "Exchange  Bonds")).  The Exchange Bonds of each new
         series  shall be issued  under and secured by the  Mortgage  Indenture,
         shall rank pari passu with all other First  Mortgage  Bonds  issued and
         outstanding  under the  Mortgage  Indenture,  shall  have  payment  and
         maturity  terms  identical  to the  Series of Notes for which they were
         exchanged,  shall have required and optional prepayment  provisions and
         provisions  relating to amounts  payable upon  acceleration of maturity
         identical  to those  applicable  to the  Series of Notes for which they
         were  exchanged  and shall  otherwise  be in the form  required  by the
         Mortgage Indenture.

                  (b) The  Corporation  covenants and agrees to take all actions
         necessary  for the due  authorization,  execution  and delivery of such
         Exchange  Bonds  including,  without  limitation,  (i)  the  filing  of
         applications  with the  Commission  in order to  obtain  the  requisite
         approvals,  authorizations and orders necessary for the issuance of the
         Exchange Bonds,  (ii) compliance with all  requirements of the Mortgage
         Indenture,  (iii) the taking of all other  actions  the  holders of the
         Notes may  reasonable  request in  connection  with the delivery of the
         Exchange  Bonds,  including  the  delivery  of  legal  opinions  and an
         exchange  agreement between the Corporation and the Holders in form and
         substance  reasonably  satisfactory  to the  Holders  of 66-2/3% of the
         Notes of each Series then outstanding.

                                      -12-

<PAGE>

                  Section  18.8.  Definitions.   Unless  the  context  otherwise
         requires,  the terms  hereinafter set forth when used in this Article V
         and elsewhere in this indenture  shall have the following  meanings and
         the  following  definitions  shall be  equally  applicable  to both the
         singular and plural forms of any of the terms herein defined:

                  "Affiliate"  shall mean any Person  (other  than a  Restricted
         Subsidiary)  (i)  which  directly  or  indirectly  through  one or more
         intermediaries  controls,  or is  controlled  by,  or is  under  common
         control with, the Corporation, (ii) which beneficially owns or holds 5%
         or more of any class of the Voting Stock of the Corporation or (iii) 5%
         or more of the Voting  Stock (or in the case of a Person which is not a
         corporation,   5%  or  more  of  the  equity   interest)  of  which  is
         beneficially owned or held by the Corporation or a Subsidiary. The term
         "control" means the possession, directly or indirectly, of the power to
         direct or cause the  direction  of the  management  and  policies  of a
         Person,  whether  through the ownership of Voting Stock, by contract or
         otherwise.

                  "Capitalized  Lease" shall mean any lease the  obligation  for
         Rentals  with  respect  to which is  required  to be  capitalized  on a
         consolidated  balance  sheet  of the  lessee  and its  subsidiaries  in
         accordance with GAAP.

                  "Capitalized  Rentals" of any Person shall mean as of the date
         of any determination  thereof the amount at which the aggregate Rentals
         due and to become due under all  Capitalized  Leases  under  which such
         Person is a lessee would be reflected as a liability on a  consolidated
         balance sheet of such Person.

                  "Commission" shall mean the Public Utilities Commission of the
         State of California.

                  "Condemnation"   with  respect  to  any  property  shall  have
         occurred  if all or any  portion  of  such  property  shall  have  been
         condemned  or taken  for any  public  or  quasi-public  use  under  any
         governmental law, order, or regulation or by right of eminent domain or
         sold to a  municipality  or other  public  body or  agency or any other
         entity  having the power of eminent  domain or the right to purchase or
         order the sale of such  property  (a  "Condemning  Authority"),  or any
         third-party  designated by any such Condemning Authority,  under threat
         of condemnation.

                  "Consolidated  Funded  Debt" shall mean all Funded Debt of the
         Corporation   and  its   Restricted   Subsidiaries,   determined  on  a
         consolidated basis eliminating intercompany items.

                  "Consolidated  Net Income" for any period shall mean the gross
         revenues of the  Corporation and its Restricted  Subsidiaries  for such
         period less all expenses and other proper charges  (including  taxes on
         income),  determined on a consolidated basis after eliminating earnings
         or losses attributable to outstanding Minority Interests, but excluding
         in any event:

                                      -13-

<PAGE>

                  (a) any gains or losses  on the sale or other  disposition  of
         Investments or fixed or capital assets,  and any taxes on such excluded
         gains and any tax deductions or credits on account of any such excluded
         losses;

                  (b) the proceeds of any life insurance policy;

                  (c) net  earnings  and  losses  of any  Restricted  Subsidiary
         accrued prior to the date it became a Restricted Subsidiary;

                  (d) net earnings and losses of any  corporation  (other than a
         Restricted Subsidiary), substantially all the assets of which have been
         acquired in any manner by the Corporation or any Restricted Subsidiary,
         realized by such corporation prior to the date of such acquisition;

                  (e) net earnings and losses of any  corporation  (other than a
         Restricted  Subsidiary)  with  which the  Corporation  or a  Restricted
         Subsidiary  shall have  consolidated or which shall have merged into or
         with the  Corporation or a Restricted  Subsidiary  prior to the date of
         such consolidation or merger;

                  (f)  net  earnings  of  any  business  entity  (other  than  a
         Restricted  Subsidiary)  in which  the  Corporation  or any  Restricted
         Subsidiary  has an ownership  interest  unless such net earnings  shall
         have  actually  been  received by the  Corporation  or such  Restricted
         Subsidiary in the form of cash distributions;

                  (g)  any  portion  of  the  net  earnings  of  any  Restricted
         Subsidiary which for any reason is unavailable for payment of dividends
         to the Corporation or any other Restricted Subsidiary;

                  (h) earnings  resulting from any  reappraisal,  revaluation or
         write-up of assets;

                  (i) any  deferred or other credit  representing  any excess of
         the equity in any  Subsidiary at the date of  acquisition  thereof over
         the amount invested in such Subsidiary;

                  (j) any gain arising from the acquisition of any Securities of
         the Corporation or any Restricted Subsidiary;

                  (k) any  reversal of any  contingency  reserve,  except to the
         extent that provision for such contingency reserve shall have been made
         from income arising during such period; and

                  (l) any other extraordinary, or nonrecurring gain or loss.

                  "Consolidated  Net Worth"  shall  mean,  as of the date of any
         determination  thereof the amount of the capital stock accounts (net of
         treasury  stock,  at cost) plus (or minus in the case of a deficit) the
         surplus in retained  earnings  of the  Corporation  and its  Restricted
         Subsidiaries  as determined on a consolidated  basis in accordance with
         GAAP.

                                      -14-

<PAGE>

                  "Consolidated  Total  Assets"  shall mean,  as the date of any
         determination   thereof,  total  assets  of  the  Corporation  and  its
         Restricted   Subsidiaries   determined  on  a  consolidated   basis  in
         accordance with GAAP.

                  "Consolidated Total  Capitalization" shall mean the sum of (i)
         Consolidated Funded Debt, and (ii) Consolidated Net Worth.

                  "Current  Debt" of any Person shall mean as of the date of any
         determination  thereof (i) all Indebtedness of such Person for borrowed
         money other than Funded Debt of such Person and (ii) Guaranties by such
         Person of Current Debt of others.

                  "First  Mortgage  Bonds"  shall mean and  include  all secured
         mortgage  bonds  issued by the  Corporation  under and  pursuant to the
         Mortgage Indenture.

                  "Funded Debt" of any Person shall mean (i) all Indebtedness of
         such Person for borrowed money or which has been incurred in connection
         with the  acquisition of assets in each case having a final maturity of
         one or more than one year from the date of origin  thereof (or which is
         renewable  or  extendible  at the option of the obligor for a period or
         periods  more than one year  from the date of  origin),  including  all
         payments  in respect  thereof  that are  required to be made within one
         year from the date of any determination of Funded Debt,  whether or not
         the  obligation  to make  such  payments  shall  constitute  a  current
         liability of the obligor under GAAP,  (ii) all  Capitalized  Rentals of
         such Person,  and (iii) all Guaranties by such Person of Funded Debt of
         others.

                  "GAAP" shall mean generally accepted accounting  principles at
         the time in the United States.

                  "Guaranties" by any Person shall mean all  obligations  (other
         than  endorsements  in the  ordinary  course of business of  negotiable
         instruments for deposit or collection) of such Person guaranteeing,  or
         otherwise   creating   contingent   liability   with  respect  to,  any
         Indebtedness,  dividend or other  obligation  of any other  Person (the
         "primary  obligor")  in any manner,  whether  directly  or  indirectly,
         including,  without  limitation,  all obligations  incurred  through an
         agreement,  contingent  or otherwise,  by such Person:  (i) to purchase
         such Indebtedness or obligation or any property or assets  constituting
         security therefor, (ii) to advance or supply funds (x) for the purchase
         or payment of such Indebtedness or obligation,  (y) to maintain working
         capital or other  balance  sheet  condition  or otherwise to advance or
         make available  funds for the purchase or payment of such  Indebtedness
         or  obligation,  (iii) to lease  property or to purchase  Securities or
         other  property or services  primarily  for the purpose of assuring the
         owner of such  Indebtedness or obligation of the ability of the primary
         obligor to make  payment of the  Indebtedness  or  obligation,  or (iv)
         otherwise to assure the owner of the  Indebtedness or obligation of the
         primary obligor against loss in respect  thereof.  Notwithstanding  the
         foregoing, the Corporation's  obligations in respect of long term water
         supply  contracts  shall  not  be  treated  as  Guaranties  under  this
         Agreement.  For  the  purposes  of all  computations  made  under  this
         Agreement, a Guaranty in respect of any Indebtedness for

                                      -15-

<PAGE>

         borrowed  money  shall  be  deemed  to be  Indebtedness  equal  to  the
         principal amount of such Indebtedness for borrowed money which has been
         guaranteed,  and a  Guaranty  in  respect  of any other  obligation  or
         liability or any dividend shall be deemed to be  Indebtedness  equal to
         the maximum aggregate amount of such obligation, liability or dividend.

                  "Indebtedness"  of any  Person  shall  mean  and  include  all
         obligations  of such  Person  which in  accordance  with GAAP  shall be
         classified  upon a balance sheet of such Person as  liabilities of such
         Person,  and in any event  shall  include all (i)  obligations  of such
         Person for borrowed money or which has been incurred in connection with
         the acquisition of property or assets,  (ii) obligations secured by any
         Lien upon  property or assets  owned by such  Person,  even though such
         Person  has not  assumed  or  become  liable  for the  payment  of such
         obligations, (iii) obligations created or arising under any conditional
         sale or other  title  retention  agreement  with  respect  to  property
         acquired by such Person,  notwithstanding  the fact that the rights and
         remedies of the seller,  lender or lessor  under such  agreement in the
         event of default are limited to repossession or sale of property,  (iv)
         Capitalized  Rentals and (v) Guaranties of obligations of others of the
         character   referred  to  in  this  definition.   Notwithstanding   the
         foregoing,  the term  "Indebtedness"  as it relates to the  Corporation
         shall not  include  obligations  of the  Corporation  with  respect  to
         advances for construction from third parties.

                  "Interest Charges" of any Person for any period shall mean all
         interest  and all  amortization  of debt  discount  and  expense on any
         particular  Indebtedness of such Person for which such calculations are
         being made.  Computations of Interest  Charges on a pro forma basis for
         (a)  Indebtedness  having a variable  interest rate,  (b)  Indebtedness
         bearing  interest at  different  fixed  rates,  (c)  Indebtedness  with
         respect to which interest has not begun to accrue as of the date of any
         determination of Interest  Charges or (d) Indebtedness  with respect to
         which interest shall not become payable until a specified date which is
         more than one year after the date of any such determination,  shall, in
         all such cases,  be  calculated at the rate equal to the greater of (i)
         the  rate in  effect  on the  date of any  determination  and  (ii) the
         average  interest rate payable on all Funded Debt of such Person during
         the  three-month   period   immediately   preceding  the  date  of  any
         determination.

                  "Lien"  shall  mean  any  interest  in  property  securing  an
         obligation owed to, or a claim by, a Person other than the owner of the
         property,  whether such interest is based on the common law, statute or
         contract,  and including but not limited to the security  interest lien
         arising from a mortgage, encumbrance, pledge, conditional sale or trust
         receipt or a lease,  consignment or bailment for security purposes. The
         term "Lien"  shall  include  reservations,  exceptions,  encroachments,
         easements, rights-of-way,  covenants, conditions,  restrictions, leases
         and other title exceptions and encumbrances (including, with respect to
         stock,  stockholder  agreements,  voting  trust  agreements,   buy-back
         agreements  and all similar  arrangements)  affecting  property of such
         Person.  For the  purposes  of this  Agreement,  the  Corporation  or a
         Restricted  Subsidiary  shall be deemed to be the owner of any property
         which it has acquired or holds subject to a conditional sale agreement,
         Capitalized Lease or other arrangement,  in any such case,  pursuant to
         which  title to the  property  has been  retained  by or vested in some
         other Person for security  purposes and such retention or vesting shall
         constitute a Lien.

                                      -16-

<PAGE>

                  "Merger" shall mean the merger of Dominguez Water Company into
         the Corporation.

                  "Merger Date" shall mean the date on which the Merger  becomes
         effective.

                  "Minority  Interests"  shall  mean any  shares of stock of any
         class of a  Restricted  Subsidiary  (other than  directors'  qualifying
         shares as required by law) that are not owned by the Corporation and/or
         one or more of its Restricted Subsidiaries. Minority Interests shall be
         valued by valuing Minority  Interests  constituting  preferred stock at
         the voluntary or involuntary liquidating value of such preferred stock,
         whichever is greater,  and by valuing Minority  Interests  constituting
         common  stock  at the book  value of  capital  and  surplus  applicable
         thereto  adjusted,  if necessary,  to reflect any changes from the book
         value of such common stock required by the foregoing  method of valuing
         Minority Interests in preferred stock.

                  "Mortgage Indenture" shall mean the Corporation's  Mortgage of
         Chattels  and Trust  Indenture,  dated  April 1,  1928,  as such  Trust
         Indenture may be amended, supplemented or modified from time to time.

                  "Net Income  Available  for  Interest  Charges" for any period
         shall mean the sum of (i)  Consolidated  Net Income  during such period
         plus (to the extent deducted in determining  Consolidated  Net Income),
         (ii) all provisions  for any Federal,  state or other income taxes made
         by  the  Corporation  and  its  Restricted  Subsidiaries  in  a  manner
         consistent  with GAAP during such period and (iii) Interest  Charges of
         the Corporation and its Restricted Subsidiaries during such period.

                  "Person" shall mean an individual,  partnership,  corporation,
         trust or  unincorporated  organization,  and a government  or agency or
         political subdivision thereof.

                  "Pro Forma Interest  Charges" for any period shall mean, as of
         the date of any determination  thereof, the maximum aggregate amount of
         Interest Charges which would have become payable by the Corporation and
         its Restricted  Subsidiaries  in such period  determined on a pro forma
         basis  giving  effect  as of  the  beginning  of  such  period  to  the
         incurrence of any Funded Debt thereof (including  Capitalized  Rentals)
         and the  concurrent  retirement of  outstanding  Funded Debt or Current
         Debt or termination of any Capitalized Leases thereof.

                  "Rentals"  shall  mean  and  include  as of  the  date  of any
         determination  thereof  all  fixed  payments  (including  as  such  all
         payments  which  the  lessee  is  obligated  to make to the  lessor  on
         termination  of the lease or surrender of the property)  payable by the
         Corporation or a Restricted Subsidiary,  as lessee or sublessee under a
         lease of real or  personal  property,  but  shall be  exclusive  of any
         amounts  required  to  be  paid  by  the  Corporation  or a  Restricted
         Subsidiary  (whether or not designated as rents or additional rents) on
         account of maintenance,  repairs, insurance, taxes and similar charges.
         Fixed rents under any so-called  "percentage  leases" shall be computed
         solely on the basis of the

                                      -17-

<PAGE>

         minimum rents, if any,  required to be paid by the lessee regardless of
         sales volume or gross revenues.

                  "Restricted Subsidiary" shall mean any Subsidiary (i) which is
         organized  under the laws of the  United  States or any State  thereof;
         (ii)  which  conducts   substantially  all  of  its  business  and  has
         substantially  all of its assets  within the  United  States;  (iii) of
         which  at  least  80% (by  number  of  votes)  of the  Voting  Stock is
         beneficially owned,  directly or indirectly,  by the Corporation and/or
         one or more  Restricted  Subsidiaries;  and (iv) which is designated by
         the Board of Directors of the Corporation, or any Director or committee
         of Directors duly designated by such Board of Directors, to be included
         in the  definition  of Restricted  Subsidiary  for all purposes of this
         Agreement,  provided  that, at the time of such  designation  and after
         giving  effect  thereto,  no  Default  or Event of  Default  shall have
         occurred hereunder.

                  "Security"  shall have the same  meaning as in Section 2(1) of
         the Securities Act of 1933, as amended.

                  The term  "subsidiary"  shall mean as to any particular parent
         corporation any corporation of which more than 50% (by number of votes)
         of  the  Voting  Stock  shall  be  beneficially   owned,   directly  or
         indirectly,  by such parent  corporation.  The term "Subsidiary"  shall
         mean a subsidiary of the Corporation.

                  "Unrestricted  Subsidiary"  shall mean any Subsidiary which is
         not a Restricted Subsidiary.

                  "Voting Stock" shall mean  Securities of any class or classes,
         the holders of which are ordinarily,  in the absence of  contingencies,
         entitled to elect a majority  of the  corporate  directors  (or Persons
         performing similar functions).

                  "Wholly-owned"  when used in  connection  with any  Subsidiary
         shall mean a  Subsidiary  of which all of the  issued  and  outstanding
         shares  of stock  (except  shares  required  as  directors'  qualifying
         shares)  and all  Funded  Debt and  Current  Debt shall be owned by the
         Corporation and/or one or more of its Wholly-owned Subsidiaries.

                  Where the  character  or amount of any asset or  liability  or
         item  of  income  or  expense  is  required  to be  determined  or  any
         consolidation  or other  accounting  computation is required to be made
         for  the  purposes  of this  Section  18,  the  same  shall  be done in
         accordance  with GAAP,  to the  extent  applicable,  except  where such
         principles are inconsistent with the requirements of this Section 18."

                                  ARTICLE THREE
                 AMENDMENTS TO ARTICLES VI, VIII, IX, XV AND XVI

         Section 3.01.  Amendments to Article VI. (a) Section 1 of Article VI is
hereby restated in its entirety to read as follows:

                                      -18-

<PAGE>

                  "Section  1.  Immediately  prior  to the  consummation  of the
         Merger  on the  Merger  Date,  all  shares  of stock  of the  following
         subsidiaries of the Corporation,  excepting such shares of stock as may
         be  necessary  to  qualify  directors,  have  been  duly  assigned  and
         delivered  by the  Corporation  to the Trustee and are being held by it
         and shall continue to be held by it subject in all respects to the lien
         and operation of this indenture:  (a) Arden Water Company, (2) Antelope
         Valley  Water  Company,  (3)  Kernville  Domestic  Water  Company,  (4)
         Lakeland  Water  Company and (5) Redwood  Valley  Water  Company  (such
         shares so held by the Trustee being hereafter  collectively referred to
         as "pledged  securities");  provided,  however, that if any subsidiary,
         the stock of which constitutes pledged  securities,  is merged into the
         Corporation,  the stock of such subsidiary  shall forthwith be released
         from the lien of this  indenture.  From and after the Merger  Date,  no
         other  shares of stock  owned by the  Corporation  shall be  subject to
         Article VI.

                  The Trustee  shall not be  obligated  to examine  into or pass
         upon the validity or genuineness  of any of the pledged  securities and
         the Trustee  shall be  entitled  to assume that any pledged  securities
         presented  for  deposit  hereunder  are genuine and valid and what they
         purport to be, and any endorsement and assignments  thereof are genuine
         and legal."

         (b) Section 10 of Article VI is hereby deleted.

         Section 3.02.  Amendments  to Article  VIII.  Section 1 of Article VIII
containing  events of default is hereby amended by deleting the event of default
described in  paragraph  (g) and adding the  following  events of default in new
paragraphs (g) and (h):

                  "(g) Default shall be made in the payment when due (whether by
         lapse of time, by declaration,  by call for redemption or otherwise) of
         the  principal of or interest on any Funded Debt or Current Debt (other
         than  bonds  secured  hereby)  of the  Corporation  or  any  Restricted
         Subsidiary  aggregating  in excess of  $5,000,000  in principal  amount
         outstanding and such default shall continue beyond the period of grace,
         if any, allowed with respect thereto; or

                  (h)  Default or the  happening  of any event shall occur under
         any indenture (including,  without limitation, the Mortgage Indenture),
         agreement  or other  instrument  under which any Funded Debt or Current
         Debt  (other  than  bonds  secured  hereby) of the  Corporation  or any
         Restricted Subsidiary  aggregating in excess of $5,000,000 in principal
         amount  outstanding  may be  issued  and such  default  or event  shall
         continue for a period of time sufficient to permit the  acceleration of
         the maturity of any Funded Debt or Current Debt of the  Corporation  or
         any Restricted Subsidiary outstanding thereunder."

         Section 3.03.  Amendments to Article IX. (a) Section 1 of Article IX is
hereby restated in its entirety to read as follows:

                  "Section 1. The Corporation may consolidate, merge or sell all
         or substantially all of its assets in accordance with the provisions of
         Section 18.4 of Article V.

                                      -19

<PAGE>

         (b) The first  sentence  of  Section 2 of  Article  IX is  modified  by
         deleting the phrase:

                  "all of its  property  as an  entirety,  after  obtaining  the
         necessary consents as aforesaid,"

         and substituting in lieu thereof the following phrase:

                  "all or substantially all of its assets,  and the requirements
         of Section 18.4 of Article V shall have been satisfied,"

         Section 3.04.  Deletion of Articles XV and XVI. Articles XV and XVI are
hereby deleted in their entirety.

                                  ARTICLE FOUR
                                  MISCELLANEOUS

         Section 1. The Corporation covenants and agrees that it will cause this
Thirteenth Supplemental Trust Indenture to be duly and properly filed for record
and recorded in the Office of the County  Recorder of Los Angeles  County and of
each county in which it has or shall acquire real property,  with all convenient
speed, so that due and legal notice of its terms will be given, and that it will
be properly and legally filed and recorded and indexed,  and that an appropriate
financing  statement,  fixture filing and other statements will be filed in such
public  offices  as may be  necessary  to  establish  of record  the lien of the
Indenture upon the properties described herein against all persons whomsoever.

         Section  2.  This  Thirteenth  Supplemental  Trust  Indenture  shall be
construed  in  connection  with  and as  part  of  the  Original  Indenture,  as
heretofore  modified,  amended and  supplemented,  and whenever in said Original
Indenture as  heretofore  modified,  amended and  supplemented,  the words "this
Indenture"  or "this  indenture"  are used,  they shall be construed to mean and
include this  Thirteenth  Supplemental  Trust Indenture in addition to all other
supplemental indentures.

                                      -20-

<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto have caused their names to be
signed by their Presidents or Vice Presidents,  respectively,  as of the day and
year first above written.

                                             CALIFORNIA WATER SERVICE COMPANY, a
                                                 California corporation

                                             By:________________________________
                                                 Name___________________________
                                                 Title__________________________

                                             CHASE MANHATTAN BANK AND TRUST
                                                COMPANY, NATIONAL ASSOCIATION

                                             By:________________________________
                                                 Name___________________________
                                                 Title__________________________

                                      -21-

<PAGE>

STATE OF CALIFORNIA                     )
                                        )        SS.
COUNTY OF LOS ANGELES                   )

         On  ______________,  2000,  before me,  ______________,  Notary Public,
personally appeared ________________,  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/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument,  the person, or the entity upon
behalf of which the person acted, executed the instrument.

         WITNESS my hand and official seal.

                                             -----------------------------------
                                             Signature of Notary

                                      -22-

<PAGE>

STATE OF CALIFORNIA                     )
                                        )        SS.
COUNTY OF LOS ANGELES                   )

         On  ______________,  2000,  before me,  ______________,  Notary Public,
personally appeared ________________,  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/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument,  the person, or the entity upon
behalf of which the person acted, executed the instrument.

         WITNESS my hand and official seal.

                                             -----------------------------------
                                             Signature of Notary

<PAGE>

                                   SCHEDULE I

               DESCRIPTION OF CURRENT DEBT AND FUNDED DEBT OF THE
               CORPORATION AND THE FUNDED DEBT OF ITS SUBSIDIARIES

1.  Current Debt of the Company outstanding on October 1, 2000 as follows:

    $18,000,000  borrowed  under the Company's  bank line of credit with Bank of
    America.

2.  Funded Debt (other than Capitalized  Rentals) of the Company  outstanding on
    October 1, 2000 was as follows:

    $116,345,000  outstanding  under  the  Company's  various  series  of  First
    Mortgage Bonds.

    $193,000  due to the City of Los  Altos  for the  purchase  of the North Los
    Altos Water System.

    $20,000,000 Series A Senior Notes due November 1, 2025.

    $20,000,000 Series B Senior Notes due November 1, 2028.

3.  *Funded Debt of Restricted  Subsidiaries  outstanding on October 1, 2000 was
    as follows:

    $4,000,000  Series  J First  Mortgage  Bonds  due  2023 of  Dominguez  Water
    Company.

    $5,000,000  Series  K First  Mortgage  Bonds  due  2012 of  Dominguez  Water
    Company.

    $259,000 DWR Loan to Arden Water Company.

    $1,894,000 DWR Loans to Kernville Domestic Water Company.

    $925,000 DWR Loans to Dominguez Water Company.

________________________
* All Funded Debt of Restricted  Subsidiaries  is assumed by the  Corporation on
the Merger Date.

<PAGE>

California Water Service Group
Deferred Compensation Plan
================================================================================

                                   SCHEDULE II

                DESCRIPTION OF LIENS EXISTING ON THE MERGER DATE

    $116,345,000 of various series of First Mortgage Bonds of the Corporation

    *$4,000,000 Series J Bonds due 2023 of Dominguez Water Company

    *$5,000,000 Series K Bonds due 2012 of Dominguez Water Company

_______________________
*   Assumed by the Corporation on the Merger Date

--------------------------------------------------------------------------------
                                                                 Executiion Copy

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