Common use of Franchises Clause in Contracts

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 F▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇ Willows King City San Mateo L▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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franchise in each of the above cities and under such constitutional franchise has a perpetual right which was not repealed by the repeal of Article XI, Section 19, of the California Constitution to continue to occupy public streets of each of said cities with its pipes and mains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 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 K▇▇▇, Los Angeles, San J▇▇▇▇▇▇, Santa C▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson Kernville Lucerne Compton Lake H▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. D▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment 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.

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 F▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇▇ Willows King City San Mateo L▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 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 K▇▇▇▇, Los Angeles, San J▇▇▇▇▇▇▇, Santa C▇▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson Kernville Lucerne Compton Lake H▇▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇▇ Redevelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. D▇▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇▇ Redevelopment 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.

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 F▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇ Willows King City San Mateo L▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 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 K▇▇▇, Los Angeles, San J▇▇▇▇▇▇, Santa C▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson C▇▇▇▇▇ Kernville Lucerne Compton Lake H▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. D▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment Project #2 subsequent to the expiration of the respective franchisesfranchise, 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.

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 F▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇ Salinas Willows King City San Mateo L▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 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 K▇▇▇, Los Angeles, San J▇▇▇▇▇▇, Santa C▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Bodfish Kernville Mountain Shadows Carson Kernville Lucerne Compton Lake H▇▇▇▇▇ Mountain Shadows Onyx Compton Lakeland Torrance Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Fremont Valley L▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇ Heights Guerneville Long Beach Los Angeles County Harbor City Lucerne K▇▇▇ 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, D▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Revelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. D▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment 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.

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 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 Bakersfield, Marysville, South San F▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville ▇, Oroville, Stockton Dixon Dixon, Redondo Beach Beach, Visalia Hermosa Beach Beach, S▇▇▇▇▇▇ ▇, Willows King City City, San Mateo L▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ 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 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 K▇▇▇, Los Angeles, San J▇▇▇▇▇▇, Santa C▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson Kernville Lucerne Compton Lake H▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. D▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment 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.

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 F▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇▇ Willows King City San Mateo L▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 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 K▇▇▇▇, Los Angeles, San J▇▇▇▇▇▇▇, Santa C▇▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson ▇▇▇▇▇▇ Kernville Lucerne Compton Lake H▇▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. D▇▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment Project #2 subsequent to the expiration of the respective franchisesfranchise, 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. However, as of May 2003, the County of Los Angeles cancelled its ▇▇▇▇▇▇▇▇▇ franchise and incorporated the franchise territory into the Company's Los Angeles County franchise.

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 FFrancisco Chico Oroville ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇Salinas Willows King City Sa▇ ▇▇▇▇▇ Willows King City San Mateo LLivermore Selma that water distribution systems were co▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ that water distribution systems were constructed and service furnished ▇urnished 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 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 K▇▇▇Kern, Los Angeles, San JJoaquin, Santa Clara and Monterey, the ▇▇▇ies of Montebello, ▇▇▇▇▇▇ce, Santa CCupe▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino▇▇, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇Carlos, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos ▇▇▇ ▇▇tos Hills and A▇▇▇▇▇▇▇Atherton. Following incorporation of the City of Rancho Palos Verdes in 1973Verd▇▇ ▇▇ ▇▇73, 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, D▇▇▇▇▇▇▇▇ Dominguez Service Corporation was merged into the Company and subsequently Dsu▇▇▇▇▇▇▇▇ ▇▇y Dominguez and its subsidiaries were also merged into the Company (collectively▇▇▇▇▇▇▇▇vely, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇ Dominguez merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇▇ or localities that Dominguez previously served: BBodfish Kern C▇▇▇▇▇ Los Angeles County ▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson Kernville ernville Lucerne Compton Lake H▇Hughes Mountain Shadows Duncans Mills Lake▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster ▇▇ncaster Squirrel Valley Guerneville L▇▇▇▇ Leona Valley Torrance Harbor City Long Beach W▇▇▇Be▇▇▇ Wofford Heights Water distribution systems were constructed and service a▇▇ ▇▇▇vice 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, D▇▇▇▇▇▇▇▇ Dominguez has no franchises from these cities and has made no franchise payments fran▇▇▇▇▇ ▇▇▇ments 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, D▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Carson Redevelopment Project #2, as to which the franchises expired without ▇▇▇▇▇ut renewal in, respectively, 1994 and 1998. D▇▇▇▇▇▇▇▇ Dominguez continued to provide water services to Compton and the City of C▇▇▇▇▇ ▇▇ Carson Redevelopment Project #2 subsequent to the expiration of the o▇ ▇▇▇ 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.

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 previous advice of outside regulatory counsel (which is itself based upon the assumption of the accuracy of information obtained by the Company from sources believed to be reliable reliable) that the following cities served by the Company were all incorporated prior to 1911: Bakersfield Marysville South San F▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇ Willows King City San Mateo L▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 such outside regulatory 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 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 K▇▇▇, Los Angeles, San J▇▇▇▇▇▇, Santa C▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇. 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 ’s franchises from the Cities of Palos Verdes Estates, Menlo Park Park, Woodside and Woodside Rancho Palos Verdes terminated in 1977, 1993 1993, 1994 and 19942003, 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 ’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, D▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "“merger"”). The Company acquired in the D▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson Kernville Lucerne Compton Lake H▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇ has no franchises from these cities and has made no franchise payments to them and, to the Company's ’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, D▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. D▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment Project #2 subsequent to the expiration of the respective franchisesfranchise, and to pay franchise fees, and to the Company's ’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. However, as of May 2003, the County of Los Angeles cancelled its D▇▇▇▇▇▇▇▇ franchise and incorporated the franchise territory into the Company’s Los Angeles County franchise.

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 F▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇▇ Willows King City San Mateo L▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 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 K▇▇▇▇, Los Angeles, San J▇▇▇▇▇▇▇, Santa C▇▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson Kernville Lucerne Compton Lake H▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. D▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment 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.

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 F▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇ Salinas Willows King City San Mateo L▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 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 K▇▇▇▇, Los Angeles, San J▇▇▇▇▇▇▇, Santa C▇▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson ▇▇▇▇▇▇ Kernville Lucerne Compton Lake H▇▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. D▇▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment Project #2 subsequent to the expiration of the respective franchisesfranchise, 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. However, as of May 2003, the County of Los Angeles cancelled its ▇▇▇▇▇▇▇▇▇ franchise and incorporated the franchise territory into the Company's Los Angeles County franchise.

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 previous advice of outside regulatory counsel (which is itself based upon the assumption of the accuracy of information obtained by the Company from sources believed to be reliable reliable) that the following cities served by the Company were all incorporated prior to 1911: Bakersfield Marysville South San F▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇ Willows King City San Mateo L▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 such outside regulatory 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 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 K▇▇▇, Los Angeles, San J▇▇▇▇▇▇, Santa C▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇. 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 ’s franchises from the Cities of Palos Verdes Estates, Menlo Park Park, Woodside and Woodside Rancho Palos Verdes terminated in 1977, 1993 1993, 1994 and 19942003, 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 ’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, D▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "“merger"). The Company acquired in the D▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇ previously served: B▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson C▇▇▇▇▇ Kernville Lucerne Compton Lake H▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇ Heights 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, D▇▇▇▇▇▇▇▇ has no franchises from these cities and has made no franchise payments to them and, to the Company's ’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, D▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇ Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. D▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇ Redevelopment Project #2 subsequent to the expiration of the respective franchisesfranchise, and to pay franchise fees, and to the Company's ’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. However, as of May 2003, the County of Los Angeles cancelled its D▇▇▇▇▇▇▇▇ franchise and incorporated the franchise territory into the Company’s Los Angeles County franchise.

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 F▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach S▇▇▇▇▇▇▇ Willows King City San Mateo L▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 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 K▇▇▇▇, Los Angeles, San J▇▇▇▇▇▇▇, Santa C▇▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇▇, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇▇. 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, D▇▇▇▇▇▇▇▇▇ Service Corporation was merged into the Company and subsequently D▇▇▇▇▇▇▇▇▇ and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇▇ merger operations in the following cities, counties, townships or localities that D▇▇▇▇▇▇▇▇▇ previously served: BBodfish Kernville Mountain Shadows Carson Lake ▇▇▇▇▇▇ ▇▇▇▇ County Los Angeles County Carson Kernville Lucerne Onyx Compton Lake HLakeland Torrance Duncans ▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville LFremont Valley ▇▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇▇ Heights Guerneville Long Beach Los Angeles County Harbor City Lucerne ▇▇▇▇ 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, D▇▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇▇ 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 C▇▇▇▇▇▇ Redevelopment Revelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. D▇▇▇▇▇▇▇▇▇ continued to provide water services to Compton and the City of C▇▇▇▇▇▇ Redevelopment 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.

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 F▇Francisco Chico Oroville Stockton Dixon ▇▇▇▇▇▇▇ ▇▇▇▇▇ Oroville Stockton Dixon Redondo Beach h Visalia Hermosa Beach S▇Salinas Willows King City San Mateo Livermore ▇▇▇▇▇ Willows King City San Mateo LThe water distribution systems wer▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ that water distribution systems were constructed and service ▇▇▇ce 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 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 K▇▇▇Kern, Los Angeles, San JJoaquin, Santa Clara and Monterey, the C▇▇▇▇s of Montebello, Torr▇▇▇▇, ▇upertino, ▇▇▇▇▇▇, Santa C▇▇▇▇ and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvalevale, Los Altos, Mountain View, Bakersfield, Commerce, San C▇▇▇▇▇Carlos, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and A▇▇▇▇▇▇▇▇ 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, D▇▇▇▇▇▇▇▇ Dominguez Service Corporation was merged into the Company and subsequently D▇subse▇▇▇▇▇▇▇ Dominguez and its subsidiaries were also merged into the Company (collectivelyco▇▇▇▇▇▇▇▇▇y, the "merger"). The Company acquired in the D▇▇▇▇▇▇▇▇ Dominguez merger operations in the following cities, counties, townships or localities that D▇▇tow▇▇▇▇▇▇ ▇▇ localities that Dominguez previously served: BBodfish Ker▇ ▇▇▇▇▇▇ Los Ange▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ County Los Angeles County Carson Kernville Lucerne Compton Lake H▇▇▇▇▇ Mountain Shadows Duncans M▇▇▇▇ Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville L▇▇▇▇ Valley Torrance Harbor City Long Beach W▇▇▇▇▇▇ Lucerne Compton Lake Hughes Mountain Shadows Duncans Mills ▇▇▇▇▇and Onyx Fr▇▇▇▇▇ Valley Lancaster Squirrel Valley Guerneville Leona Valley Torrance Harbor C▇▇▇ ▇ong Beach Wofford Heights Water distribution systems were constructed and service constructe▇ ▇▇▇ ▇ervice 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, D▇▇▇▇▇▇▇▇ Dominguez has no franchises from these cities and has made no franchise payments fran▇▇▇▇▇ ▇▇yments 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, D▇▇▇▇▇▇▇▇ Dominguez has received written franchise agreements which are in full force ▇▇▇▇ ▇▇rce and effect and has paid all franchise fees to date, with the exception of Compton and the City of C▇▇▇▇▇ Carson Redevelopment Project #2, as to which the franchises expired without wi▇▇▇▇▇ renewal in, respectively, 1994 and 1998. D▇▇▇▇▇▇▇▇ Dominguez continued to provide water services to Compton and the City of CCit▇ ▇▇ ▇▇▇▇▇ son Redevelopment Project #2 subsequent to the expiration of the respective t▇▇ ▇▇▇pective 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.