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 Fxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Willows King City San Mateo Lxxxxxxxx Xxxxx 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franchise in each of the above cities and under such constitutional franchise has a perpetual right which was not repealed by the repeal of Article XI, Section 19, of the California Constitution to continue to occupy public streets of each of said cities with its pipes and mains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 Kxxx, Los Angeles, San Jxxxxxx, Santa Cxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San Cxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and Axxxxxxx. 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, Dxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx previously served: Bxxxxxx Xxxx County Los Angeles County Carson Kernville Lucerne Compton Lake Hxxxxx Mountain Shadows Duncans Mxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Valley Torrance Harbor City Long Beach Wxxxxxx 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, Dxxxxxxxx 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, Dxxxxxxxx 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 Cxxxxx Redevelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. Dxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Fxxxxxxxx Xxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Xxxxxxx Willows King City San Mateo Lxxxxxxxx Xxxxxxxxx Xxxxx 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 KxxxXxxx, Los Angeles, San JxxxxxxXxxxxxx, Santa Cxxxx Xxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San CxxxxxXxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and AxxxxxxxXxxxxxxx. 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, Dxxxxxxxx Xxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx Xxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx Xxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx Xxxxxxxxx previously served: Bxxxxxx Xxxxxxx Xxxx County Los Angeles County Carson Kernville Lucerne Compton Lake Hxxxxx Xxxxxx Mountain Shadows Duncans Mxxxx Xxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Xxxxx Valley Torrance Harbor City Long Beach Wxxxxxx Xxxxxxx 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, Dxxxxxxxx Xxxxxxxxx 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, Dxxxxxxxx Xxxxxxxxx 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 Cxxxxx Xxxxxx Redevelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. Dxxxxxxxx Xxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx Xxxxxx 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 Fxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Willows King City San Mateo Lxxxxxxxx Xxxxx 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 Kxxx, Los Angeles, San Jxxxxxx, Santa Cxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San Cxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and Axxxxxxx. 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, Dxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx previously served: Bxxxxxx Xxxx County Los Angeles County Carson Cxxxxx Kernville Lucerne Compton Lake Hxxxxx Mountain Shadows Duncans Mxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Valley Torrance Harbor City Long Beach Wxxxxxx 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, Dxxxxxxxx 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, Dxxxxxxxx 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 Cxxxxx Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. Dxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Fxxxxxxxx Xxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Salinas Willows King City San Mateo Lxxxxxxxx Xxxxxxxxx Xxxxx 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 KxxxXxxx, Los Angeles, San JxxxxxxXxxxxxx, Santa Cxxxx Xxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San CxxxxxXxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and AxxxxxxxXxxxxxxx. 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, Dxxxxxxxx Xxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx Xxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx Xxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx Xxxxxxxxx previously served: Bxxxxxx Xxxxxxx Xxxx County Los Angeles County Carson Xxxxxx Kernville Lucerne Compton Lake Hxxxxx Xxxxxx Mountain Shadows Duncans Mxxxx Xxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Xxxxx Valley Torrance Harbor City Long Beach Wxxxxxx Xxxxxxx 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, Dxxxxxxxx Xxxxxxxxx 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, Dxxxxxxxx Xxxxxxxxx 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 Cxxxxx Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. Dxxxxxxxx Xxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Xxxxxxxxx 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 Fxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Willows King City San Mateo Lxxxxxxxx Xxxxx 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 Kxxx, Los Angeles, San Jxxxxxx, Santa Cxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San Cxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and Axxxxxxx. 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, Dxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "“merger"). The Company acquired in the Dxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx previously served: Bxxxxxx Xxxx County Los Angeles County Carson Cxxxxx Kernville Lucerne Compton Lake Hxxxxx Mountain Shadows Duncans Mxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Valley Torrance Harbor City Long Beach Wxxxxxx 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, Dxxxxxxxx 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, Dxxxxxxxx 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 Cxxxxx Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. Dxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Dxxxxxxxx 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 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 Fxxxxxxxx Xxxxx Oroville Xxxxx, Oroville, Stockton Dixon Dixon, Redondo Beach Beach, Visalia Hermosa Beach Sxxxxxx Beach, Sxxxxxx, Willows King City City, San Mateo Lxxxxxxxx Lxxxxxxxx, Xxxxx 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 Kxxx, Los Angeles, San Jxxxxxx, Santa Cxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San Cxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and Axxxxxxx. 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, Dxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx previously served: Bxxxxxx Xxxx County Los Angeles County Carson Kernville Lucerne Compton Lake Hxxxxx Mountain Shadows Duncans Mxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Valley Torrance Harbor City Long Beach Wxxxxxx 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, Dxxxxxxxx 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, Dxxxxxxxx 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 Cxxxxx Redevelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. Dxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Fxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Salinas Willows King City San Mateo Lxxxxxxxx Xxxxx 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 Kxxx, Los Angeles, San Jxxxxxx, Santa Cxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San Cxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and Axxxxxxx. 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, Dxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx previously served: Bxxxxxx Xxxx County Bodfish Kernville Mountain Shadows Carson Lake Hxxxxx Onyx Compton Lakeland Torrance Duncans Mxxxx Lancaster Squirrel Valley Fremont Valley Lxxxx Valley Wxxxxxx Heights Guerneville Long Beach Los Angeles County Carson Kernville Lucerne Compton Lake Hxxxxx Mountain Shadows Duncans Mxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Valley Torrance Harbor City Long Beach Wxxxxxx Heights Lucerne Kxxx 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, Dxxxxxxxx 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, Dxxxxxxxx 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 Cxxxxx Redevelopment Revelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. Dxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Fxxxxxxxx Xxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Xxxxxxx Willows King City San Mateo Lxxxxxxxx Xxxxxxxxx Xxxxx 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 KxxxXxxx, Los Angeles, San JxxxxxxXxxxxxx, Santa Cxxxx Xxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San CxxxxxXxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and AxxxxxxxXxxxxxxx. 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, Dxxxxxxxx Xxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx Xxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx Xxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx Xxxxxxxxx previously served: Bxxxxxx Xxxx County Bodfish Kernville Mountain Shadows Carson Lake Xxxxxx Onyx Compton Lakeland Torrance Duncans Xxxxx Lancaster Squirrel Valley Fremont Valley Xxxxx Valley Xxxxxxx Heights Guerneville Long Beach Los Angeles County Carson Kernville Lucerne Compton Lake Hxxxxx Mountain Shadows Duncans Mxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Valley Torrance Harbor City Long Beach Wxxxxxx Heights Lucerne Xxxx 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, Dxxxxxxxx Xxxxxxxxx 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, Dxxxxxxxx Xxxxxxxxx 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 Cxxxxx Redevelopment Xxxxxx Revelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. Dxxxxxxxx Xxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx Redevelopment Xxxxxx 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 Fxxxxxxxx Xxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Xxxxxxx Willows King City San Mateo Lxxxxxxxx Xxxxxxxxx Xxxxx 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 KxxxXxxx, Los Angeles, San JxxxxxxXxxxxxx, Santa Cxxxx Xxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San CxxxxxXxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and AxxxxxxxXxxxxxxx. 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, Dxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx previously served: Bxxxxxx Xxxx County Los Angeles County Carson Kernville Lucerne Compton Lake Hxxxxx Mountain Shadows Duncans Mxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Valley Torrance Harbor City Long Beach Wxxxxxx 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, Dxxxxxxxx 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, Dxxxxxxxx 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 Cxxxxx Redevelopment Project #2, as to which the franchises expired without renewal in, respectively, 1994 and 1998. Dxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Fxxxxxxxx Xxxxx Francisco Chico Oroville Stockton Dixon Redondo Beach Xxxxxxx Xxxxh Visalia Hermosa Beach Sxxxxxx Salinas Willows King City San Mateo Lxxxxxxxx Livermore Xxxxx that The water distribution systems were constructed and service werx xxxxxxxxxxx xxx xxxxxce 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 KxxxKern, Los Angeles, San JxxxxxxJoaquin, Santa Cxxxx Clara and Monterey, the Cities Cxxxxs of Montebello, TorranceTorrxxxx, CupertinoXupertino, SunnyvaleXxxxxvale, Los Altos, Mountain View, Bakersfield, Commerce, San CxxxxxCarlos, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Xxxxx Hills and AxxxxxxxAtherton. Following incorporation of the City of Rancho Palos Verdes in 1973xx 0000, 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, Dxxxxxxxx Dominguez Service Corporation was merged into the Company and subsequently Dxxxxxxxx subsexxxxxxx Dominguez and its subsidiaries were also merged into the Company (collectivelycoxxxxxxxxxy, the "merger"). The Company acquired in the Dxxxxxxxx Dominguez merger operations in the following cities, counties, townships or towxxxxxx xx localities that Dxxxxxxxx Dominguez previously served: Bxxxxxx Xxxx County Bodfish Kerx Xxxxxx Los Angeles County Carson Kernville Angexxx Xxxxxx Xxxxxx Xxxxxxxxx Lucerne Compton Lake Hxxxxx Hughes Mountain Shadows Duncans Mxxxx Lakeland Mills Xxxxxand Onyx Fremont Frxxxxx Valley Lancaster Squirrel Valley Guerneville Lxxxx Leona Valley Torrance Harbor City Long Cxxx Xong Beach Wxxxxxx Wofford Heights Water distribution systems were constructed and service constructex xxx xervice 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, Dxxxxxxxx Dominguez has no franchises from these cities and has made no franchise payments franxxxxx xxyments 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, Dxxxxxxxx Dominguez has received written franchise agreements which are in full force xxxx xxrce and effect and has paid all franchise fees to date, with the exception of Compton and the City of Cxxxxx Carson Redevelopment Project #2, as to which the franchises expired without wixxxxx renewal in, respectively, 1994 and 1998. Dxxxxxxxx Dominguez continued to provide water services to Compton and the City of Cxxxxx Citx xx Xxxson Redevelopment Project #2 subsequent to the expiration of the respective txx xxxpective 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 Fxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Willows King City San Mateo Lxxxxxxxx Xxxxx 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 Kxxx, Los Angeles, San Jxxxxxx, Santa Cxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San Cxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and Axxxxxxx. 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, Dxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "“merger"”). The Company acquired in the Dxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx previously served: Bxxxxxx Xxxx County Los Angeles County Carson Kernville Lucerne Compton Lake Hxxxxx Mountain Shadows Duncans Mxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Valley Torrance Harbor City Long Beach Wxxxxxx 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, Dxxxxxxxx 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, Dxxxxxxxx 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 Cxxxxx Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. Dxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Dxxxxxxxx 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 Fxxxxxxxx Xxxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Xxxxxxx Willows King City San Mateo Lxxxxxxxx Xxxxxxxxx Xxxxx 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 KxxxXxxx, Los Angeles, San JxxxxxxXxxxxxx, Santa Cxxxx Xxxxx and Monterey, the Cities of Montebello, Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San CxxxxxXxxxxx, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Hills and AxxxxxxxXxxxxxxx. 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, Dxxxxxxxx Xxxxxxxxx Service Corporation was merged into the Company and subsequently Dxxxxxxxx Xxxxxxxxx and its subsidiaries were also merged into the Company (collectively, the "merger"). The Company acquired in the Dxxxxxxxx Xxxxxxxxx merger operations in the following cities, counties, townships or localities that Dxxxxxxxx Xxxxxxxxx previously served: Bxxxxxx Xxxxxxx Xxxx County Los Angeles County Carson Xxxxxx Kernville Lucerne Compton Lake Hxxxxx Xxxxxx Mountain Shadows Duncans Mxxxx Xxxxx Lakeland Onyx Fremont Valley Lancaster Squirrel Valley Guerneville Lxxxx Xxxxx Valley Torrance Harbor City Long Beach Wxxxxxx Xxxxxxx 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, Dxxxxxxxx Xxxxxxxxx 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, Dxxxxxxxx Xxxxxxxxx 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 Cxxxxx Redevelopment Project #2Compton, as to which the franchises franchise expired without renewal in, respectively, 1994 and 1998in 1994. Dxxxxxxxx Xxxxxxxxx continued to provide water services to Compton and the City of Cxxxxx 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 Xxxxxxxxx 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 Fxxxxxxxx Francisco Chico Oroville Xxxxxxxx Xxxxx Oroville Stockton Dixon Redondo Beach Visalia Hermosa Beach Sxxxxxx Salinas Willows King City San Mateo Lxxxxxxxx Sax Xxxxx Livermore Selma that water distribution systems were constructed and service furnished coxxxxxxxxx xxx xxxxxxx xurnished 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 KxxxKern, Los Angeles, San JxxxxxxJoaquin, Santa Cxxxx Clara and Monterey, the Cities Xxxies of Montebello, TorranceXxxxxxce, CupertinoCupexxxxx, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce, San CxxxxxCarlos, Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos Xxx Xxtos Hills and AxxxxxxxAtherton. Following incorporation of the City of Rancho Palos Verdes in 1973Verdxx xx 0073, 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, Dxxxxxxxx Dominguez Service Corporation was merged into the Company and subsequently Dxxxxxxxx suxxxxxxxxxy Dominguez and its subsidiaries were also merged into the Company (collectivelyxxxxxxxxvely, the "merger"). The Company acquired in the Dxxxxxxxx Dominguez merger operations in the following cities, counties, townships xxxxxxxxx or localities that Dxxxxxxxx Dominguez previously served: Bxxxxxx Xxxx County Bodfish Kern Cxxxxx Los Angeles County Carson Kernville Xxxxxx Xernville Lucerne Compton Lake Hxxxxx Hughes Mountain Shadows Duncans Mxxxx Lakeland Mills Lakexxxx Onyx Fremont Valley Lancaster Xxncaster Squirrel Valley Guerneville Lxxxx Leona Valley Torrance Harbor City Long Beach Wxxxxxx Bexxx Wofford Heights Water distribution systems were constructed and service axx xxxvice 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, Dxxxxxxxx Dominguez has no franchises from these cities and has made no franchise payments franxxxxx xxxments 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, Dxxxxxxxx Dominguez has received written franchise agreements which are in full xx xxxx force and effect and has paid all franchise fees to date, with the exception of Compton and the City of Cxxxxx Carson Redevelopment Project #2, as to which the franchises expired without xxxxxut renewal in, respectively, 1994 and 1998. Dxxxxxxxx Dominguez continued to provide water services to Compton and the City of Cxxxxx Xxxx xx Carson Redevelopment Project #2 subsequent to the expiration of the ox xxx 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.