CALIFORNIA WATER SERVICE GROUP
SEPARATION AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>p19619_ex10.txt
<DESCRIPTION>SEPARATION AGREEMENT
<TEXT>

                        SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release between Richard D. Nye and California
Water Service Group (hereinafter the "Agreement") is made and entered into as of
the last date appearing opposite any signature on the signature pages below (the
"Execution Date") by and between the Parties to the Agreement as defined below.

                                   DEFINITIONS

     A. This Agreement is entered into by and between the following Parties:

          (1) Richard D. Nye; and

          (2)  California  Water  Service  Group (the  "Group")  and each of its
     current,   former  and  future   parent   companies,   holding   companies,
     subsidiaries,  divisions,  operating entities,  affiliates, joint ventures,
     partnerships,  benefit plans, agents,  independent  contractors,  trustees,
     employees, insurers, attorneys, officers,  stockholders,  board members and
     directors, and all of their predecessors, successors and assigns, including
     without  limitation  California  Water  Service  Company ("Cal Water") (all
     collectively referred to as "CWS");

     B. The Party identified in subparagraph  A(1) is referred to and defined as
"Nye" for purposes of this  Agreement.  The Parties  identified in  subparagraph
A(2) are  collectively  referred  to and  defined as "CWS" for  purposes of this
Agreement.  As used in this  Agreement,  the term  "Party"  or  "Parties"  shall
include Nye and CWS;

     C. "And" means the conjunctive and the disjunctive.


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<PAGE>

                                    RECITALS

     D. WHEREAS,  Nye was employed  March 1, 2003,  by California  Water Service
Group  and  California  Water  Service  Company  as the  Vice  President,  Chief
Financial  Officer and Treasurer of each entity and his  employment  was at-will
with both entities;

     E. WHEREAS,  Nye does not have pending  against CWS any claim,  charge,  or
action in or with any federal, state, or local court or administrative agency;

     F. WHEREAS, Nye and CWS desire to settle fully and finally all possible and
potential differences between them; and

     G.  WHEREAS,  Nye  resigned  his  employment  with the  Group and Cal Water
effective October 27, 2005.

                                    AGREEMENT

     NOW, THEREFORE,  in consideration of the payment of funds and of the mutual
agreements, covenants and other obligations described below it is understood and
agreed by and between the Parties as follows:

     1.  Salary/Vacation  Payment.  On October 28, 2005, CWS tendered payment to
Nye of his final salary at his current rate of compensation  through October 27,
2005 and tendered payment to Nye of six (6) weeks of vacation pay at his current
rate of compensation  representing  payment for any earned and unused  vacation,
and  tendered  payment  to  Nye of one  week's  salary  a his  current  rate  of
compensation for termination  wages.  Except as set forth herein,  no additional
compensation of any kind has been earned or is due or payable to Nye.

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<PAGE>

     2. Separation Pay. Provided that Nye has not revoked this Agreement, during
the Revocation  Period,  as defined in paragraph 9 of this Agreement,  CWS shall
forward to Nye via  Federal  Express a payment  of six (6) months  salary at his
current  compensation  rate in the  aggregate  amount  of  $137,500.00  less all
applicable tax  withholdings  within three business days of receipt of a request
for payment signed by Nye  communicated  to CWS pursuant to paragraph 15 of this
Agreement, (the "Request For Payment"). The Request For Payment submitted by Nye
shall be made on any date between January 3, 2006 and March 31, 2006.

     3. Benefits.

          (a) Nye shall be entitled to his benefits  accrued,  if any, under the
     existing terms of the California  Water Service  Company  Pension Plan, the
     California Water Service Company  Supplemental  Executive  Retirement Plan,
     the California  Water Service Company Savings Plan and the California Water
     Service Group Deferred  Compensation Plan (and any successor  non-qualified
     deferred  compensation  plan)  (collectively the "Plans") as of October 27,
     2005.

          (b) Nye shall  receive  distributions  of any vested  account  balance
     under the California Water Service Group Deferred Compensation Plan and any
     successor plan in accordance with the terms of such plan(s),  including any
     amendments made pursuant to Internal Revenue Code section 409A and guidance
     issued under such section.  Certain  payments made under such plan(s) shall
     comply with section 409A of the Internal Revenue Code,  including any delay
     in payment  required by section  409A(a)(2)(B)(i).  Payments  made from any
     nonqualified deferred compensation plan shall be subject to tax withholding
     and reporting as required by law.

          (c) CWS  agrees  to pay Nye an  amount  equal to his  current  medical
     insurance  premiums for a twelve (12) month period in the aggregate  amount
     of $6,795.00,  less all applicable tax  withholdings.  This payment is made
     for the sole  purpose of  allowing  Nye to elect  COBRA  (the  Consolidated
     Omnibus  Budget  Reconciliation  Act,  29  U.S.C.  ss.  1161-1168)  medical


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<PAGE>


     continuation  coverage  and to  cover  the  cost of such  premiums,  at the
     current  premium  rates,  for the twelve (12) month  period  November  2005
     through  October  2006.  Nothing in this  sub-paragraph  (c) is intended to
     extend the period of Nye's COBRA eligibility.

     4. Return of  Property.  Nye agrees that he has no  entitlement  to and has
returned all CWS property,  including the CWS provided computer,  except for the
CWS provided automobile, which Nye has purchased from CWS.

     5. Voluntary  Resignation and Future  Employment.  Nye acknowledges that he
decided to voluntarily  and  irrevocably  resign from his employment and officer
status with CWS, including without limitation the Group and Cal Water, effective
October 27,  2005,  and has  confirmed  that  resignation  in writing.  Nye also
acknowledges  that he resigned from his trustee  positions  with the pension and
savings plans of CWS effective  October 27, 2005. Nye further  acknowledges that
he has no further  employment  relationship  whatsoever with CWS. Nye waives any
right or claim to reinstatement as an employee or an officer of CWS and will not
seek  employment or consulting  work as an independent  contractor in the future
with  CWS or  any of its  respective  divisions,  subsidiaries,  affiliates,  or
holding  companies.   If  Nye  requires  employment   references  from  CWS  for
prospective  employers,  he will refer prospective employers only to the Group's
President and Chief  Executive  Officer and not to any other past or present CWS
employee, or Board member.

     6.  Status as Agent.  As of  September  28,  2005,  Nye agrees  that he had
relinquished  all power and  authority  as an employee  and officer of CWS,  and
acknowledges that he is not authorized to bind CWS in any agreement, contract or
promise,  and agrees not to represent  that he has such powers to third parties.
In  addition,  he  agrees  to  execute  any such  other  documents  that CWS may
reasonably require him to execute to effect the terms of this paragraph.


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<PAGE>

     7.  Release.  Nye  individually,  and  for  each  of  his  heirs,  assigns,
executors,  beneficiaries,   administrators,   successors  and  assigns,  hereby
acknowledges  full and complete  satisfaction  of, and hereby  releases and does
hereby covenant not to sue, and forever discharge CWS, as defined herein, of and
from, any and all claims,  demands,  actions, and causes of action, in law or in
equity, suits, liabilities, obligations, demands, losses, agreements, contracts,
covenants,  payments,  wages, debts, benefits,  expenses,  costs,  violations of
statute,  regulation,  ordinance or code,  attorneys'  fees,  costs or expenses,
known or unknown,  suspected or  unsuspected  that Nye now has, or may ever have
had against CWS, including without limitation,  any and all claims described in,
arising out of or in any way  whatsoever  related to, Nye's  employment  with or
resignation and separation from CWS (including  without limitation the Group and
Cal Water),  the California  Fair  Employment and Housing Act (the "FEHA"),  the
California  Labor Code,  Title VII of the Civil Rights Act, the Civil Rights Act
of 1991,  the Americans  with  Disabilities  Act, the Unruh Act, the Federal Age
Discrimination  in Employment Act (the "ADEA"),  the Employee  Retirement Income
Security  Act  ("ERISA")  and any other  claim  based on any  other  California,
Federal or Local statute, law, regulation, ordinance, Executive Order or code of
any kind, and any and all other contract,  tort or common law claims of any kind
(hereinafter  collectively  the "Released  Claims").  Nye  acknowledges  that he
intends  that the  Released  Claims  released  herein be construed as broadly as
possible.  Nye further expressly  releases all insurance  companies insuring CWS
for  employment-related  claims, and directors and  officers-related  claims, as
well as any other applicable  insurance,  to the same extent he is releasing CWS
in this  paragraph  and in  paragraph  8 below,  except to the  extent he may be
entitled  to  benefits  thereunder  as an  insured.  Notwithstanding  the above,
nothing in this Agreement shall act as a waiver and release of Nye's rights,  if
any, to: (a)  indemnification for matters arising out of the course and scope of
his  service to CWS as a trustee,  officer or employee  pursuant  to  California
Labor Code Section  2802 and the CWS bylaws and  certificate  of  incorporation;
and, (b) benefits as an insured under the terms of any CWS insurance policies.

     8.  Section 1542 Waiver.  Nye agrees and  represents  that it is within his
contemplation that he may have claims, demands,  causes of action,  obligations,
damages or liabilities  against CWS which,  at the time as of the execution date
of this  Agreement,  Nye has no  knowledge  or  suspicion,  but Nye  agrees  and
represents that this Agreement extends to all claims, demands, causes of action,
obligations,  damages or  liabilities  in any way based upon,  connected with or
related to the  Released  Claims,  Nye's  employment  with and  resignation  and
separation from CWS (including  without limitation the Group and Cal Water), and
any claims by Nye  against  the CWS  insurers  released  in  paragraph  7 above,
whether known or unknown,  claimed or suspected by Nye. Nye expressly waives the
benefits of Section 1542 of the California Civil Code, which provides:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
                  WHICH THE CREDITOR DOES NOT KNOW OR
                  SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
                  EXECUTING THE RELEASE, WHICH IF KNOWN BY
                  HIM MUST HAVE MATERIALLY AFFECTED HIS
                  SETTLEMENT WITH THE DEBTOR.


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<PAGE>

     9. Waiver of Rights Under the Age  Discrimination  in  Employment  Act. Nye
understands  that the  release of claims set forth in  paragraphs  7 and 8 above
includes any and all claims and rights Nye has or might have under the ADEA. The
waiver of Nye's  rights  under the ADEA does not extend to claims or rights that
might arise after this  Agreement  is  executed.  For a period of seven (7) days
following  the  Execution  Date of this  Agreement,  Nye may revoke its terms by
submitting a written document  received by CWS through delivery to its attorneys
Hanson, Bridgett, Marcus, Vlahos & Rudy, LLP, 333 Market Street, 21st Floor, San
Francisco,  CA 94105,  on or before  the end of the  seven (7) day  period  (the
"Revocation  Period").  This  Agreement will not be final or of effect until the
Revocation Period has expired without Nye's having revoked the Agreement.

     Nye understands and agrees that he has the right to consider this Agreement
for a full  twenty-one  (21)  days from  receipt  of the  Agreement  and that in
executing  this  Agreement  after  less  than a full  twenty-one  (21)  days  of
consideration he is voluntarily and forever waiving his right to consider it for
twenty-one (21) days prior to executing it. Nye further  acknowledges and agrees
that he consulted with his attorney prior to executing this Agreement.

     10.  Warranty  Regarding  Claims.  Nye represents that he has no charges or
claims of any kind pending against CWS. If, for some reason,  there are any such
charges or claims,  he agrees to  withdraw  and to dismiss  them with  prejudice
immediately,  or,  if  applicable,  to take  all  actions  necessary  to cause a
withdrawal or dismissal  with prejudice of all such charges or claims as soon as
possible.

     11. Warranty of Non-Assignment. Nye represents and warrants that he has not
assigned or otherwise transferred any interest in any claim which is the subject
of this Agreement.

     12. Non-Admission.  CWS expressly denies that Nye has any claim against CWS
and this Agreement shall not be deemed an admission of liability by CWS, or of a
violation by CWS of any applicable  contract,  statute,  law, rule,  regulation,
code,  duty or order  of any  kind,  all of which  CWS  expressly  denies.  This
Agreement  shall not in any way be construed as an admission by CWS that Nye has
any rights whatsoever  against CWS or that CWS has acted wrongfully with respect
to Nye, any other  employee of CWS, or any other  person,  and CWS  specifically
disclaims any liability to Nye, any other employee of CWS or any other person.


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<PAGE>

     13.  Non-Disparagement.  Nye agrees  that he will not orally or in writing,
publicly or privately,  make or express any comment,  view or opinion that would
disparage  or  defame  CWS,  and its  present  or  former  partners,  employees,
directors, attorneys, board members and agents, nor will Nye authorize any agent
or  representative  or  immediate  family  member  to make or  express  any such
comment, view or opinion, except as may be compelled by law.

     14.  Confidentiality.  Nye  agrees  to keep the  terms  and  amount of this
Agreement  completely  confidential and that he will not hereafter  disclose any
information concerning this Agreement to anyone,  provided that any Party hereto
may make  such  disclosures  as are  required  by law and as are  necessary  for
legitimate law enforcement or compliance purposes.  Nye may disclose information
concerning  this  Agreement  to his  attorneys,  accountants  and his spouse and
immediate  family  members.  Nye further  agrees to comply with the terms of any
written  agreements  signed by him during the course of his employment  with CWS
and further  agrees that any trade secrets  obtained by him during the course of
his  employment  with CWS will not be divulged by him to any third  party.  This
section 14 of the  Agreement is not intended to and does not bar Nye from making
truthful  statements  about his employment  with CWS, but does not permit Nye to
disclose any  information  whatsoever  that is protected from  disclosure by the
attorney client privilege or the attorney work product doctrine held by CWS.


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<PAGE>


     15. Notices. All notices and other communications hereunder shall be either
communicated  to all  Parties in  writing  and shall be  delivered  or mailed by
registered or certified mail, postage prepaid and with return receipt requested.
Hand delivered  notices  delivered shall be deemed  communicated  when received.
Mailed notices shall be deemed communicated when received.  Mailed notices shall
be deemed  communicated  as of three (3) full  business days after  mailing,  if
mailed on a business day to the following  respective  addresses,  with the sole
exception of a Notice of  Revocation  pursuant to paragraph 9 of this  Agreement
and Request For Payment which shall not be deemed communicated until received.

         CWS:                    Peter Nelson
                                 President and Chief Executive Officer
                                 California Water Service Group
                                 1720 North First Street
                                 San Jose, CA 95112

                        With Copy to:

                                 Raymond F. Lynch
                                 Hanson, Bridgett, Marcus, Vlahos & Rudy, LLP
                                 333 Market Street
                                 21st Floor
                                 San Francisco, CA 94105-2173

         Nye:                    Richard D. Nye
                                 6440 Freedom Boulevard
                                 Aptos, CA 95003

                                 Mark S. Howitson
                                 Orrick, Herrington & Sutcliffe LLP
                                 1010 Marsh Road
                                 Menlo Park, CA  94025

     16.  Waiver.  No waiver by CWS of any  breach  by Nye of any  condition  or
provision of the  Agreement to be performed by Nye shall be deemed a waiver of a
similar  or  dissimilar  condition  or  provision  at the  same or any  prior or
subsequent time.


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<PAGE>

     17. Ambiguities. This Agreement has been reviewed by Nye and CWS, and their
respective  attorneys,  and Nye and CWS have had a full opportunity to negotiate
the contents of this  Agreement.  Nye and CWS expressly  waive any common law or
statutory rule of construction that ambiguities  should be construed against the
drafter  of this  Agreement,  and agree that the  language  in all parts of this
Agreement  shall be in all cases  construed  as a whole,  according  to its fair
meaning.

     18.  Advice  of  Counsel.  Nye  represents  that he was  represented  by an
attorney  of his own  choice in the  negotiations  for and  preparation  of this
Agreement,  that his attorney reviewed this Agreement with him, that he has read
this Agreement,  that he is fully aware of its contents and of its legal effect,
that he has  considered its contents and its legal effect and that he freely and
voluntarily enters into it.

     19.  Applicable  Law. This Agreement shall be construed and governed by the
laws of the State of California. Each of the Parties further agrees that if, for
any reason any provision  hereof is  unenforceable  or otherwise  invalid or the
application of such provision to any Party,  person or  circumstance  other than
those as to which it is held  invalid or  unenforceable,  the  remainder of this
Agreement  shall not be affected  and shall  nonetheless  remain  binding to the
maximum extent permitted by law.

     20. Binding Arbitration.  Nye and CWS agree that any controversy,  claim or
dispute arising out of or relating to this Agreement,  including but not limited
to the  confidentiality  agreement  contained in paragraph 14 of this Agreement,
shall be submitted  to binding  arbitration  pursuant to the current  Employment
Dispute Resolution Rules of the American Arbitration Association. The prevailing
party in the arbitration shall be entitled to its reasonable costs and expenses,
including  but not  limited  to  attorneys'  fees and  expert  witness  fees and
expenses.  In any  arbitration  proceeding,  the Parties  shall be  permitted to
conduct  discovery as provided by  California  Code of Civil  Procedure  section
1283.05.


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<PAGE>

     21.  Indemnity.  If  Nye  brings  a  claim,  or  his  successors,  judgment
creditors,   heirs,  executors,   administrators,   representatives,   devisees,
transferees,  beneficiaries, employees, agents or assigns (collectively "Related
Parties" or individually "Related Party") bring a claim, or for whose benefit or
the benefit of any Related Party or Related Parties a claim is brought, contrary
to the releases made in paragraphs 7 and 8 above,  Nye shall  indemnify and hold
CWS released  above  harmless from and against any claims,  including all claims
for court costs and attorneys fees,  which are asserted against any of them as a
result of, or in  connection  with,  any action or  proceeding  contrary to this
Agreement.  This agreement of indemnity  shall be deemed breached and a cause of
action shall be deemed to have accrued thereon immediately upon the commencement
of any such action or other proceeding, and in that event, this Agreement may be
pleaded  as a full and  complete  defense,  as the  basis for  abatement  of and
injunction  against  that  action  or other  proceeding,  and as the  basis of a
cross-complaint  for damages,  including  without  limitation  the return of the
Separation  Pay set  forth in  paragraph  2 and the COBRA  payment  set forth in
paragraph 3(c) in their entirety.

     22.  Integration.  This Agreement  constitutes the entire agreement between
each of the Parties  pertaining to the subjects  contained in it and  supersedes
all prior and contemporaneous agreements, representations and understandings. It
is expressly  understood  and agreed by each of the Parties that this  Agreement
may not be altered,  amended,  modified or  otherwise  changed in any respect or
particular  whatsoever  except by a writing duly executed by each of the Parties
which,  in  the  case  of  CWS,  must  be  executed  by  an  authorized  officer
representative of CWS.

     23.  Successors and Assigns.  This Agreement  shall be binding upon each of
the  Parties  and  each  of  their   heirs,   executors,   judgment   creditors,
administrators,  assigns, devisees,  representatives,  transferees,  successors,
beneficiaries,  employees and agents,  and shall inure to the benefit of each of
the Parties and their successors and assigns.


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<PAGE>


     24.  Execution  of   Counterparts.   This  Agreement  may  be  executed  in
counterparts, and if so executed and delivered, all of the counterparts together
shall constitute one and the same Agreement.

     25.  Captions.  The  captions  and  paragraph  numbers  appearing  in  this
Agreement  are  inserted  for the  reader's  convenience,  and in no way define,
limit,  construe  or  describe  the scope or intent  of the  provisions  of this
Agreement.

     The undersigned  have read the foregoing  Agreement and accept and agree to
the provisions contained therein and hereby execute it voluntarily and with full
understanding of its consequences.


         Dated:  12/14/05                       RICHARD D. NYE

                                                /s/ Richard D. Nye
                                                --------------------------------
                                                     Richard D. Nye



                                                CALIFORNIA WATER SERVICE GROUP



         Dated:  12/15/05                       By:  /s/ Peter C. Nelson
                                                   ----------------------------


                                                Its: President & CEO
                                                    ----------------------------


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