Agenda packet — San Jacinto City Council, April 1, 2025 (part 2 of 3)

STATE OF CALIFORNIA ) RESOLUTION NO. PFA 25-02
COUNTY OF RIVERSIDE ) ss

CITY OF SAN JACINTO )

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY

APPROVING AN INSTALLMENT PURCHASE

AGREEMENT AND ASSIGNMENT AGREEMENT, WITH

RESPECT TO FINANCING IMPROVEMENTS TO THE

WATER SYSTEM OF THE CITY OF SAN JACINTO IN AN
AMOUNT NOT TO EXCEED $9,500,000 AND OTHER

MATTERS PERTAINING THERETO
WHEREAS, the City of San Jacinto (the “City”) is authorized by the laws of the State of California to acquire, design, and construct improvements to the City’s water system (the “Water System”); and
WHEREAS, the City has heretofore undertaken the acquisition, design and construction of improvements to the Water System (the “Project”); and WHEREAS, the City and the City of San Jacinto Public Financing Authority (the “Authority”) have determined that it would be in their best interests to provide for the financing (the “Financing”) of the Project by entering into the Installment Purchase Agreement dated April 1, 2025 by and between the City and the Authority (the “Agreement”); and
WHEREAS, the Authority will enter into an Assignment Agreement dated April 1, 2025 with Banc of America Public Capital Corp. (the “Bank”) pursuant to which the Authority will assign its interests in the Agreement to the Bank which in turn will provide the funding for the Project;
WHEREAS, the City, Authority, the Bank and Argent Institutional Trust Company (“Escrow Agent”) will enter into the Escrow and Account Control Agreement dated April 1, 2025 (the “Escrow Agreement”) pursuant to which the Custodian will hold the funds deposited in the project fund established under the Agreement (the “Project Fund”);
WHEREAS, the City has determined that the Financing should be offered for private placement and has received a term sheet from the Bank and that such Financing will bear interest at a fixed rate; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of the Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized to execute, enter into and perform the Agreement;

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Packet Pg. 125 Attachment: Resolution No. PFA 25-02 (Approval of Financing for Certain Water System Improvements) Resolution No. PFA 25-02

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NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE CITY OF
SAN JACINTO PUBLIC FINANCING AUTHORITY RESOLVES AS FOLLOWS:

SECTION 1. Approval of Installment Purchase Agreement. The Agreement, which provides generally for (i) the resale of the Project by the Authority to the City, (ii) the purchase by the City from the Authority of the Project, and (iii) the payment by the City to the Authority of installment payments in amounts which will be sufficient to pay the principal of and interest owing to the Bank, is hereby approved and any of the Executive Director and the Treasurer of the Authority (together, the “Authorized Officers”) are each individually authorized to execute, acknowledge and deliver said agreement on behalf of the Authority in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

SECTION 2 Approval of Assignment Agreement. The Assignment Agreement, which provides generally for the assignment of the Authority’s rights and interests under the Agreement to the Bank in consideration for the purchase price of the Project, is hereby approved and any of the Authorized Officers are each individually authorized to execute, acknowledge and deliver said agreement on behalf of the Authority in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

SECTION 3. Approval of Escrow Agreement. The Escrow Agreement, which provides the terms and conditions pursuant to which the Project Fund is held, is hereby approved and any of the Authorized Officers are each individually authorized to execute, acknowledge and deliver said agreement on behalf of the Authority in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

SECTION 4. Other Acts. The Authorized Officers are hereby authorized and directed, jointly and severally, to do any and all things, to execute and deliver any and all documents, which in consultation with the staff and the City’s legal counsel they may deem necessary or advisable in order to consummate the Financing, or otherwise to effectuate the purposes of this Resolution, and any such actions previously taken by such officers are hereby ratified and confirmed.

SECTION 5. Effective Date. This Resolution shall become effective on the date on which it is adopted.

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Packet Pg. 126 Attachment: Resolution No. PFA 25-02 (Approval of Financing for Certain Water System Improvements) Resolution No. PFA 25-02

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PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Board of Directors of the City of San Jacinto Public Financing Authority on the 1st day of April 2025, by the following vote:

AYES:

NAYS:

ABSENT:

ABSTAIN:

City of San Jacinto Public Financing
Authority:
______________________________
Valerie Vandever, Chairperson
ATTEST:
______________________________
Julia Espinoza, Board Secretary
APPROVED AS TO FORM:

Best Best & Krieger LLP
______________________________
Craig Hayes, General Counsel

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Packet Pg. 127 Attachment: Resolution No. PFA 25-02 (Approval of Financing for Certain Water System Improvements) Resolution No. PFA 25-02

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CERTIFICATION

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss

CITY OF SAN JACINTO )
I, Julia Espinoza, Board Secretary of the City of San Jacinto Public Financing Authority, DO HEREBY CERTIFY that the foregoing Resolution No. PFA 25-02 was passed, approved, and adopted at the Joint Meeting of the San Jacinto City Council and the Board of Directors of the City of San Jacinto Public Financing Authority held on the 1st day of April 2025.

AYES:

NAYS:

ABSENT:

ABSTAIN:

WITNESS MY HAND AND OFFICIAL SEAL this 1st day of April 2025. ________________________________
Julia Espinoza, Board Secretary
City of San Jacinto

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Packet Pg. 128 Attachment: Resolution No. PFA 25-02 (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4

INSTALLMENT PURCHASE AGREEMENT
Dated as of April 1, 2025
by and between

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY
and

CITY OF SAN JACINTO
Relating To

CITY OF SAN JACINTO
$9,097,000
2025 INSTALLMENT FINANCING
(WATER SYSTEM IMPROVEMENTS)

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Packet Pg. 129 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4

TABLE OF CONTENTS
Page
-iARTICLE 1

DEFINITIONS AND EXHIBITS
Section 1.1. Definitions.............................................................................................................. 1 Section 1.2. Liability of City Limited to Net Revenues ............................................................ 7 Section 1.3. Benefits of Installment Purchase Agreement Limited to Parties........................... 7 Section 1.4. Successor Is Deemed Included in all References to Predecessor .......................... 8 Section 1.5. Waiver of Personal Liability.................................................................................. 8 Section 1.6. Article and Section Headings, Gender and References......................................... 8 Section 1.7. Partial Invalidity..................................................................................................... 8 Section 1.8. Exhibits.................................................................................................................. 8 ARTICLE 2

REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City........................................ 8 Section 2.2. Representations, Covenants and Warranties of the Authority ............................. 12 ARTICLE 3

TERMS OF AGREEMENT
Section 3.1. Purchase of Project and City; Risk of Loss. ........................................................ 12 Section 3.2. Security Interest ................................................................................................... 14 Section 3.3. Repayment of the Project by the City; Event of Taxability................................. 14 Section 3.4. Substitution of the Project.................................................................................... 15 Section 3.5. Term..................................................................................................................... 15 Section 3.6. Payments Generally ............................................................................................. 15 Section 3.7. Taxes.................................................................................................................... 16 Section 3.8. Conditions Precedent. .......................................................................................... 16 Section 3.9. Nature of City’s Obligations................................................................................ 17 Section 3.10. Revenue Fund; Pledge of Net Revenues.............................................................. 20 Section 3.11. Project Fund......................................................................................................... 21 ARTICLE 4

COVENANTS OF THE CITY
Section 4.1. Reports and Notices. ............................................................................................ 21 Section 4.2. Existence as City.................................................................................................. 22 Section 4.3. Change in Business.............................................................................................. 22 Section 4.4. Liens against the System...................................................................................... 22 Section 4.5. Insurance .............................................................................................................. 23 Section 4.6. System Maintenance ............................................................................................ 24 Section 4.7. Against Sale or Other Disposition of the System ................................................ 24 Section 4.8. Eminent Domain Proceeds................................................................................... 24 Section 4.9. Amounts of Rates, Fees and Charges; Financial Covenants................................ 25 Section 4.10. Enforcement of and Performance Under Parity Obligations............................... 26

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Packet Pg. 130 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4

TABLE OF CONTENTS
(continued)
Page
-iiSection 4.11. Collection of Charges, Fees and Rates ................................................................ 26 Section 4.12. Against Encumbrances......................................................................................... 26 Section 4.13. Execution of Parity Obligations........................................................................... 27 Section 4.14. Conditions for Entering into Parity Obligations.................................................. 27 Section 4.15. Tax Covenants. .................................................................................................... 28 Section 4.16. Reconstruction of System; Application of Insurance Proceeds........................... 28 Section 4.17. Records and Accounts.......................................................................................... 29 Section 4.18. Collection of Charges .......................................................................................... 29 Section 4.19. Against Competing Utility................................................................................... 29 Section 4.20. Compliance with this Installment Purchase Agreement ...................................... 29 Section 4.21. Observance of Laws and Regulations.................................................................. 30 Section 4.22. Budget.................................................................................................................. 30 Section 4.23. Inspection............................................................................................................. 30 Section 4.24. Further Assurances and Other Information.......................................................... 30 Section 4.25. Delivery of Original Documents.......................................................................... 30 Section 4.26. No Public Registration......................................................................................... 30 Section 4.27. Indemnity for Taxes............................................................................................. 31 Section 4.28. ERISA.................................................................................................................. 31 ARTICLE 5

EVENTS OF DEFAULT AND REMEDIES
Section 5.1. Events of Default and Acceleration of Installment Purchase Agreement............ 31 Section 5.2. Application of Funds Upon Acceleration or Event.............................................. 34 Section 5.3. Other Remedies of the Authority......................................................................... 36 Section 5.4. No Remedy Exclusive.......................................................................................... 36 Section 5.5. Agreement to Pay Attorneys’ Fees and Expenses ............................................... 36 Section 5.6. No Additional Waiver Implied by One Waiver................................................... 36 Section 5.7. Prosecution and Defense of Suits ........................................................................ 37 ARTICLE 6

PREPAYMENT OF AGREEMENT
Section 6.1. Optional Prepayment ........................................................................................... 37 Section 6.2. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain................................................................................................................. 37 Section 6.3. Effect of Prepayment ........................................................................................... 38 ARTICLE 7

MISCELLANEOUS
Section 7.1. Notices ................................................................................................................. 38 Section 7.2. Assignment by the Authority............................................................................... 39 Section 7.3. Assignment by the City........................................................................................ 40 Section 7.4. Amendment of this Installment Purchase Agreement ......................................... 40

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Packet Pg. 131 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4

TABLE OF CONTENTS
(continued)
Page
-iiiSection 7.5. Binding Effect...................................................................................................... 40 Section 7.6. Severability .......................................................................................................... 41 Section 7.7. Net-Net-Net Parity Obligation............................................................................. 41 Section 7.8. Further Assurances and Corrective Instruments.................................................. 41 Section 7.9. Execution in Counterparts.................................................................................... 41 Section 7.10. Applicable Law and Venue.................................................................................. 41 Section 7.11. Captions............................................................................................................... 41 Section 7.12. USA Patriot Act Notice ....................................................................................... 41 Section 7.13. Costs and Expenses.............................................................................................. 42 Section 7.14. Indemnification .................................................................................................... 42 Section 7.15. Waiver of Jury Trial............................................................................................. 42 EXHIBIT A – Description of Project ........................................................................................A-1 EXHIBIT B – Schedule of Installment Payments .....................................................................B-1 EXHIBIT C – Form of Investor Letter ......................................................................................C-1 EXHIBIT D – Form of Final Acceptance Certificate................................................................D-1 EXHIBIT E – Form of Notice of Acknowledgment of Assignment ...............................................

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Packet Pg. 132 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
1 INSTALLMENT PURCHASE AGREEMENT
THIS INSTALLMENT PURCHASE AGREEMENT (this “Installment Purchase Agreement”), dated for convenience as of April 1, 2025, is by and between City of San Jacinto Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), and the City of San Jacinto (the “City”), a municipal corporation duly organized and existing under the laws of the State of California; WITNESSETH:

WHEREAS, the City desires to enter into this Installment Purchase Agreement for the purpose of financing the acquisition, design and construction of certain improvements to the City’s water system (the “System”) as identified in Exhibit A attached hereto and incorporated herein by reference (the “Project”); and
WHEREAS, in order to finance the Project, the Authority has agreed to sell the Project to the City as provided herein for $9,097,000 and the City will acquire the Project from the Authority and obligate itself to make installment payments in the amounts and on the dates set forth in Exhibit B attached hereto (the “Installment Payments”); and
NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS AND EXHIBITS
SECTION 1.1. Definitions. All capitalized terms used in this Section 1.1 shall for all purposes of this Installment Purchase Agreement have the meanings herein specified or as hereinafter defined.
“2015 Installment Sale Contract” means the Installment Purchase Contract dated as of July 7, 2015 by and between the City and Municipal Finance Corporation, as such agreement was originally executed and as it may from time to time be amended or supplemented. “Acquisition Amount” means $9,097,000.
“Acquisition Period” means the period ending five (5) business days prior to May 1, 2028, (or such later date as may be mutually agreed upon by the Assignee and the City). “Annual Debt Service” means, for any Fiscal Year, the sum of (1) the Installment Payments coming due in such Fiscal Year, and (2) the principal and interest coming due and payable in such Fiscal Year on any Parity Obligations, including the principal amount coming due and payable by operation of mandatory sinking fund redemption. There shall be excluded from such calculation any principal of and interest on the Installment Payments and any Parity Obligations which have

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Packet Pg. 133 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
2 been defeased or discharged, or for the payment of which a security deposit has been posted. In determining the debt service on Parity Obligations for which interest is calculated at a variable interest rates, such Parity Obligation shall be assumed to bear interest at a fixed interest rate equal to the highest variable rate borne over the preceding 24 months by outstanding variable rate debt of the City, or, if no such variable rate debt is at the time outstanding, by variable rate debt for which the interest rate is computed by reference to an index comparable to that to be utilized in determining the interest rate for the Parity Obligation proposed to be issued. With respect to any Parity Obligation that is a tax incentive bond (such as a Build America Bond), such interest shall be equal to the net interest paid by the City after taking into account any anticipated payments to be received by or on behalf of the City from the United States of America. “Assignee” means Banc of America Public Capital Corp, and its successors and assigns. “Assignment Agreement” means the Assignment Agreement dated April 1, 2025 by and between the Authority and the Assignee, as supplemented, amended, modified or restated from time to time.
“Authorized Investments” means any of the following, but only to the extent that the same are acquired at fair market value, which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:
(a) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America; (b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: (i) Export-Import Authority; (ii) Farm Credit System Financial Assistance Corporation, (iii) Farmers Home Administration; (iv) General Services Administration; (v) U.S. Maritime Administration; (vi) Small Business Administration; (vii) Government National Mortgage Association (GNMA); (viii) U.S. Department of Housing & Urban Development (PHA’s); (ix) Federal Housing Administration and (x) Federal Financing Authority; (c) senior debt obligations rated “Aaa” by Moody’s and “AAA” by S&P issued by the Federal National Mortgage Association or the Federal Home Financing Mortgage Corporation, senior debt obligations of other government-sponsored agencies, obligations of the Resolution Funding Corporation (REFCORP) and senior debt obligations of other government sponsored agencies;
(d) U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks (including the Authority and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-1” or “A-1+” by S&P and maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank;
(e) commercial paper which is rated at the time of purchase in the single highest classification, “P-1” by Moody’s and “A-1+” by S&P, and which matures not more than 270 days after the date of purchase;

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Packet Pg. 134 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
3 (f) pre-refunded municipal obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based upon an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s and S&P or any successors thereto; or (ii)(A) which are fully secured as to principal and interest and prepayment premium or redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (a) above, which escrow may be applied only to the payment of such principal of and interest and prepayment premium or redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified prepayment date or redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and prepayment premium or redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the prepayment date or redemption date or dates specified in the irrevocable instructions referred to above, as appropriate;
(g) the Local Agency Investment Fund maintained by the State of California; and
(h) the California Asset Management Program.
“Business Day” means any day other than a Saturday or Sunday or a day on which (i) banks located in Denver, Colorado or Los Angeles, California are not required or authorized to remain closed, and (ii) the New York Stock Exchange is not closed; and (iii) the Authority and Federal Reserve Banks are not closed.
“City” means City of San Jacinto, a municipal corporation duly organized and existing under the laws of the State of California.
“Closing Date” means April 10, 2025.
“Contract(s)” means any instrument pursuant to which a Parity Obligation is issued. “Contract Payment Date” means any date on which Contract Payments are scheduled to be paid by the City under and pursuant to the Parity Obligations and includes each Installment Payment Date under this Installment Purchase Agreement.. “Contract Payments” means the payments scheduled to be paid by the City under and Contract and pursuant to the Parity Obligations, which payments are secured by a pledge of Net Revenues on a parity with this Installment Purchase Agreement. “Contract Rate” means the rate identified as such in the Schedule of Installment Payments. “Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the City and related to the authorization, execution, sale and delivery of this

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Packet Pg. 135 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
4 Installment Purchase Agreement any Parity Obligations, including but not limited to any costs, fees and charges for preparation and execution of this Installment Purchase Agreement or any Parity Obligations and any other cost, charge or fee incurred in connection with the delivery of this Installment Purchase Agreement or such Parity Obligations. “Default” means any event or circumstance which, passage of time or the giving of notice or, following the applicable cure period or any of the foregoing, would constitute an Event of Default.
“Escrow Account” means the Escrow Account established and held pursuant to the Escrow Agreement.
“Escrow Agent” means Argent Institutional Trust Company, a Florida trust company, and any successor escrow agent.
“Escrow Agreement” means the Escrow and Account Control Agreement dated April 1, 2025 by and among the Authority, the City, the Assignee and the Escrow Agent pursuant to which the Project Fund will be held.
“Event of Default” means any of the events of default as defined in Section 5.1. “Federal Securities” means any direct general non-callable obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations the timely payment of principal of and interest on which are directly guaranteed by the United States of America. “Finance Director” means the City’s finance director.
“Financing Documents” means this Installment Purchase Agreement, the Assignment Agreement, the Escrow Agreement and any and all other documents from time to time evidencing, securing, or delivered to the Authority in connection with, this Installment Purchase Agreement. “Fiscal Year” means each twelve-month period during the Term of this Installment Purchase Agreement, commencing on July 1 in any calendar year and ending on June 30 in the next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal year period.
“Generally Accepted Accounting Principles” means United States generally accepted accounting principles, or those required of the regulatory agency having jurisdiction over the City, including but not limited to the Government Accounting Standard Board, if applicable, or such other commission or body as may be agreeable to the Assignee. “Governmental Authority” means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, district or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other person with authority to bind a party at law.

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Packet Pg. 136 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
5 “Independent Certified Public Accountant” means an independent certified public accountant or any firm of certified public accountants appointed by the City. “Installment Payment Date” means each date upon which Installment Payments are due and payable as set forth on Exhibit B hereto.
“Installment Payments” means all payments required to be paid by the City on any date under this Installment Purchase Agreement and pursuant to Section 3.3 and 3.6, including any prepayment thereof pursuant to Section 6.2 or 6.3 and includes all amounts as specified in the Schedule of Installment Payments, consisting of a principal component and an interest component, and in all cases sufficient to repay such principal component and interest thereon at the applicable Contract Rate (or Taxable Rate if then in effect).
“Installment Purchase Agreement” means this Installment Purchase Agreement, dated as of April 1, 2025, between the Authority and the City.
“Maintenance and Operation Costs” means the reasonable and necessary costs and expenses paid by the City for maintaining and operating the System, including but not limited to the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the System in good repair and working order, and including but not limited to administrative costs of the City attributable to the System and the financing thereof, including salaries and wages of employees, payment to employees
“Material Adverse Change” means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business, facilities or operations of the City or the System, (b) the ability of the City to carry out its business in the manner conducted as of the date of this Installment Purchase Agreement or Parity Obligations or to meet or perform its obligations under this Installment Purchase Agreement, any Financing Document or Parity Obligations on a timely basis, (c) the validity or enforceability of this Installment Purchase Agreement or Parity Obligations, or (d) the exclusion of the interest component of the Installment Payments or Parity Obligations, as applicable, from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes. “Maximum Annual Debt Service means, as of the date of any calculation, the maximum sum obtained for the current or any future Fiscal Year during the Term of this Installment Purchase Agreement by totaling the aggregate amount of (1) the Installment Payments coming due in such Fiscal Year, and (2) the principal and interest coming due and payable in such Fiscal Year on any Parity Obligations, including the principal amount coming due and payable by operation of mandatory sinking fund redemption. There shall be excluded from such calculation any principal of and interest on the Installment Payments and any Parity Obligations which have been defeased or discharged, or for the payment of which a security deposit has been posted. In determining the debt service on Parity Obligations for which interest is calculated at a variable interest rates, such Parity Obligation shall be assumed to bear interest at a fixed interest rate equal to the highest variable rate borne over the preceding 24 months by outstanding variable rate debt of the City, or, if no such variable rate debt is at the time outstanding, by variable rate debt for which the interest rate is computed by reference to an index comparable to that to be utilized in determining the interest rate for the Parity Obligation proposed to be issued. With respect to any Parity Obligation

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Packet Pg. 137 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
6 that is a tax incentive bond (such as a Build America Bond), such interest shall be equal to the net interest paid by the City after taking into account any anticipated payments to be received by or on behalf of the City from the United States of America. “Net Proceeds” means any insurance proceeds or condemnation award paid with respect to the System, if any, remaining after payment therefrom of all expenses incurred in the collection thereof.
“Net Revenues” means for any period, an amount equal to all of the Revenues received during such period, minus the amount required to pay all Maintenance and Operation Costs becoming payable during such period.
“Parity Obligations” means all other bonds, notes, installment sale agreements, leases, or other obligations of the City, including this Installment Purchase Agreement, payable from and secured by a pledge of and lien upon any of the Net Revenues incurred on a parity with the Installment Payments, issued in accordance with Section 4.14 hereof, including, but not limited to the 2015 Installment Purchase Contract.
“Person” means any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof). “Project” means the equipment, fixtures and other goods and property listed in the Exhibit A hereto and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to this Installment Purchase Agreement. “Project Costs” means the total cost of the Project, including related soft costs such as freight, installation and taxes and other capitalizable costs, and other costs incurred in connection with the acquisition, installation and/or financing of the Project. “Project Fund” means the Escrow Account.
“Resolution of Issuance” means Resolution No. __ adopted on April 1, 2025. “Revenue Fund” means the fund established under Section 3.9 and held by the City for the receipt and deposit of Revenues.
“Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the System, including, without limiting the generality of the foregoing, (1) all income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys derived by City from the sale, furnishing and supplying of the water or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the System, plus (2) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, or other moneys, including City reserves, plus (3) the proceeds of any stand-by or water availability charges collected by City, but excluding in all cases customer deposits, connection fees, development impact fees or any other deposits or advances subject to refund until such deposits or advances have become the property of City.

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Packet Pg. 138 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
7 ”Schedule of Installment Payments” means the schedule set forth in Exhibit B. “Subordinate Obligations” means all obligations of the City that are subordinate in all respects, including priority and payment and enforcement, to the Installment Payments and payments required under Parity Obligations.
“System” means the existing facilities and property owned or operated by the City in connection with the water supply services of the City, together with all extensions thereof and improvements thereto hereafter acquired, constructed or installed by the City. For the avoidance of doubt, the term System is synonymous with the definitions of “Enterprise” under the 2015 Installment Sale Agreement.
“System Obligation” means any long-term obligation of the City payable from and/or secured by (in whole or in part) any of the Revenue Fund (or any portion thereof) or any Revenues (or any portion thereof), including this Installment Purchase Agreement and all other Parity Obligations and Subordinate Obligations.
“Taxable Rate” means, 5.5142%.
“Tax Code” means the Internal Revenue Code of 1986, as amended. Any reference herein to a provision of the Tax Code shall include all applicable temporary and permanent regulations promulgated under the Tax Code.
“Term of this Installment Purchase Agreement” or “Term” means the time during which this Installment Purchase Agreement is in effect, as provided in Section 3.4.

SECTION 1.2. Liability of City Limited to Net Revenues. Notwithstanding anything to the contrary contained in this Installment Purchase Agreement, the City shall not be required to advance any money derived from any source of income other than the Net Revenues, for the payment of the principal of or interest or prepayment premiums, if any, on the Installment Payments or for the performance of any covenants herein contained, nor for the maintenance and operation of the System from any source of income other than the Revenues. The City may, however, advance funds for any such purpose so long as such funds are derived from a source legally available for such purpose without incurring any indebtedness. The Installment Payments and any prepayment premiums upon the prepayment thereof shall be payable exclusively from the Net Revenues only as provided in this Installment Purchase Agreement. The credit of the City is not otherwise pledged for the payment of the Installment Payments or interest thereon. The principal of and interest on the Installment Payments and any prepayment premiums upon the prepayment thereof shall not be payable from or secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the City or any of its income, receipts, or revenues, except the Net Revenues pledged to the payment thereof as provided in this Installment Purchase Agreement.

SECTION 1.3. Benefits of Installment Purchase Agreement Limited to Parties.

Nothing contained herein, expressed or implied, is intended to give to any person other than the City and the Authority any right, remedy or claim under or pursuant hereto. Any agreement or covenant required herein to be performed by or on behalf of the City shall be for the sole and exclusive benefit of the Authority.

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8 SECTION 1.4. Successor Is Deemed Included in all References to Predecessor.

Whenever the City is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the City, and all agreements and covenants required hereby to be performed by or on behalf of the City shall be assumed fully by and will bind and inure to the benefit of the successors thereof whether so expressed or not.

SECTION 1.5. Waiver of Personal Liability. No member of the City’s Board of Directors and no officer, agent, or employee of the City, or of any department or agency thereof, shall be individually or personally liable for the payment of the principal of or interest on this Installment Purchase Agreement, but nothing contained herein shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law or hereby.

SECTION 1.6. Article and Section Headings, Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. Words of any gender shall be deemed and construed to include all genders. All references herein to “articles,” “sections” and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith” and other words of similar import refer to this Installment Purchase Agreement as a whole and not to any particular article, section, subdivision or clause hereof.

SECTION 1.7. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the City shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof; but the Authority shall retain all the rights and benefits accorded to it under any applicable provisions of law.

SECTION 1.8. Exhibits. The following Exhibits are attached to, and by reference made a part of this Installment Purchase Agreement:

Exhibit A: Description of the Project.

Exhibit B: Schedule of Installment Payments.

Exhibit C: Form of Investor Letter to be executed by the Assignee.

ARTICLE 2

REPRESENTATIONS, COVENANTS AND WARRANTIES
SECTION 2.1. Representations, Covenants and Warranties of the City. The City represents, covenants and warrants to the Authority as follows:
(a) Installment Purchase Agreement. Each representation and warranty and all information set forth in this Installment Purchase Agreement, each other Financing Document

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9 and/or any other document submitted in connection with, or to induce the Authority to enter into this Installment Purchase Agreement is correct in all material respects as of the Closing Date. (b) Due Organization and Existence. The City is a municipal corporation and political subdivision of the State of California, duly organized and existing under the laws of the State of California, with full power and authority to enter into this Installment Purchase Agreement and each other Financing Document and conduct its business. (c) Authorization. The laws of the State of California authorize the City to enter into this Installment Purchase Agreement and each other Financing Document and to enter into the transactions contemplated hereby and thereby, and to carry out its obligations under this Installment Purchase Agreement and each other Financing Document and the Board of Directors of the City has duly authorized the execution and delivery of this Installment Purchase Agreement and each other Financing Document.
(d) Conflicting Agreements. Neither the execution and delivery of the this Installment Purchase Agreement or any other Financing Document nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City or any of its property is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrances whatsoever upon any of the property or assets of the City, other than as set forth herein. (e) Consents and Approvals. All consents, approvals, authorizations, orders, licenses or permits of any Governmental Authority, legislative body, board, agency or commission having jurisdiction of the matter, that are required for the due authorization by, or that would constitute a condition precedent to or the absence of which would materially adversely affect the making or accepting of this Installment Purchase Agreement and the execution, delivery of and performance of any Financing Document by the City have been duly obtained (except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of this Installment Purchase Agreement, as to which no representation is made).
(f) Budgets; Full Disclosure. All budgets, projections, feasibility studies, and other documentation submitted by the City to the Authority in connection with, or to induce the Authority to enter into, this Installment Purchase Agreement and the other Financing Documents to which it is a party are based upon assumptions that are true and correct, and as of the Closing Date, no fact has come to light, and no event has occurred, that would cause any assumption made therein to be misleading or untrue. Neither this Installment Purchase Agreement or any other Financing Document nor other certificate, statement, agreement, or document furnished to the Authority in connection with this Installment Purchase Agreement or any other Financing Document (a) contains any untrue statement of a material fact, or (b) fails to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. The City is not aware of any Material Adverse Change that has not been disclosed in writing to the Authority.

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10 (g) Accurate Financial Information. Each submission of financial information or documents relating to the City will constitute a representation and warranty by the City that such information and documents (a) are true and accurate in all material respects, and (b) do not fail to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (h) System Condition. The System reasonably meets present demand in all material respects, is constructed in a good and professional manner, is in good working order and condition, and complies in all material respects with all applicable law. (i) Rate Matters. The City’s rates for the provision of water have been approved, if applicable, by any and all necessary governmental regulatory authorities, including, without limitation, each public service commission or public utilities commission that may have jurisdiction over the operations and rates of the City. Further, to the City’s actual knowledge there is no pending or threatened proceeding before any Governmental Authority, the objective or result of which is or could be to materially reduce or otherwise materially adversely change any of the City’s rates for the provision of water services, or otherwise have a material adverse effect on the condition, financial or otherwise, operations, properties, or business of the System. (j) Litigation. There is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, government agency, public board or body, is pending for which the City has been served or, to the City’s actual current knowledge, threatened against the City: (i) in any way affecting the existence of the City or in any way challenging the respective powers of the several offices or the titles of the officials of the City to such offices; (ii) affecting or seeking to prohibit, restrain or enjoin the making, execution or delivery of this Installment Purchase Agreement or the other Financing Documents or the application of the proceeds of this Installment Purchase Agreement or the other Financing Documents; (iii) in any way contesting or affecting, as to the City, the validity or enforceability of this Installment Purchase Agreement or the other Financing Documents; (iv) in any way contesting the powers of the City or its authority with respect to the adoption of Resolution of Issuance, or the execution and delivery of this Installment Purchase Agreement or the other Financing Documents; or (v) in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby or that might materially adversely affect the ability of the City to perform and satisfy its obligations under this Installment Purchase Agreement or the other Financing Documents; nor to the best of the City’s knowledge is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the proceedings authorizing this Installment Purchase Agreement or the other Financing Documents or the performance by the City of its obligations hereunder or thereunder, or the authorization, execution, delivery or performance by the City of this Installment Purchase Agreement or the other Financing Documents.
(k) Valid and Binding Obligation. This Installment Purchase Agreement and each of the Financing Documents is a valid and binding obligation of the City enforceable in accordance with its terms.
(l) Pledge and Other Liens. The pledge in Section 3.9(b) of this Installment Purchase Agreement constitutes a lien on and a pledge of all Net Revenues and there are no other liens on

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11 the Net Revenues as of the Closing Date except those in favor of the 2015 Installment Sale Agreement on a pari passu basis with this Installment Purchase Agreement. (m) Due Execution. The City has duly authorized and executed this Installment Purchase Agreement and the other Financing Documents in accordance with the laws of the State. (n) No Default Event of Non-Appropriation. The City is not in default and has not failed to appropriate funds required under the terms, conditions or provisions of any agreement or instrument to which the City has issued debt in the past ten years. (o) Outstanding Parity Obligations. The City has not issued or incurred any obligations which are currently outstanding having any priority in payment out of the Revenues or the Net Revenues over the payment of the Installment Payments as provided herein. As of the date of this Installment Purchase Agreement, the 2015 Installment Sale Agreement constitutes the only outstanding Parity Obligations. Other than the lien granted to the 2015 Installment Sale Agreement on a pari passu basis with this Installment Purchase Agreement, the City has not granted any lien in the Net Revenues or the Project that would be senior in priority to, or pari passu with, the first priority lien granted to the Authority on the Net Revenues and the Project under this Installment Purchase Agreement.
(p) Project Representations.
i. The City has complied and will comply with such procurement and public bidding requirements as may be applicable to the acquisition and construction by the City of the Project.
ii. During the Term, the Project will be used by the City only for the purpose of performing essential governmental or proprietary functions of the City consistent with the permissible scope of the City’s authority. The City does not intend to sell or otherwise dispose of the Project or any interest therein prior to the last Installment Payment scheduled to be paid hereunder.
iii. The City has an immediate need for the Project and expects to make immediate use of the Project. The City’s need for the Project is not temporary and the City does not expect the need for any item of the Project to diminish during the Term. iv. The City is the fee owner of the real estate where the Project is and will be located (the “Real Property”) and has good and marketable title thereto, and there exists no mortgage, pledge, lien, security interest, charge or other encumbrance of any nature whatsoever on or with respect to such Real Property. In the event any lien, encumbrance, restriction, asserted encumbrance, claim, dispute or other issue exists or arises with respect to the City’s legal title to or valid and marketable, beneficial use and enjoyment of the Real Property or impairs or adversely impacts Authority’s right, title or interest in the Project or any of Authority’s rights or remedies under this Installment Purchase Agreement with respect to the Project (each of the foregoing referred to as a “Real Property Issue”), City will take all steps necessary to promptly quiet, resolve and/or eliminate such Real Property Issue to the satisfaction of Authority and ensure that City and Authority have adequate access to and use of (including beneficial use and enjoyment of) the Real Property for all

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12 purposes of the Project contemplated herein and City shall ensure that its fee interest in the Real Property and Authority’s right, title or interest in the Project and rights or remedies under this Installment Purchase Agreement with respect to the Project remain free and clear of Real Property Issues.

SECTION 2.2. Representations, Covenants and Warranties of the Authority. The Authority represents, covenants and warrants to the City as follows:
(a) Due Organization and Existence. The Authority is a joint powers authority organized and existing under the laws of the State of California. (b) Authorization. The Authority is authorized to enter into this Installment Purchase Agreement and each other Financing Document to which it is a party and the transactions contemplated hereby, and the Authority has duly authorized the execution and delivery of this Installment Purchase Agreement and each other Financing Document to which it is a party. (c) No Violations. Neither the execution and delivery of this Installment Purchase Agreement nor any other Financing Document to which it is a party nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Authority is now a party or by which the Authority or its property is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Authority. (d) Litigation. To the best knowledge of the Authority, there is no pending or threatened action or proceeding against the Authority or for which the Authority has received actual notice before any court or administrative agency which will materially adversely affect the ability of the Authority to perform its obligations under this Installment Purchase Agreement or any other Financing Document to which it is a party.
(e) Investor Letter. The Authority will cause the Assignee to deliver to the City a certificate or letter substantially in the form set forth in Exhibit C attached hereto, and will abide by all transfer restrictions herein and therein.

ARTICLE 3

TERMS OF AGREEMENT
SECTION 3.1. Purchase of Project and City; Risk of Loss.. (a) The Authority agrees to provide funds, in a single advance on the Closing Date solely through proceeds received from the Assignment Agreement, in the Acquisition Amount to the City via wire transfer, as set forth in written instructions provided by the City, for the City to acquire property and easements which are necessary for the acquisition, construction and/or installation of the Project and for the acquisition, construction and/or installation of the Project.

The Authority hereby appoints the City as its agent to carry out all phases of the acquisition, design construction, installation and/or equipping of the Project and the City, as agent of the Authority,

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13 assumes all rights, duties, responsibilities and liabilities of the Authority regarding the acquisition, design, construction, installation and/or equipping of the Project. Title to the Project, and each and every portion thereof shall vest in the City upon the acquisition, design and construction thereof; provided, however, the City shall be subject to the payment of Installment Payments as described under this Installment Purchase Agreement and any other amounts due hereunder, to the remedies of the Authority in the Event of Default as provided in Article 5 hereof. The City, as agent of the Authority, may enter into any purchase order, construction management agreement, architecture or engineering contract or construction contract required for the design, acquisition, construction, installation and completion of the Project. The Authority hereby assigns to the City all rights and powers to enforce such purchase orders or contracts as are required for design, acquisition, construction, installation, purchase and completion of the Project, which enforcement may be by auction at law or in equity; provided that the assignment made by the Authority herein shall not prevent the Authority, or its assignee, from asserting any rights or remedies legally available to it. Any appointment of the City as agent of the Authority is limited solely to the extent required under applicable law to render enforceable this Installment Purchase Agreement and to enable the City to acquire, construct, own and operate the Project, but shall not operate to bind or obligate the Authority for any purpose whatsoever. The City shall not represent to any person that it is acting as agent for the Authority.
(b) Risk of Loss. Whether or not covered by insurance or self insurance, the City hereby assumes all risk of loss of, or damage to and liability related to injury or damage to any persons or property arising from the Project from any cause whatsoever, and no such loss of or damage to or liability arising from the Project shall relieve the City of the obligation to make the Installment Payments or to perform any other obligation under this Installment Purchase Agreement. Whether or not covered by insurance or self insurance, the City hereby agrees to reimburse the Authority and the Assignee (to the fullest extent permitted by applicable law, but only from legally available funds) for any and all liabilities, obligations, losses, costs, claims, taxes or damages suffered or incurred by reimburse the Authority or the Assignee, regardless of the cause thereof and all expenses incurred in connection therewith (including, without limitation, counsel fees and expenses, and penalties connected therewith imposed on interest received) arising out of or as a result of (a) entering into this Installment Purchase Agreement or any of the transactions contemplated hereby, (b) the ordering, acquisition, ownership use, operation, condition, purchase, delivery, acceptance, rejection, storage or return of any item of the Project, (c) any accident in connection with the operation, use, condition, possession, storage or return of any item of the Project resulting in damage to property or injury to or death to any person, and/or (d) the breach of any covenant of the City under or in connection with this Installment Purchase Agreement or any material misrepresentation provided by the City under or in connection with this Installment Purchase Agreement. The provisions of this Section 3.1(b) shall continue in full force and effect notwithstanding the full payment of all obligations under this Installment Purchase Agreement or the termination of the Term of this Installment Purchase Agreement for any reason. (c) Disclaimer of Warranties. The Authority and Assignee make no warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for particular purpose or fitness for use of any of the Project, or any other warranty or representation, express or implied, with respect thereto and, as to the Authority and the Assignee, the City’s acquisition of the Project shall be on an “as is” basis. In no event shall the Assignee be liable for any incidental, indirect, special or consequential damage in connection with or arising

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14 out of this Installment Purchase Agreement, the Project or the existence, furnishing, functioning or the City’s use of any item, product or service provided for in this Installment Purchase Agreement.

SECTION 3.2. Security Interest. As additional security for the payment and performance of all of the City’s obligations hereunder, the City hereby grants to Assignee as assignee of the Authority (a) a first priority security interest in the Project, together with all replacements, repairs, restorations, modifications and improvements thereof or thereto and all accessories, equipment, parts and appurtenances appertaining or attached to any of the Project, and all substitutions, renewals, or replacements of and additions, improvements, accessions and accumulations to any and all of such Project, together with all the rents, issues, income, profits, proceeds and avails therefrom, (b) first priority security interest constituting a first lien on moneys and investments held from time to time in the Project Fund, (c) a first priority security interest constituting a first lien on the Revenue Fund and Net Revenues on a parity basis with the other Parity Obligations, (d) a first priority security interest constituting a first lien on all accounts, chattel paper, deposit accounts, documents, instruments, general intangibles and investment property (including any securities accounts and security entitlements relating thereto) evidenced by or arising out of or otherwise relating to the foregoing collateral described in clauses (b) and (c) above, as such terms are defined in Article 9 of the California Commercial Code, and (e) any and all proceeds of any and all of the foregoing, including, without limitation, insurance proceeds (collectively, the “Collateral”). The City authorizes the Assignee to file (and City agrees to execute, if applicable) such notices of assignment, chattel mortgages, financing statements and other documents, in form satisfactory to the Assignee, which the Assignee deems necessary or appropriate to establish and maintain the Assignee’s security interest in the Collateral, including, without limitation, such financing statements with respect to personal property and fixtures under Article 9 of the California Commercial Code and treating such Article 9 as applicable to entities such as City. Notwithstanding the foregoing or anything herein to the contrary, the Authority acknowledges and agrees that its security interest in the Project may be subordinated to the rights of the holders of the Parity Obligations, and it shall not exercise any remedies with respect to its security interest in the Project if doing so would impair the operation of the System or any part thereof necessary to secure adequate Net Revenues for the payment of the interest on and principal of the Parity Obligations, or which would otherwise impair the rights of the holders of Parity Obligations with respect to the Net Revenues or the operation of the System.

SECTION 3.3. Repayment of the Project by the City; Event of Taxability. (a) The City hereby agrees to purchase from the Authority the Project at a purchase price equal to the Acquisition Amount together with interest on the unpaid principal balance of the Acquisition Amount, payable in Installment Payments, payable on each Installment Payment Date as set forth in Exhibit B. If any Installment Payment or other amount payable hereunder is not paid within ten (10) days of its due date, the City shall pay an administrative late charge of five percent (5%) of the amount not timely paid or the maximum amount permitted by law, whichever is less. (b) Upon the occurrence of an Event of Taxability, the interest component of Installment Payments and any charge on Installment Payments or other amounts payable based on the Contract Rate shall have accrued and be payable at the Taxable Rate retroactive to the date as of which the interest component is determined by the Internal Revenue Service to be includible in the gross income of the owner or owners thereof for federal income tax purposes (which retroactive date

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15 shall be the earliest date as of which the interest component of any Installment Payment is deemed includable in the gross income of the owner or owners thereof for federal income tax purposes, which may be earlier than the date of delivery of such determination by the Internal Revenue Service), and the City will pay such additional amount as will result in the owner receiving the interest component at the Taxable Rate.

For purposes of this Section, “Event of Taxability” means the circumstance of the interest component of any Installment Payment paid or payable pursuant to this Installment Purchase Agreement becoming includible for federal income tax purposes in an owner’s gross income as a consequence of any act, omission or event whatsoever, including but not limited to the matters described in the immediately succeeding sentence, and regardless of whether the same was within or beyond the control of the City. An Event of Taxability shall be presumed to have occurred upon (a) the receipt by the Assignee or the City of an original or a copy of an Internal Revenue Service Technical Advice Memorandum or Statutory Notice of Deficiency or other written correspondence which legally holds that the interest component of any Installment Payment is includable in the gross income of the owner thereof; (b) the issuance of any public or private ruling of the Internal Revenue Service that the interest component of any Installment Payment is includable in the gross income of the owner thereof; or (c) receipt by the Assignee or the City of a written opinion of a nationally recognized firm of attorneys experienced in matters pertaining to the tax exempt status of interest on obligations issued by states and their political subdivisions, selected by the Assignee and acceptable to the City, to the effect that the interest component of any Installment Payment has become includable in the gross income of the owner thereof for federal income tax purposes.

For all purposes of this definition, an Event of Taxability shall be deemed to occur on the date as of which the interest component of any Installment Payment is deemed includable in the gross income of the owner thereof for federal income tax purposes.

SECTION 3.4. Substitution of the Project. The City may substitute other property or components of the Project, but only if the City first obtains the prior written consent of the Assignee in its sole and absolute discretion, which consent shall not be unreasonably withheld, and files with the Authority a statement of the City which:
(a) identifies the property, facilities or combination thereof, to be substituted and the components of the Project that they will replace; and
(b) states that the estimated costs of the substituted property, facilities or combination thereof is not less than the cost of the components of the Project being replaced; and (c) states that such substitution will not adversely affect Net Revenues or otherwise result in a Material Adverse Change.

SECTION 3.5. Term. The Term of this Installment Purchase Agreement shall commence on the Closing Date, and shall end on the date upon which all Installment Payments and all other sums due to the Authority and Assignee hereunder shall be paid in full.

SECTION 3.6. Payments Generally. The Authority has assigned its right to receive payments hereunder to the Assignee. Payments shall be made on or prior to each Installment Payment Date by wire transfer in immediately available funds to the Assignee in accordance with

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16 written instructions provided by the Assignee to the City. Any such written instructions shall be provided by the Assignee to the City at least five days prior to the first Installment Payment Date provided that any failure of the City to receive written instructions shall not delay, impair or eliminate the City’s obligation to timely pay Installment Payments.

SECTION 3.7. Taxes. Any payment by the City to the Authority will be made net of any taxes (other than income and similar taxes imposed on or measured by the Authority’s overall net income). The City shall be responsible for the payment of all such taxes.

SECTION 3.8. Conditions Precedent.

The Authority’s obligation to extend financing under this Installment Purchase Agreement is subject to the condition precedent that the Authority receive, in form and substance satisfactory to the Authority, each of the following:
(a) Installment Purchase Agreement. A duly executed copy of this Installment Purchase Agreement and all instruments and documents contemplated hereby and thereby. (b) Evidence of Authority. Such certified board resolutions, certificates of incumbency, and other evidence that the Authority may require that this Installment Purchase Agreement, all instruments and documents executed in connection herewith have been duly authorized and executed.
(c) Insurance. Such evidence as the Authority may require that the City is in compliance with Section 4.5 below.
(d) Consents and Approvals. Evidence as the Authority may require that all regulatory and other consents and approvals referred to in Section 2.1 have been obtained and are in full force and effect.
(e) Opinions of Counsel. The City shall provide (i) an opinion of special counsel regarding the validity of this Installment Purchase Agreement; (ii) the entering into and performance of the Financing Documents by the City and the execution and delivery of this Installment Purchase Agreement and the incurrence of debt thereunder complies in all respects with the limitations and restrictions set forth in all of the Contracts and Parity Obligations including the 2015 Installment Sale Agreement; (iii) this Installment Purchase Agreement establishes a first lien on and pledge of the Net Revenues and other funds pledged thereby for the security of the Installment Payments and other amounts payable under this Installment Purchase Agreement, on a parity with the 2015 Installment Sale Agreement and any other Contract or Parity Obligation including issued in accordance with the terms of the Agreement; (iv) this Installment Purchase Agreement establishes a first lien on and pledge of the Net Revenues and other funds pledged thereby for the security of the Installment Payments and other amounts payable under this Installment Purchase Agreement, on a parity with the 2015 Installment Sale Agreement and any other Contract or Parity Obligation including issued in accordance with the terms of the Agreement; (v) the City has duly and validity adopted Resolution No. __ on April 1, 2025 (“Resolution”) at a meeting of the City Council that was duly noticed and held and at which a quorum was present and acting throughout in accordance with the law of the State of California that are applicable to the City, and such Resolution is in full force and effect and has not been modified, amended or

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17 rescinded; and (vi) the portion of Installment Payments designated as interest is excluded from gross income for Federal income tax purposes under Section 103 of the Code and is exempt from State of California personal income taxes; and such interest is not a specific item of tax preference for purposes of the federal alternative minimum tax; and (vii) the tax-exempt status of interest on the interest component of Installment Payments under State laws. (f) Opinion of City Attorney. An opinion of City Attorney to the City to the effect that (i) the City is duly organized, validly existing, and in good standing under the laws of the State, (ii) the City has duly received all requisite approvals and has the legal power to enter into and perform under the Financing Documents, (iii) all proceedings of the City necessary to be taken in connection with the authorization, execution, delivery and performance of the Financing Documents have been duly taken and all such authorizations are presently in effect, (iv) the Financing Documents have been duly executed and delivered by the City and each constitutes the valid and binding obligation of the City enforceable against the City in accordance with its terms, except as enforceability may be limited: by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the rights of creditors generally and by general equitable principles which may limit the right to obtain the remedy of specific performance of obligation other than the obligation to pay money, and (v) the execution, delivery, and performance by the City of the Financing Documents does not as of the date of the opinion: (a) violate any provision of any law, rule or regulation, any judgment, order or ruling of any court or governmental agency, articles of organization, articles of incorporation, other charter documents, bylaws or operating agreement, as applicable, of the City, or any agreement, indenture, mortgage, or other instrument to which the City is a party or by which the City or any of its properties within the system is bound; or (b) be in conflict with, result in a breach of, or constitute with the giving of notice or passage of time, or both, a default under any such agreement, indenture, mortgage, or other instrument; (vi) no consent, permission, authorization, order or license of any governmental authority is necessary in connection with the execution, delivery, performance, or enforcement of the Financing Documents, except such as have been obtained and are in full force and effect; and (vii) the authorization, approval, execution and delivery of the Financing Documents and all other proceedings of the City relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, procurement and public bidding laws and all other applicable State or Federal laws; (viii) to the best of such counsel’s knowledge, there are no actions, suits, or proceedings affecting the City or any of its assets pending or threatened before any governmental entity which: (a) if adversely decided could have a material adverse effect on the City’s condition, financial or otherwise, operations, properties or business, or on its ability to perform its obligations under the Financing Documents; or (b) could adversely affect the transactions contemplated by the Financing Documents or the pledge of Net Revenues to repay Installment Payments and other amounts payable under this Installment Purchase Agreement on a pari passu basis with the 2015 Installment Sale Agreement and any other Contract or Parity Obligation or the security interest of Assignee or its assigns, as the case may be, in the Project, the Project Fund or other Collateral thereunder; or (c) seeks to rescind, terminate, modify, or suspend any consent, permission, authorization, order or license of any governmental authority referred to above.

SECTION 3.9. Nature of City’s Obligations.
(a) Special Obligation. The City’s obligation to pay the Installment Payments is a special obligation of the City limited solely to the Net Revenues and all amounts on deposit in the

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18 Revenue Fund and the Project Fund. Under no circumstances is the City required to advance moneys derived from any source of income other than the Net Revenues and other sources specifically identified herein for the payment of the Installment Payments, and no other funds or property of the City are liable for the payment of the Installment Payments. Notwithstanding the foregoing provisions of this Section, however, nothing herein prohibits the City voluntarily from making any payment hereunder from any source of available funds of the City. (b) Obligations Absolute. The obligations of the City to pay the Installment Payments from the Net Revenues and to perform and observe the other agreements contained herein are absolute and unconditional and are not subject to any defense or any right of setoff, counterclaim or recoupment arising out of any breach of the City or the Authority of any obligation to the City or otherwise with respect to the System, whether hereunder or otherwise, or out of indebtedness or liability at any time owing to the City by the Authority. Until such time as all of the Installment Payments have been fully paid or prepaid, the City:
(i) will not suspend or discontinue payment of any Installment Payments; (ii) will perform and observe all other agreements contained in this Installment Purchase Agreement; and
(iii) will not terminate this Installment Purchase Agreement for any cause, including, without limiting the generality of the foregoing, the occurrence of any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the System, sale of the System, the taking by eminent domain of title to or temporary use of any component of the System, commercial frustration of purpose, any change in the tax or other laws of the United States of America or the State of California or any political subdivision of either thereof or any failure of the Authority to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Installment Purchase Agreement. (c) Protection of Rights. If the Authority fails to perform any such agreements on its part, the City may institute such action against the Authority as the City deems necessary to compel performance so long as such action does not abrogate the obligations of the City contained in the preceding subsection (b). The City may, however, at the City’s own cost and expense and in the City’s own name or in the name of the Authority prosecute or defend any action or proceeding or take any other action involving third persons which the City deems reasonably necessary in order to secure or protect the City’s rights hereunder, and in such event the Authority will (upon reasonable notice, and at the sole expense of the City) cooperate fully with the City to the extent reasonably necessary and take such action reasonably necessary to effect the substitution of the City for the Authority in such action or proceeding if the City shall so request. (d) Budget and Appropriation of Installment Payments. During the Term of this Installment Sale Agreement, the City shall adopt all necessary budgets and make all necessary appropriations of the Installment Payments from the Net Revenues. In the event any Installment Payment requires the adoption by the City of any supplemental budget or appropriation, the City shall promptly adopt the same. The covenants on the part of the City contained in this subsection (d) shall be deemed to be and shall be construed to be duties imposed by law, and it shall be the

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19 duty of each and every public official of the City to take such actions and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out the perform the covenants and agreements in this subsection (d). (e) The City agrees that it will perform and comply with each and every covenant and agreement required to be performed or observed by it each Contract and each other Parity Obligation. All events of default and remedies contained in each Contract and each other Parity Obligation, as well as related defined terms contained therein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety (amended to also take into account this Installment Purchase Agreement and all of the obligations of the City and Installment Payments and other amounts payable under this Installment Purchase Agreement) all of which shall be deemed to be made for the benefit of the Assignee and shall be enforceable against the City (the “Incorporated Provisions”). To the extent that any such Incorporated Provision permits the City or any other party to waive compliance with such provision or requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to the City or any other party, for purposes of this Installment Purchase Agreement, such provision shall be complied with unless it is specifically waived by the Assignee in writing in its sole and absolute discretion and such document, opinion or other instrument and such event or condition shall be acceptable or satisfactory only if it is acceptable or satisfactory to the Assignee which shall only be evidenced by the written approval by the Assignee of the same in its sole and absolute discretion. No termination or amendment to any Incorporated Provision or release of the City made pursuant to any Contract or any other Parity Obligation, shall be effective to terminate or amend such Incorporated Provisions or release the City with respect thereto in each case as incorporated by reference herein without the prior written consent of the Assignee in its sole and absolute discretion. The City shall continue to observe the Incorporated Provisions for the benefit of the Assignee until the termination of such Parity Obligation or payment in full of the applicable Contract. All such Incorporated Provisions shall be in addition to the express covenants contained herein and shall not be limited by the express covenants contained herein nor shall such Incorporated Provisions be a limitation on the express covenants contained herein. (f) In the event that the City shall, directly or indirectly, enter into or otherwise consent to any instrument which such instrument provides any Person with different or more restrictive covenants, different or additional events of default and/or greater rights and remedies with respect to any System Obligation or other instrument or all or any portion of the Revenues, Net Revenues or all or any portion of the System than are provided to the Assignee in this Installment Purchase Agreement, the City shall provide the Assignee with a copy of each such instrument and such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies shall automatically be deemed to be incorporated into this Installment Purchase Agreement and the Assignee shall have the benefits of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies as if specifically set forth herein. The City shall promptly enter into an amendment to this Installment Purchase Agreement to include different or more restrictive covenants, different or additional events of default and/or greater rights and remedies; provided that the Assignee shall have and maintain the benefit of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies even if the City fails to provide such amendment.

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20 The City will preserve and protect the security of the Parity Obligations and the rights of the Assignee and the other owners of the Parity Obligations, and will warrant and defend their rights against all claims and demands of all persons. From and after the execution and delivery of this Installment Purchase Agreement, this Installment Purchase Agreement shall be incontestable by the City.

SECTION 3.10. Revenue Fund; Pledge of Net Revenues.
(a) Revenue Fund; Receipt and Deposit of Net Revenues. There has heretofore been established a special fund known as the “City of San Jacinto Revenue Fund,” which fund is the same fund as the Revenue Fund described in Section 3.8 of the 2015 Installment Sale Agreement and which fund shall continue to be held and maintained by the City so long as this Installment Purchase Agreement and any Parity Obligations are outstanding. All of the Net Revenues and all amounts on deposit in the Revenue Fund are hereby irrevocably pledged to the punctual payment of the Installment Payments and any Parity Obligations. The Net Revenues and such other funds may not be used for any other purpose so long as any of the Installment Payments and any Parity Obligations remain unpaid; except that out of the Net Revenues there may be apportioned such sums, for such purposes, as are expressly permitted by this Section 3.10. In accordance with Section 5451 of Title 1, Chapter 5.5 of the California Government Code, this pledge shall constitute a first and exclusive lien on the Net Revenues and such other moneys for the payment of the Installment Payments and any Parity Obligations in accordance with the terms hereof and the terms of the instruments authorizing the issuance of any Parity Obligations. The City shall deposit all Revenues as and when received by it in the Revenue Fund and the City agrees and covenants that all Revenues deposited by it in the Revenue Fund will be accounted for through and held in trust in the Revenue Fund for the benefit of the Authority and for the benefit of the owners of any Parity Obligations on a pari passu basis. The City shall withdraw from such Revenue Fund and transfer to the Authority an amount of Net Revenues equal to the aggregate amount of the Installment Payment when and as the same becomes due and payable. In addition, the City shall withdraw from such fund or funds such amounts of Net Revenues at such times as required to pay the principal of and interest on any Parity Obligations and otherwise comply with the provisions of the instruments authorizing the issuance of any Parity Obligations. (b) Pledge of Net Revenues. All the Net Revenues are irrevocably pledged by the City to the punctual payment of the interest on and principal of and redemption premiums, if any, on the Installment Payments and the payment of any Contract Payments, subject to the provisions permitting the application thereof for the purposes and on the conditions and terms set forth in this Installment Purchase Agreement. This pledge shall constitute a first lien on the Net Revenues and such other money for the payment of the Installment Payments and the payment of any Contract Payments, in accordance with the terms of this Installment Purchase Agreement and any Parity Obligations. The principal of and interest on the Installment Payments and any prepayment premiums upon the prepayment thereof shall not be payable from or secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the City or any of its income, receipts, or revenues, except the Net Revenues pledged to the payment thereof as provided in this Installment Purchase Agreement.
(c) Other Uses Permitted. The City shall manage, conserve and apply the Net Revenues in such a manner that all deposits required to be made under the preceding paragraph

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21 will be made at the times and in the amounts so required. Subject to the foregoing sentence, so long as no Default has occurred and is continuing hereunder or would result therefrom, the City may at any time and from time to time use and apply Net Revenues for (i) the acquisition and construction of improvements to the System; (ii) the prepayment of this Installment Purchase Agreement or Parity Obligations; or (iii) any other lawful purpose of the City.

SECTION 3.11. Project Fund. Subject to the terms and conditions of this Installment Purchase Agreement, the Authority shall cause the Assignee to provide the Acquisition Amount and deposit the Acquisition Amount in the Project Fund under the Escrow Agreement. The Assignee’s approval of disbursement of funds under the Escrow Agreement is contingent on the City’s compliance with the terms and conditions of this Installment Purchase Agreement and the Escrow Agreement. When amounts are requested from the Project Fund, the City shall promptly execute and deliver Disbursement Requests to the Assignee pursuant to the Escrow Agreement for the purpose of effecting disbursements from the Project Fund to pay (or reimburse) Project Costs for the Project so acquired and installed. In connection with the execution and delivery by the City to Assignee of the final Disbursement Request, the City shall deliver to Assignee a “Final Acceptance Certificate” in the form attached hereto as Exhibit D. Assignee shall not have any responsibility to pay amounts for any Project Costs or Costs of issuance with respect to the Financing Documents or the Project that individually or collectively exceed the Acquisition Amount.

ARTICLE 4

COVENANTS OF THE CITY
SECTION 4.1. Reports and Notices.
(a) Annual Financial Statements. No later than 270 days after the end of each Fiscal Year commencing with Fiscal Year 2024/25 the City shall deliver to the Authority audited financial statements of the City prepared in accordance with the accounting standards set forth by the Government Accounting Standard Board. Such financial statements will: (1) be audited by independent certified public accountants selected by the City; and (2) be accompanied by a report of such accountants containing an opinion. Notwithstanding the foregoing, if audited financial statements are not available within such 270 day period, the City shall provide to the Authority a statement to that effect together with unaudited financial statements reasonably acceptable to the Authority, and shall thereafter provide to the Authority its audited financial statements within 30 days of the City Council meeting at which such audited financial statements are received by the City Council of the City.

Each such audit, in addition to whatever matters may be thought proper by the accountant to be included therein, shall include a summary statement showing the amount of Revenues and the amount of all other funds collected which are required to be pledged or otherwise made available as security for payment of principal of and interest on the Parity Obligations (including the Installment Payments), the disbursements from the Revenues and other funds in reasonable detail. The City shall also provide the Assignee with the City’s approved operating budget for each Fiscal Year within 30 days of approval by the City Council. Any reports required to be delivered to the Assignee may be provided via electronic mail or through the Municipal Securities

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22 Rulemaking Board Electronic Municipal Market Access website. The City further agrees to provide such additional information to the Assignee as Assignee may from time to time reasonably request. Credit information relating to the City may be disseminated among Assignee and any of its affiliates and any of their respective successors and assigns. (b) Notice of Default. Promptly after becoming aware thereof, the City shall provide to the Authority notice of the occurrence of an Event of Default, including, without limitation, any error in the City’s financial information previously provided to the Authority and the occurrence of any breach, default, event of default or event that, with the giving of notice and/or the passage of time and/or the occurrence of any other condition, would become a breach, default or event of default under this Installment Purchase Agreement.
(c) Notice of Certain Events. The City shall provide to the Authority (1) notice at least 30 days prior thereto, of any change in the principal place of business of the City or the office where its records concerning its accounts are kept; and (2) all other notices required to be provided hereunder.

SECTION 4.2. Existence as City. The City shall continue to municipal corporation under the laws of the State of California during the term of this Installment Purchase Agreement.

SECTION 4.3. Change in Business. The City shall not, without the prior written consent of the Assignee, engage in any business activities or operations substantially different from or unrelated to the City’s present business activities or operations.

SECTION 4.4. Liens against the System. The City shall keep the System and the Project free of all levies, Liens, and encumbrances except those created by this Installment Purchase Agreement. With respect to the System, the City shall not, without the prior written consent of the Assignee, create, incur, assume, or allow to exist any mortgage, deed of trust, pledge, lien (including the lien of an attachment, judgment, or execution), security interest, or other encumbrance of any kind upon any of the System’s property, real or personal (collectively, “Liens”). The foregoing restrictions will not apply to:
(a) Liens in favor of the Authority and the Assignee under the Financing Documents;
(b) Liens for taxes, assessments, or governmental charges that are not past due; (c) pledges and deposits under workers’ compensation, unemployment insurance, and social security laws;
(d) pledges and deposits to secure the performance of bids, tenders, contracts (other than contracts for payment of money), and like obligations arising in the ordinary course of business as conducted on the date hereof;
(e) Liens imposed by the law in favor of mechanics, material suppliers, warehouses, and like persons that secure obligations if such Lien is being diligently contested in good faith for a period of thirty days, and the City has posted a bond or posted cash collateral for the full amount of such claim;

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23 (f) easements, rights-of-way, restrictions, and other similar encumbrances that, in the aggregate, do not materially interfere with the occupation, use, and enjoyment of the property or assets encumbered thereby in the normal course of business or materially impair the value of the property subject thereto;
(g) purchase money Liens to secure indebtedness permitted hereunder so long as such security interest is subordinated and subject in all respects to the terms of this Installment Purchase Agreement and the Contracts and Parity Obligations and all rights of the Assignee and the other holders of the Parity Obligations, and the secured party shall not exercise any remedies with respect to its security interest if doing so would impair the operation of the System or any part thereof necessary to secure adequate Revenues or Net Revenues for the payment of the interest on and principal of the Parity Obligations (including this Installment Purchase Agreement), or which would otherwise impair the rights of the holders of Parity Obligations (including the Assignee) with respect to the Revenues or Net Revenues or the operation of the System; and/or (h) Liens relating to Parity Obligations issued in compliance with the provisions of Section 4.14 hereof if such Liens equally and ratably secures all of this Installment Purchase Agreement and the Parity Obligations; and/or (i) existing liens as of the Closing Date and disclosed to the Authority and Assignee in writing prior to the Closing Date and which do not adversely affect the value of, or materially impair, the operation, use or Revenues of the System.

SECTION 4.5. Insurance. The City shall maintain insurance with reputable and financially sound insurance companies or associations, including self-insurance to the extent customary, acceptable to the Authority in such amounts and covering such risks as are usually carried by companies engaged in the same or similar business and similarly situated, and make such increases in the type or amount of coverage as the Authority may reasonably request. All such policies insuring any collateral for the City’s obligations to the Authority will have additional insured, mortgagee and lender’s loss payee clauses or endorsements, as applicable, in form and substance satisfactory to the Authority. At the Authority’s request, the City agrees to deliver to the Authority such proof of compliance with this section as the Authority may require.

The City shall at all times maintain with responsible insurers all such insurance on the System as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to the System. The City shall also maintain, with responsible insurers, worker’s compensation insurance and insurance against public liability and property damage to the extent reasonably necessary to protect the City, the Authority and the Assignee.

Any insurance required to be maintained hereunder may be maintained under and in accordance with a joint exercise of powers agreement, and may be maintained by the City in the form of self insurance or in the form of participation by the City in a program of pooled insurance.

The City shall during the Term of this Installment Purchase Agreement, maintain or cause to be maintained liability insurance naming Assignee and its assigns as additional insured that protects Assignee from liability with limits of at least $5,000,000 per occurrence for bodily injury and property damage coverage (such liability insurance coverage may be in a combination of

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24 primary general liability and/or excess liability umbrella coverage), and in all events issued in form and amount satisfactory to Assignee and by an insurance company that is authorized to do business in the State and having a financial strength rating by A.M. Best Company of “A ” or better; and worker’s compensation coverage as required by the laws of the State. In the event the City is permitted, at Assignee’s sole discretion, to self insure, the City shall provide to Assignee a self insurance letter in form and substance satisfactory to Assignee. The City shall furnish to Assignee evidence of all such insurance or self insurance coverage described in this Section throughout the Term of this Installment Purchase Agreement. The City shall not cancel or modify such insurance or self insurance coverage in any way without first giving written notice thereof to Assignee at least thirty (30) days in advance of such cancellation or modification.

SECTION 4.6. System Maintenance. The City shall maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, the System, and make all alterations, replacements, and improvements thereto as may from time to time be necessary in order to ensure that its properties remain in good working order and condition. The City agrees that at the Authority’s request, which request may not be made more than once a year, the City will furnish to the Authority a report on the condition of the City’s property prepared by a professional engineer satisfactory to the Authority.

SECTION 4.7. Against Sale or Other Disposition of the System. The City will not sell or otherwise dispose of the System or any part thereof essential to the proper operation of the System or that would have a Material Adverse Change on the Net Revenues received or receivable by the City, unless the Installment Payments and the Parity Obligations have been fully paid or provision has been made therefor. The City will not enter into any lease or agreement which impairs the operation of the System or any part thereof necessary to secure adequate Net Revenues for the payment of the interest on and principal of, prepayment premium and redemption premiums, if any, on the Installment Payments and the Parity Obligations, or which would otherwise impair the rights of the Authority or the owners of the Parity Obligations with respect to the Net Revenues or the operation of the System or the tax-exempt status of the interest component of Installment Payments.

The City covenants that neither the System as a whole or substantially as a whole nor any property that is a part thereof which is essential to its proper operation or to the maintenance of the Revenues shall be mortgaged or otherwise encumbered, sold, leased, pledged or disposed of. The Revenues shall not be mortgaged, encumbered, sold, leased, pledged or disposed of or used or have any charge placed thereon except as authorized by the terms of this Installment Purchase Agreement. The City further covenants that it will not enter into any agreement or transaction, including one leasing, selling or otherwise disposing of nonessential property included as part of the System, which impairs the operation of the System or any part of the System necessary to secure adequate Net Revenues (or any portion thereof) to pay all Installment Payments and all Parity Obligations and any other System Obligations, or which otherwise would materially impair the rights of the City with respect to the Net Revenues (or any portion thereof) or the operation of the System (or any portion thereof).

SECTION 4.8. Eminent Domain Proceeds. If all or any part of the System shall be taken by eminent domain proceedings, the net proceeds shall be used as follows:

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25 (a) Except as provided herein, the City covenants that the System will not be encumbered, sold, leased, pledged, any charge placed thereon, or otherwise disposed of, as a whole or substantially as a whole if such encumbrance, sale, lease, pledge, charge or other disposition would materially impair the ability of the City to pay the Installment Payments or the principal of or interest on any Parity Obligations, or would materially adversely affect its ability to comply with the terms of this Installment Purchase Agreement or the instruments authorizing the issuance of any Parity Obligations. The City shall not enter into any agreement which impairs the operation of the System or any part of it necessary to secure adequate Net Revenues to pay the Installment Payments and any Parity Obligations, or which otherwise would impair the rights of the Authority with respect to the Net Revenues. If any substantial part of the System is sold, the payment therefor must either (a) be used for the acquisition or construction of improvements and extensions or replacement facilities or (b) be applied to prepay or redeem the Installment Payments and any Parity Obligations, on a pro rata basis, in the manner provided herein and in the instruments authorizing such Parity Obligations.
(b) Any amounts received as awards as a result of the taking of all or any part of the System by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, shall either (a) be used for the acquisition or construction of improvements and extension or replacement facilities of the System, or (b) be applied to prepay or redeem the Installment Payments and any Parity Obligations, on a pro rata basis, in the manner provided herein and in the instruments authorizing such Parity Obligations.

SECTION 4.9. Amounts of Rates, Fees and Charges; Financial Covenants. (a) The City will, at all times while any of the Installment Payments remain outstanding, fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the System during each Fiscal Year and manage the operation of the System for each Fiscal Year so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and errors in the estimates, to pay the following amounts during such Fiscal Year in the following order of priority:
(i) All current Maintenance and Operation Costs;
(ii) The interest on and principal of and prepayment premium (if any) the Installment Payments and the payments for the Parity Obligations, without preference or priority;
(iii) All payments required for compliance with the terms of this Installment Purchase Agreement and each other Parity Obligation, including without limitation, any obligation to maintain a reserve fund at a certain level, collectively, on a parity basis; (iv) All payments to meet any other obligations of the City which are charges, liens or encumbrances upon, or payable from, the Revenues; and (v) To the extent all of the foregoing amounts have been paid and no Event of Default or Default has occurred, payments with respect to the Subordinate Obligations and any other System Obligations as they become due and payable.

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26 (b) Debt Service Coverage Ratio. The City will at the end of each Fiscal Year of the City, commencing with the Fiscal Year ending June 30, 2025, the Debt Service Coverage Ratio of: (i) Net Revenues for such Fiscal Year; to (ii) Maximum Annual Debt Service for such Fiscal Year.

SECTION 4.10. Enforcement of and Performance Under Parity Obligations. The City shall enforce all material provisions of any contracts to which it is a party, an assignee, successor in interest to a party, or third-party beneficiary, in any case where such contracts provide for water to be produced, transmitted and distributed by the System or provide for payments or services to be rendered to the City. Further, the City will comply with, keep, observe and perform all material agreements, conditions, covenants and terms, express or implied, required to be performed by it, contained in all contracts affecting or involving the System, to the extent that the City is a party thereto.

SECTION 4.11. Collection of Charges, Fees and Rates. The City will have in effect at all times rules and regulations requiring each customer to pay the applicable charges, fees and rates and providing for the billing thereof. In each case where such bill remains unpaid in whole or in part after it becomes delinquent, the City will take necessary actions to enforce the collection procedures contained in the rules and regulations.

SECTION 4.12. Against Encumbrances. The City will not mortgage or otherwise encumber, pledge or place any charge or lien upon the System or any of the Revenues or Net Revenues except as provided in this Installment Purchase Agreement and will not issue any obligations secured by or payable from Net Revenues on a parity with, or senior to, the Installment Payments and Parity Obligations.

The City further covenants that the City shall not issue or incur any Subordinate Obligation unless:
(a) Net Revenues, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or any more recent twelve (12) month period selected by the City ending not more than sixty (60) days prior to the adoption of the resolution approving the instrument pursuant to which such Subordinate Obligation is issued or incurred, as shown by the books of the City shall, after deducting all amounts required for the payment of Installment Payments and all Parity Obligations, have amounted to at least 1.00 times the sum of the maximum annual debt service on all Subordinate Obligations and System Obligations outstanding immediately subsequent to the incurring of such additional obligations. (b) The City must be in compliance with all covenants set forth in this Installment Purchase Agreement and each other Parity Obligation and Contract and System Obligation (including, but not limited to, covenants relating to the issuance of Subordinate Obligations taking into account such proposed Subordinate Obligations) and no Default or Event of Default shall have occurred or be continuing.
(c) The Subordinate Obligations must provide that:
(i) The proceeds of such Subordinate Obligations must be applied to the acquisition, construction, improvement, financing or refinancing of additional facilities,

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27 improvements or extensions of existing facilities within the System, or otherwise for facilities, improvements or property which the City determines are of benefit to the System, or for the purpose of refunding any Parity Obligations and Subordinate Obligations in whole or in part, including all costs (including costs of issuing such Subordinate Obligations and including capitalized interest on such Subordinate Obligations during any period which the City deems necessary or advisable) relating thereto; (ii) Interest on such Subordinate Obligations must be payable no more frequently than any Installment Payment Date (and not on any additional dates); and (iii) The principal of such Subordinate Obligations must be payable on no more frequently than any Installment Payment Date (and not on any additional dates) in which principal is payable on Installment Payments.

The City shall not be required to obtain the consent of the Assignee required pursuant to Section 7.3.

SECTION 4.13. Execution of Parity Obligations. The City may at any time execute any Parity Obligations the Contract Payments under which are payable on a parity with the Installment Payments; provided, that such Parity Obligations meet the conditions and requirements for the issuance of Parity Obligations under Section 4.14 below.

SECTION 4.14. Conditions for Entering into Parity Obligations. The City may at any time enter into a Parity Obligation payable from the Net Revenues and secured by a lien and charge upon the Net Revenues equal to and on a parity with the lien and charge securing this Installment Purchase Agreement, without the consent of Assignee required pursuant to Section

7.3, but only subject to specific conditions precedent, which are summarized below:
(a) The City is not in default under the terms of this Installment Purchase Agreement and the City shall be in compliance with all agreements, conditions, covenants and terms contained in this Installment Purchase Agreement (including, without limitation, the provisions of Sections

4.9 and 4.11) and in each other Parity Obligations required to be observed or performed by it, and a certificate signed by the Finance Director to that effect shall have been filed with the Assignee (this condition shall not apply where the purpose of a Parity Obligation proposed to be issued is to cure such non-compliance, provided that the certification shall identify such noncompliance and state that the issuance of such Parity Obligations and application of the proceeds thereof will cure such noncompliance).
(b) The execution of the Parity Obligation shall have been duly authorized pursuant to all applicable laws.
(c) The Net Revenues for the most recent Fiscal Year for which audited financial statements are available shall have produced Net Revenues equal to at least one hundred twenty percent (120%) of the Maximum Annual Debt Service as calculated after the date of such Parity Obligation and a certificate signed by the Finance Director with supporting calculations based on the audited financial statements demonstrating such compliance delivered to Assignee to that effect shall have been filed with the Authority; provided, that in the event that all or a portion of such Parity Obligation being entered into is for the purpose of refunding and retiring any

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28 outstanding Parity Obligation, interest and principal payments on the Parity Obligation to be so refunded and retired from the proceeds of such Parity Obligation being issued shall be excluded from the foregoing computation of Maximum Annual Debt Service. (d) The Contract Payment Dates for any Parity Obligations shall be:
(i) for interest payments, payable no more frequently than semiannually on any Installment Payment Date (i.e. February 7 and August 7, and not on any additional dates); and
(ii) for principal payments, payable no more frequently than semiannually on any Installment Payment Date (i.e. February 7 and August 7, and not on any additional dates).

SECTION 4.15. Tax Covenants.

The City hereby covenants that, notwithstanding any other provision of this Installment Purchase Agreement, it will make no use of the proceeds of this Installment Purchase Agreement or of any other amounts, regardless of the source, or of any property or take any action, or refrain from taking any action, that would cause this Installment Purchase Agreement to be “arbitrage bonds” within the meaning of Section 148 of the Tax Code.

The City will not use or permit the use of either System or any portion thereof by any person other than a governmental unit as such term is used in Section 141 of the Tax Code, in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of the interest payable pursuant to this Installment Purchase Agreement under Section 103 of the Tax Code.

The City will not make any use of the proceeds from this Installment Purchase Agreement or any other funds of the City, or take or omit to take any other action, that would cause the obligation provided herein to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code or “private activity bonds” within the meaning of Section 141 of the Tax Code. To that end, so long as the Installment Payments are unpaid, the City, with respect to such proceeds and such other funds, will comply with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under the Tax Code to the extent such requirements are, at the time, applicable and in effect.

The City shall promptly file or cause to be filed an information report for the Installment Payments in compliance with Section 149 (e) of the Tax Code.

The City has complied with the Tax Code, with respect to this Installment Purchase Agreement, and the City shall not knowingly take or omit to take any action that, under existing law which may adversely affect the exclusion from gross income for federal income tax purposes, or the exemption from any applicable State tax of the interest on Installment Purchase Agreement.

SECTION 4.16. Reconstruction of System; Application of Insurance Proceeds. If any useful portion of the System shall be damaged or destroyed, the City shall, as expeditiously as possible, continuously and diligently pursue or cause to be pursued the reconstruction or

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29 replacement thereof, unless the City shall file with the Authority a written certificate of an engineer qualified to render such certificate to the effect that such reconstruction or replacement is not in the best interests of the City and the Authority. All amounts collected from insurance against accident to or destruction of any portion of the System shall be used to repair or rebuild such damaged or destroyed portion of the System or if determined not to repair or rebuild such portion and in any event to the extent not so applied, must either (a) be used for the acquisition or construction or improvements and extensions or replacement facilities or (b) be applied to prepay or redeem the Installment Payments and any Parity Obligations, on a pro rata basis, in the manner provided in the Installment Sale Agreement and the Installment Purchase Agreement and in any other instruments authorizing such Parity Obligations. The proceeds of any insurance paid on account of such damage or destruction, other than business interruption loss insurance or public liability insurance, shall be deposited by the City in a special account, held in trust by the City, and made available for, and to the extent necessary applied to, the cost of such reconstruction or replacement, if any and applied pursuant to this Section. Pending such application, such proceeds may be invested by the City in investments permitted by Section 53601 of the California Government Code which mature not later than such times as shall be necessary to provide moneys when needed to pay such cost of reconstruction or replacement. Any balance of such proceeds of insurance not required by the City for the purposes aforesaid shall be deemed Revenues.

SECTION 4.17. Records and Accounts. The City covenants and agrees that it shall keep proper books of record and accounts of the System, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the System, the Revenues and the Net Revenues. Said books shall at all reasonable times be subject to the inspection of the Authority and the Assignee.

SECTION 4.18. Collection of Charges. The City covenants and agrees that, except to the extent that the City is required under agreements and/or contracts existing on the effective date of this Installment Purchase Agreement, no water service from the System may be furnished or rendered to the United States of America, the State, or any private corporation or person free of charge, or for consideration lower than that charged other persons for similar service in accordance with the City’s regulations. The City covenants that it shall maintain and enforce valid regulations for the payment of bills for water service and wastewater treatment and disposal service.

SECTION 4.19. Against Competing Utility. The City will not acquire, construct, operate or maintain, and will not, within the fullest scope of its lawful powers, permit any other private or public corporation, political subdivision, district or agency, or any person whomsoever to acquire, construct, operate or maintain any water system, sewer system or sewer utility in an area presently served by the System.

SECTION 4.20. Compliance with this Installment Purchase Agreement. The City will faithfully observe and perform or cause to be faithfully observed and performed all the covenants, conditions and requirements of this Installment Purchase Agreement, and will not suffer or permit any default to occur hereunder. The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would constitute an Event of Default hereunder. Upon request by the Authority, the City shall provide a written certificate of the City

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30 to the effect that it is in compliance with all covenants, conditions and requirements of this Installment Purchase Agreement, other than those expressly waived by Authority.

SECTION 4.21. Observance of Laws and Regulations. The City will well and truly keep, observe and perform or cause to be kept, observed and performed all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired and enjoyed by the City, including the City’s right to exist and carry on business as a water district, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired.

SECTION 4.22. Budget. The City hereby covenants to take such action as may be necessary to include all Installment Payments and all other amounts due hereunder in its annual budget and to make the necessary annual appropriations for all such Installment Payments and all other amounts due hereunder. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be ministerial duties imposed by law and it shall be the ministerial duty of each and every public official of the City to take such action and do such things as are required by law in the performance of such official duty of such officials to enable the City to carry out and perform the covenants and agreements on the part of the City contained in this Installment Purchase Agreement.

SECTION 4.23. Inspection. Permit the Authority or its agents, upon reasonable notice and during normal business hours or at such other times as the parties may agree, to inspect and visit any of its properties, examine and make excerpts from its books and records, and to discuss its business affairs, finances and accounts with its officers, directors, employees, and independent certified public accountants and to conduct reviews of any collateral.

SECTION 4.24. Further Assurances and Other Information. From time to time and at its expense, execute and deliver such documents and do such other acts and things as the Authority in its sole discretion may deem necessary or advisable from time to time in order to more fully carry out the provisions and purpose of this Installment Purchase Agreement, including delivery of such other information regarding the condition or operations, financial or otherwise, of the City as the Authority may from time to time reasonably request, including, but not limited to, copies of all pleadings, notices and communications referred to in Section 4.1 herein.

SECTION 4.25. Delivery of Original Documents. The City shall deliver to the Authority the original executed versions of this Installment Purchase Agreement, the Financing Documents and the certificates, instruments and documents required to be executed hereunder.

SECTION 4.26. No Public Registration. Without the prior written consent of the Assignee, this Installment Purchase Agreement shall not be (i) assigned a rating by any credit rating agency, (ii) registered with The Depository Trust Company or any other securities depository, (iii) offered pursuant to any type of offering document or official statement or (iv) assigned a CUSIP number.

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31 SECTION 4.27. Indemnity for Taxes. At all times the City shall indemnify and hold and save the Authority and the Assignee harmless from and against any and all actions or causes of action, claims, demands, liabilities, loss, damage or expense of whatsoever kind and nature incurred by the Authority as a result of the non-payment of any documentary stamp tax, intangible tax, interest or penalties associated therewith or any other local, state or federal assessment required to be paid, but not paid in conjunction with the indebtedness evidenced by this Installment Purchase Agreement. The City agrees to pay to the Authority and the Assignee, their successors and assigns, all sums of money requested by the Authority or the Assignee hereunder within ten days of such request, which the Authority or the Assignee will or may advance, pay or cause to be paid, or become liable to pay, on account of or in connection with failure to pay as required by the regulations of the Governmental Authority so imposing said payment. The Authority and the Assignee will be entitled to charge for any and all disbursements made by it in good faith, under the reasonable belief that it or the City is or was liable for the amount so assessed. Any default by the City in making any payments required under this covenant will constitute a payment Event of Default under this Installment Purchase Agreement and the Authority or the Assignee may, at its option, declare the entire amount of principal plus accrued interest thereon due and payable without The parties to this Installment Purchase Agreement contemplate that the Project will be used for a governmental or proprietary purpose of the City and that the Project will therefore be exempt from all property taxes. If the lease, sale, purchase, operation, use, possession or acquisition of the Project or the System is nevertheless determined to be subject to taxation, the City shall pay when due all sales and other taxes, special assessments, governmental and other charges of any kind that are at any time lawfully assessed or levied against or with respect to the Project or the System, the Installment Payments or any part of either thereof, or which become due during the Term of this Installment Purchase Agreement, whether assessed against the City, the Authority or Assignee. The City shall pay all utility and other charges incurred in the operation, use and maintenance of the Project and the System. The City shall pay such taxes, assessments or charges as the same may become due. The City shall pay the fee charged by the California Debt and Investment Advisory Commission with respect to this Installment Purchase Agreement pursuant to Section 8856 (or any successor provision) of the California Government Code. The obligation of the City under this Section 4.27 shall survive termination of this Agreement.

SECTION 4.28. ERISA. The City and its subsidiaries, for so long as this Installment Purchase Agreement remains outstanding, will remain in compliance in all material respects with the applicable provisions of ERISA, the failure to comply with which has or may have a material adverse effect on the City.

ARTICLE 5

EVENTS OF DEFAULT AND REMEDIES
SECTION 5.1. Events of Default and Acceleration of Installment Purchase Agreement. Any of the following events shall constitute an event of default:
(a) Events of Default.

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32 (i) If default shall be made in the due and punctual payment of the interest component of Installment Payments payable pursuant to this Installment Purchase Agreement or with respect to any Parity Obligation when and as the same shall become due and payable; or
(ii) If default shall be made in the due and punctual payment of the principal component of Installment Payments of or prepayment premium, if any, on or of any sinking fund installment pursuant to this Installment Purchase Agreement or with respect to any Parity Obligation when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; or
(iii) If default shall be made by the City in the observance or performance of any of the other agreements, conditions, covenants or terms on its part contained in this Installment Purchase Agreement, and such default shall have continued for a period of thirty (30) days after the City shall have been given notice in writing of such default by the Authority, which may give notice in its discretion; provided, that such default shall not constitute an Event of Default if the City shall commence to cure such default within such thirty (30)-day period and thereafter diligently and in good faith shall proceed to cure such default within a reasonable period of time but not later than an additional thirty (30) days; or
(iv) If the City shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the City, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; or
(v) Any representation or warranty made or deemed to be made by or on behalf of the City in this Installment Purchase Agreement or any other Financing Document or in any certificate, financial or other statement furnished by or on behalf of the City to the Authority pursuant hereto or thereto shall prove to have been inaccurate, misleading or incomplete in any material respect when made; or
(vi) Any material provision of this Installment Purchase Agreement or any other Financing Document shall at any time for any reason cease to be the legal, valid and binding obligation of the City or the Authority or shall cease to be in full force and effect, or shall be declared to be unenforceable, invalid or void, or the validity or enforceability thereof shall be contested by the City or the Authority, or the City or the Authority shall renounce the same or deny that it has any further liability hereunder or thereunder; or (vii) Dissolution, termination of existence, insolvency or business failure of the City; or

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33 (viii) Any court of competent jurisdiction with jurisdiction to rule on the validity of any provision of this Installment Purchase Agreement shall find or rule that this Installment Purchase Agreement is not valid or not binding on the City; or (ix) The City should, after any applicable grace period, breach or be in default under the terms of this Installment Purchase Agreement or any other agreement between the City and the Authority or any affiliate of the Authority; or (x) A judgment, decree, or order for the payment of money will have been rendered against the System which has a material adverse effect on the City and either: (1) enforcement proceedings will have been commenced; (2) a lien prohibited by this Installment Purchase Agreement will have been obtained; or (3) such judgment, decree, or order will continue unsatisfied and in effect for a period of 30 consecutive days without being vacated, discharged, satisfied, bonded, or stayed pending appeal; or (xi) This Installment Purchase Agreement or any Schedule ceases to be legal, valid, binding and enforceable against the City or is in any way terminated (except in accordance with its terms) or becomes or is declared ineffective or inoperative; or (xii) The City has a Material Adverse Change; or
(xiii) Any default occurs (i) under any Parity Obligations or Subordinate Obligations instrument or any other System Obligation; or (ii) any other agreement for borrowing money, lease financing of property or otherwise receiving credit under which the City is an obligor if such default (A) arises under any other agreement for borrowing money, lease financing of property or provision of credit provided by Assignee or any affiliate of Assignee, or (B) arises under any Parity Obligation or Subordinate Obligation instrument or any other System Obligation under which there is outstanding, owing or committed an aggregated amount in excess of $100,000.00; or (xiv) the City fails to maintain insurance required under Section 4.5 hereof, or (iii) observe and perform any covenant, condition or agreement on its part to be observed or performed under Sections 4.4, 4.7, 4.9, 4.12 and/or 4.14 hereof; or (xv) The City shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of the City, or of all or a substantial part of the assets of the City, (ii) be unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have an order for relief entered against it under applicable Federal bankruptcy law, or (v) be subject to any liquidation, readjustment, reorganization, moratorium or insolvency proceeding; or (xvi) An order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator for the City or the System or of all or a substantial part of the assets of the City or the System.
(b) Remedies on Default. Whenever any Event of Default shall have happened and be continuing, the Authority shall have the right, at its option upon notice to the City, to declare the

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34 unpaid aggregate principal components of the Installment Payments as identified on Exhibit B hereto, and the interest accrued thereon, to be immediately due and payable, whereupon the same shall immediately become due and payable.

The Authority shall also have the right, at its option upon notice to the City, to (i) apply to and obtain from any court of competent jurisdiction such decree or order as may be necessary to require officials of the City to charge and collect rates for services provided by the City and the System sufficient to meet all requirements of this Installment Purchase Agreement, (ii) take whatever action at law or in equity as may appear necessary or desirable to collect the Installment Payments then due or thereafter to become due during the Term of this Installment Purchase Agreement, or enforce performance and observance of any obligation, agreement or covenant of the City under this Installment Purchase Agreement, subject to the following paragraph, (iii) Assignee may terminate the Escrow Agreement and apply any proceeds in the Project Fund to the Installment Payments scheduled to be paid hereunder, and (iv) Assignee may take whatever action at law or in equity as may appear necessary or desirable to enforce its rights under the Escrow Agreement or as a secured party in any or all of the Project or the Escrow Account; and/or Assignee may exercise any and all rights and remedies conferred under any Parity Obligation or Contract, including any Incorporated Provision.

Notwithstanding any provision of this Installment Purchase Agreement, the City’s liability to pay the Installment Payments and other amounts hereunder shall be limited solely to Net Revenues as provided in Article 3 hereof. In the event that Net Revenues shall be insufficient at any time to pay the principal and interest on the Installment Payments in full, the City shall not be liable to pay or prepay such delinquent Installment Payments other than from Net Revenues.

In addition, the City shall be liable for, and hereby agrees to pay, all legal costs and expenses, including court costs, incurred by the Assignee in the enforcement of any of the remedies listed above or any other remedy available to the Assignee.

SECTION 5.2. Application of Funds Upon Acceleration or Event. Following an Event of Default, the City shall cause all Net Revenues to be applied to the payment of the principal of and interest then due on the Parity Obligations including this Installment Purchase Agreement (upon presentation of the Parity Obligations to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) as follows: (a) Unless the principal of all of the Parity Obligations including this Installment Purchase Agreement shall have become or have been declared due and payable,
FIRST: To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and
SECOND: To the payment to the persons entitled thereto of the unpaid principal of any the Parity Obligations including this Installment Purchase Agreement which shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by such Parity Obligations including this Installment Purchase Agreement, and, if the

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35 amount available shall not be sufficient to pay in full all such Parity Obligations, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference; and additionally once delinquent payments are paid ratably, as follows:
(b) There shall be created in the Revenue Fund a separate principal and interest subaccount (each a “Principal and Interest Subaccount”) for each Parity Obligation (including this Installment Purchase Agreement) and there shall be transferred, on the last day of each calendar month, from Net Revenues in the Revenue Fund, and credited to the respective Principal and Interest Subaccount, an amount equal to the sum of:
(i) one-twelfth (1/12) of the principal coming due on the next succeeding Contract Payment Date for each Parity Obligation for which principal is scheduled to be paid on an annual basis (including this Installment Purchase Agreement); (ii) one-sixth (1/6) of the principal coming due on the next succeeding Contract Payment Date for each Parity Obligation for which principal is scheduled to be paid on a semiannual basis;
(iii) one-twelfth (1/12) of the interest coming due on the next succeeding Contract Payment Date for each Parity Obligation for which interest is scheduled to be paid on an annual basis; and
(iv) one-sixth (1/6) of the interest coming due on the next succeeding Contract Payment Date for each Parity Obligation for which interest is scheduled to be paid on a semiannual basis (including each Installment Payment Date for this Installment Purchase Agreement); until the amount available in the respective Principal and Interest Subaccount shall equal the principal or interest, as applicable, payable on the next succeeding Contract Payment Date. (c) If the principal of all of the Parity Obligations including this Installment Purchase Agreement shall have become or have been declared due and payable, Net Revenues shall be applied to the payment of the principal and interest then due and unpaid upon such Parity Obligations including this Installment Purchase Agreement, with interest on the overdue principal at the rate borne by such Parity Obligations including this Installment Purchase Agreement, and, if the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Parity Obligation over any other Parity Obligation, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or preference.

Notwithstanding anything in any other instrument to the contrary, following an Event of Default, no portion of any Net Revenues shall pay any amounts on any Subordinate Obligations or other System Obligations other than Parity Obligations including this Installment Purchase Agreement until all Parity Obligations including this Installment Purchase Agreement have been paid current and all Events of Default have been fully cured.

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36 SECTION 5.3. Other Remedies of the Authorityby mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any director, officer or employee thereof, and to compel the City or any such director, officer or employee to perform and carry out its or his duties under the agreements and covenants required to be performed by it or him contained herein;
(b) by suit in equity to enjoin any acts or things that are unlawful or violate the rights of the Authority; or
(c) by suit in equity upon the happening of an Event of Default to require the City and its Board of Directors, officers and employees to account as the trustee of an express trust.

SECTION 5.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Installment Purchase Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article 5 it shall not be necessary to give any notice, other than such notice as may be required, in this Article 5 or by law.

SECTION 5.5. Agreement to Pay Attorneys’ Fees and Expenses. In the event either party to this Installment Purchase Agreement should default under any of the provisions hereof and the non-defaulting party should employ attorneys (including in-house counsel) or incur other expenses for the collection of moneys or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the non-defaulting party the reasonable fees of such attorneys (including the allocable cost of in-house counsel) and such other expenses so incurred by the non-defaulting party.

SECTION 5.6. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Installment Purchase Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.

A waiver of any default or breach of duty or contract by the Authority shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Authority to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Authority by law or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Authority. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Authority, the City and the Authority shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.

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37 SECTION 5.7. Prosecution and Defense of Suits. The City shall promptly, upon request of the Assignee, from time to time take or cause to be taken such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the System whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose.

ARTICLE 6

PREPAYMENT OF AGREEMENT
SECTION 6.1. Optional Prepayment. From and after the date specified (if any) in the Schedule of Installment Payments (the “Prepayment Option Commencement Date”), on the Installment Payment Dates specified in the Schedule of Installment Payments, upon not less than forty-five (45) days prior written notice, and upon payment in full of the sum of all Installment Payments then due plus the then applicable Prepayment Price, which shall include a prepayment premium on the unpaid Outstanding Balance as set forth in the Schedule of Installment Payments plus all other amounts then owing hereunder.

After payment of the applicable Prepayment Price and all other amounts then owing hereunder in accordance with this Section 6.1 of this Installment Purchase Agreement, Assignee’s security interests in and to the Project will be terminated and the City will own such Project free and clear of Assignee’s security interest in such Project.

SECTION 6.2. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The City shall prepay the unpaid principal components of the Installment Payments in whole on any date or in part, on any Installment Payment Date from all amounts collected from insurance against accident to or destruction of any portion of the System shall be used to repair or rebuild such damaged or destroyed portion of the System or if determined not to repair or rebuild such portion and in any event to the extent not so applied, must either (a) be used for the acquisition or construction or improvements and extensions or replacement facilities or (b) be applied to prepay or redeem the Installment Payments and any Parity Obligations, on a pro rata basis, in the manner provided in this Installment Sale Agreement and the Installment Purchase Agreement authorizing such Parity Obligations.

Except as provided herein, the City covenants that the System will not be encumbered, sold, leased, pledged, any charge placed thereon, or otherwise disposed of, as a whole or substantially as a whole if such encumbrance, sale, lease, pledge, charge or other disposition would materially impair the ability of the City to pay the Installment Payments or the principal of or interest on any Parity Obligations, or would materially adversely affect its ability to comply with the terms of this Installment Sale Agreement or the instruments authorizing the issuance of any Parity Obligations. The City shall not enter into any agreement which impairs the operation of the System or any part of it necessary to secure adequate Net Revenues to pay the Installment Payments and any Parity Obligations, or which otherwise would impair the rights of the Corporation with respect to the Net Revenues. If any substantial part of the System is sold, the payment therefor must either (a) be used for the acquisition or construction of improvements and extensions or replacement facilities or (b) be applied to prepay or redeem the Installment Payments

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38 and any Parity Obligations, on a pro rata basis, in the manner provided herein and in the instruments authorizing such Parity Obligations.

Any amounts received as awards as a result of the taking of all or any part of the System by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, shall either (a) be used for the acquisition or construction of improvements and extension or replacement facilities of the System, or (b) be applied to prepay or redeem the Installment Payments and any Parity Obligations, on a pro rata basis, in the manner provided herein and in the instruments authorizing such Parity Obligations.

SECTION 6.3. Effect of Prepayment. In the event that the City prepays all the Installment Payments in full and all other sums due to the Authority hereunder in full pursuant to Article 6, the City’s obligations under this Installment Purchase Agreement shall thereupon cease and terminate, including but not limited to the City’s obligation to pay Installment Payments under this Installment Purchase Agreement.

Mandatory prepayment of unexpended proceeds is provided as follows:
(a) Any funds not applied to Project Costs and remaining in the Project Fund on the earliest of (i) the expiration of the Acquisition Period, (ii) the date on which the City delivers to the Assignee the executed Disbursement Request to effect the final disbursement to pay (or reimburse) Project Costs from the Project Fund or (iii) a termination of the Project Fund as provided in the Escrow Agreement shall be applied by Assignee on each successive Installment Payment Date thereafter to pay all or a portion of the Installment Payment due and owing in the succeeding twelve (12) months and any remaining amounts shall be applied by Assignee as prepayment to the applicable unpaid Principal Portion of Installment Payments owing hereunder in the inverse order of the Installment Payment Dates at a price of 100% of such prepaid Principal Portion plus accrued interest thereon to the prepayment date. (b) In connection with any partial prepayment of Installment Payments, Assignee shall prepare a new Schedule of Installment Payments reflecting the application of such prepayments in the inverse order of the Installment Payment Dates and deliver the same to the City, which shall be binding, absent manifest error.

ARTICLE 7

MISCELLANEOUS
SECTION 7.1. Notices. All written notices to be given under this Installment Purchase Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by telecopier or other form of telecommunication or electronic mail, at its number set forth below. Notice shall be effective either (a) upon transmission by telecopier or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person or electronic mail, upon actual receipt. The Authority and the City may, by written notice to the other party, from time to time modify the address or number to which communications are to be given hereunder.

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39 If to the Authority, as follows:

City of San Jacinto Public Financing Authority
595 S San Jacinto Avenue
San Jacinto, CA 92583
Attn: Executive Director
If to the City, as follows:

City of San Jacinto
595 S San Jacinto Avenue
San Jacinto, CA 92583
Attn: City Manager
SECTION 7.2. Assignment by the Authority. The Authority’s rights under this Installment Purchase Agreement, including the right to receive and enforce payment of the Installment Payments to be made by the City under this Installment Purchase Agreement and security interest in the Project shall be assigned to the Assignee. Assignee’s right, title and interest in and to this Installment Purchase Agreement, the Installment Payments and any other amounts payable by the City hereunder, the Escrow Agreement, its security interest in the Project (collectively, the “Assigned Rights”), may be assigned and reassigned by Assignee at any time, in whole or in part, to one or more assignees or sub assignees without the necessity of obtaining the consent of the City; provided, that any such assignment, transfer or conveyance (i) shall be made only to investors each of whom the Assignee reasonably believes is a “qualified institutional buyer” as defined in Rule 144A(a)(1) promulgated under the Securities Act of 1933, as amended, or an “accredited investor” as defined in Section 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act of 1933, as amended, and in either case is purchasing the Assigned Rights (or any interest therein) for its own account with no present intention to resell or distribute such Assigned Rights (or interest therein), subject to each investor’s right at any time to dispose of the Assigned Rights (or any interest therein) as it determines to be in its best interests, (ii) shall not result in more than 35 owners of the Assigned Rights or the creation of any interest in the Assigned Rights in an aggregate principal component that is less than $100,000 and (iii) shall not require the City to make Installment Payments, to send notices or otherwise to deal with respect to matters arising hereunder or under the Escrow Agreement with or to more than one Servicer (as such term is defined below), and any trust agreement, participation agreement or custodial agreement under which multiple ownership interests in the Assigned Rights are created shall provide the method by which the owners of such interests shall establish the rights and duties of a single entity, trustee, owner, servicer or other fiduciary or agent acting on behalf of all of the assignees (herein referred to as the “Servicer”) to act on their behalf with respect to the Assigned Rights, including with respect to the exercise of rights and remedies of Assignee on behalf of such owners upon the occurrence of an Event of Default under this Installment Purchase Agreement.

Unless to an affiliate controlling, controlled by or under common control with Assignee, no assignment, transfer or conveyance permitted by this Section 7.1 shall be effective as against the City until the City shall have received a written notice of assignment that discloses the name and address of each such assignee and an Investor Letter in substantially the form attached hereto in Exhibit C; provided, that if such assignment is made to a bank or trust company as trustee or paying agent for owners of certificates of participation, participation interests, trust certificates or partnership interests with respect to the Installment Payments payable under this Installment Purchase Agreement, it shall thereafter be sufficient that the City receives notice of the name and address of the bank, trust company or other entity that acts as the Servicer. During the Term of this Installment Purchase Agreement, the City shall keep, or cause to be kept, a complete and accurate record of all such assignments in form necessary to comply with Section 149 of the Code.

The City shall retain all such notices as a register of all assignees and shall make all payments to the assignee or assignees or Servicer last designated in such register. The City shall not have the

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40 right to and shall not assert against any assignee any claim, counterclaim or other right the City may have against Assignee. Assignments in part may include without limitation assignment of all of Assignee’s security interest in and to the Project and all rights in, to and under this Installment Purchase Agreement related to such Project, and all of Assignee’s security interest in and to the Collateral, or all rights in, to and under the Escrow Agreement. Upon any assignment the Authority shall provide the City a written notice of such assignment naming the assignee. If Assignee notifies the City of its intent to assign this Installment Purchase Agreement, the City agrees that it shall execute and deliver to Assignee a Notice and Acknowledgement of Assignment substantially in the form of Exhibit E attached hereto within five (5) business days after its receipt of such request.

The City acknowledges and agrees that the Authority has entered into the Assignment Agreement with Assignee concurrently with this Installment Purchase Agreement pursuant to which the Authority has assigned its rights and obligations under this Installment Purchase Agreement to the Assignee.

The Authority or any assignee has the right to make additional assignments of its rights and obligations under this Installment Purchase Agreement, but the City shall not be required to pay more than a single payee, regardless of the number of assignees, and no such assignment will be effective as against the City unless and until the City consents to such assignment. The City shall pay all Installment Payments hereunder under the written direction of the Authority or the assignee named in the most recent assignment or notice of assignment filed with the City. During the Term of this Installment Purchase Agreement, the City shall keep a complete and accurate record of all such notices of assignment.

SECTION 7.3. Assignment by the City. None of the City’s right, title, and interest in, to and under this Installment Purchase Agreement or any portion of the Project, the Escrow Agreement, the Escrow Account or the other Collateral may be assigned, encumbered or subleased by the City for any reason, and any purported assignment, encumbrance or sublease without Assignee’s prior written consent, which consent shall not be unreasonably withheld, shall be null and void. In connection with any such assignment by the City, the City shall provide the Authority with an opinion of bond counsel that the assignee is legally obligated to pay all Installment Payments and other sums hereunder and to satisfy all of the obligations of the City under this Installment Purchase Agreement and the other Financing Documents, and that such assignment shall not adversely affect the exclusion of interest payable pursuant to this Installment Purchase Agreement from gross income for federal income tax purposes and the exemption of such interest for State of California income tax purposes.

SECTION 7.4. Amendment of this Installment Purchase Agreement. This Installment Purchase Agreement may be amended only in writing by the City and the Authority with the prior written consent of the Assignee.

SECTION 7.5. Binding Effect. This Installment Purchase Agreement shall inure to the benefit of and shall be binding upon the Authority and the City and their respective successors and assigns The Assignee is deemed to be a third-party beneficiary of this Installment Purchase Agreement..

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41 SECTION 7.6. Severability. In the event any provision of this Installment Purchase Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

SECTION 7.7. Net-Net-Net Parity Obligation. This Installment Purchase Agreement shall be deemed and construed to be a “net-net-net” contract, and the City hereby agrees that the Installment Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.

SECTION 7.8. Further Assurances and Corrective Instruments. The Authority and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the expressed intention of this Installment Purchase Agreement. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Installment Purchase Agreement, and for the better assuring and confirming unto the owners of the Parity Obligations the rights and benefits provided herein and in the Parity Obligations.

SECTION 7.9. Execution in Counterparts. This Installment Purchase Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

SECTION 7.10. Applicable Law and Venue. This Installment Purchase Agreement shall be governed by and construed in accordance with the laws of the State of California. The parties hereto consent and submit to the jurisdiction of the State and venue in any state or Federal court of such State of California in Riverside County for the purposes of any suit, action or other proceeding arising in connection with this Installment Purchase Agreement.

SECTION 7.11. Captions. The captions or headings in this Installment Purchase Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Installment Purchase Agreement.

SECTION 7.12. USA Patriot Act Notice. The Authority hereby notifies the City that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify, and record information that identifies the City in accordance with the USA Patriot Act. The City covenants and agrees it will not, and agrees to cause each of its subsidiaries not to, at any time, directly or indirectly be (a) a person with whom the Authority is restricted from doing business under any Anti-Terrorism Law, (b) engaged in any business involved in making or receiving any contribution of funds, goods or services to or for the benefit of such a person or in any transaction that evades or avoids, or has the purpose of evading or avoiding, the prohibitions set forth in any AntiTerrorism Law, or (c) otherwise in violation of any Anti-Terrorism Law (the City will and will cause each of its subsidiaries to provide to the Authority any certifications or information that the Authority requests to confirm compliance by the City and its subsidiaries with any Anti-Terrorism Law). “Anti-Terrorism Law” means any law relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the laws comprising or implementing the Authority Secrecy Act, and the Laws administered by the United States Treasury Department’s

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42 Office of Foreign Asset Control, as any of the foregoing laws may from time to time be amended, renewed, extended, or replaced.

SECTION 7.13. Costs and Expenses. To the extent allowed by law, the City agrees to pay all reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained or employed by the Authority) incurred by the Authority and any participants of the Authority in connection with the origination, administration, collection and enforcement of this Installment Purchase Agreement, including, without limitation, all costs and expenses incurred in obtaining, perfecting, maintaining, determining the priority of, and releasing any security for the City’s obligations to the Authority, and any stamp, intangible, transfer or like tax incurred in connection with this Installment Purchase Agreement or the recording hereof or thereof.

SECTION 7.14. Indemnification. To the extent allowed by law, the City indemnifies the Authority, the Assignee, its affiliates and its and their respective officers, directors, employees, agents and advisors (each an “Indemnitee”) against, and holds each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including fees and expenses of employed or retained counsel) incurred by any Indemnitee or asserted against any Indemnitee by any third party arising out of or as a result of (a) the execution or delivery of any Financing Document, (b) the acquisition, construction, ownership, operation and all other matters relating to, the acquisition, construction, ownership, operation and all other matters relating to the Project and the System or the grant of agency made by the Authority under Section 3.1 hereunder, the performance or nonperformance by the City of its obligations under any Financing Document or the consummation of the transactions contemplated thereby, including the use of the proceeds therefrom, (c) breach of representations, warranties or covenants of the City under this Installment Purchase Agreement, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under environmental Laws or pertaining to environmental matters, regardless whether any Indemnitee is a party thereto; provided that such indemnity will not, as to an Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the active negligence or willful misconduct of such Indemnitee. The obligation of the City under this Section

7.14 shall survive termination of this Agreement.

SECTION 7.15. Waiver of Jury Trial. To the extent allowed by law, the City and the Authority each hereby irrevocably waives any right it may have to a trial by jury in connection with any action directly or indirectly arising out of or relating to this Installment Purchase Agreement and any other Financing Document. Each party hereto (i) certifies that no representative, administrative agent or attorney of any other person has represented, expressly or otherwise, that such other person would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Installment Purchase Agreement by, among other things, the mutual waivers and certifications in this section. If the waiver of jury trial contained herein is unenforceable for any reason, then the parties hereto agree that the court shall, and is hereby directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to a referee to hear and determine all of the issues in such action or proceeding (whether of fact or of law) and to report a statement of decision.

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43 (Signature page follows)

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S-1
IN WITNESS WHEREOF, the Authority has caused this Installment Purchase Agreement to be executed in its corporate name by its duly authorized officer, and the City has caused this Installment Purchase Agreement to be executed in its name by its duly authorized officer, as of the date first above written.

CITY OF SAN JACINTO PUBLIC FINANCING

AUTHORITY
By: ______________________________________
Robert Johnson, Executive Director
ATTEST:

By: _______________________________
Julia Espinoza, Secretary

CITY OF SAN JACINTO
By: ______________________________________
Robert Johnson, City Manager
ATTEST:

By: _____________________________
Julia Espinoza, City Clerk
-Signature PageInstallment Purchase Agreement

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A-1

EXHIBIT A

DESCRIPTION OF THE PROJECT
The Project consists of improvements to the City’s Grand Well, located at 906 Industrial Way. Improvements will be constructed that will equip the Grand Well with a 600-horsepower motor and pump capable of delivering 2,500 gallons per minute. Additionally, the existing treatment plant and clarifier tank adjacent to the well will be demolished and will be replaced with a new clarifier tank that expands the existing clarifier pit and a new treatment plant facility. The Project will also involve installing all necessary electrical components for the well, treatment plant, and existing booster pumps. Further improvements will be made to the existing water reservoir, along with security enhancements to the well site.

The Project is located on Assessor Parcel Number: 435020029 Legal description of site: 3.41 ACRES M/L IN POR LOT 154 MB 008/357 SD SAN JACINTO RANCHO Lot 154 Subdivision Name SAN JACINTO RANCHO Acres 003.41 M/L Lot Type Lot RecMapType Map Book Recorded COCode SD Map Plat B 008 Map Plat P 357 Portion Lot Portion.

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B-1

EXHIBIT B

SCHEDULE OF INSTALLMENT PAYMENTS
Date
Funding/Outstanding
Balance Principal
Interest
@ 4.3204 Payment
[ADD prepay with
premium amts
Apr-10-25 $9,097,000
Aug-07-25 $ 183,000.00 $ 121,183.26 $ 304,183.26
Feb-07-26 182,000.00 192,560.23 374,560.23
Aug-07-26 152,000.00 188,628.66 340,628.66
Feb-07-27 152,000.00 185,345.16 337,345.16
Aug-07-27 159,000.00 182,061.66 341,061.66
Feb-07-28 159,000.00 178,626.94 337,626.94
Aug-07-28 166,000.00 175,192.22 341,192.22
Feb-07-29 166,000.00 171,606.29 337,606.29
Aug-07-29 173,000.00 168,020.36 341,020.36
Feb-07-30 173,000.00 164,283.21 337,283.21
Aug-07-30 180,000.00 160,546.06 340,546.06
Feb-07-31 181,000.00 156,657.70 337,657.70
Aug-07-31 188,000.00 152,747.74 340,747.74
Feb-07-32 189,000.00 148,686.57 337,686.57
Aug-07-32 196,000.00 144,603.79 340,603.79
Feb-07-33 197,000.00 140,369.80 337,369.80
Aug-07-33 206,000.00 136,114.20 342,114.20
Feb-07-34 205,000.00 131,664.19 336,664.19
Aug-07-34 214,000.00 127,235.78 341,235.78
Feb-07-35 214,000.00 122,612.95 336,612.95
Aug-07-35 223,000.00 117,990.12 340,990.12
Feb-07-36 224,000.00 113,172.88 337,172.88
Aug-07-36 234,000.00 108,334.03 342,334.03
Feb-07-37 233,000.00 103,279.16 336,279.16
Aug-07-37 243,000.00 98,245.90 341,245.90
Feb-07-38 244,000.00 92,996.61 336,996.61
Aug-07-38 254,000.00 87,725.72 341,725.72
Feb-07-39 254,000.00 82,238.81 336,238.81
Aug-07-39 266,000.00 76,751.91 342,751.91
Feb-07-40 265,000.00 71,005.77 336,005.77
Aug-07-40 277,000.00 65,281.24 342,281.24
Feb-07-41 277,000.00 59,297.49 336,297.49
Aug-07-41 289,000.00 53,313.74 342,313.74
Feb-07-42 289,000.00 47,070.76 336,070.76
Aug-07-42 301,000.00 40,827.78 341,827.78
Feb-07-43 302,000.00 34,325.58 336,325.58
Aug-07-43 315,000.00 27,801.77 342,801.77
Feb-07-44 315,000.00 20,997.14 335,997.14
Aug-07-44 328,000.00 14,192.51 342,192.51
Feb-07-45 329,000.00 _____7,107.06 336,107.06
$9,097,000 $9,097,000.00 $4,470,702.75 $13,567,702.75

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C-1

EXHIBIT C

FORM OF INVESTOR LETTER
LENDER’S CERTIFICATE

CITY OF SAN JACINTO

INSTALLMENT PURCHASE AGREEMENT
(the “Obligation”)
In connection with that certain Installment Purchase Agreement dated April 1, 2025 (the “Obligation”) entered into by the City of San Jacinto (the “Issuer”) and City of San Jacinto Public Financing Authority (the “Authority”), Banc of America Public Capital Corp., as assignee of the Authority (the “Lender”), the Lender hereby states:

1. The Lender has knowledge and experience in financial and business matters relating to the Obligation and is capable of evaluating the merits and risks of the Obligation and is able to bear the economic risks thereof.

2. The Lender has made such investigation of the financial information provided by the Issuer as the Lender, in the exercise of its business judgment, considers appropriate under the circumstances. In making its decision to acquire the Obligation, the Lender has relied on the accuracy and completeness of information provided by the Issuer. The Lender has not required the Issuer to deliver any offering document in connection with the issuance of the Obligation.

3. The Lender is aware that investment in the Obligation involves various risks, that the Obligation is not a general obligation of the Issuer, and that payment of the Obligation is secured only from the sources described in the resolution or ordinance of the Issuer authorizing the Obligation (the “Authorizing Measure”) and the Installment Purchase Agreement and related Financing documents identified therein.

4. Neither the Lender nor any of its affiliates is acting as a fiduciary for the Issuer or in the capacity of broker, dealer, underwriter, or municipal advisor with respect to the Obligation.

Neither the Lender nor any of its affiliates has provided or will provide any financial, legal, tax, accounting or other advice to the Issuer with respect to the Obligation; it being understood that the Issuer has sought and obtained and will obtain such advice (including as it relates to structure, timing, terms, and similar matters) with respect to the Obligation from its own advisors (and not the Lender or any of its affiliates) to the extent that the Issuer desired or desires to obtain such advice.

5. The Lender acknowledges that the Authorizing Measure is not being qualified under the Trust Indenture Act of 1939, as amended, and the Obligation is not being registered in reliance upon the exemption from registration under Section 3(a)(2) of the Securities Act of 1933, as amended, and that neither the Issuer nor bond counsel shall have any obligation to effect any such registration or qualification.

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C-2

6. The Lender is not acting as a broker or other intermediary and is making the Financing and acquiring the Obligation as an investment for its own account and not with a present view to a resale or other distribution to the public. The Lender understands that the Obligation may not be transferred except in compliance with applicable federal and state laws.

7. The Lender is an “accredited investor” within the meaning of the Securities Act of 1933, as amended, and Regulation D thereunder.

DATED as of __________, 20__
BANC OF AMERICA PUBLIC CAPITAL CORP.[
By:

Name:

Title:

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D-1

EXHIBIT D
$9,097,000

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY
2025 INSTALLMENT FINANCING
(WATER SYSTEM IMPROVEMENTS)

FINAL ACCEPTANCE CERTIFICATE
The undersigned hereby states and certifies:
(i) that she is the duly appointed, qualified and acting Finance Director of the City (the “City”) and as such she is authorized to sign a written certificate of the City; (ii) that, pursuant to Section 3.11 of the Installment Purchase Agreement as defined below, the final Disbursement Request has been submitted by the City and the City delivers to the assignee Assignee a this Final Acceptance Certificate as of the date set forther below.

Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Installment Purchase Agreement, dated as of April 1, 2025, by and between the City of San Jacinto Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State of California, and the City of San Jacinto, a municipal corporation duly organized and existing under the laws of the State of California.

Date: __________

CITY OF SAN JACINTO
_______________________
Finance Director

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E-1

EXHIBIT E
$9,097,000

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY
2025 INSTALLMENT FINANCING
(WATER SYSTEM IMPROVEMENTS)

NOTICE OF ACKNOWLEDGEMENT OF ASSIGNMENT
The undersigned officer of the City acknowledges that it has received the Authority’s written notice of an assignment under the Installment Purchase Agreement.

Date: __________

CITY OF SAN JACINTO
_______________________
Finance Director

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ASSIGNMENT AGREEMENT

BETWEEN

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY

AND THE

BANC OF AMERICA PUBLIC CAPITAL CORP

RELATING TO

CITY OF SAN JACINTO
$9,097,000
2025 INSTALLMENT FINANCING
(WATER SYSTEM IMPROVEMENTS)
DATED AS OF APRIL 1, 2025

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1 ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of April 1, 2025 (this “Assignment Agreement”), is made by and between the CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and validly existing under and by virtue of the laws of the State of California (the “Authority”) and BANC OF AMERICA PUBLIC CAPITAL CORP, a Kansas corporation (together with its successors and assigns, hereinafter referred to as “Assignee”);
W I T N E S S E T H:

WHEREAS, the Authority desires to assign to the Assignee without recourse all of its rights under the Installment Purchase Agreement, dated as of April 1, 2025 (as supplemented, amended and restated from time to time, the “Installment Purchase Agreement”), between the Authority and the City of San Jacinto, a municipal corporation duly organized and validly existing under the laws of the State of California (the “City”), including all of its rights to receive Installment Payments scheduled to be paid or payable by the City under and pursuant to the Installment Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions. All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Installment Purchase Agreement.

Section 2. Assignment. The Authority hereby sells, assigns and transfers to the Assignee, irrevocably and absolutely, without recourse all of the Authority’s rights, title and interest in and to the Installment Purchase Agreement, including, without limitation, its right to receive, and enforce payment of, the Installment Payments to be paid by the City under and pursuant to the Installment Purchase Agreement, and the right to exercise all rights and remedies conferred on the Authority under the Installment Purchase Agreement as may be necessary or convenient to enforce payment of the Installment Payments, or otherwise to protect the interests of Assignee in the event of a default by the City under the Installment Purchase Agreement.

Section 3. Acceptance of Assignment. The Assignee hereby accepts the assignment and transfer of all of the Authority’s rights, title and interest in and to the Installment Purchase Agreement as are assigned and transferred to it pursuant to the terms of this Assignment Agreement.

Section 4. Deposit and Application of Funds. In consideration of the assignment made hereunder by the Authority to the Assignee, the Assignee hereby agrees to provide the amount of $9,097,000 on the Closing Date for the account of the Authority for the purpose of financing the Project, subject to the City and the Authority shall delivering to Assignee, in form and substance satisfactory to Assignee, the following:

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2 (a) the Installment Purchase Agreement executed by the City and the Authority and an Escrow and Account Control Agreement in form and substance satisfactory to Assignee (the “Escrow Agreement”) executed by the City, the Authority and Argent Institutional Trust Company, a Florida trust company (hereinafter referred to as “Escrow Agent”) and a copy of the Agreement dated ______, 2025 by and between the City and the __________ (“Vendor”) and the City (the “Vendor Agreement”)]; (b) A certified copy of a resolution, ordinance or other official action of the City’s governing body, authorizing the execution and delivery of the Installment Purchase Agreement and the Escrow Agreement and performance by the City of its obligations under the Installment Purchase Agreement and the Escrow Agreement; and a certified copy of a resolution, ordinance or other official action of the Authority’s governing body, authorizing the execution and delivery of the Installment Purchase Agreement, the Escrow Agreement and this Agreement and performance by the Authority of its obligations under the Installment Purchase Agreement, the Escrow Agreement and this Agreement; (c) An Incumbency Certificate completed and executed by the Clerk or Secretary or other comparable officer of the City, substantially in the form attached hereto as Exhibit A-1, completed to the satisfaction of Assignee; and an Incumbency Certificate completed and executed by the Secretary or other comparable officer of the Authority, substantially in the form attached hereto as Exhibit A-2 , completed to the satisfaction of Assignee;
(d) Opinions of Special Counsel and the City Attorney, which in the aggregate opine on the matters set forth in the form attached hereto as Exhibit B-1 and B-2 and which are otherwise satisfactory to Assignee; and an opinion of counsel to the Authority dated the Closing Date and addressed to and in form and substance satisfactory to Assignee; (e) Evidence of insurance as required by Section 4.5 of the Installment Purchase Agreement;
(f) Evidence that all the requirements under the 2015 Installment Sale Agreement and any other existing Parity Obligation and Contract and with respect to the execution and delivery of the Installment Purchase Agreement, this Agreement and the Escrow Agreement and the City’s acquisition, installation and financing of the Project and the transactions contemplated under the Installment Purchase Agreement have been satisfied and evidence of compliance with all the additional debt tests and restrictions and other conditions precedent in the Existing Parity Debt and any existing Parity Obligation Instrument in connection with the incurrence of debt evidenced by the Installment Purchase Agreement as a Parity Obligation;
(g) All documents, including financing statements, affidavits, notices and similar instruments which Assignee deems necessary or appropriate at that time pursuant to Section 4.1 of the Installment Purchase Agreement;
(h) A copy of the Form 8038 G, fully completed by Special Counsel as paid preparer and executed by the City;

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3 (i) In the event that the City is to be reimbursed for expenditures that it has paid more than sixty (60) days prior to the Closing Date, evidence of the adoption of a reimbursement resolution or other official action covering the reimbursement from tax exempt proceeds of expenditures incurred not more than sixty (60) days prior to the date of such resolution;
(j) Copies of invoices (and proofs of payment of such invoices, if the City seeks reimbursement) and bills of sale (if title to Project has passed to the City), to the extent required by Section 4.17of the Installment Purchase Agreement; (k) Wire instructions for payments to be made to Vendors and Form W 9 from each such Vendor;
(l) For each Vendor, a certified copy of any Surety Bond satisfying the conditions set forth in the Installment Purchase Agreement, if applicable, or, at Assignee’s sole discretion, such Surety Bonds may be provided after the Closing Date. (m) Evidence that each written agreement between the City and each Vendor provides and will provide that: (A) for and in consideration of amounts to be disbursed from the Escrow Account, that automatically and without any further act or action, ownership of and title to the Project (or portion thereof, as applicable) paid for by such disbursement shall vest in the City (or its assigns) immediately upon the Escrow Agent’s disbursement of moneys from the Escrow Account; and (B) acknowledges the vesting of legal title in the Project in the City as provided in Section 3.1 of the Installment Purchase Agreement.
(n) A certificate signed by an authorized officer of the City dated the Closing Date certifying that: (i) the representations and warranties of the City contained herein and in the other Financing Documents to which the City is a party are true and correct in all material respects on and as of the Closing Date; (ii) no Event of Default has occurred and is continuing or would result from the execution, delivery or performance of the Installment Purchase Agreement or any other Financing Document to which the City is a party; (iii) there has been no event or circumstance since the date of the audited annual financial statements of the City for the Fiscal Year ended June 30, 2024, that has resulted or could be reasonably expected to result, either individually or in the aggregate, in a Material Adverse Change; (iv) the accuracy and genuineness of the names and signatures of the persons authorized to sign, on behalf of the City, the Financing Documents to which the City is a party; (v) attached thereto are copies of the resolution of the governing board of the City approving the execution and delivery of the Financing Documents to which the City is a party, and the other matters contemplated hereby, that are true and complete in all material respects and in full force and effect on the Closing Date; (vi) there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that challenges the organization or existence of the City, the authority of its governing board or officers, the proper authorization, approval and execution of the Financing Documents to which the City is a party, the ability of the City otherwise to perform its obligations under the Financing Documents to which the City is a party and the transactions contemplated thereby, the title of the City, as the case may be, in the Project

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4 or the pari passu pledge of the Net Revenues granted to the Assignee or its assigns or the security interest granted to the Assignee or its assigns in and to the Collateral; and (vii) the correct legal name of the City for purposes of the Uniform Commercial Code in effect on April 10, 2025; a certificate signed by an authorized officer of the City dated the Closing Date in substantially the form attached hereto as Exhibit C; and such other closing certificates of the City in form and substance satisfactory to the Assignee; (o) If requested by Assignee, evidence that Assignee’s sale of the Project to the City under the Installment Purchase Agreement does not, and will not, result in an obligation of Assignee to pay any ad valorem property (whether on real or personal property) or other taxes of any kind under state, State law or federal law and, if any such taxes are so payable during the Term of the Installment Purchase Agreement, that the City has expressly provided for payment of such taxes in accordance with Section 3 of the Installment Purchase Agreement; and
(p) Such other items reasonably required by Assignee.

Section 5. Representations and Warranties of the Authority. The Authority hereby represents and warrants to the Assignee that, as of the Closing Date:
(a) No modifications, amendments or changes have been made to the Installment Purchase Agreement.
(b) The Installment Purchase Agreement is valid, binding and enforceable in accordance with its terms.
(c) It has not previously assigned any right, title or interest the Authority has in the Installment Purchase Agreement to any other party and no other party has any superior right, title or interest than such right, title and interest being assigned to the Assignee pursuant to this Assignment Agreement.
(d) It does not have any defenses, set-off rights, claims or other demands of any kind that can be asserted to reduce, eliminate or contravene the rights being assigned to the Assignee pursuant to this Assignment Agreement.
(e) It has the right to assign the Installment Purchase Agreement to the Assignee as set forth herein.
(f) The undersigned officer of the Authority has the requisite power and authority to enter into this Assignment Agreement.

Section 6. No Additional Rights or Duties. This Assignment Agreement shall not impose any duties, obligations or responsibilities upon the Authority or the Authority beyond those expressly provided in the Installment Purchase Agreement or as otherwise set forth herein.

Section 7. Further Assurances. The Authority will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Assignment Agreement, and for

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5 the better assuring and confirming to the Assignee the rights and obligations intended to be conveyed pursuant hereto.

Section 8. Counterparts. This Assignment Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement.

Section 9. Law Governing. This Assignment Agreement is made in the State of California under the Constitution and laws of the State of California and is to be so construed.

Section 10. Notices. All notices under this Assignment Agreement shall be in accordance with the Installment Purchase Agreement.

Section 11. Binding Effect; Successors. This Assignment Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

Whenever in this Assignment Agreement any party is named or referred to, such reference shall be deemed to include such party’s successors and assigns and all covenants and agreements contained in this Assignment Agreement by or on behalf of any party hereto shall bind and inure to the benefit of such party’s successors and assigns whether so expressed or not. (Signature page follows)

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IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement as of the date first above written.

CITY OF SAN JACINTO PUBLIC

FINANCING AUTHORITY
By: ______________________________________
Robert Johnson, Executive Director

BANC OF AMERICA PUBLIC CAPITAL
CORP
By: ______________________________________
Authorized Officer
-Signature PageAssignment Agreement

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EXHIBIT A-1

INCUMBENCY CERTIFICATE OF THE CITY

INCUMBENCY AND SIGNATURE

CERTIFICATE OF THE CITY OF SAN JACINTO
The undersigned hereby state and certify:
(i) that they are the duly appointed, qualified and acting Mayor and City Clerk, respectively, of the City of San Jacinto, a general law city, duly organized and existing under and by virtue of the laws of the State of California (the “City”), and as such, are familiar with the facts herein certified and are authorized and qualified to certify the same; (ii) that the following are now, and have continuously been since the dates of the beginning of their respective current terms of office shown below, the duly elected, qualified and acting members of the City Council, and the dates of the beginning and ending of their respective current terms of office are hereunder correctly designated opposite their names:

Member Ending Date of Current Term
Valerie Vandever, Mayor December 2026
Alonzo Ledezma, Mayor Pro Tem December 2026
Phil Ayala, Councilmember December 2028
Crystal Ruiz, Councilmember December 2028
Clarissa Sanchez, Councilmember December 2028
(iii) that the signatures set forth opposite the names and titles of the following persons are the true and correct specimen, or are the genuine, signatures of such persons, each of whom holds the office designated:

Name/Title Signature
Valerie Vandever, Mayor
Robert Johnson, City Manager
Erika Gomez, Finance Director

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Julia Espinoza, City Clerk
(iv) that for and on behalf of the City, the within-named City Manager has executed, and the within-named City Clerk has attested to that certain Installment Purchase Agreement dated as of April 1, 2025, by and between the City of San Jacinto Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority) and the City;
(v) that for and on behalf of the City, the within named City Manager has executed that certain Escrow and Account Control Agreement dated April 1, 2025 by and among the Authority, the City, the Assignee and the Escrow Agent; and
(vi) this Officer’s Certificate of the City may be executed in counterparts, each of which shall be deemed an original.

Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Installment Purchase Agreement,
Dated: April 10, 2025

CITY OF SAN JACINTO
By: ______________________________________
Robert Johnson, City Manager
ATTEST:

By:

Julia Espinoza, City Clerk

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EXHIBIT A-2

INCUMBENCY CERTIFICATE OF THE AUTHORITY

INCUMBENCY AND SIGNATURE

CERTIFICATE OF THE AUTHORITY
The undersigned hereby state and certify:
(i) that they are the duly appointed, qualified and acting Executive Director and Secretary, respectively, of the City of San Jacinto Public Financing Authority, a California joint exercise of powers authority, duly organized and validly existing under and pursuant to the laws of the State of California, (the “Authority”), and as such, are familiar with the facts herein certified and are authorized and qualified to certify the same;
(ii) that the following are now, and have continuously been since the dates of the beginning of their respective current terms of office shown below, the duly appointed, qualified and acting members of the Board of Directors of the Authority, and the dates of the ending of their respective current terms of office are hereunder correctly designated opposite their names:

Member Ending Date of Current Term
Valerie Vandever, Chairperson December 2026
Alonzo Ledezma, Vice Chairperson December 2026
Phil Ayala, Member December 2028
Crystal Ruiz, Member December 2028
Clarissa Sanchez, Member December 2028
(iii) that the signatures set forth opposite the names and titles of the following persons are the true and correct specimen, or are the genuine, signatures of such persons, each of whom holds the office designated:

Name/Title Signature
Valerie Vandever, Chairperson
Robert Johnson, Executive Director
Erika Gomez, Treasurer
Julia Espinoza, Secretary

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(iv) that for and on behalf of the Authority, the within-named Executive Director has executed, and the within-named Secretary has attested to that certain Installment Purchase Agreement by and between the Authority and the City of San Jacinto (the “City”), dated as of April 1, 2025 relating to the City of San Jacinto Public Financing Authority 2025 Installment Financing (Water System Improvement) (the ”Installment Purchase Agreement); (v) that for and on behalf of the Authority, the within-named Executive Director has executed that certain Assignment Agreement by and between the Authority and the Assignee, dated as of April 1, 2025 relating to the City of San Jacinto Public Financing Authority 2025 Installment Financing (Water System Improvement); and
(vi) that for and on behalf of the Authority, the within named Executive Director has executed that certain Escrow and Account Control Agreement dated April 1, 2025 by and among the Authority, the City, the Assignee and the Escrow Agent; and (vii) this Incumbency and Signature Certificate of the Authority may be executed in counterparts, each of which shall be deemed an original.

Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Installment Purchase Agreement
Dated: ______________, 2025

CITY OF SAN JACINTO PUBLIC

FINANCING AUTHORITY
By:

Robert Johnson, Executive Director
By:

Julia Espinoza, Secretary

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EXHIBIT B

FORM OF SPECIAL COUNSEL AND OPINION TO THE CITY COUNSEL

OPINION OF SPECIAL COUNSEL TO THE AUTHORITY
April 10, 2025
We have acted a Special Counsel to the City of San Jacinto Public Financing Authority with respect to the Installment Purchase Agreement, dated as of April 1, 2025, by and between the City of San Jacinto Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State of California, and the City of San Jacinto, a municipal corporation duly organized and existing under the laws of the State of California (the “Installment Purchase Agreement”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Installment Purchase Agreement. In this capacity we have reviewed the Constitution and the laws of the State of California and certain proceedings taken by the Authority. In such connection, we have reviewed the Financing Documents, the tax certificate of the Authority for the Bonds dated the date hereof (the “Tax Certificate”), certificates of the Authority and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.

The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities.

Such opinions may be affected by actions taken or omitted or events occurring after the date hereof.

We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. We express no opinion with respect to any indemnification, contribution, lien priority or choice of law provisions contained in the foregoing documents.

In our examination, we have assumed, without independent investigation, the authenticity of all documents submitted to us as originals, of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents and the accuracy of the statements and representations contained in such documents. In addition, we have assumed the authority of and due execution by each of the parties to the documents other than the City.

We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to ensure that future actions, omissions or events will not cause interest on the Installment Payments to be included in gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Installment Purchase Agreement,
(i) the Instalment Purchase Agreement is authorized, valid and existing under the laws of the State of California;

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(ii) the entering into and performance of the Financing Documents by the City and the execution and delivery of this Installment Purchase Agreement and the incurrence of debt thereunder complies in all respects with the limitations and restrictions set forth in all of the Contracts and Parity Obligations including the 2015 Installment Sale Agreement; (iii) the Installment Purchase Agreement establishes a first lien on and pledge of the Net Revenues and other funds pledged thereby for the security of the Installment Payments and other amounts payable under this Installment Purchase Agreement, on a parity with the 2015 Installment Sale Agreement and any other Contract or Parity Obligation including issued in accordance with the terms of the Agreement;
(iv) the Authority has duly and validity adopted Resolution No. __ on April 1, 2025 (“Resolution”) at a meeting of the Board of Directors that was duly noticed and held and at which a quorum was present and acting throughout in accordance with the law of the State of California that are applicable to the City, and such Resolution is in full force and effect and has not been modified, amended or rescinded; and
(v) the portion of Installment Payments designated as interest is excluded from gross income for Federal income tax purposes under Section 103 of the Code and is exempt from State of California personal income taxes; and such interest is not a specific item of tax preference for purposes of the federal alternative minimum tax; and (vii) the tax-exempt status of interest on the interest component of Installment Payments under State laws. Although the interest components of the Installment Payments are excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on such Installment Payments, or any portion thereof, may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend on the recipient’s particular tax status or other items of income or deduction. We express no opinion regarding any such consequences.

The opinion expressed above in (v) as to the exclusion from gross income of the interest is based upon certain representations of fact and certifications made by the Authority and the City and others and is subject to the condition that the Authority and the City comply with all requirements of the Code that must be satisfied subsequent to the execution and delivery of the Agreement to assure that such interest will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the portion of the interest payable under the Agreement to be included in gross income for federal income tax purposes retroactive to the date of execution and delivery of the Agreement. The Authority and the City has covenanted to comply with all such requirements. The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Other than expressly stated herein, we express no other opinion regarding tax consequences of the obligation of the Authority and the City under the Agreement.

The rights of the Assignee and the enforceability of the Installment Purchase Agreement may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and their enforcement may be subject to the exercise of

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judicial discretion in accordance with general principles of equity. We express no opinion with respect to any indemnification, contribution, lien priority or choice of law provisions contained in the Financing Documents.

This opinion may not be relied upon by anyone other than the addressee hereof and its successors and assigns, without our written consent.

The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities.

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FORM OF OPINION OF THE CITY ATTORNEY\
City of San Jacinto
595 S. San Jacinto Ave.

San Jacinto, CA 92583
Banc of America Public Capital Corp
Re: Installment Purchase Agreement dated as of April 1, 2025, by and between the City of San Jacinto and the City of San Jacinto Public Financing Authority Ladies and Gentlemen:

We have acted as city attorney to the City with respect to Installment Purchase Agreement described above (the “Installment Purchase Agreement”) and in this capacity have reviewed a copy of the executed Installment Purchase Agreement and the executed Escrow and Account Control Agreement dated April 1, 2025 (the “Escrow Agreement”)., by and among the Authority, the City, the Escrow Agent, and the Assignee. We have also reviewed certificates executed by officers of the City, City of San Jacinto Public Financing Authority, Escrow Agent and Banc of America Public Capital Corp (the “Assignee”), as Assignee under the Assignment Agreement. As to questions of fact material to our opinion, we have relied upon the certificates of officers of the City, the Authority and the Bank and others which have been furnished to us, but we have not undertaken to verify the accuracy thereof through independent investigation. All terms not defined herein have the meanings ascribed to those terms in the Installment Purchase Agreement.

The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities.

Such opinions may be affected by actions taken or omitted or events occurring after the date hereof.

As used in this opinion, the phrase “current actual knowledge” means knowledge as we have obtained from (i) the incumbency and signature certificate of the City, (ii) the representations and warranties contained in each closing certificate of the City, and (iii) knowledge of facts or other information currently known to lawyers currently in our firm who have performed legal services for the City.

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Capitalized terms used herein but not defined have the meaning given them in the Lease.

Relying on such examination and pertinent law and subject to the limitations and qualifications hereinafter set forth, we are of the opinion that:

1. the City is duly organized, validly existing, and in good standing under the laws of the Stat.

2. the City has duly received all requisite approvals and has the legal power to enter into and perform under the Financing Documents;

3. all proceedings of the City necessary to be taken in connection with the authorization, execution, delivery and performance of the Financing Documents have been duly taken and all such authorizations are presently in effect;

4. the Financing Documents have been duly executed and delivered by the City and each constitutes the valid and binding obligation of the City enforceable against the City in accordance with its terms, except as enforceability may be limited: by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the rights of creditors generally and by general equitable principles which may limit the right to obtain the remedy of specific performance of obligation other than the obligation to pay money, and

5. the execution, delivery, and performance by the City of the Financing Documents does not as of the date of the opinion: (a) violate any provision of any law, rule or regulation, any judgment, order or ruling of any court or governmental agency, articles of organization, articles of incorporation, other charter documents, bylaws or operating agreement, as applicable, of the City, or any agreement, indenture, mortgage, or other instrument to which the City is a party or by which the City or any of its properties within the system is bound; or (b) be in conflict with, result in a breach of, or constitute with the giving of notice or passage of time, or both, a default under any such agreement, indenture, mortgage, or other instrument;

6. no consent, permission, authorization, order or license of any governmental authority is necessary in connection with the execution, delivery, performance, or enforcement of the Financing Documents, except such as have been obtained and are in full force and effect; and

7. the authorization, approval, execution and delivery of the Financing Documents and all other proceedings of the City relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, procurement and public bidding laws and all other applicable State or Federal laws; (viii) to the best of such counsel’s knowledge, there are no actions, suits, or proceedings affecting the City or any of its assets pending or threatened before any governmental entity which: (a) if adversely decided could have a material adverse effect on the City’s condition, financial or otherwise, operations, properties or business, or on its ability to perform its obligations under the Financing Documents; or (b) could adversely affect the transactions contemplated by the Financing Documents or the pledge of Net Revenues to repay Installment Payments and

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other amounts payable under this Installment Purchase Agreement on a pari passu basis with the 2015 Installment Sale Agreement and any other Contract or Parity Obligation or the security interest of Assignee or its assigns, as the case may be, in the Project, the Project Fund or other Collateral thereunder; or (c) seeks to rescind, terminate, modify, or suspend any consent, permission, authorization, order or license of any governmental authority referred to above.

Our engagement with respect to the Installment Purchase Agreement has concluded with its execution, and we disclaim any obligation to update this letter.

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EXHIBIT C

CERTIFICATE REGARDING REPRESENTATIONS AND WARRANTIES

OF THE CITY
$9,097,000

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY
2025 INSTALLMENT FINANCING
(WATER SYSTEM IMPROVEMENTS)

CERTIFICATE OF THE CITY
The undersigned hereby states and certifies that she is the duly appointed, qualified and acting Finance Director of the City (the “City”) and as such she is authorized to sign a written certificate of the City as follows:
(i) the representations and warranties of the City contained in the Installment Purchase Agreement and in the other Financing Documents to which the City is a party are true and correct in all material respects on and as of the Closing Date; (ii) no Event of Default has occurred and is continuing or would result from the execution, delivery or performance of the Installment Purchase Agreement or any other Financing Document to which the City is a party;
(iii) there has been no event or circumstance since the date of the audited annual financial statements of the City for the Fiscal Year ended June 30, 2024, that has resulted or could be reasonably expected to result, either individually or in the aggregate, in a Material Adverse Change;
(iv) the accuracy and genuineness of the names and signatures of the persons authorized to sign, on behalf of the City, the Financing Documents to which the City is a party; (v) attached thereto are copies of the resolution of the governing board of the City approving the execution and delivery of the Financing Documents to which the City is a party, and the other matters contemplated hereby, that are true and complete in all material respects and in full force and effect on the Closing Date;
(vi) there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that challenges the organization or existence of the City, the authority of its governing board or officers, the proper authorization, approval and execution of the Financing Documents to which the City is a party, the ability of the City otherwise to perform its obligations under the Financing Documents to which the City is a party and the transactions contemplated thereby, the title of the City, as the case may be, in the Project or the pari passu pledge of the Net Revenues granted to the Assignee or its assigns or the security interest granted to the Assignee or its assigns in and to the Collateral; and

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(vii) the correct legal name of the City is the City of San Jacinto for purposes of the Uniform Commercial Code in effect as of the date hereof;
Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Installment Purchase Agreement, dated as of April 1, 2025, by and between the City of San Jacinto Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State of California, and the City of San Jacinto, a municipal corporation duly organized and existing under the laws of the State of California.

Date: April 10, 2025

CITY OF SAN JACINTO
_______________________
Finance Director

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2327575

ESCROW AND ACCOUNT CONTROL AGREEMENT
This ESCROW AND ACCOUNT CONTROL AGREEMENT (this “Agreement”), dated as of April __, 2025, by and among Banc of America Public Capital Corp, a Kansas corporation (together with its successors and assigns, hereinafter referred to as “Assignee”), City of San Jacinto, a municipal corporation existing under the laws of the State of California (hereinafter referred to as “City”), the City of San Jacinto Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”) and Argent Institutional Trust Company, a Florida trust company (hereinafter referred to as “Escrow Agent”).

Reference is made to (a) that certain Installment Purchase Agreement dated as of April 1, 2025 between Authority and City (as supplemented, amended or restated, the “IPA”) relating to the financing the acquisition, design and construction of certain improvements to the City’s water system (the “System”) as identified in Exhibit A attached thereto (the “Project”) and the sale by the Authority and acquisition by the City of the Project in exchange for installment payments; and (b) that certain Assignment Agreement dated as of April 1, 2025 between Authority and Assignee (as supplemented, amended or restated, the “Assignment Agreement”), pursuant to which Authority has assigned to Assignee all of its rights under the IPA including all of its rights in the Project and rights to receive installment payments to be paid by the Authority under and pursuant to the IPA. It is a requirement of the IPA and the Assignment Agreement that the Acquisition Amount in the amount of $___________________________ be deposited into a segregated escrow account under terms satisfactory to Assignee, for the purpose of fully funding the IPA, and providing a mechanism for the application of such amounts to the acquisition of and payment for the Project and the Costs of Issuance (as defined in the IPA).

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Creation of Escrow Account.
(a) There is hereby created an escrow fund to be known as the “City of San Jacinto 2025 IPA Escrow Account” (the “Escrow Account”) to be held by the Escrow Agent for the purposes stated herein, for the benefit of Assignee and City, to be held, disbursed and returned in accordance with the terms hereof.
(b) City may, from time to time, provide written instructions for Escrow Agent to use any available cash in the Escrow Account to purchase any money market fund or liquid deposit investment vehicle that Escrow Agent from time to time makes available to the parties hereto. Such written instructions shall be provided via delivery to Escrow Agent of a signed and completed Escrow Account Investment Selection Form (such form available from Escrow Agent upon request). All funds invested by Escrow Agent at the direction of City in such short-term investments (as more particularly described in Escrow Agent’s Escrow Account Investment Selection Form) shall be deemed to be part of the Escrow Account and subject to all the terms and conditions of this Agreement. If any cash is received for the Escrow Account after the cut-off time for the designated short-term investment vehicle, the Escrow Agent shall hold such cash uninvested until the next Business Day. “Business Day” means a day other than a Saturday,

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Sunday or legal holiday, on which banking institutions are not closed in Chicago, Illinois, San Jacinto, California or New York, New York. In the absence of written instructions from City (on Escrow Agent’s Escrow Account Investment Selection Form) designating a short-term investment of cash in the Escrow Account, cash in the Escrow Account shall remain uninvested and it shall not be collateralized. Escrow Agent shall have no obligation to pay interest on cash in respect of any period during which it remains uninvested. City shall be solely responsible for ascertaining that all proposed investments and reinvestments are Qualified Investments and that they comply with federal, state and local laws, regulations and ordinances governing investment of such funds and for providing appropriate notice to the Escrow Agent for the reinvestment of any maturing investment. Accordingly (and, with respect to the Escrow Agent, provided that the Escrow Agent has acted pursuant to the written instruction of the City), none of the Escrow Agent, Authority nor Assignee shall be responsible for any liability, cost, expense, loss or claim of any kind, directly or indirectly arising out of or related to the investment or reinvestment of all or any portion of the moneys on deposit in the Escrow Account, and City agrees to and does hereby release the Escrow Agent, Authority and Assignee from any such liability, cost, expenses, loss or claim. Interest on the Escrow Account shall become part of the Escrow Account, and gains and losses on the investment of the moneys on deposit in the Escrow Account shall be borne by the City. The Escrow Agent shall have no discretion whatsoever with respect to the management, disposition or investment of the Escrow Account. The Escrow Agent shall not be responsible for any market decline in the value of the Escrow Account and has no obligation to notify Assignee, Authority and City of any such decline or take any action with respect to the Escrow Account, except upon specific written instructions stated herein. For purposes of this Agreement, “Qualified Investments” means any investments which meet the requirements of California Government Code Sections 53600 et seq.
(c) Unless the Escrow Account is earlier terminated in accordance with the provisions of paragraph (d) below, amounts in the Escrow Account shall be disbursed by the Escrow Agent in payment of amounts described in Section 2 hereof upon receipt of written instruction(s) from Assignee, as is more fully described in Section 2 hereof. If the amounts in the Escrow Account are insufficient to pay such amounts, City shall provide any balance of the funds needed to complete the acquisition of the Project. Any moneys remaining in the Escrow Account on or after the earlier of (i) the expiration of the Acquisition Period or (ii) the date on which City executes a Final Acceptance Certificate shall be applied as provided in Section 4 hereof. (d) The Escrow Account shall be terminated at the earliest of (i) the final distribution of amounts in the Escrow Account, (ii) the date on which City executes a Final Acceptance Certificate or (iii) written notice given by Assignee of the occurrence of an Event of Default under the IPA. Notwithstanding the foregoing, this Agreement shall not terminate nor shall the Escrow Account be closed until all funds deposited hereunder have been disbursed. (e) The Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine and may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner of execution, or validity of any instrument nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the receipt of such moneys, instruments or other documents received by it as the Escrow Agent, and for the disposition of the same in accordance

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Packet Pg. 203 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -3-
herewith. Notwithstanding and without limiting the generality of the foregoing, concurrent with the execution of this Agreement, City and Assignee, respectively, shall deliver to the Escrow Agent an authorized signers form in the form of Exhibit A-1 (City) and Exhibit A-2 (Assignee) attached hereto. Notwithstanding the foregoing sentence, the Escrow Agent is authorized to comply with and rely upon any notices, instructions or other communications believed by it to have been sent or given by the parties or by a person or persons authorized by the parties. The Escrow Agent specifically allows for receiving direction by written or electronic transmission from an authorized representative with the following caveat, to the extent permitted by law, City and Assignee agree to indemnify and hold harmless the Escrow Agent against any and all claims, losses, damages, liabilities, judgments, costs and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) incurred or sustained by the Escrow Agent as a result of or in connection with the Escrow Agent’s reliance upon and compliance with instructions or directions given by written or electronic transmission given by each, respectively, provided, however, that such Losses have not arisen from the gross negligence or willful misconduct of the Escrow Agent, it being understood that deliberate forbearance on the part of the Escrow Agent to verify or confirm that the person giving the instructions or directions, is, in fact, an authorized person due to Escrow Agent’s good faith determination that such forbearance is in the best interests of the Parties shall not be deemed in and of itself to constitute gross negligence or willful misconduct.

In the event conflicting instructions as to the disposition of all or any portion of the Escrow Account are at any time given by Assignee and City, the Escrow Agent shall abide by the instructions or entitlement orders given by Assignee without consent of the City. (f) Unless the Escrow Agent is guilty of gross negligence or willful misconduct with regard to its duties hereunder, City agrees to and does hereby release and indemnify the Escrow Agent and hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or any other expenses, fees or charges of any character or nature, which it may incur or with which it may be threatened by reason of its acting as Escrow Agent under this Agreement; and in connection therewith, does to the extent permitted by law, indemnify the Escrow Agent against any and all expenses, including reasonable attorneys’ fees and the cost of defending any action, suit or proceeding or resisting any claim. (g) If City and Assignee shall be in disagreement about the interpretation of the IPA, or about the rights and obligations, or the propriety of any action contemplated by the Escrow Agent hereunder, the Escrow Agent may, but shall not be required to, file an appropriate civil action including an interpleader action to resolve the disagreement. The Escrow Agent shall be reimbursed by City for all costs, including reasonable attorneys’ fees, in connection with such civil action, and shall be fully protected in suspending all or part of its activities under this Agreement until a final judgment in such action is received.
(h) The Escrow Agent may consult with counsel of its own choice (which counsel shall have experience and knowledge with respect to escrow agreements similar to this Agreement) and shall have full and complete authorization and protection with the opinion of such counsel. The Escrow Agent shall otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts or omissions of any kind unless caused by the gross negligence or willful misconduct of the Escrow Agent or its counsel.

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Packet Pg. 204 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -4-
(i) City shall reimburse the Escrow Agent for all reasonable costs and expenses, including those of the Escrow Agent’s attorneys, agents and employees incurred for non-routine administration of the Escrow Account and the performance of the Escrow Agent’s powers and duties hereunder in connection with any Event of Default under the IPA or in connection with any dispute between Assignee and City concerning the Escrow Account. (j) The Escrow Agent or any successor may at any time resign by giving mailed notice to City and Assignee of its intention to resign and of the proposed date of resignation (the “Effective Date”), which shall be a date not less than 60 days after such notice is delivered to an express carrier, charges prepaid, unless an earlier resignation date and the appointment of a successor shall have been approved by the City and Assignee. After the Effective Date, the Escrow Agent shall be under no further obligation except to hold the Escrow Account in accordance with the terms of this Agreement, pending receipt of written instructions from Assignee regarding further disposition of the Escrow Account.
(k) The Escrow Agent shall have no responsibilities, obligations or duties other than those expressly set forth in this Agreement and no implied duties, responsibilities or obligations shall be read into this Agreement.

Section 2. Acquisition and Installation of Project.
(a) Acquisition Contracts. City will arrange for, supervise and provide for, or cause to be supervised and provided for, the acquisition of the Project, with moneys available in the Escrow Account. City represents the estimated costs of the Project are within the funds estimated to be available therefor, and Authority and Assignee make no warranty or representation with respect thereto. Authority and Assignee shall have no liability under any of the acquisition or construction contracts. City shall obtain all necessary permits and approvals, if any, for the acquisition, equipping and installation of the Project, and the operation and maintenance thereof.

Escrow Agent shall have no duty to monitor or enforce City’s compliance with the foregoing covenant.
(b) Authorized Escrow Account Disbursements. It is agreed as between City and Assignee that disbursements from the Escrow Account shall be made for the purpose of paying (including the reimbursement to City for advances from its own funds to accomplish the purposes hereinafter described) the cost of acquiring the Project and the Costs of Issuance. (c) Requisition Procedure. No disbursement from the Escrow Account shall be made unless and until Assignee has approved in writing such requisition. Prior to disbursement from the Escrow Account there shall be filed with the Escrow Agent a requisition for such payment in the form of Disbursement Request attached hereto as Schedule 1, stating each amount to be paid and the name of the person, firm or corporation to whom payment thereof is due. All disbursements shall be made by wire transfer. The Escrow Agent is authorized to obtain and rely on confirmation of such Disbursement Request and payment instructions by telephone call-back to the person or persons designated for verifying such requests on Exhibit A-2 (such person verifying the request shall be different than the person initiating the request). The Assignee and City hereby confirm that any call-back performed by Escrow Agent to verify a disbursement instruction pursuant to a Disbursement Request submitted pursuant to this Section 2(c) before

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Packet Pg. 205 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -5-
release, shall be made to Assignee only and Escrow Agent shall have no obligation to call-back City.

Each such Disbursement Request shall be signed by an authorized representative of City (an “Authorized Representative”) and by Assignee, and shall be subject to the following conditions, which Escrow Agent shall conclusively presume have been satisfied at such time as a requisition executed by City and Assignee is delivered to it:

1. Delivery to Assignee of an executed Disbursement Request in the form attached hereto as Schedule 1;

2. Delivery to Assignee of copies of invoices (and proofs of payment of such invoices, if City seeks reimbursement) and bills of sale therefor or other evidence of title Project transfer, and release by Vendor of any security interest, therefor as required by Section ___ of the IPA and any additional documentation reasonably requested by Assignee; and

3. The disbursement shall occur during the Acquisition Period.

City and Assignee agree that their execution of the form attached hereto as Schedule 1 and delivery of the executed form to Escrow Agent confirms that all of the requirements and conditions with respect to disbursements set forth in this Section 2 have been satisfied.

Section 3. Deposit to Escrow Account. Upon satisfaction of the conditions specified in Section ___ of the [IPA][Assignment Agreement], Assignee will cause the Acquisition Amount to be deposited in the Escrow Account. City agrees to pay any costs with respect to the Project in excess of amounts available therefor in the Escrow Account.

Section 4. Excess Proceeds in Escrow Account. Upon receipt of written instructions from Assignee including a representation that one of the following conditions has been satisfied (upon which representation Escrow Agent shall conclusively rely), any funds remaining in the Escrow Account on or after the earliest of (a) the expiration of the Acquisition Period, (b) the date on which City executes a Final Acceptance Certificate, or (c) upon a termination of the Escrow Account as provided in this Agreement, shall be distributed by the Escrow Agent to the Assignee in order for the Assignee to apply such funds to amounts owed by City under the IPA in accordance with Section ___ of the IPA.

Section 5. Security Interest. The Escrow Agent and City acknowledge and agree that the Escrow Account and all proceeds thereof are being held by Escrow Agent for disbursement or return as set forth herein. City hereby grants to Assignee a first priority perfected security interest in the Escrow Account, and all proceeds thereof, and all investments made with any amounts in the Escrow Account. If the Escrow Account, or any part thereof, is converted to investments as set forth in this Agreement, such investments shall be made in the name of Escrow Agent and the Escrow Agent hereby agrees to hold such investments as bailee for Assignee so that Assignee is deemed to have possession of such investments for the purpose of perfecting its security interest.

Section 6. Control of Escrow Account. In order to perfect Assignee’s security interest by means of control in (i) the Escrow Account established hereunder, (ii) all securities

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Packet Pg. 206 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -6-
entitlements, investment property and other financial assets now or hereafter credited to the Escrow Account, (iii) all of City’s rights in respect of the Escrow Account, such securities entitlements, investment property and other financial assets, and (iv) all products, proceeds and revenues of and from any of the foregoing personal property (collectively, the “Collateral”), Assignee, City, Authority and Escrow Agent further agree as follows:
(a) All terms used in this Section 6 which are defined in the California Commercial Code (the “Commercial Code”) but are not otherwise defined herein shall have the meanings assigned to such terms in the Commercial Code, as in effect on the date of this Agreement.
(b) Escrow Agent will comply with all entitlement orders originated by Assignee with respect to the Collateral, or any portion of the Collateral, without further consent by City.
(c) Provided that account investments shall be held in the name of the Escrow Agent, Escrow Agent hereby represents and warrants (i) that the records of Escrow Agent show that City is the sole owner of the Collateral, (ii) that Escrow Agent has not been served with any notice of levy or received any notice of any security interest in or other claim to the Collateral, or any portion of the Collateral, other than Assignee’s claim pursuant to this Agreement, and (iii) that Escrow Agent is not presently obligated to accept any entitlement order from any person with respect to the Collateral, except for entitlement orders that Escrow Agent is obligated to accept from Assignee under this Agreement and entitlement orders that Escrow Agent, subject to the provisions of paragraph (e) below, is obligated to accept from City. (d) Without the prior written consent of Assignee, Escrow Agent will not enter into any agreement by which Escrow Agent agrees to comply with any entitlement order of any person other than Assignee or, subject to the provisions of paragraph (e) below, City, with respect to any portion or all of the Collateral. Escrow Agent shall promptly notify Assignee if any person requests Escrow Agent to enter into any such agreement or otherwise asserts or seeks to assert a Lien, encumbrance or adverse claim against any portion or all of the Collateral. (e) Except as otherwise provided in this paragraph (e) and subject to Section 1(b) hereof, City may effect sales, trades, transfers and exchanges of Collateral within the Escrow Account, but will not, without the prior written consent of Assignee, withdraw any Collateral from the Escrow Account. Escrow Agent acknowledges that Assignee reserves the right, by delivery of written notice to Escrow Agent, to prohibit City from effecting any withdrawals (including withdrawals of ordinary cash dividends and interest income), sales, trades, transfers or exchanges of any Collateral held in the Escrow Account. Further, Escrow Agent hereby agrees to comply with any and all written instructions delivered by Assignee to Escrow Agent (once it has had a reasonable opportunity to comply therewith) and has no obligation to, and will not, investigate the reason for any action taken by Assignee, the amount of any obligations of City to Assignee, the validity of any of Assignee’s claims against or agreements with City, the existence of any defaults under such agreements, or any other matter. (f) City hereby irrevocably authorizes Escrow Agent to comply with all instructions and entitlement orders delivered by Assignee to Escrow Agent.

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Packet Pg. 207 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -7-
(g) Escrow Agent will not attempt to assert control, and does not claim and will not accept any security or other interest in, any part of the Collateral, and Escrow Agent will not exercise, enforce or attempt to enforce any right of setoff against the Collateral, or otherwise charge or deduct from the Collateral any amount whatsoever. (h) Escrow Agent and City hereby agree that any property held in the Escrow Account shall be treated as a financial asset under such section of the Commercial Code as corresponds with Section 8-102 of the Uniform Commercial Code, notwithstanding any contrary provision of any other agreement to which Escrow Agent may be a party. (i) Escrow Agent is hereby authorized and instructed, and hereby agrees, to send to Assignee at its address set forth in Section 8 below, concurrently with the sending thereof to City, duplicate copies of any and all monthly Escrow Account statements or reports issued or sent to City with respect to the Escrow Account.

Section 7. Information Required Under USA PATRIOT ACT. The parties acknowledge that in order to help the United States government fight the funding of terrorism and money laundering activities, pursuant to Federal regulations that became effective on October 1, 2003 (Section 326 of the USA PATRIOT Act) all financial institutions are required to obtain, verify, record and update information that identifies each person establishing a relationship or opening an account. The parties to this Agreement agree that they will provide to the Escrow Agent such information as it may request, from time to time, in order for the Escrow Agent to satisfy the requirements of the USA PATRIOT Act, including but not limited to the name, address, tax identification number and other information that will allow it to identify the individual or entity who is establishing the relationship or opening the account and may also ask for formation documents such as articles of incorporation or other identifying documents to be provided.

Section 8. Miscellaneous. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the IPA. This Agreement may not be amended except in writing signed by all parties hereto. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original instrument and each shall have the force and effect of an original and all of which together constitute, and shall be deemed to constitute, one and the same instrument. Notices hereunder shall be made in writing and shall be deemed to have been duly given when personally delivered or when deposited in the mail, first class postage prepaid, or delivered to an express carrier, charges prepaid, or sent by facsimile with electronic confirmation, addressed to each party at its address below.

Notices and other communications hereunder may be delivered or furnished by electronic mail provided that any formal notice shall be attached to an email message in PDF format and provided further that any notice or other communication sent to an e-mail address shall be deemed received upon and only upon the sender’s receipt of affirmative acknowledgement or receipt from the intended recipient. For purposes hereof no acknowledgement of receipt generated on an automated basis shall be deemed sufficient for any purpose hereunder or admissible as evidence of receipt. It is understood and agreed that for no purpose shall notice to Argent Institutional Trust Company in its capacity hereunder constitute notice to Banc of America Public Capital Corp in its capacity hereunder.

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Packet Pg. 208 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -8-
If to Assignee: Banc of America Public Capital Corp
11333 McCormick Road
Hunt Valley II
M/C MD5-032-07-05
Hunt Valley, MD 21031
Attn: Contract Administration
If to City: City of San Jacinto
595 S. San Jacinto Avenue
San Jacinto, CA 92583
Telephone: (951) 487-7330
Attn: Finance Director
If to Escrow Agent: Argent Institutional Trust Company
1715 N. Westshore Boulevard, Suite 750
Tampa, FL 33607
Attn: Alice Wolan
Telephone: (312) 405-5393
E-mail: [email protected]
Section 9. City and Assignee understand and agree that they are required to provide the Escrow Agent with a properly completed and signed Tax Certification (as defined below) and that the Escrow Agent may not perform its duties hereunder without having been provided with such Tax Certification. As used herein “Tax Certification” shall mean an IRS form W-9 or W-8 as described above. The Escrow Agent will comply with any U.S. tax withholding or backup withholding and reporting requirements that are required by law. With respect to earnings allocable to a foreign person, the Escrow Agent will withhold U.S. tax as required by law and report such earnings and taxes withheld, if any, for the benefit of such foreign person on IRS Form 1042-S (or any other required form), unless such earnings and withheld taxes are exempt from reporting under Treasury Regulation Section 1.1461-1(c)(2)(ii) or under other applicable law.

With respect to earnings allocable to a United States person, the Escrow Agent will report such income, if required, on IRS Form 1099 or any other form required by law. The IRS Forms 1099 and/or 1042-S shall show the Escrow Agent as payor and City as payee. Escrow Agent shall recognize City as the designated party for regulatory reporting purposes.

City and Assignee agree that they are not relieved of their respective obligations, if any, to prepare and file information reports under Code Section 6041, and the Treasury regulations thereunder, with respect to amounts of imputed interest income, as determined pursuant to Code Sections 483 or 1272. The Escrow Agent shall not be responsible for determining or reporting such imputed interest.

Section 10. This Agreement shall be governed by and construed in accordance with the laws of the State of California and the parties hereto consent to jurisdiction in the State of California and venue in any state or federal court located in the State of California, and each party expressly waives any objections that it may have to the venue of such courts. THE PARTIES

HERETO EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION

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Packet Pg. 209 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -9-
BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT. If the waiver of jury trial contained herein is unenforceable for any reason, then the parties hereto agree that the court shall, and is hereby directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to a referee to hear and determine all of the issues in such action or proceeding (whether of fact or of law) and to report a statement of decision.

Section 11. Any bank or corporation into which the Escrow Agent may be merged or with which it may be consolidated, or any bank or corporation to whom the Escrow Agent may transfer a substantial amount of its escrow business, shall be the successor to the Escrow Agent without the execution or filing of any paper or any further act on the part of any of the parties, anything herein to the contrary notwithstanding. Any bank or corporation into which the Assignee may be merged or with which it may be consolidated, or any bank or corporation to whom the Assignee may transfer a substantial amount of its business, shall be the successor to the Assignee without the execution or filing of any paper or any further act on the part of any of the parties, anything herein to the contrary notwithstanding.

Section 12. This Agreement may be amended, modified, and/or supplemented only by an instrument in writing executed by all parties hereto.

Section 13. No party hereto shall assign its rights hereunder until its assignee has submitted to the Escrow Agent (i) Patriot Act disclosure materials and the Escrow Agent has determined that on the basis of such materials it may accept such assignee as a customer and (ii) assignee has delivered an IRS Form W-8 or W-9, as appropriate, to the Escrow Agent which the Escrow Agent has determined to have been properly signed and completed.

Section 14. Escrow Agent will treat information related to this Agreement as confidential but, unless prohibited by law, City and Assignee authorize the transfer or disclosure of any information relating to this Agreement to and between the subsidiaries, officers, affiliates and other representatives and advisors of Escrow Agent and third parties selected by any of them, wherever situated, for confidential use in the ordinary course of business, and further acknowledge that Escrow Agent and any such subsidiary, officer, affiliate or third party may transfer or disclose any such information as required by any law, court, regulator or legal process.

Assignee will treat information related to this Agreement as confidential but, unless prohibited by law, Escrow Agent and City authorize the transfer or disclosure of any information relating to this Agreement to and between the subsidiaries, officers, affiliates, other representatives and advisors of Assignee and debt and equity sources and third parties selected by any of them, and to their prospective assignees wherever situated, for confidential use in the ordinary course of business, and further acknowledge that Assignee and any such subsidiary, officer, affiliate, debt and equity source or third party or prospective assignee may transfer or disclose any such information as required by any law, court, regulator or legal process. For the avoidance of doubt, nothing herein prohibits any individual from communicating or disclosing information regarding suspected violations of laws, rules, or regulations to a governmental, regulatory, or self-regulatory authority without any notification to any person.

City and Authority will treat the terms of this Agreement as confidential except on a “need to know” basis to persons within or outside City’s or Authority’s organization (including affiliates

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Packet Pg. 210 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -10-
of such party), such as attorneys, accountants, bankers, financial advisors, auditors and other consultants of such party and its affiliates, except as required by any law, court, regulator or legal process and except pursuant to the express prior written consent of the other parties, which consent shall not be unreasonably withheld.

Section 15. This Agreement may be executed and delivered by facsimile signature or other electronic or digital means (including, without limitation, Adobe’s Portable Document Format (“PDF”)). Any such signature shall be of the same force and effect as an original signature, it being the express intent of the parties to create a valid and legally enforceable contract between them. The exchange and delivery of this Agreement and the related signature pages via facsimile or as an attachment to electronic mail (including in PDF) shall constitute effective execution and delivery by the parties and may be used by the parties for all purposes.

Notwithstanding the foregoing, at the request of either party, the parties hereto agree to exchange inked original replacement signature pages as soon thereafter as reasonably practicable. [Remainder of page intentionally left blank; signature page follows]

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Packet Pg. 211 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) [Signature Page to Escrow and Account Control Agreement] IN WITNESS WHEREOF, the parties have executed this Escrow and Account Control Agreement as of the date first above written.

BANC OF AMERICA PUBLIC CAPITAL CORP
as Assignee

CITY OF SAN JACINTO
as City
By: ________________________________
Name: ___________________________
Title: ____________________________
By: ________________________________
Name:___________________________
Title:____________________________

ARGENT INSTITUTIONAL TRUST COMPANY
as Escrow Agent

CITY OF SAN JACINTO CITY OF SAN JACINTO

PUBLIC FINANCING AUTHORITY
as Authority
By: ________________________________
Name: ___________________________
Title: ____________________________
By: ________________________________
Name:___________________________
Title: ____________________________

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Packet Pg. 212 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) Schedule 1-1
SCHEDULE 1

TO THE ESCROW AND ACCOUNT CONTROL AGREEMENT

FORM OF DISBURSEMENT REQUEST
Re: Installment Purchase Agreement dated as of April 1, 2025 between City of San Jacinto and Banc of America Public Capital Corp, as assignee of the City of San Jacinto Public Financing Authority (the “IPA”) (Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the IPA.)
In accordance with the terms of the Escrow and Account Control Agreement, dated as of April __, 2025 (the “Escrow and Account Control Agreement”) by and among Banc of America Public Capital Corp (“Assignee”), the City of San Jacinto (“City”), the City of San Jacinto Public Financing Authority (the “Authority”) and Argent Institutional Trust Company, as escrow agent (the “Escrow Agent”), the undersigned hereby requests the Escrow Agent pay the following persons the following amounts from the Escrow Account created under the Escrow and Account Control Agreement for the following purposes:

Disbursement Amounts:

Payee’s Name and Address (if
disbursement via wire, must include
wire transfer instructions)
Invoice Number Dollar Amount Purpose
<Payee’s Name>
<Payee Address 1>
<Payee Address 2>
<Payee Address 3>
<Payee Bank Name*>
<Payee Bank ABA/Routing*>
<Payee Bank Account No*>
<Payee Account Name*>
<*Payee Address and Payee Bank
information is required.>
<invoice list OR “see
attached” with a
spreadsheet>
< invoice amount> <general description of
equipment; ex “police cruiser”>
<Payee’s Name>
<Payee Address 1>
<Payee Address 2>
<Payee Address 3>
<Payee Bank Name*>
<Payee Bank ABA/Routing*>
<Payee Bank Account No*>
<Payee Account Name*>
<*Payee Address and Payee Bank
information is required.>
<invoice list OR “see
attached” with a
spreadsheet>
< invoice amount> <general description of
equipment; ex “police cruiser”>

4.A.1.e
Packet Pg. 213 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) Schedule 1-2
City hereby represents, covenants and warrants for the benefit of Assignee on the date hereof as follows:
(i) Each obligation specified in the table herein titled as “Disbursement Amounts” (a) has been incurred by City in the stated amount, (b) the same is a proper charge against the Escrow Account for costs relating to the Project identified above and has not been paid (or has been paid by City and City requests reimbursement thereof), and (c) has not been paid (or has been paid by City and City requests reimbursement thereof), and the Project relating to such obligation has been delivered, installed and accepted by City. [For COI Disbursement only: Each obligation specified in the table herein titled as “Disbursement Amounts” (a) has been incurred by City in the stated amount, and (b) the same is a proper charge for costs of delivery of the IPA identified above and has not been paid (or has been paid by City and City requests reimbursement thereof, in which event City further certifies that the requested reimbursement is not with respect to any amount previously paid).] (ii) For each item of Project relating to an obligation specified in the table herein titled as “Disbursement Amounts” (a) City has conducted such inspection and testing of the Project as it deems appropriate in order to unconditionally accept such Project, and (b) such Project has been delivered, installed, and unconditionally accepted for all purposes by City and title thereto has transferred to City and any security interest of Vendor therein has been released. Attached hereto is a copy of the original invoice, and certification from Vendor as to title transfer and release by Vendor of any security interest with respect to such obligation. (iii) The undersigned, as Authorized Representative, has no notice of any vendor’s, mechanic’s or other Liens or rights to Liens, chattel mortgages, conditional sales contracts or security interest which should be satisfied or discharged before such payment is made. (iv) This requisition contains no item representing payment on account, or any retained percentages which City is, at the date hereof, entitled to retain (except to the extent such amounts represent a reimbursement to City).
(v) The Project is insured in accordance with the IPA.
(vi) No Event of Default, and no event which with notice or lapse of time, or both, would become an Event of Default, under the IPA has occurred and is continuing at the date hereof. (vii) The disbursement shall occur during the Acquisition Period. (viii) The representations, warranties and covenants of City set forth in the IPA are true and correct as of the date hereof.
(ix) No Material Adverse Change has occurred since the date of the execution and delivery of the IPA.
(x) The information in this Disbursement Request regarding each Payee, including their respective name, address and wiring instructions (collectively, the “Payee Information”), is true and correct, such Payee Information has been verified and confirmed by City and the Assignee can rely on City’s verification and confirmation of the accuracy of such Payee Information. City

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Packet Pg. 214 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) Schedule 1-3
hereby acknowledges and agrees that any call-back performed by Assignee to verify the disbursement instructions pursuant to this Disbursement Request shall be made to City only and Assignee shall have no obligation to call-back any Payee listed above. [Remainder of page intentionally left blank]

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Packet Pg. 215 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) [Signature Page to Disbursement Request]
Dated: ________________

CITY OF SAN JACINTO
By:____________________________________
Name: ______________________________
Title: _______________________________
Disbursement of funds from the Escrow
Account in accordance with the foregoing
Disbursement Request hereby is authorized

BANC OF AMERICA PUBLIC CAPITAL CORP
as Assignee under the IPA
By:

Name:

Title:

4.A.1.e
Packet Pg. 216 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) [AN “EXHIBIT A-1” MUST BE COMPLETED AND EXECUTED AT TIME OF EXECUTION OF THE AGREEMENT]
EXHIBIT A-1

FORM OF INCUMBENCY AND AUTHORIZATION CERTIFICATE
The undersigned, a duly elected or appointed and acting Clerk of the City of San Jacinto (“City”) certifies as follows:

A. The following listed persons are duly elected or appointed and acting officials of City (the “Officials”) in the capacity set forth opposite their respective names below and the facsimile signatures below are true and correct as of the date hereof; and B. The Officials are duly authorized, on behalf of City, to negotiate, execute, in writing or electronically, and deliver the Installment Purchase Agreement dated as of April 1 2025 by and between City and the City of San Jacinto Public Financing Authority (the “Authority”), the Escrow and Account Control Agreement dated as of April __, 2025 by and among Banc of America Public Capital Corp (“Assignee”), City, Authority and Argent Institutional Trust Company as Escrow Agent, all documents related thereto and delivered in connection therewith, and any future modification(s) or amendments thereof (collectively, the “Operative Agreements”), and the Operative Agreements each are the binding and authorized agreements of City, enforceable in all respects in accordance with their respective terms.

NAME OF OFFICIAL TITLE SIGNATURE
________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ Dated: April __, 2025
By:____________________________________
Name: ______________________________
Title: _______________________________
(The signer of this Certificate cannot be listed above as authorized to execute the Operative Agreements.)

4.A.1.e
Packet Pg. 217 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) [AN “EXHIBIT A-2” MUST BE COMPLETED AND EXECUTED AT TIME OF EXECUTION OF THE AGREEMENT]
EXHIBIT A-2
ESCROW AND ACCOUNT CONTROL AGREEMENT DATED AS OF APRIL __, 2025 BY AND AMONG BANC

OF AMERICA PUBLIC CAPITAL CORP, AS ASSIGNEE, CITY OF SAN JACINTO, AS CITY, THE CITY OF

SAN JACINTO PUBLIC FINANCING AUTHORITY AND ARGENT INSTITUTIONAL TRUST COMPANY, AS

ESCROW AGENT
CERTIFICATE OF AUTHORIZED REPRESENTATIVES – [ASSIGNEE]
Name: Candy Tam Name: Nancy Nusenko
Title: Authorized Agent Title: Authorized Agent
Phone: 415-765-7492 Phone: 443-541-3646
Facsimile: 415-633-0183 Facsimile: 443-541-3057
E-mail: [email protected] E-mail: [email protected] Signature: Signature:

Fund Transfer / Disbursement Authority Level: Fund Transfer / Disbursement Authority Level:

Initiate Initiate
Verify transactions initiated by others Verify transactions initiated by others Name: Nancy K. Hepner Name: Arlene Sobieck
Title: Authorized Agent Title: Authorized Agent
Phone: 443-541-3645 Phone: 443-541-3643
Facsimile: 804-553-2407 Facsimile: 443-541-3057
E-mail: [email protected] E-mail: [email protected] Signature: Signature:

Fund Transfer / Disbursement Authority Level: Fund Transfer / Disbursement Authority Level:

Initiate Initiate
Verify transactions initiated by others Verify transactions initiated by others The Escrow Agent is authorized to comply with and rely upon any notices, instructions or other communications believed by it to have been sent or given by the person or persons identified above including without limitation, to initiate and verify funds transfers as indicated.

BANC OF AMERICA PUBLIC CAPITAL CORP
By:

Name:

Title:

Date: April __, 2025

4.A.1.e
Packet Pg. 218 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) April 1, 2025
TO: City Council
REQUESTED BY: Erika Gomez, Finance Director
APPROVED BY: Robert A. Johnson, City Manager
SUBJECT: Approval of Financing for Certain Water System Improvements RECOMMENDATION:

Staff recommends that the City Council adopt the attached Resolution No. 4069, authorizing and directing execution of an Installment Sale Agreement, Assignment Agreement, and Escrow Agreement to finance the purchase of equipment and the construction of a new treatment plant and well, including site improvements, project management, and inspection costs related to the water system (the “Project”), and approving related documents and official actions.

DISCUSSION:

The Grand Well and Grand Well Treatment Plant project (Project) emerged as a vital response to the City’s growing water infrastructure needs. Initially funded by the American Rescue Plan Act of 2021 (ARPA) and the Infrastructure Investment and Jobs Act of 2021, the project aimed to strengthen the City’s water system. In 2022, the first phase of the initiative was successfully completed with the drilling of the Grand Well. However, as the pandemic brought rising costs nationwide, the City Council approved reallocation of all remaining ARPA funds in 2024 to finalize other critical infrastructure projects, like the Bath Well Treatment Plant and its site improvements.

Despite the shift in funding, the completion of the Grand Well and its treatment plant remains essential. This facility replaces the former Grand Well, which was abandoned and removed from the City’s Water Conveyance System roughly five years ago. The new Grand Well and Treatment Plant will improve and address inefficiencies in the City’s water distribution. The location of the new treatment plant resolves logistical challenges caused by the concentration of the City’s three active wells on the east side of town and minimizes costs associated with pumping water across town.

As residential and commercial growth continues, ensuring a reliable water supply has become a pressing priority. The new well delivers a production capacity of up to 2,500 gallons per minute, which will allow the City to maintain full reservoirs and steady water pressure during extreme heat or emergencies, such as fires. Beyond increasing supply, the Grand Well Treatment Plant enhances water quality by eliminating contaminants like iron and manganese, improving the color, taste, and odor of the water. Reliable access to high-quality drinking water is fundamental to public health, and this investment will enhance the overall well-being of the community while supporting future economic growth.

4.B.1
Packet Pg. 219
Summary of Bids
In order to secure the funds required to construct the Project, a Request for Proposal was sent to 17 banks on March 4, 2025, and 10 bids were received on March 13, 2025. Of the ten bids received, two were considered the most competitive, and a summary is provided below:

Banc of America Webster Bank
Term 15-Year Term 20-Year Term 15-Year Term 20-Year Term Interest Rate 4.1357% 4.3204% 4.18% 4.43%
All-in True
Interest Cost

4.30% 4.45% 4.34% 4.56%
Optional
Redemption
Feature
Callable on or
after 2/1/2033 at
100%
Callable on or
after 8/1/2035 at
100%
Callable on or
after 6/30/2030
at 100%
Callable on
6/30/2030
through
6/29/2032 at
101%, and on or
after 6/30/2032
at 100%
Based upon an evaluation of the bids and the specific terms requested by the bidders, staff and the City’s Finance Team are recommending the selection of Banc of America Public Capital Corp (the “Bank”) as the City’s lender at a rate of 4.3204% for a 20-year term. A copy of the Bank’s term sheet is attached.

Actions Needed
Resolution No. PFA 25-02 authorizes all proceedings related to the financing of the Project and approves the following financing documents necessary to complete the lease financing:
• Installment Sale Agreement – is between the Authority and the City. In order to provide financing for the Project, the Authority and the City wish to enter into this Agreement under which the Authority will provide funds to acquire, construct and/or improve the Project and sell the Project to the City in consideration of the agreement by the City to pay the purchase price thereof in semiannual installment payments. The obligation of the City to pay installment payments under this Agreement will be secured by a pledge of and lien on the Net Revenues of the Water System and a lien on the Project. • Escrow Agreement – is between the City, Authority, the Bank, and Argent Institutional Trust Company (the “Escrow Agent”). The Escrow Agreement sets forth the terms and conditions under which the Project Fund is to be held and disbursed in connection with the financing of the Project.

4.B.1
Packet Pg. 220
After the adoption of the Resolution, staff and the City’s Finance Team will complete the required actions to close the financing by April 10, 2025, at which time the funds will be available.

FISCAL IMPACT:

Approval of this item does not impact the General Fund. Principal and interest on the financing will be repaid by the Authority from semi-annual installment payments received from the City.

The City’s installment payments to the Authority will be made from the water system’s Net Revenues. Financial projections indicate there will be more than sufficient Net Revenues to meet the debt service requirements. The financing is being structured to provide a total of $9 million in net proceeds to fund the Project. Repayment will be made through level annual payments, with the average annual payment estimated at approximately $678,879. Including the water system’s existing 2015 loan, the total average annual debt service cost is projected to be about $988,470 from FY 2026 through FY 2036, when the 2015 loan is scheduled to mature.

From FY 2037 to FY 2045, only the new 2025 loan will remain outstanding.

Actions Needed
At tonight’s meeting, the attached Resolution authorizes all proceedings related to the financing of the Project and approves the following financing documents necessary to complete the lease financing:
• Installment Sale Agreement – is between the Authority and the City. In order to provide financing for the Project, the Authority and the City wish to enter into this Agreement under which the Authority will provide funds to acquire, construct and/or improve the Project and sell the Project to the City in consideration of the agreement by the City to pay the purchase price thereof in semiannual installment payments, and provides that the Authority purchase the Project and.

The obligation of the City to pay installment payments under this Agreement will be secured by a pledge of and lien on the Net Revenues of the Water System and a lien in the Project.
• Assignment Agreement – is between the Authority and the Bank, as the Assignee. The rights, obligations and interest of the Authority will be assigned to the Assignee, in exchange for the assignment by the Authority of its right to receive the Installment Payments.
• Escrow Agreement – is between the City, Authority, the Bank, and Argent Institutional Trust Company (the “Escrow Agent”). The Escrow Agreement sets forth the terms and conditions under which the Project Fund is to be held and disbursed in connection with the financing of the Project.

4.B.1
Packet Pg. 221
After the adoption of the Resolution, staff and the City’s Finance Team will complete the required actions to close the financing by April 10, 2025, at which time the funds will be available.

FISCAL IMPACT:

Principal and interest on the financing will be repaid by the Authority from semi-annual installment payments received from the City. The City’s installment payments to the Authority will be made from the water system’s Net Revenues. Financial projections indicate there will be more than sufficient Net Revenues to meet the debt service requirements. The financing is being structured to provide a total of $9 million in net proceeds to fund the Project. Repayment will be made through level annual payments, with the average annual payment estimated at approximately $678,879. Including the water system’s existing 2015 loan, the total average annual debt service cost is projected to be about $988,470 from FY 2026 through FY 2036, when the 2015 loan is scheduled to mature. From FY 2037 to FY 2045, only the new 2025 loan will remain outstanding.

ATTACHMENTS:

Term Sheet
Resolution No. 4069
Installment Sale Agreement
Escrow Agreement

4.B.1
Packet Pg. 222
Jill M. Forsyth
Senior Vice President
Government Finance Group
14636 N. Scottsdale Road, Suite 200
Scottsdale, AZ 85254
T: (480) 624-0369 | F: (415) 796-1301
E: [email protected]
“Bank of America” is the marketing name used by certain Global Banking and Global Markets businesses of Bank of America Corporation. Lending, leasing, equipment finance and other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Banc of America Public Capital Corp, a wholly-owned subsidiary of Bank of America, National Association, is not a municipal advisor and is not subject to the fiduciary duty established in Section 15B(c)(1) of the Securities Exchange Act of 1934, as amended, with respect to any municipal financial product or issuance of municipal securities. The information provided in this document is not intended to be and should not be construed as “advice” with the meaning Section 15B of the Securities Exchange Act of 1934 and the municipal advisor rules of the SEC.© 2025 Bank of America Corporation. All rights reserved.

March 12, 2025
City of San Jacinto
Attn: Eric Staniek | Email: [email protected]
Jeff Land | Email: [email protected]
595 S. San Jacinto Ave
San Jacinto, CA
Re: Request for Proposal – 2025 Installment Purchase Agreement Dear Mr. Staniek and Mr. Land,
Banc of America Public Capital Corp is pleased to submit a response to the City of San Jacinto’s Request for Proposal for the 2025 Installment Purchase Agreement. BAPCC’s detailed response is described in the Summary of Terms and Conditions below (“the Proposal”).

Banc of America Public Capital Corp provides capital for essential use projects and equipment financing. As one of the largest tax-exempt providers in the nation, the entire team is dedicated to public sector financing.

The City of San Jacinto is a valued client of BAPCC, and we look forward to expanding the relationship further.

Thank you for the opportunity to present this response to the City.

Jill M. Forsyth
Senior Vice President
Government Finance Group
Banc of America Public Capital Corp: Government Group

4.B.1.1
Packet Pg. 223 Attachment: Term Sheet (Approval of Financing for Certain Water System Improvements) The transaction described in this document is an arm’s length, commercial transaction between you and Banc of America Public Capital Corp or one of its subsidiaries or affiliates (collectively, “BAPCC”) in which: (i) BAPCC is acting solely as a principal (i.e., as a lender or lessor) and for its own interest; (ii) BAPCC is not acting as a municipal advisor or financial advisor to you; (iii) BAPCC has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to you with respect to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether BAPCC or any of its affiliates has provided other services or is currently providing other services to you on other matters); (iv) the only obligations BAPCC has to you with respect to this transaction are set forth in the definitive transaction agreements between us; and (v) BAPCC is not recommending that you take an action with respect to the transaction described in this document, and before taking any action with respect to the this transaction, you should discuss the information contained herein with your own legal, accounting, tax, financial and other advisors, as you deem appropriate. If you would like a municipal advisor in this transaction that has legal fiduciary duties to you, you are free to engage a municipal advisor to serve in that capacity.

Summary of Terms and Conditions
Borrower: City of San Jacinto, California (“the City” or “Borrower”) Lender: Banc of America Public Capital Corp (“BAPCC” or “Lender”) Structure: Installment Purchase Agreement (“IPA”) between the City of San Jacinto Public Finance Authority and the City of San Jacinto. BAPCC will provide funding to the City for the acquisition of the water system through the IPA.

Security: Secured by a pledge of net revenues of the water system and a security interest in the equipment (to be determined).

Covenants: Rate covenant of 1.20x
Additional indebtedness covenant of 1.20x
Term: a) 15 years
b) 20 years
Amount: Approximately $10,110,000
Rate: a) 4.1357%
b) 4.3204%
The proposed interest rate includes a rate lock and will be valid for fundings on or before April 30, 2025. After April 30, 2025, the interest rate may be adjusted to maintain the economics to the Lender. To lock the interest rate, the City must notify BAPCC of its intent to award the transaction by March 20, 2025. The rate lock is subject to final City Council approval.

Payments: Payments will be in accordance with the attached amortization schedules with semi-annual principal and interest payments commencing on August 1, 2025.

Please note if alternative payment frequencies or changes to the principal amounts due on each payment date are requested, this may be accommodated, but any changes to the average life may also impact the rate quoted herein.

Prepayment: Callable after 50% of the term in full on any regularly scheduled payment date at par.

Governmental
Entity: The base payments are calculated on the assumptions that the Borrower is a political subdivision of a state within the meaning of Section 103(c) of the Internal Revenue Code (the "Code"), that this transaction will constitute an

4.B.1.1
Packet Pg. 224 Attachment: Term Sheet (Approval of Financing for Certain Water System Improvements) The transaction described in this document is an arm’s length, commercial transaction between you and Banc of America Public Capital Corp or one of its subsidiaries or affiliates (collectively, “BAPCC”) in which: (i) BAPCC is acting solely as a principal (i.e., as a lender or lessor) and for its own interest; (ii) BAPCC is not acting as a municipal advisor or financial advisor to you; (iii) BAPCC has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to you with respect to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether BAPCC or any of its affiliates has provided other services or is currently providing other services to you on other matters); (iv) the only obligations BAPCC has to you with respect to this transaction are set forth in the definitive transaction agreements between us; and (v) BAPCC is not recommending that you take an action with respect to the transaction described in this document, and before taking any action with respect to the this transaction, you should discuss the information contained herein with your own legal, accounting, tax, financial and other advisors, as you deem appropriate. If you would like a municipal advisor in this transaction that has legal fiduciary duties to you, you are free to engage a municipal advisor to serve in that capacity. obligation of Borrower within the meaning of Section 103(a) of the Code, notwithstanding Section 103(b) of the Code.

End of Lease: Under the IPA, Lender will release its security interest when paid in full.

Expenses: Each party will be responsible for their own closing costs.

Escrow Account: Available upon request.

Documentation: The Proposal is subject to credit and documentation approvals. The City is an existing client of BAPCC, and this opportunity has been successfully prescreened. A cross-default with other BAPCC exposure will be required.

Opinion of Counsel: If credit requires a tax opinion, Borrower agrees to work with bond counsel. The opinion will be at Lender’s cost, if needed.

Market Disruption: Notwithstanding anything contained herein to the contrary, in the event any material change shall occur in the financial markets after the date of this Proposal, including, but not limited to any governmental action or other event which materially adversely affects the extension of credit by banks, leasing companies or other lending institutions, the Lender may modify the indicative pricing described above.

USA Patriot Act
Compliance: Borrower acknowledges pursuant to the requirements of the USA Patriot Act, as amended from time to time (including as amended by the USA Freedom Act of 2015) (the "Patriot Act"), the Lender is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with the Patriot Act.

Proposal
Expiration: This Proposal will expire on June 30, 2025, and may be re-issued at the Lender’s discretion.

4.B.1.1
Packet Pg. 225 Attachment: Term Sheet (Approval of Financing for Certain Water System Improvements) The transaction described in this document is an arm’s length, commercial transaction between you and Banc of America Public Capital Corp or one of its subsidiaries or affiliates (collectively, “BAPCC”) in which: (i) BAPCC is acting solely as a principal (i.e., as a lender or lessor) and for its own interest; (ii) BAPCC is not acting as a municipal advisor or financial advisor to you; (iii) BAPCC has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to you with respect to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether BAPCC or any of its affiliates has provided other services or is currently providing other services to you on other matters); (iv) the only obligations BAPCC has to you with respect to this transaction are set forth in the definitive transaction agreements between us; and (v) BAPCC is not recommending that you take an action with respect to the transaction described in this document, and before taking any action with respect to the this transaction, you should discuss the information contained herein with your own legal, accounting, tax, financial and other advisors, as you deem appropriate. If you would like a municipal advisor in this transaction that has legal fiduciary duties to you, you are free to engage a municipal advisor to serve in that capacity. __________________________________________________________________________________ 15-Year Amortization Schedule
20-Year Amortization Schedule

4.B.1.1
Packet Pg. 226 Attachment: Term Sheet (Approval of Financing for Certain Water System Improvements) The transaction described in this document is an arm’s length, commercial transaction between you and Banc of America Public Capital Corp or one of its subsidiaries or affiliates (collectively, “BAPCC”) in which: (i) BAPCC is acting solely as a principal (i.e., as a lender or lessor) and for its own interest; (ii) BAPCC is not acting as a municipal advisor or financial advisor to you; (iii) BAPCC has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to you with respect to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether BAPCC or any of its affiliates has provided other services or is currently providing other services to you on other matters); (iv) the only obligations BAPCC has to you with respect to this transaction are set forth in the definitive transaction agreements between us; and (v) BAPCC is not recommending that you take an action with respect to the transaction described in this document, and before taking any action with respect to the this transaction, you should discuss the information contained herein with your own legal, accounting, tax, financial and other advisors, as you deem appropriate. If you would like a municipal advisor in this transaction that has legal fiduciary duties to you, you are free to engage a municipal advisor to serve in that capacity.

Municipal Advisor Registration Rule Statement:

This Proposal is submitted in response to your Request for Proposal – 2025 Installment Purchase Agreement dated March 4, 2025. The contents of this proposal and any subsequent discussions between us, including any and all information, recommendations, opinions, indicative pricing, quotations, and analysis with respect to any municipal financial product or issuance of municipal securities, are provided to you in reliance upon the exemption provided for responses to requests for proposals or qualifications under the municipal advisor rules (the “Rules”) of the Securities and Exchange Commission (240 CFR 15Ba1-1 et seq.).

The Staff of the SEC’s Office of Municipal Securities has issued guidance which provides that, in order for a request for proposals to be consistent with this exemption, it must (a) identify a particular objective, (b) be open for not more than a reasonable period of time (up to six months being generally considered as reasonable), and (c) involve a competitive process (such as by being provided to at least three reasonably competitive market participants) or by being publicly posted to your official website. In submitting this Proposal, we have relied upon your compliance with this guidance.

In submitting this Proposal, we are not undertaking to act as a “municipal advisor” to you or any other person within the meaning of the Rules. In connection with this Proposal and the transactions described herein, we are not subject to, and we hereby disclaim, any fiduciary duty to you or to any other person. We understand that you will consult with and rely on the advice of your own municipal, financial, tax, legal and other advisors as and to the extent you deem necessary in connection with your evaluation of this Proposal and the transactions described herein.

4.B.1.1
Packet Pg. 227 Attachment: Term Sheet (Approval of Financing for Certain Water System Improvements) Resolution No. 4069

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STATE OF CALIFORNIA ) RESOLUTION NO. 4069
COUNTY OF RIVERSIDE ) ss

CITY OF SAN JACINTO )

A RESOLUTION OF THE CITY OF SAN JACINTO,

CALIFORNIA, APPROVING AN INSTALLMENT

PURCHASE AGREEMENT, WITH RESPECT TO

FINANCING IMPROVEMENTS TO THE WATER SYSTEM
IN AN AMOUNT NOT TO EXCEED $9,500,000 AND OTHER

MATTERS PERTAINING THERETO
WHEREAS, the City of San Jacinto (the “City”) is authorized by the laws of the State of California to acquire, design, and construct improvements to the City’s water system (the “Water System”); and
WHEREAS, the City has heretofore undertaken the acquisition, design and construction of improvements to the Water System (the “Project”); and WHEREAS, the City and the City of San Jacinto Public Financing Authority (the “Authority”) have determined that it would be in their best interests to provide for the financing (the “Financing”) of the Project by entering into the Installment Purchase Agreement dated April 1, 2025 by and between the City and the Authority (the “Agreement”); and
WHEREAS, the Authority will enter into an Assignment Agreement dated April 1, 2025 with Banc of America Public Capital Corp. (the “Bank”) pursuant to which the Authority will assign its interests in the Agreement to the Bank which in turn will provide the funding for the Project;
WHEREAS, the City, Authority, the Bank and Argent Institutional Trust Company (“Escrow Agent”) will enter into the Escrow and Account Control Agreement dated April 1, 2025 (the “Escrow Agreement”) pursuant to which the Custodian will hold the funds deposited in the project fund established under the Agreement (the “Project Fund”);
WHEREAS, the City has determined that the Financing should be offered for private placement and have received a term sheet from the Bank and that such Financing will bear interest at a fixed rate; and
WHEREAS, Section 5852.1 of the Government Code of the State of California (“Section 5852.1”) provides that the City obtain from an underwriter, municipal advisor or private lender and disclose, in a meeting open to the public, prior to authorization of the Financing, good faith estimates of: (a) the true interest cost of the installment payments made pursuant to the Agreement (the “Installment Payments”), (b) the finance charge of the Agreement, meaning the sum of all fees and charges paid to third parties, (c) the amount of proceeds of the Agreement received less the finance charge described above and any reserves or capitalized interest paid or funded with proceeds of the Agreement and (d) the sum total of all Installment Payments calculated

4.B.1.2
Packet Pg. 228 Attachment: Resolution No. 4069 (Approval of Financing for Certain Water System Improvements) Resolution No. 4069

Page 2 of 4 ends

to the final Installment Payment Date (as defined in the Agreement) plus the fees and charges paid to third parties not paid with the proceeds of the Agreement; and WHEREAS, in accordance with Section 5852.1, the City has obtained such good faith estimates from the Bank and such estimates are attached hereto as Exhibit A; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of the Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized to execute, enter into and perform the Agreement;

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN
JACINTO RESOLVES AS FOLLOWS:

SECTION 1. Approval of Installment Purchase Agreement. The Agreement, which provides generally for (i) the resale of the Project by the Authority to the City, (ii) the purchase by the City from the Authority of the Project, and (ii) the payment by the City to the Authority of the Installment Payments in amounts which will be sufficient to pay the principal of and interest owing to the Bank, is hereby approved and any of the City Manager, the Deputy City Manager and Finance Director of the City (together, the “Authorized Officers”) are each individually authorized to execute, acknowledge and deliver said agreement on behalf of the City in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

SECTION 2. Approval of Escrow Agreement. The Escrow Agreement, which provides the terms and conditions pursuant to which the Project Fund is held, is hereby approved and any of the Authorized Officers are each individually authorized to execute, acknowledge and deliver said agreement on behalf of the Authority in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

SECTION 3. Financing Terms. The financing terms presented to the City by the Bank are approved as follows: maximum principal amount of financing is $9,500,000; maximum interest rate with respect to the financing is 4.50%, except in the event of default, or if interest payable on the Agreement is determined to be taxable, such rate may increase as agreed upon in the Agreement, and maximum term for the financing is 20 years.

SECTION 4. Requisitions. The Authorized Officers, or any one of them, are hereby authorized and directed to execute one or more requisitions authorizing the

4.B.1.2
Packet Pg. 229 Attachment: Resolution No. 4069 (Approval of Financing for Certain Water System Improvements) Resolution No. 4069

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payment of costs of preparing and delivering the Financing from the proceeds of payment by the Bank.

SECTION 5. Appointment of Professionals. The City hereby authorizes and approves the following professionals to provide services in connection with the Financing: Fieldman, Rolapp & Associates, Inc., as municipal advisor, Best Best & Krieger LLP, as special counsel and Oppenheimer & Co., Inc., as placement agent and the Authorized Officers are hereby authorized to enter into agreement with said firm in connection with their providing services with respect to the Financing.

SECTION 6. Other Acts. The Authorized Officers are hereby authorized and directed, jointly and severally, to do any and all things, to execute and deliver any and all documents, which in consultation with the staff and the City’s legal counsel they may deem necessary or advisable in order to consummate the Financing, or otherwise to effectuate the purposes of this Resolution, and any such actions previously taken by such officers are hereby ratified and confirmed.

SECTION 7. Effective Date. This Resolution shall become effective on the date on which it is adopted.

PASSED, APPROVED, AND ADOPTED, at a regular meeting of the City Council on the 1st day of April 2025, by the following vote:

AYES:

NAYS:

ABSENT:

ABSTAIN:

City of San Jacinto:
______________________________
Valerie Vandever, Mayor
ATTEST:
______________________________
Julia Espinoza, City Clerk
APPROVED AS TO FORM:

Best Best & Krieger LLP
______________________________
Craig Hayes, City Attorney

4.B.1.2
Packet Pg. 230 Attachment: Resolution No. 4069 (Approval of Financing for Certain Water System Improvements) 24438.70027\43324553.3
Resolution No. 4069
A-1

EXHIBIT A
SB 450 SUMMARY
Set forth below are good faith estimates of Fieldman, Rolapp & Associates, Inc., the City’s municipal advisor, as required under Section 5852.1 of the California Government Code (the “Code”) for the Installment Purchase Agreement to finance the acquisition, design and construction of certain improvements to City of San Jacinto’s water system. a) The true interest cost of the installment payments is at 4.32%, calculated as provided in Section 5852.1(a)(1)(A) of the Code.
b) The finance charge of the Installment Purchase Agreement, including all fees and charges paid to third parties, is estimated at $97,000. c) Proceeds of the Installment Purchase Agreement received by the City of $9,097,000 less the finance charges set forth in (b) above, is equal to $9,000,000.
d) The total payment amount calculated as provided in Section 5852.1(a)(1)(D) of the Code is estimated at $13,577,580.

The foregoing are estimates and the final costs can vary from the estimated amounts set forth above.

4.B.1.2
Packet Pg. 231 Attachment: Resolution No. 4069 (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4

INSTALLMENT PURCHASE AGREEMENT
Dated as of April 1, 2025
by and between

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY
and

CITY OF SAN JACINTO
Relating To

CITY OF SAN JACINTO
$9,097,000
2025 INSTALLMENT FINANCING
(WATER SYSTEM IMPROVEMENTS)

4.B.1.3
Packet Pg. 232 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4

TABLE OF CONTENTS
Page
-iARTICLE 1

4.B.1.3
Packet Pg. 233 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4

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Packet Pg. 234 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4

4.B.1.3
Packet Pg. 235 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
1 INSTALLMENT PURCHASE AGREEMENT
THIS INSTALLMENT PURCHASE AGREEMENT (this “Installment Purchase Agreement”), dated for convenience as of April 1, 2025, is by and between City of San Jacinto Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), and the City of San Jacinto (the “City”), a municipal corporation duly organized and existing under the laws of the State of California; WITNESSETH:

ARTICLE 1

4.B.1.3
Packet Pg. 236 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
2 been defeased or discharged, or for the payment of which a security deposit has been posted. In determining the debt service on Parity Obligations for which interest is calculated at a variable interest rates, such Parity Obligation shall be assumed to bear interest at a fixed interest rate equal to the highest variable rate borne over the preceding 24 months by outstanding variable rate debt of the City, or, if no such variable rate debt is at the time outstanding, by variable rate debt for which the interest rate is computed by reference to an index comparable to that to be utilized in determining the interest rate for the Parity Obligation proposed to be issued. With respect to any Parity Obligation that is a tax incentive bond (such as a Build America Bond), such interest shall be equal to the net interest paid by the City after taking into account any anticipated payments to be received by or on behalf of the City from the United States of America. “Assignee” means Banc of America Public Capital Corp, and its successors and assigns. “Assignment Agreement” means the Assignment Agreement dated April 1, 2025 by and between the Authority and the Assignee, as supplemented, amended, modified or restated from time to time.
“Authorized Investments” means any of the following, but only to the extent that the same are acquired at fair market value, which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:
(a) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America; (b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: (i) Export-Import Authority; (ii) Farm Credit System Financial Assistance Corporation, (iii) Farmers Home Administration; (iv) General Services Administration; (v) U.S. Maritime Administration; (vi) Small Business Administration; (vii) Government National Mortgage Association (GNMA); (viii) U.S. Department of Housing & Urban Development (PHA’s); (ix) Federal Housing Administration and (x) Federal Financing Authority; (c) senior debt obligations rated “Aaa” by Moody’s and “AAA” by S&P issued by the Federal National Mortgage Association or the Federal Home Financing Mortgage Corporation, senior debt obligations of other government-sponsored agencies, obligations of the Resolution Funding Corporation (REFCORP) and senior debt obligations of other government sponsored agencies;
(d) U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks (including the Authority and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-1” or “A-1+” by S&P and maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank;
(e) commercial paper which is rated at the time of purchase in the single highest classification, “P-1” by Moody’s and “A-1+” by S&P, and which matures not more than 270 days after the date of purchase;

4.B.1.3
Packet Pg. 237 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
3 (f) pre-refunded municipal obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based upon an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s and S&P or any successors thereto; or (ii)(A) which are fully secured as to principal and interest and prepayment premium or redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (a) above, which escrow may be applied only to the payment of such principal of and interest and prepayment premium or redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified prepayment date or redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and prepayment premium or redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the prepayment date or redemption date or dates specified in the irrevocable instructions referred to above, as appropriate;
(g) the Local Agency Investment Fund maintained by the State of California; and
(h) the California Asset Management Program.
“Business Day” means any day other than a Saturday or Sunday or a day on which (i) banks located in Denver, Colorado or Los Angeles, California are not required or authorized to remain closed, and (ii) the New York Stock Exchange is not closed; and (iii) the Authority and Federal Reserve Banks are not closed.
“City” means City of San Jacinto, a municipal corporation duly organized and existing under the laws of the State of California.
“Closing Date” means April 10, 2025.
“Contract(s)” means any instrument pursuant to which a Parity Obligation is issued. “Contract Payment Date” means any date on which Contract Payments are scheduled to be paid by the City under and pursuant to the Parity Obligations and includes each Installment Payment Date under this Installment Purchase Agreement.. “Contract Payments” means the payments scheduled to be paid by the City under and Contract and pursuant to the Parity Obligations, which payments are secured by a pledge of Net Revenues on a parity with this Installment Purchase Agreement. “Contract Rate” means the rate identified as such in the Schedule of Installment Payments. “Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the City and related to the authorization, execution, sale and delivery of this

4.B.1.3
Packet Pg. 238 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
4 Installment Purchase Agreement any Parity Obligations, including but not limited to any costs, fees and charges for preparation and execution of this Installment Purchase Agreement or any Parity Obligations and any other cost, charge or fee incurred in connection with the delivery of this Installment Purchase Agreement or such Parity Obligations. “Default” means any event or circumstance which, passage of time or the giving of notice or, following the applicable cure period or any of the foregoing, would constitute an Event of Default.
“Escrow Account” means the Escrow Account established and held pursuant to the Escrow Agreement.
“Escrow Agent” means Argent Institutional Trust Company, a Florida trust company, and any successor escrow agent.
“Escrow Agreement” means the Escrow and Account Control Agreement dated April 1, 2025 by and among the Authority, the City, the Assignee and the Escrow Agent pursuant to which the Project Fund will be held.
“Event of Default” means any of the events of default as defined in Section 5.1. “Federal Securities” means any direct general non-callable obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations the timely payment of principal of and interest on which are directly guaranteed by the United States of America. “Finance Director” means the City’s finance director.
“Financing Documents” means this Installment Purchase Agreement, the Assignment Agreement, the Escrow Agreement and any and all other documents from time to time evidencing, securing, or delivered to the Authority in connection with, this Installment Purchase Agreement. “Fiscal Year” means each twelve-month period during the Term of this Installment Purchase Agreement, commencing on July 1 in any calendar year and ending on June 30 in the next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal year period.
“Generally Accepted Accounting Principles” means United States generally accepted accounting principles, or those required of the regulatory agency having jurisdiction over the City, including but not limited to the Government Accounting Standard Board, if applicable, or such other commission or body as may be agreeable to the Assignee. “Governmental Authority” means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, district or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other person with authority to bind a party at law.

4.B.1.3
Packet Pg. 239 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
5 “Independent Certified Public Accountant” means an independent certified public accountant or any firm of certified public accountants appointed by the City. “Installment Payment Date” means each date upon which Installment Payments are due and payable as set forth on Exhibit B hereto.
“Installment Payments” means all payments required to be paid by the City on any date under this Installment Purchase Agreement and pursuant to Section 3.3 and 3.6, including any prepayment thereof pursuant to Section 6.2 or 6.3 and includes all amounts as specified in the Schedule of Installment Payments, consisting of a principal component and an interest component, and in all cases sufficient to repay such principal component and interest thereon at the applicable Contract Rate (or Taxable Rate if then in effect).
“Installment Purchase Agreement” means this Installment Purchase Agreement, dated as of April 1, 2025, between the Authority and the City.
“Maintenance and Operation Costs” means the reasonable and necessary costs and expenses paid by the City for maintaining and operating the System, including but not limited to the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the System in good repair and working order, and including but not limited to administrative costs of the City attributable to the System and the financing thereof, including salaries and wages of employees, payment to employees
“Material Adverse Change” means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business, facilities or operations of the City or the System, (b) the ability of the City to carry out its business in the manner conducted as of the date of this Installment Purchase Agreement or Parity Obligations or to meet or perform its obligations under this Installment Purchase Agreement, any Financing Document or Parity Obligations on a timely basis, (c) the validity or enforceability of this Installment Purchase Agreement or Parity Obligations, or (d) the exclusion of the interest component of the Installment Payments or Parity Obligations, as applicable, from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes. “Maximum Annual Debt Service means, as of the date of any calculation, the maximum sum obtained for the current or any future Fiscal Year during the Term of this Installment Purchase Agreement by totaling the aggregate amount of (1) the Installment Payments coming due in such Fiscal Year, and (2) the principal and interest coming due and payable in such Fiscal Year on any Parity Obligations, including the principal amount coming due and payable by operation of mandatory sinking fund redemption. There shall be excluded from such calculation any principal of and interest on the Installment Payments and any Parity Obligations which have been defeased or discharged, or for the payment of which a security deposit has been posted. In determining the debt service on Parity Obligations for which interest is calculated at a variable interest rates, such Parity Obligation shall be assumed to bear interest at a fixed interest rate equal to the highest variable rate borne over the preceding 24 months by outstanding variable rate debt of the City, or, if no such variable rate debt is at the time outstanding, by variable rate debt for which the interest rate is computed by reference to an index comparable to that to be utilized in determining the interest rate for the Parity Obligation proposed to be issued. With respect to any Parity Obligation

4.B.1.3
Packet Pg. 240 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
6 that is a tax incentive bond (such as a Build America Bond), such interest shall be equal to the net interest paid by the City after taking into account any anticipated payments to be received by or on behalf of the City from the United States of America. “Net Proceeds” means any insurance proceeds or condemnation award paid with respect to the System, if any, remaining after payment therefrom of all expenses incurred in the collection thereof.
“Net Revenues” means for any period, an amount equal to all of the Revenues received during such period, minus the amount required to pay all Maintenance and Operation Costs becoming payable during such period.
“Parity Obligations” means all other bonds, notes, installment sale agreements, leases, or other obligations of the City, including this Installment Purchase Agreement, payable from and secured by a pledge of and lien upon any of the Net Revenues incurred on a parity with the Installment Payments, issued in accordance with Section 4.14 hereof, including, but not limited to the 2015 Installment Purchase Contract.
“Person” means any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof). “Project” means the equipment, fixtures and other goods and property listed in the Exhibit A hereto and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to this Installment Purchase Agreement. “Project Costs” means the total cost of the Project, including related soft costs such as freight, installation and taxes and other capitalizable costs, and other costs incurred in connection with the acquisition, installation and/or financing of the Project. “Project Fund” means the Escrow Account.
“Resolution of Issuance” means Resolution No. __ adopted on April 1, 2025. “Revenue Fund” means the fund established under Section 3.9 and held by the City for the receipt and deposit of Revenues.
“Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the System, including, without limiting the generality of the foregoing, (1) all income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys derived by City from the sale, furnishing and supplying of the water or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the System, plus (2) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, or other moneys, including City reserves, plus (3) the proceeds of any stand-by or water availability charges collected by City, but excluding in all cases customer deposits, connection fees, development impact fees or any other deposits or advances subject to refund until such deposits or advances have become the property of City.

4.B.1.3
Packet Pg. 241 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
7 ”Schedule of Installment Payments” means the schedule set forth in Exhibit B. “Subordinate Obligations” means all obligations of the City that are subordinate in all respects, including priority and payment and enforcement, to the Installment Payments and payments required under Parity Obligations.
“System” means the existing facilities and property owned or operated by the City in connection with the water supply services of the City, together with all extensions thereof and improvements thereto hereafter acquired, constructed or installed by the City. For the avoidance of doubt, the term System is synonymous with the definitions of “Enterprise” under the 2015 Installment Sale Agreement.
“System Obligation” means any long-term obligation of the City payable from and/or secured by (in whole or in part) any of the Revenue Fund (or any portion thereof) or any Revenues (or any portion thereof), including this Installment Purchase Agreement and all other Parity Obligations and Subordinate Obligations.
“Taxable Rate” means, 5.5142%.
“Tax Code” means the Internal Revenue Code of 1986, as amended. Any reference herein to a provision of the Tax Code shall include all applicable temporary and permanent regulations promulgated under the Tax Code.
“Term of this Installment Purchase Agreement” or “Term” means the time during which this Installment Purchase Agreement is in effect, as provided in Section 3.4.

SECTION 1.3. Benefits of Installment Purchase Agreement Limited to Parties.

4.B.1.3
Packet Pg. 242 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
8 SECTION 1.4. Successor Is Deemed Included in all References to Predecessor.

SECTION 1.8. Exhibits. The following Exhibits are attached to, and by reference made a part of this Installment Purchase Agreement:

Exhibit A: Description of the Project.

Exhibit B: Schedule of Installment Payments.

Exhibit C: Form of Investor Letter to be executed by the Assignee.

ARTICLE 2

4.B.1.3
Packet Pg. 243 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
9 and/or any other document submitted in connection with, or to induce the Authority to enter into this Installment Purchase Agreement is correct in all material respects as of the Closing Date. (b) Due Organization and Existence. The City is a municipal corporation and political subdivision of the State of California, duly organized and existing under the laws of the State of California, with full power and authority to enter into this Installment Purchase Agreement and each other Financing Document and conduct its business. (c) Authorization. The laws of the State of California authorize the City to enter into this Installment Purchase Agreement and each other Financing Document and to enter into the transactions contemplated hereby and thereby, and to carry out its obligations under this Installment Purchase Agreement and each other Financing Document and the Board of Directors of the City has duly authorized the execution and delivery of this Installment Purchase Agreement and each other Financing Document.
(d) Conflicting Agreements. Neither the execution and delivery of the this Installment Purchase Agreement or any other Financing Document nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City or any of its property is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrances whatsoever upon any of the property or assets of the City, other than as set forth herein. (e) Consents and Approvals. All consents, approvals, authorizations, orders, licenses or permits of any Governmental Authority, legislative body, board, agency or commission having jurisdiction of the matter, that are required for the due authorization by, or that would constitute a condition precedent to or the absence of which would materially adversely affect the making or accepting of this Installment Purchase Agreement and the execution, delivery of and performance of any Financing Document by the City have been duly obtained (except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of this Installment Purchase Agreement, as to which no representation is made).
(f) Budgets; Full Disclosure. All budgets, projections, feasibility studies, and other documentation submitted by the City to the Authority in connection with, or to induce the Authority to enter into, this Installment Purchase Agreement and the other Financing Documents to which it is a party are based upon assumptions that are true and correct, and as of the Closing Date, no fact has come to light, and no event has occurred, that would cause any assumption made therein to be misleading or untrue. Neither this Installment Purchase Agreement or any other Financing Document nor other certificate, statement, agreement, or document furnished to the Authority in connection with this Installment Purchase Agreement or any other Financing Document (a) contains any untrue statement of a material fact, or (b) fails to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. The City is not aware of any Material Adverse Change that has not been disclosed in writing to the Authority.

4.B.1.3
Packet Pg. 244 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
10 (g) Accurate Financial Information. Each submission of financial information or documents relating to the City will constitute a representation and warranty by the City that such information and documents (a) are true and accurate in all material respects, and (b) do not fail to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (h) System Condition. The System reasonably meets present demand in all material respects, is constructed in a good and professional manner, is in good working order and condition, and complies in all material respects with all applicable law. (i) Rate Matters. The City’s rates for the provision of water have been approved, if applicable, by any and all necessary governmental regulatory authorities, including, without limitation, each public service commission or public utilities commission that may have jurisdiction over the operations and rates of the City. Further, to the City’s actual knowledge there is no pending or threatened proceeding before any Governmental Authority, the objective or result of which is or could be to materially reduce or otherwise materially adversely change any of the City’s rates for the provision of water services, or otherwise have a material adverse effect on the condition, financial or otherwise, operations, properties, or business of the System. (j) Litigation. There is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, government agency, public board or body, is pending for which the City has been served or, to the City’s actual current knowledge, threatened against the City: (i) in any way affecting the existence of the City or in any way challenging the respective powers of the several offices or the titles of the officials of the City to such offices; (ii) affecting or seeking to prohibit, restrain or enjoin the making, execution or delivery of this Installment Purchase Agreement or the other Financing Documents or the application of the proceeds of this Installment Purchase Agreement or the other Financing Documents; (iii) in any way contesting or affecting, as to the City, the validity or enforceability of this Installment Purchase Agreement or the other Financing Documents; (iv) in any way contesting the powers of the City or its authority with respect to the adoption of Resolution of Issuance, or the execution and delivery of this Installment Purchase Agreement or the other Financing Documents; or (v) in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby or that might materially adversely affect the ability of the City to perform and satisfy its obligations under this Installment Purchase Agreement or the other Financing Documents; nor to the best of the City’s knowledge is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the proceedings authorizing this Installment Purchase Agreement or the other Financing Documents or the performance by the City of its obligations hereunder or thereunder, or the authorization, execution, delivery or performance by the City of this Installment Purchase Agreement or the other Financing Documents.
(k) Valid and Binding Obligation. This Installment Purchase Agreement and each of the Financing Documents is a valid and binding obligation of the City enforceable in accordance with its terms.
(l) Pledge and Other Liens. The pledge in Section 3.9(b) of this Installment Purchase Agreement constitutes a lien on and a pledge of all Net Revenues and there are no other liens on

4.B.1.3
Packet Pg. 245 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
11 the Net Revenues as of the Closing Date except those in favor of the 2015 Installment Sale Agreement on a pari passu basis with this Installment Purchase Agreement. (m) Due Execution. The City has duly authorized and executed this Installment Purchase Agreement and the other Financing Documents in accordance with the laws of the State. (n) No Default Event of Non-Appropriation. The City is not in default and has not failed to appropriate funds required under the terms, conditions or provisions of any agreement or instrument to which the City has issued debt in the past ten years. (o) Outstanding Parity Obligations. The City has not issued or incurred any obligations which are currently outstanding having any priority in payment out of the Revenues or the Net Revenues over the payment of the Installment Payments as provided herein. As of the date of this Installment Purchase Agreement, the 2015 Installment Sale Agreement constitutes the only outstanding Parity Obligations. Other than the lien granted to the 2015 Installment Sale Agreement on a pari passu basis with this Installment Purchase Agreement, the City has not granted any lien in the Net Revenues or the Project that would be senior in priority to, or pari passu with, the first priority lien granted to the Authority on the Net Revenues and the Project under this Installment Purchase Agreement.
(p) Project Representations.
i. The City has complied and will comply with such procurement and public bidding requirements as may be applicable to the acquisition and construction by the City of the Project.
ii. During the Term, the Project will be used by the City only for the purpose of performing essential governmental or proprietary functions of the City consistent with the permissible scope of the City’s authority. The City does not intend to sell or otherwise dispose of the Project or any interest therein prior to the last Installment Payment scheduled to be paid hereunder.
iii. The City has an immediate need for the Project and expects to make immediate use of the Project. The City’s need for the Project is not temporary and the City does not expect the need for any item of the Project to diminish during the Term. iv. The City is the fee owner of the real estate where the Project is and will be located (the “Real Property”) and has good and marketable title thereto, and there exists no mortgage, pledge, lien, security interest, charge or other encumbrance of any nature whatsoever on or with respect to such Real Property. In the event any lien, encumbrance, restriction, asserted encumbrance, claim, dispute or other issue exists or arises with respect to the City’s legal title to or valid and marketable, beneficial use and enjoyment of the Real Property or impairs or adversely impacts Authority’s right, title or interest in the Project or any of Authority’s rights or remedies under this Installment Purchase Agreement with respect to the Project (each of the foregoing referred to as a “Real Property Issue”), City will take all steps necessary to promptly quiet, resolve and/or eliminate such Real Property Issue to the satisfaction of Authority and ensure that City and Authority have adequate access to and use of (including beneficial use and enjoyment of) the Real Property for all

4.B.1.3
Packet Pg. 246 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
12 purposes of the Project contemplated herein and City shall ensure that its fee interest in the Real Property and Authority’s right, title or interest in the Project and rights or remedies under this Installment Purchase Agreement with respect to the Project remain free and clear of Real Property Issues.

ARTICLE 3

4.B.1.3
Packet Pg. 247 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
13 assumes all rights, duties, responsibilities and liabilities of the Authority regarding the acquisition, design, construction, installation and/or equipping of the Project. Title to the Project, and each and every portion thereof shall vest in the City upon the acquisition, design and construction thereof; provided, however, the City shall be subject to the payment of Installment Payments as described under this Installment Purchase Agreement and any other amounts due hereunder, to the remedies of the Authority in the Event of Default as provided in Article 5 hereof. The City, as agent of the Authority, may enter into any purchase order, construction management agreement, architecture or engineering contract or construction contract required for the design, acquisition, construction, installation and completion of the Project. The Authority hereby assigns to the City all rights and powers to enforce such purchase orders or contracts as are required for design, acquisition, construction, installation, purchase and completion of the Project, which enforcement may be by auction at law or in equity; provided that the assignment made by the Authority herein shall not prevent the Authority, or its assignee, from asserting any rights or remedies legally available to it. Any appointment of the City as agent of the Authority is limited solely to the extent required under applicable law to render enforceable this Installment Purchase Agreement and to enable the City to acquire, construct, own and operate the Project, but shall not operate to bind or obligate the Authority for any purpose whatsoever. The City shall not represent to any person that it is acting as agent for the Authority.
(b) Risk of Loss. Whether or not covered by insurance or self insurance, the City hereby assumes all risk of loss of, or damage to and liability related to injury or damage to any persons or property arising from the Project from any cause whatsoever, and no such loss of or damage to or liability arising from the Project shall relieve the City of the obligation to make the Installment Payments or to perform any other obligation under this Installment Purchase Agreement. Whether or not covered by insurance or self insurance, the City hereby agrees to reimburse the Authority and the Assignee (to the fullest extent permitted by applicable law, but only from legally available funds) for any and all liabilities, obligations, losses, costs, claims, taxes or damages suffered or incurred by reimburse the Authority or the Assignee, regardless of the cause thereof and all expenses incurred in connection therewith (including, without limitation, counsel fees and expenses, and penalties connected therewith imposed on interest received) arising out of or as a result of (a) entering into this Installment Purchase Agreement or any of the transactions contemplated hereby, (b) the ordering, acquisition, ownership use, operation, condition, purchase, delivery, acceptance, rejection, storage or return of any item of the Project, (c) any accident in connection with the operation, use, condition, possession, storage or return of any item of the Project resulting in damage to property or injury to or death to any person, and/or (d) the breach of any covenant of the City under or in connection with this Installment Purchase Agreement or any material misrepresentation provided by the City under or in connection with this Installment Purchase Agreement. The provisions of this Section 3.1(b) shall continue in full force and effect notwithstanding the full payment of all obligations under this Installment Purchase Agreement or the termination of the Term of this Installment Purchase Agreement for any reason. (c) Disclaimer of Warranties. The Authority and Assignee make no warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for particular purpose or fitness for use of any of the Project, or any other warranty or representation, express or implied, with respect thereto and, as to the Authority and the Assignee, the City’s acquisition of the Project shall be on an “as is” basis. In no event shall the Assignee be liable for any incidental, indirect, special or consequential damage in connection with or arising

4.B.1.3
Packet Pg. 248 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
14 out of this Installment Purchase Agreement, the Project or the existence, furnishing, functioning or the City’s use of any item, product or service provided for in this Installment Purchase Agreement.

4.B.1.3
Packet Pg. 249 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
15 shall be the earliest date as of which the interest component of any Installment Payment is deemed includable in the gross income of the owner or owners thereof for federal income tax purposes, which may be earlier than the date of delivery of such determination by the Internal Revenue Service), and the City will pay such additional amount as will result in the owner receiving the interest component at the Taxable Rate.

4.B.1.3
Packet Pg. 250 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
16 written instructions provided by the Assignee to the City. Any such written instructions shall be provided by the Assignee to the City at least five days prior to the first Installment Payment Date provided that any failure of the City to receive written instructions shall not delay, impair or eliminate the City’s obligation to timely pay Installment Payments.

SECTION 3.8. Conditions Precedent.

4.B.1.3
Packet Pg. 251 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
17 rescinded; and (vi) the portion of Installment Payments designated as interest is excluded from gross income for Federal income tax purposes under Section 103 of the Code and is exempt from State of California personal income taxes; and such interest is not a specific item of tax preference for purposes of the federal alternative minimum tax; and (vii) the tax-exempt status of interest on the interest component of Installment Payments under State laws. (f) Opinion of City Attorney. An opinion of City Attorney to the City to the effect that (i) the City is duly organized, validly existing, and in good standing under the laws of the State, (ii) the City has duly received all requisite approvals and has the legal power to enter into and perform under the Financing Documents, (iii) all proceedings of the City necessary to be taken in connection with the authorization, execution, delivery and performance of the Financing Documents have been duly taken and all such authorizations are presently in effect, (iv) the Financing Documents have been duly executed and delivered by the City and each constitutes the valid and binding obligation of the City enforceable against the City in accordance with its terms, except as enforceability may be limited: by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the rights of creditors generally and by general equitable principles which may limit the right to obtain the remedy of specific performance of obligation other than the obligation to pay money, and (v) the execution, delivery, and performance by the City of the Financing Documents does not as of the date of the opinion: (a) violate any provision of any law, rule or regulation, any judgment, order or ruling of any court or governmental agency, articles of organization, articles of incorporation, other charter documents, bylaws or operating agreement, as applicable, of the City, or any agreement, indenture, mortgage, or other instrument to which the City is a party or by which the City or any of its properties within the system is bound; or (b) be in conflict with, result in a breach of, or constitute with the giving of notice or passage of time, or both, a default under any such agreement, indenture, mortgage, or other instrument; (vi) no consent, permission, authorization, order or license of any governmental authority is necessary in connection with the execution, delivery, performance, or enforcement of the Financing Documents, except such as have been obtained and are in full force and effect; and (vii) the authorization, approval, execution and delivery of the Financing Documents and all other proceedings of the City relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, procurement and public bidding laws and all other applicable State or Federal laws; (viii) to the best of such counsel’s knowledge, there are no actions, suits, or proceedings affecting the City or any of its assets pending or threatened before any governmental entity which: (a) if adversely decided could have a material adverse effect on the City’s condition, financial or otherwise, operations, properties or business, or on its ability to perform its obligations under the Financing Documents; or (b) could adversely affect the transactions contemplated by the Financing Documents or the pledge of Net Revenues to repay Installment Payments and other amounts payable under this Installment Purchase Agreement on a pari passu basis with the 2015 Installment Sale Agreement and any other Contract or Parity Obligation or the security interest of Assignee or its assigns, as the case may be, in the Project, the Project Fund or other Collateral thereunder; or (c) seeks to rescind, terminate, modify, or suspend any consent, permission, authorization, order or license of any governmental authority referred to above.

4.B.1.3
Packet Pg. 252 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
18 Revenue Fund and the Project Fund. Under no circumstances is the City required to advance moneys derived from any source of income other than the Net Revenues and other sources specifically identified herein for the payment of the Installment Payments, and no other funds or property of the City are liable for the payment of the Installment Payments. Notwithstanding the foregoing provisions of this Section, however, nothing herein prohibits the City voluntarily from making any payment hereunder from any source of available funds of the City. (b) Obligations Absolute. The obligations of the City to pay the Installment Payments from the Net Revenues and to perform and observe the other agreements contained herein are absolute and unconditional and are not subject to any defense or any right of setoff, counterclaim or recoupment arising out of any breach of the City or the Authority of any obligation to the City or otherwise with respect to the System, whether hereunder or otherwise, or out of indebtedness or liability at any time owing to the City by the Authority. Until such time as all of the Installment Payments have been fully paid or prepaid, the City:
(i) will not suspend or discontinue payment of any Installment Payments; (ii) will perform and observe all other agreements contained in this Installment Purchase Agreement; and
(iii) will not terminate this Installment Purchase Agreement for any cause, including, without limiting the generality of the foregoing, the occurrence of any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the System, sale of the System, the taking by eminent domain of title to or temporary use of any component of the System, commercial frustration of purpose, any change in the tax or other laws of the United States of America or the State of California or any political subdivision of either thereof or any failure of the Authority to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Installment Purchase Agreement. (c) Protection of Rights. If the Authority fails to perform any such agreements on its part, the City may institute such action against the Authority as the City deems necessary to compel performance so long as such action does not abrogate the obligations of the City contained in the preceding subsection (b). The City may, however, at the City’s own cost and expense and in the City’s own name or in the name of the Authority prosecute or defend any action or proceeding or take any other action involving third persons which the City deems reasonably necessary in order to secure or protect the City’s rights hereunder, and in such event the Authority will (upon reasonable notice, and at the sole expense of the City) cooperate fully with the City to the extent reasonably necessary and take such action reasonably necessary to effect the substitution of the City for the Authority in such action or proceeding if the City shall so request. (d) Budget and Appropriation of Installment Payments. During the Term of this Installment Sale Agreement, the City shall adopt all necessary budgets and make all necessary appropriations of the Installment Payments from the Net Revenues. In the event any Installment Payment requires the adoption by the City of any supplemental budget or appropriation, the City shall promptly adopt the same. The covenants on the part of the City contained in this subsection (d) shall be deemed to be and shall be construed to be duties imposed by law, and it shall be the

4.B.1.3
Packet Pg. 253 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
19 duty of each and every public official of the City to take such actions and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out the perform the covenants and agreements in this subsection (d). (e) The City agrees that it will perform and comply with each and every covenant and agreement required to be performed or observed by it each Contract and each other Parity Obligation. All events of default and remedies contained in each Contract and each other Parity Obligation, as well as related defined terms contained therein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety (amended to also take into account this Installment Purchase Agreement and all of the obligations of the City and Installment Payments and other amounts payable under this Installment Purchase Agreement) all of which shall be deemed to be made for the benefit of the Assignee and shall be enforceable against the City (the “Incorporated Provisions”). To the extent that any such Incorporated Provision permits the City or any other party to waive compliance with such provision or requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to the City or any other party, for purposes of this Installment Purchase Agreement, such provision shall be complied with unless it is specifically waived by the Assignee in writing in its sole and absolute discretion and such document, opinion or other instrument and such event or condition shall be acceptable or satisfactory only if it is acceptable or satisfactory to the Assignee which shall only be evidenced by the written approval by the Assignee of the same in its sole and absolute discretion. No termination or amendment to any Incorporated Provision or release of the City made pursuant to any Contract or any other Parity Obligation, shall be effective to terminate or amend such Incorporated Provisions or release the City with respect thereto in each case as incorporated by reference herein without the prior written consent of the Assignee in its sole and absolute discretion. The City shall continue to observe the Incorporated Provisions for the benefit of the Assignee until the termination of such Parity Obligation or payment in full of the applicable Contract. All such Incorporated Provisions shall be in addition to the express covenants contained herein and shall not be limited by the express covenants contained herein nor shall such Incorporated Provisions be a limitation on the express covenants contained herein. (f) In the event that the City shall, directly or indirectly, enter into or otherwise consent to any instrument which such instrument provides any Person with different or more restrictive covenants, different or additional events of default and/or greater rights and remedies with respect to any System Obligation or other instrument or all or any portion of the Revenues, Net Revenues or all or any portion of the System than are provided to the Assignee in this Installment Purchase Agreement, the City shall provide the Assignee with a copy of each such instrument and such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies shall automatically be deemed to be incorporated into this Installment Purchase Agreement and the Assignee shall have the benefits of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies as if specifically set forth herein. The City shall promptly enter into an amendment to this Installment Purchase Agreement to include different or more restrictive covenants, different or additional events of default and/or greater rights and remedies; provided that the Assignee shall have and maintain the benefit of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies even if the City fails to provide such amendment.

4.B.1.3
Packet Pg. 254 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
20 The City will preserve and protect the security of the Parity Obligations and the rights of the Assignee and the other owners of the Parity Obligations, and will warrant and defend their rights against all claims and demands of all persons. From and after the execution and delivery of this Installment Purchase Agreement, this Installment Purchase Agreement shall be incontestable by the City.

4.B.1.3
Packet Pg. 255 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
21 will be made at the times and in the amounts so required. Subject to the foregoing sentence, so long as no Default has occurred and is continuing hereunder or would result therefrom, the City may at any time and from time to time use and apply Net Revenues for (i) the acquisition and construction of improvements to the System; (ii) the prepayment of this Installment Purchase Agreement or Parity Obligations; or (iii) any other lawful purpose of the City.

ARTICLE 4

4.B.1.3
Packet Pg. 256 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
22 Rulemaking Board Electronic Municipal Market Access website. The City further agrees to provide such additional information to the Assignee as Assignee may from time to time reasonably request. Credit information relating to the City may be disseminated among Assignee and any of its affiliates and any of their respective successors and assigns. (b) Notice of Default. Promptly after becoming aware thereof, the City shall provide to the Authority notice of the occurrence of an Event of Default, including, without limitation, any error in the City’s financial information previously provided to the Authority and the occurrence of any breach, default, event of default or event that, with the giving of notice and/or the passage of time and/or the occurrence of any other condition, would become a breach, default or event of default under this Installment Purchase Agreement.
(c) Notice of Certain Events. The City shall provide to the Authority (1) notice at least 30 days prior thereto, of any change in the principal place of business of the City or the office where its records concerning its accounts are kept; and (2) all other notices required to be provided hereunder.

SECTION 4.2. Existence as City. The City shall continue to municipal corporation under the laws of the State of California during the term of this Installment Purchase Agreement.

4.B.1.3
Packet Pg. 257 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
23 (f) easements, rights-of-way, restrictions, and other similar encumbrances that, in the aggregate, do not materially interfere with the occupation, use, and enjoyment of the property or assets encumbered thereby in the normal course of business or materially impair the value of the property subject thereto;
(g) purchase money Liens to secure indebtedness permitted hereunder so long as such security interest is subordinated and subject in all respects to the terms of this Installment Purchase Agreement and the Contracts and Parity Obligations and all rights of the Assignee and the other holders of the Parity Obligations, and the secured party shall not exercise any remedies with respect to its security interest if doing so would impair the operation of the System or any part thereof necessary to secure adequate Revenues or Net Revenues for the payment of the interest on and principal of the Parity Obligations (including this Installment Purchase Agreement), or which would otherwise impair the rights of the holders of Parity Obligations (including the Assignee) with respect to the Revenues or Net Revenues or the operation of the System; and/or (h) Liens relating to Parity Obligations issued in compliance with the provisions of Section 4.14 hereof if such Liens equally and ratably secures all of this Installment Purchase Agreement and the Parity Obligations; and/or (i) existing liens as of the Closing Date and disclosed to the Authority and Assignee in writing prior to the Closing Date and which do not adversely affect the value of, or materially impair, the operation, use or Revenues of the System.

4.B.1.3
Packet Pg. 258 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
24 primary general liability and/or excess liability umbrella coverage), and in all events issued in form and amount satisfactory to Assignee and by an insurance company that is authorized to do business in the State and having a financial strength rating by A.M. Best Company of “A ” or better; and worker’s compensation coverage as required by the laws of the State. In the event the City is permitted, at Assignee’s sole discretion, to self insure, the City shall provide to Assignee a self insurance letter in form and substance satisfactory to Assignee. The City shall furnish to Assignee evidence of all such insurance or self insurance coverage described in this Section throughout the Term of this Installment Purchase Agreement. The City shall not cancel or modify such insurance or self insurance coverage in any way without first giving written notice thereof to Assignee at least thirty (30) days in advance of such cancellation or modification.

SECTION 4.8. Eminent Domain Proceeds. If all or any part of the System shall be taken by eminent domain proceedings, the net proceeds shall be used as follows:

4.B.1.3
Packet Pg. 259 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
25 (a) Except as provided herein, the City covenants that the System will not be encumbered, sold, leased, pledged, any charge placed thereon, or otherwise disposed of, as a whole or substantially as a whole if such encumbrance, sale, lease, pledge, charge or other disposition would materially impair the ability of the City to pay the Installment Payments or the principal of or interest on any Parity Obligations, or would materially adversely affect its ability to comply with the terms of this Installment Purchase Agreement or the instruments authorizing the issuance of any Parity Obligations. The City shall not enter into any agreement which impairs the operation of the System or any part of it necessary to secure adequate Net Revenues to pay the Installment Payments and any Parity Obligations, or which otherwise would impair the rights of the Authority with respect to the Net Revenues. If any substantial part of the System is sold, the payment therefor must either (a) be used for the acquisition or construction of improvements and extensions or replacement facilities or (b) be applied to prepay or redeem the Installment Payments and any Parity Obligations, on a pro rata basis, in the manner provided herein and in the instruments authorizing such Parity Obligations.
(b) Any amounts received as awards as a result of the taking of all or any part of the System by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, shall either (a) be used for the acquisition or construction of improvements and extension or replacement facilities of the System, or (b) be applied to prepay or redeem the Installment Payments and any Parity Obligations, on a pro rata basis, in the manner provided herein and in the instruments authorizing such Parity Obligations.

4.B.1.3
Packet Pg. 260 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
26 (b) Debt Service Coverage Ratio. The City will at the end of each Fiscal Year of the City, commencing with the Fiscal Year ending June 30, 2025, the Debt Service Coverage Ratio of: (i) Net Revenues for such Fiscal Year; to (ii) Maximum Annual Debt Service for such Fiscal Year.

4.B.1.3
Packet Pg. 261 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
27 improvements or extensions of existing facilities within the System, or otherwise for facilities, improvements or property which the City determines are of benefit to the System, or for the purpose of refunding any Parity Obligations and Subordinate Obligations in whole or in part, including all costs (including costs of issuing such Subordinate Obligations and including capitalized interest on such Subordinate Obligations during any period which the City deems necessary or advisable) relating thereto; (ii) Interest on such Subordinate Obligations must be payable no more frequently than any Installment Payment Date (and not on any additional dates); and (iii) The principal of such Subordinate Obligations must be payable on no more frequently than any Installment Payment Date (and not on any additional dates) in which principal is payable on Installment Payments.

The City shall not be required to obtain the consent of the Assignee required pursuant to Section 7.3.

4.B.1.3
Packet Pg. 262 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
28 outstanding Parity Obligation, interest and principal payments on the Parity Obligation to be so refunded and retired from the proceeds of such Parity Obligation being issued shall be excluded from the foregoing computation of Maximum Annual Debt Service. (d) The Contract Payment Dates for any Parity Obligations shall be:
(i) for interest payments, payable no more frequently than semiannually on any Installment Payment Date (i.e. February 7 and August 7, and not on any additional dates); and
(ii) for principal payments, payable no more frequently than semiannually on any Installment Payment Date (i.e. February 7 and August 7, and not on any additional dates).

SECTION 4.15. Tax Covenants.

The City shall promptly file or cause to be filed an information report for the Installment Payments in compliance with Section 149 (e) of the Tax Code.

4.B.1.3
Packet Pg. 263 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
29 replacement thereof, unless the City shall file with the Authority a written certificate of an engineer qualified to render such certificate to the effect that such reconstruction or replacement is not in the best interests of the City and the Authority. All amounts collected from insurance against accident to or destruction of any portion of the System shall be used to repair or rebuild such damaged or destroyed portion of the System or if determined not to repair or rebuild such portion and in any event to the extent not so applied, must either (a) be used for the acquisition or construction or improvements and extensions or replacement facilities or (b) be applied to prepay or redeem the Installment Payments and any Parity Obligations, on a pro rata basis, in the manner provided in the Installment Sale Agreement and the Installment Purchase Agreement and in any other instruments authorizing such Parity Obligations. The proceeds of any insurance paid on account of such damage or destruction, other than business interruption loss insurance or public liability insurance, shall be deposited by the City in a special account, held in trust by the City, and made available for, and to the extent necessary applied to, the cost of such reconstruction or replacement, if any and applied pursuant to this Section. Pending such application, such proceeds may be invested by the City in investments permitted by Section 53601 of the California Government Code which mature not later than such times as shall be necessary to provide moneys when needed to pay such cost of reconstruction or replacement. Any balance of such proceeds of insurance not required by the City for the purposes aforesaid shall be deemed Revenues.

4.B.1.3
Packet Pg. 264 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
30 to the effect that it is in compliance with all covenants, conditions and requirements of this Installment Purchase Agreement, other than those expressly waived by Authority.

4.B.1.3
Packet Pg. 265 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
31 SECTION 4.27. Indemnity for Taxes. At all times the City shall indemnify and hold and save the Authority and the Assignee harmless from and against any and all actions or causes of action, claims, demands, liabilities, loss, damage or expense of whatsoever kind and nature incurred by the Authority as a result of the non-payment of any documentary stamp tax, intangible tax, interest or penalties associated therewith or any other local, state or federal assessment required to be paid, but not paid in conjunction with the indebtedness evidenced by this Installment Purchase Agreement. The City agrees to pay to the Authority and the Assignee, their successors and assigns, all sums of money requested by the Authority or the Assignee hereunder within ten days of such request, which the Authority or the Assignee will or may advance, pay or cause to be paid, or become liable to pay, on account of or in connection with failure to pay as required by the regulations of the Governmental Authority so imposing said payment. The Authority and the Assignee will be entitled to charge for any and all disbursements made by it in good faith, under the reasonable belief that it or the City is or was liable for the amount so assessed. Any default by the City in making any payments required under this covenant will constitute a payment Event of Default under this Installment Purchase Agreement and the Authority or the Assignee may, at its option, declare the entire amount of principal plus accrued interest thereon due and payable without The parties to this Installment Purchase Agreement contemplate that the Project will be used for a governmental or proprietary purpose of the City and that the Project will therefore be exempt from all property taxes. If the lease, sale, purchase, operation, use, possession or acquisition of the Project or the System is nevertheless determined to be subject to taxation, the City shall pay when due all sales and other taxes, special assessments, governmental and other charges of any kind that are at any time lawfully assessed or levied against or with respect to the Project or the System, the Installment Payments or any part of either thereof, or which become due during the Term of this Installment Purchase Agreement, whether assessed against the City, the Authority or Assignee. The City shall pay all utility and other charges incurred in the operation, use and maintenance of the Project and the System. The City shall pay such taxes, assessments or charges as the same may become due. The City shall pay the fee charged by the California Debt and Investment Advisory Commission with respect to this Installment Purchase Agreement pursuant to Section 8856 (or any successor provision) of the California Government Code. The obligation of the City under this Section 4.27 shall survive termination of this Agreement.

ARTICLE 5

4.B.1.3
Packet Pg. 266 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
32 (i) If default shall be made in the due and punctual payment of the interest component of Installment Payments payable pursuant to this Installment Purchase Agreement or with respect to any Parity Obligation when and as the same shall become due and payable; or
(ii) If default shall be made in the due and punctual payment of the principal component of Installment Payments of or prepayment premium, if any, on or of any sinking fund installment pursuant to this Installment Purchase Agreement or with respect to any Parity Obligation when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; or
(iii) If default shall be made by the City in the observance or performance of any of the other agreements, conditions, covenants or terms on its part contained in this Installment Purchase Agreement, and such default shall have continued for a period of thirty (30) days after the City shall have been given notice in writing of such default by the Authority, which may give notice in its discretion; provided, that such default shall not constitute an Event of Default if the City shall commence to cure such default within such thirty (30)-day period and thereafter diligently and in good faith shall proceed to cure such default within a reasonable period of time but not later than an additional thirty (30) days; or
(iv) If the City shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the City, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; or
(v) Any representation or warranty made or deemed to be made by or on behalf of the City in this Installment Purchase Agreement or any other Financing Document or in any certificate, financial or other statement furnished by or on behalf of the City to the Authority pursuant hereto or thereto shall prove to have been inaccurate, misleading or incomplete in any material respect when made; or
(vi) Any material provision of this Installment Purchase Agreement or any other Financing Document shall at any time for any reason cease to be the legal, valid and binding obligation of the City or the Authority or shall cease to be in full force and effect, or shall be declared to be unenforceable, invalid or void, or the validity or enforceability thereof shall be contested by the City or the Authority, or the City or the Authority shall renounce the same or deny that it has any further liability hereunder or thereunder; or (vii) Dissolution, termination of existence, insolvency or business failure of the City; or

4.B.1.3
Packet Pg. 267 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
33 (viii) Any court of competent jurisdiction with jurisdiction to rule on the validity of any provision of this Installment Purchase Agreement shall find or rule that this Installment Purchase Agreement is not valid or not binding on the City; or (ix) The City should, after any applicable grace period, breach or be in default under the terms of this Installment Purchase Agreement or any other agreement between the City and the Authority or any affiliate of the Authority; or (x) A judgment, decree, or order for the payment of money will have been rendered against the System which has a material adverse effect on the City and either: (1) enforcement proceedings will have been commenced; (2) a lien prohibited by this Installment Purchase Agreement will have been obtained; or (3) such judgment, decree, or order will continue unsatisfied and in effect for a period of 30 consecutive days without being vacated, discharged, satisfied, bonded, or stayed pending appeal; or (xi) This Installment Purchase Agreement or any Schedule ceases to be legal, valid, binding and enforceable against the City or is in any way terminated (except in accordance with its terms) or becomes or is declared ineffective or inoperative; or (xii) The City has a Material Adverse Change; or
(xiii) Any default occurs (i) under any Parity Obligations or Subordinate Obligations instrument or any other System Obligation; or (ii) any other agreement for borrowing money, lease financing of property or otherwise receiving credit under which the City is an obligor if such default (A) arises under any other agreement for borrowing money, lease financing of property or provision of credit provided by Assignee or any affiliate of Assignee, or (B) arises under any Parity Obligation or Subordinate Obligation instrument or any other System Obligation under which there is outstanding, owing or committed an aggregated amount in excess of $100,000.00; or (xiv) the City fails to maintain insurance required under Section 4.5 hereof, or (iii) observe and perform any covenant, condition or agreement on its part to be observed or performed under Sections 4.4, 4.7, 4.9, 4.12 and/or 4.14 hereof; or (xv) The City shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of the City, or of all or a substantial part of the assets of the City, (ii) be unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have an order for relief entered against it under applicable Federal bankruptcy law, or (v) be subject to any liquidation, readjustment, reorganization, moratorium or insolvency proceeding; or (xvi) An order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator for the City or the System or of all or a substantial part of the assets of the City or the System.
(b) Remedies on Default. Whenever any Event of Default shall have happened and be continuing, the Authority shall have the right, at its option upon notice to the City, to declare the

4.B.1.3
Packet Pg. 268 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
34 unpaid aggregate principal components of the Installment Payments as identified on Exhibit B hereto, and the interest accrued thereon, to be immediately due and payable, whereupon the same shall immediately become due and payable.

4.B.1.3
Packet Pg. 269 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
35 amount available shall not be sufficient to pay in full all such Parity Obligations, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference; and additionally once delinquent payments are paid ratably, as follows:
(b) There shall be created in the Revenue Fund a separate principal and interest subaccount (each a “Principal and Interest Subaccount”) for each Parity Obligation (including this Installment Purchase Agreement) and there shall be transferred, on the last day of each calendar month, from Net Revenues in the Revenue Fund, and credited to the respective Principal and Interest Subaccount, an amount equal to the sum of:
(i) one-twelfth (1/12) of the principal coming due on the next succeeding Contract Payment Date for each Parity Obligation for which principal is scheduled to be paid on an annual basis (including this Installment Purchase Agreement); (ii) one-sixth (1/6) of the principal coming due on the next succeeding Contract Payment Date for each Parity Obligation for which principal is scheduled to be paid on a semiannual basis;
(iii) one-twelfth (1/12) of the interest coming due on the next succeeding Contract Payment Date for each Parity Obligation for which interest is scheduled to be paid on an annual basis; and
(iv) one-sixth (1/6) of the interest coming due on the next succeeding Contract Payment Date for each Parity Obligation for which interest is scheduled to be paid on a semiannual basis (including each Installment Payment Date for this Installment Purchase Agreement); until the amount available in the respective Principal and Interest Subaccount shall equal the principal or interest, as applicable, payable on the next succeeding Contract Payment Date. (c) If the principal of all of the Parity Obligations including this Installment Purchase Agreement shall have become or have been declared due and payable, Net Revenues shall be applied to the payment of the principal and interest then due and unpaid upon such Parity Obligations including this Installment Purchase Agreement, with interest on the overdue principal at the rate borne by such Parity Obligations including this Installment Purchase Agreement, and, if the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Parity Obligation over any other Parity Obligation, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or preference.

4.B.1.3
Packet Pg. 270 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
36 SECTION 5.3. Other Remedies of the Authorityby mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any director, officer or employee thereof, and to compel the City or any such director, officer or employee to perform and carry out its or his duties under the agreements and covenants required to be performed by it or him contained herein;
(b) by suit in equity to enjoin any acts or things that are unlawful or violate the rights of the Authority; or
(c) by suit in equity upon the happening of an Event of Default to require the City and its Board of Directors, officers and employees to account as the trustee of an express trust.

4.B.1.3
Packet Pg. 271 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
37 SECTION 5.7. Prosecution and Defense of Suits. The City shall promptly, upon request of the Assignee, from time to time take or cause to be taken such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the System whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose.

ARTICLE 6

4.B.1.3
Packet Pg. 272 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
38 and any Parity Obligations, on a pro rata basis, in the manner provided herein and in the instruments authorizing such Parity Obligations.

ARTICLE 7

4.B.1.3
Packet Pg. 273 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
39 If to the Authority, as follows:

City of San Jacinto Public Financing Authority
595 S San Jacinto Avenue
San Jacinto, CA 92583
Attn: Executive Director
If to the City, as follows:

4.B.1.3
Packet Pg. 274 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
40 right to and shall not assert against any assignee any claim, counterclaim or other right the City may have against Assignee. Assignments in part may include without limitation assignment of all of Assignee’s security interest in and to the Project and all rights in, to and under this Installment Purchase Agreement related to such Project, and all of Assignee’s security interest in and to the Collateral, or all rights in, to and under the Escrow Agreement. Upon any assignment the Authority shall provide the City a written notice of such assignment naming the assignee. If Assignee notifies the City of its intent to assign this Installment Purchase Agreement, the City agrees that it shall execute and deliver to Assignee a Notice and Acknowledgement of Assignment substantially in the form of Exhibit E attached hereto within five (5) business days after its receipt of such request.

4.B.1.3
Packet Pg. 275 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
41 SECTION 7.6. Severability. In the event any provision of this Installment Purchase Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

4.B.1.3
Packet Pg. 276 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
42 Office of Foreign Asset Control, as any of the foregoing laws may from time to time be amended, renewed, extended, or replaced.

7.14 shall survive termination of this Agreement.

4.B.1.3
Packet Pg. 277 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027
\43315153.4
43 (Signature page follows)

4.B.1.3
Packet Pg. 278 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
S-1
IN WITNESS WHEREOF, the Authority has caused this Installment Purchase Agreement to be executed in its corporate name by its duly authorized officer, and the City has caused this Installment Purchase Agreement to be executed in its name by its duly authorized officer, as of the date first above written.

CITY OF SAN JACINTO PUBLIC FINANCING

AUTHORITY
By: ______________________________________
Robert Johnson, Executive Director
ATTEST:

By: _______________________________
Julia Espinoza, Secretary

CITY OF SAN JACINTO
By: ______________________________________
Robert Johnson, City Manager
ATTEST:

By: _____________________________
Julia Espinoza, City Clerk
-Signature PageInstallment Purchase Agreement

4.B.1.3
Packet Pg. 279 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
A-1

EXHIBIT A

4.B.1.3
Packet Pg. 280 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
B-1

EXHIBIT B

4.B.1.3
Packet Pg. 281 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
C-1

EXHIBIT C

FORM OF INVESTOR LETTER
LENDER’S CERTIFICATE

CITY OF SAN JACINTO

4. Neither the Lender nor any of its affiliates is acting as a fiduciary for the Issuer or in the capacity of broker, dealer, underwriter, or municipal advisor with respect to the Obligation.

4.B.1.3
Packet Pg. 282 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
C-2

7. The Lender is an “accredited investor” within the meaning of the Securities Act of 1933, as amended, and Regulation D thereunder.

DATED as of __________, 20__
BANC OF AMERICA PUBLIC CAPITAL CORP.[
By:

Name:

Title:

4.B.1.3
Packet Pg. 283 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
D-1

EXHIBIT D
$9,097,000

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY
2025 INSTALLMENT FINANCING
(WATER SYSTEM IMPROVEMENTS)

Date: __________

CITY OF SAN JACINTO
_______________________
Finance Director

4.B.1.3
Packet Pg. 284 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 24438.70027\43315153.4
E-1

EXHIBIT E
$9,097,000

CITY OF SAN JACINTO PUBLIC FINANCING AUTHORITY
2025 INSTALLMENT FINANCING
(WATER SYSTEM IMPROVEMENTS)

Date: __________

CITY OF SAN JACINTO
_______________________
Finance Director

4.B.1.3
Packet Pg. 285 Attachment: Installment Sale Agreement (Approval of Financing for Certain Water System Improvements) 5153
2327575

4.B.1.4
Packet Pg. 286 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -2-
Sunday or legal holiday, on which banking institutions are not closed in Chicago, Illinois, San Jacinto, California or New York, New York. In the absence of written instructions from City (on Escrow Agent’s Escrow Account Investment Selection Form) designating a short-term investment of cash in the Escrow Account, cash in the Escrow Account shall remain uninvested and it shall not be collateralized. Escrow Agent shall have no obligation to pay interest on cash in respect of any period during which it remains uninvested. City shall be solely responsible for ascertaining that all proposed investments and reinvestments are Qualified Investments and that they comply with federal, state and local laws, regulations and ordinances governing investment of such funds and for providing appropriate notice to the Escrow Agent for the reinvestment of any maturing investment. Accordingly (and, with respect to the Escrow Agent, provided that the Escrow Agent has acted pursuant to the written instruction of the City), none of the Escrow Agent, Authority nor Assignee shall be responsible for any liability, cost, expense, loss or claim of any kind, directly or indirectly arising out of or related to the investment or reinvestment of all or any portion of the moneys on deposit in the Escrow Account, and City agrees to and does hereby release the Escrow Agent, Authority and Assignee from any such liability, cost, expenses, loss or claim. Interest on the Escrow Account shall become part of the Escrow Account, and gains and losses on the investment of the moneys on deposit in the Escrow Account shall be borne by the City. The Escrow Agent shall have no discretion whatsoever with respect to the management, disposition or investment of the Escrow Account. The Escrow Agent shall not be responsible for any market decline in the value of the Escrow Account and has no obligation to notify Assignee, Authority and City of any such decline or take any action with respect to the Escrow Account, except upon specific written instructions stated herein. For purposes of this Agreement, “Qualified Investments” means any investments which meet the requirements of California Government Code Sections 53600 et seq.
(c) Unless the Escrow Account is earlier terminated in accordance with the provisions of paragraph (d) below, amounts in the Escrow Account shall be disbursed by the Escrow Agent in payment of amounts described in Section 2 hereof upon receipt of written instruction(s) from Assignee, as is more fully described in Section 2 hereof. If the amounts in the Escrow Account are insufficient to pay such amounts, City shall provide any balance of the funds needed to complete the acquisition of the Project. Any moneys remaining in the Escrow Account on or after the earlier of (i) the expiration of the Acquisition Period or (ii) the date on which City executes a Final Acceptance Certificate shall be applied as provided in Section 4 hereof. (d) The Escrow Account shall be terminated at the earliest of (i) the final distribution of amounts in the Escrow Account, (ii) the date on which City executes a Final Acceptance Certificate or (iii) written notice given by Assignee of the occurrence of an Event of Default under the IPA. Notwithstanding the foregoing, this Agreement shall not terminate nor shall the Escrow Account be closed until all funds deposited hereunder have been disbursed. (e) The Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine and may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner of execution, or validity of any instrument nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the receipt of such moneys, instruments or other documents received by it as the Escrow Agent, and for the disposition of the same in accordance

4.B.1.4
Packet Pg. 287 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -3-
herewith. Notwithstanding and without limiting the generality of the foregoing, concurrent with the execution of this Agreement, City and Assignee, respectively, shall deliver to the Escrow Agent an authorized signers form in the form of Exhibit A-1 (City) and Exhibit A-2 (Assignee) attached hereto. Notwithstanding the foregoing sentence, the Escrow Agent is authorized to comply with and rely upon any notices, instructions or other communications believed by it to have been sent or given by the parties or by a person or persons authorized by the parties. The Escrow Agent specifically allows for receiving direction by written or electronic transmission from an authorized representative with the following caveat, to the extent permitted by law, City and Assignee agree to indemnify and hold harmless the Escrow Agent against any and all claims, losses, damages, liabilities, judgments, costs and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) incurred or sustained by the Escrow Agent as a result of or in connection with the Escrow Agent’s reliance upon and compliance with instructions or directions given by written or electronic transmission given by each, respectively, provided, however, that such Losses have not arisen from the gross negligence or willful misconduct of the Escrow Agent, it being understood that deliberate forbearance on the part of the Escrow Agent to verify or confirm that the person giving the instructions or directions, is, in fact, an authorized person due to Escrow Agent’s good faith determination that such forbearance is in the best interests of the Parties shall not be deemed in and of itself to constitute gross negligence or willful misconduct.

4.B.1.4
Packet Pg. 288 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -4-
(i) City shall reimburse the Escrow Agent for all reasonable costs and expenses, including those of the Escrow Agent’s attorneys, agents and employees incurred for non-routine administration of the Escrow Account and the performance of the Escrow Agent’s powers and duties hereunder in connection with any Event of Default under the IPA or in connection with any dispute between Assignee and City concerning the Escrow Account. (j) The Escrow Agent or any successor may at any time resign by giving mailed notice to City and Assignee of its intention to resign and of the proposed date of resignation (the “Effective Date”), which shall be a date not less than 60 days after such notice is delivered to an express carrier, charges prepaid, unless an earlier resignation date and the appointment of a successor shall have been approved by the City and Assignee. After the Effective Date, the Escrow Agent shall be under no further obligation except to hold the Escrow Account in accordance with the terms of this Agreement, pending receipt of written instructions from Assignee regarding further disposition of the Escrow Account.
(k) The Escrow Agent shall have no responsibilities, obligations or duties other than those expressly set forth in this Agreement and no implied duties, responsibilities or obligations shall be read into this Agreement.

4.B.1.4
Packet Pg. 289 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -5-
release, shall be made to Assignee only and Escrow Agent shall have no obligation to call-back City.

1. Delivery to Assignee of an executed Disbursement Request in the form attached hereto as Schedule 1;

3. The disbursement shall occur during the Acquisition Period.

Section 6. Control of Escrow Account. In order to perfect Assignee’s security interest by means of control in (i) the Escrow Account established hereunder, (ii) all securities

4.B.1.4
Packet Pg. 290 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -6-
entitlements, investment property and other financial assets now or hereafter credited to the Escrow Account, (iii) all of City’s rights in respect of the Escrow Account, such securities entitlements, investment property and other financial assets, and (iv) all products, proceeds and revenues of and from any of the foregoing personal property (collectively, the “Collateral”), Assignee, City, Authority and Escrow Agent further agree as follows:
(a) All terms used in this Section 6 which are defined in the California Commercial Code (the “Commercial Code”) but are not otherwise defined herein shall have the meanings assigned to such terms in the Commercial Code, as in effect on the date of this Agreement.
(b) Escrow Agent will comply with all entitlement orders originated by Assignee with respect to the Collateral, or any portion of the Collateral, without further consent by City.
(c) Provided that account investments shall be held in the name of the Escrow Agent, Escrow Agent hereby represents and warrants (i) that the records of Escrow Agent show that City is the sole owner of the Collateral, (ii) that Escrow Agent has not been served with any notice of levy or received any notice of any security interest in or other claim to the Collateral, or any portion of the Collateral, other than Assignee’s claim pursuant to this Agreement, and (iii) that Escrow Agent is not presently obligated to accept any entitlement order from any person with respect to the Collateral, except for entitlement orders that Escrow Agent is obligated to accept from Assignee under this Agreement and entitlement orders that Escrow Agent, subject to the provisions of paragraph (e) below, is obligated to accept from City. (d) Without the prior written consent of Assignee, Escrow Agent will not enter into any agreement by which Escrow Agent agrees to comply with any entitlement order of any person other than Assignee or, subject to the provisions of paragraph (e) below, City, with respect to any portion or all of the Collateral. Escrow Agent shall promptly notify Assignee if any person requests Escrow Agent to enter into any such agreement or otherwise asserts or seeks to assert a Lien, encumbrance or adverse claim against any portion or all of the Collateral. (e) Except as otherwise provided in this paragraph (e) and subject to Section 1(b) hereof, City may effect sales, trades, transfers and exchanges of Collateral within the Escrow Account, but will not, without the prior written consent of Assignee, withdraw any Collateral from the Escrow Account. Escrow Agent acknowledges that Assignee reserves the right, by delivery of written notice to Escrow Agent, to prohibit City from effecting any withdrawals (including withdrawals of ordinary cash dividends and interest income), sales, trades, transfers or exchanges of any Collateral held in the Escrow Account. Further, Escrow Agent hereby agrees to comply with any and all written instructions delivered by Assignee to Escrow Agent (once it has had a reasonable opportunity to comply therewith) and has no obligation to, and will not, investigate the reason for any action taken by Assignee, the amount of any obligations of City to Assignee, the validity of any of Assignee’s claims against or agreements with City, the existence of any defaults under such agreements, or any other matter. (f) City hereby irrevocably authorizes Escrow Agent to comply with all instructions and entitlement orders delivered by Assignee to Escrow Agent.

4.B.1.4
Packet Pg. 291 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -7-
(g) Escrow Agent will not attempt to assert control, and does not claim and will not accept any security or other interest in, any part of the Collateral, and Escrow Agent will not exercise, enforce or attempt to enforce any right of setoff against the Collateral, or otherwise charge or deduct from the Collateral any amount whatsoever. (h) Escrow Agent and City hereby agree that any property held in the Escrow Account shall be treated as a financial asset under such section of the Commercial Code as corresponds with Section 8-102 of the Uniform Commercial Code, notwithstanding any contrary provision of any other agreement to which Escrow Agent may be a party. (i) Escrow Agent is hereby authorized and instructed, and hereby agrees, to send to Assignee at its address set forth in Section 8 below, concurrently with the sending thereof to City, duplicate copies of any and all monthly Escrow Account statements or reports issued or sent to City with respect to the Escrow Account.

4.B.1.4
Packet Pg. 292 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -8-
If to Assignee: Banc of America Public Capital Corp
11333 McCormick Road
Hunt Valley II
M/C MD5-032-07-05
Hunt Valley, MD 21031
Attn: Contract Administration
If to City: City of San Jacinto
595 S. San Jacinto Avenue
San Jacinto, CA 92583
Telephone: (951) 487-7330
Attn: Finance Director
If to Escrow Agent: Argent Institutional Trust Company
1715 N. Westshore Boulevard, Suite 750
Tampa, FL 33607
Attn: Alice Wolan
Telephone: (312) 405-5393
E-mail: [email protected]
Section 9. City and Assignee understand and agree that they are required to provide the Escrow Agent with a properly completed and signed Tax Certification (as defined below) and that the Escrow Agent may not perform its duties hereunder without having been provided with such Tax Certification. As used herein “Tax Certification” shall mean an IRS form W-9 or W-8 as described above. The Escrow Agent will comply with any U.S. tax withholding or backup withholding and reporting requirements that are required by law. With respect to earnings allocable to a foreign person, the Escrow Agent will withhold U.S. tax as required by law and report such earnings and taxes withheld, if any, for the benefit of such foreign person on IRS Form 1042-S (or any other required form), unless such earnings and withheld taxes are exempt from reporting under Treasury Regulation Section 1.1461-1(c)(2)(ii) or under other applicable law.

HERETO EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION

4.B.1.4
Packet Pg. 293 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -9-
BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT. If the waiver of jury trial contained herein is unenforceable for any reason, then the parties hereto agree that the court shall, and is hereby directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to a referee to hear and determine all of the issues in such action or proceeding (whether of fact or of law) and to report a statement of decision.

Section 12. This Agreement may be amended, modified, and/or supplemented only by an instrument in writing executed by all parties hereto.

4.B.1.4
Packet Pg. 294 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) -10-
of such party), such as attorneys, accountants, bankers, financial advisors, auditors and other consultants of such party and its affiliates, except as required by any law, court, regulator or legal process and except pursuant to the express prior written consent of the other parties, which consent shall not be unreasonably withheld.

4.B.1.4
Packet Pg. 295 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) [Signature Page to Escrow and Account Control Agreement] IN WITNESS WHEREOF, the parties have executed this Escrow and Account Control Agreement as of the date first above written.

BANC OF AMERICA PUBLIC CAPITAL CORP
as Assignee

ARGENT INSTITUTIONAL TRUST COMPANY
as Escrow Agent

CITY OF SAN JACINTO CITY OF SAN JACINTO

4.B.1.4
Packet Pg. 296 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) Schedule 1-1
SCHEDULE 1

TO THE ESCROW AND ACCOUNT CONTROL AGREEMENT

Disbursement Amounts:

4.B.1.4
Packet Pg. 297 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) Schedule 1-2
City hereby represents, covenants and warrants for the benefit of Assignee on the date hereof as follows:
(i) Each obligation specified in the table herein titled as “Disbursement Amounts” (a) has been incurred by City in the stated amount, (b) the same is a proper charge against the Escrow Account for costs relating to the Project identified above and has not been paid (or has been paid by City and City requests reimbursement thereof), and (c) has not been paid (or has been paid by City and City requests reimbursement thereof), and the Project relating to such obligation has been delivered, installed and accepted by City. [For COI Disbursement only: Each obligation specified in the table herein titled as “Disbursement Amounts” (a) has been incurred by City in the stated amount, and (b) the same is a proper charge for costs of delivery of the IPA identified above and has not been paid (or has been paid by City and City requests reimbursement thereof, in which event City further certifies that the requested reimbursement is not with respect to any amount previously paid).] (ii) For each item of Project relating to an obligation specified in the table herein titled as “Disbursement Amounts” (a) City has conducted such inspection and testing of the Project as it deems appropriate in order to unconditionally accept such Project, and (b) such Project has been delivered, installed, and unconditionally accepted for all purposes by City and title thereto has transferred to City and any security interest of Vendor therein has been released. Attached hereto is a copy of the original invoice, and certification from Vendor as to title transfer and release by Vendor of any security interest with respect to such obligation. (iii) The undersigned, as Authorized Representative, has no notice of any vendor’s, mechanic’s or other Liens or rights to Liens, chattel mortgages, conditional sales contracts or security interest which should be satisfied or discharged before such payment is made. (iv) This requisition contains no item representing payment on account, or any retained percentages which City is, at the date hereof, entitled to retain (except to the extent such amounts represent a reimbursement to City).
(v) The Project is insured in accordance with the IPA.
(vi) No Event of Default, and no event which with notice or lapse of time, or both, would become an Event of Default, under the IPA has occurred and is continuing at the date hereof. (vii) The disbursement shall occur during the Acquisition Period. (viii) The representations, warranties and covenants of City set forth in the IPA are true and correct as of the date hereof.
(ix) No Material Adverse Change has occurred since the date of the execution and delivery of the IPA.
(x) The information in this Disbursement Request regarding each Payee, including their respective name, address and wiring instructions (collectively, the “Payee Information”), is true and correct, such Payee Information has been verified and confirmed by City and the Assignee can rely on City’s verification and confirmation of the accuracy of such Payee Information. City

4.B.1.4
Packet Pg. 298 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) Schedule 1-3
hereby acknowledges and agrees that any call-back performed by Assignee to verify the disbursement instructions pursuant to this Disbursement Request shall be made to City only and Assignee shall have no obligation to call-back any Payee listed above. [Remainder of page intentionally left blank]

4.B.1.4
Packet Pg. 299 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) [Signature Page to Disbursement Request]
Dated: ________________

BANC OF AMERICA PUBLIC CAPITAL CORP
as Assignee under the IPA
By:

Name:

Title:

4.B.1.4
Packet Pg. 300 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) [AN “EXHIBIT A-1” MUST BE COMPLETED AND EXECUTED AT TIME OF EXECUTION OF THE AGREEMENT]
EXHIBIT A-1

FORM OF INCUMBENCY AND AUTHORIZATION CERTIFICATE
The undersigned, a duly elected or appointed and acting Clerk of the City of San Jacinto (“City”) certifies as follows:

4.B.1.4
Packet Pg. 301 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) [AN “EXHIBIT A-2” MUST BE COMPLETED AND EXECUTED AT TIME OF EXECUTION OF THE AGREEMENT]
EXHIBIT A-2
ESCROW AND ACCOUNT CONTROL AGREEMENT DATED AS OF APRIL __, 2025 BY AND AMONG BANC

OF AMERICA PUBLIC CAPITAL CORP, AS ASSIGNEE, CITY OF SAN JACINTO, AS CITY, THE CITY OF

SAN JACINTO PUBLIC FINANCING AUTHORITY AND ARGENT INSTITUTIONAL TRUST COMPANY, AS

Fund Transfer / Disbursement Authority Level: Fund Transfer / Disbursement Authority Level:

BANC OF AMERICA PUBLIC CAPITAL CORP
By:

Name:

Title:

Date: April __, 2025

4.B.1.4
Packet Pg. 302 Attachment: Escrow Agreement (Approval of Financing for Certain Water System Improvements) April 1, 2025
TO: City Council
REQUESTED BY: Mathew Osborn, Superintendent
APPROVED BY: Robert A. Johnson, City Manager
SUBJECT: Award of Contract for Equipping of the Grand Well and Construction of Grand Treatment Plant
RECOMMENDATION:

Staff recommends that the City Council:
. DETERMINE the proposed project is not subject to environmental review under the California Environmental Quality Act (“CEQA”) pursuant to State CEQA Guidelines (Cal. Code Regs., § 15000 et seq.) Sections 15061(b)(2) in that the proposed project is categorically exempt from environmental review pursuant to CEQA Guidelines Sections 15301, 15302, 15303, 15304, 15332; and Section 15061 (b)(3) - Common Sense Exemption in that it can be seen with certainty that there is no possibility that the project may have a significant effect on the environment;

2. ADOPT the plans, specifications, and detailed working drawings for the construction of the potable water treatment plant and the equipping of the Well at the Grand Well site;

3. ACCEPT the proposal by Pacific Hydrotech Corporation for site improvements, construction of the potable water treatment plant, and equipping of the Well at the Grand Well site;

4. AWARD a contract to Pacific Hydrotech Corporation in the amount of $8,091,700 with an additional 5% contingency for a total project cost of $8,496,285; and

5. REJECT all other bids.

DISCUSSION:

In 2021, the Federal Government passed the American Rescue Plan Act of 2021 (ARPA) and the Infrastructure Investment and Jobs Act of 2021, which provided significant funding to the City to address infrastructure needs. In fact, without this funding source, the City would not be able to improve its outdated and deteriorating water conveyance system components.

One of the projects approved by the City Council for funding was the drilling and equipping of the new Grand Well, and the construction of the Grand Well Treatment Plant. The first phase of the project, the drilling of the well, was completed in 2023. However, due to rising costs across the country caused by the COVID-19 pandemic, all remaining ARPA funding had to be

4.B.2
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reallocated in 2024 to complete the construction of the ARPA-funded Bath Treatment Plant and site improvements.

Although ARPA funds have been exhausted on other essential infrastructure projects, the construction of the Grand Well and Grand Treatment Plant remain critical to the functionality of the City’s water system. The new Grand Well has already been drilled, and the proposed contract will enable the City to fully develop the necessary water production and distribution capacity for its district.

The Well and treatment plant will replace aging infrastructure that has exceeded its lifespan while incorporating elements of the existing system to optimize resources. Keeping the Well and treatment plant at the planned location addresses the challenge of centralized water production.

Currently, all three of the City’s active wells are located on the east side of town, resulting in increased costs to pump water across the City to the Grand Well site reservoir and booster pumps.

As the City continues to experience residential and commercial growth, completing this facility is essential to ensuring future water supply reliability, particularly during extreme heat and/or emergency situations like the recent fires in Los Angeles. The new Well will have a production capacity of up to 2,500 gallons per minute, allowing the City to maintain full reservoirs and prevent significant drops in water pressure and supply.

Beyond increasing supply and reliability, the construction of the Grand Treatment Plant will significantly enhance the City’s water quality. The new facility will be equipped to remove iron and manganese from the water supply, eliminating any measurable amounts of these hard minerals. This advanced treatment process will improve the color, odor, and taste of the water, providing residents and businesses with a cleaner product that looks, smells, and tastes better. By addressing these long-standing water quality concerns, the City will instill greater confidence in its water system and ensure compliance with state and federal water quality standards. Reliable access to high-quality drinking water is fundamental to public health, and this investment will enhance the overall well-being of the community while supporting future economic growth.

Further, the State conducts a sanitary survey of each water department every three years. In the last three consecutive surveys, the State has identified San Jacinto’s water pumping capacity as deficient for fire protection. This new Well complex will bring the City into compliance while also reducing strain on existing wells by providing much-needed operational flexibility.

On November 7, 2023, the City Council awarded a contract to Civiltec Engineering for the design of the Grand Well Treatment Plant and Well improvements. Subsequently, on September 23, 2024, the City Council awarded a contract to California Environmental Controls to supply the treatment plant equipment, ensuring standardization with the Bath Treatment Plant. The specifications and design for the Grand Well and Treatment Plant were completed in December

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2024. Copies of the plans, specifications, and detailed working drawings can be found on the City’s PlanetBid website at https://vendors.planetbids.com/portal/39490/bo/bo-detail/126031#.

The City is subject to the California Uniform Public Construction Cost Accounting Act and must adhere to the bidding procedures outlined in the Cost Accounting Policies and Procedures Manual. These procedures require that any public works construction project exceeding $220,000 undergo a formal bidding process and be awarded to the lowest responsible bidder.

Additionally, the project must be advertised in local trade journals, as designated by the Commission, at least 14 calendar days before the bid opening.

On February 3, 2025, the City issued a request for proposal utilizing the City’s PlanetBids platform, soliciting proposals for the construction of the Grand Well Treatment Plant and the equipping of the Grand Well. On February 4, 2025, the project was posted in both trade journals required by the California Uniform Construction Cost Accounting Commission—Associated General Contractors of America, San Diego Chapter, Inc., and BidAmerica. Additionally, as required by the California Uniform Construction Cost Accounting Commission, the project was posted in the local newspaper, The Press Enterprise, on February 7, 2025.

A mandatory job walk was held on February 13, 2025, with 19 contractors in attendance. Bids were due on March 11, 2025, and the city received six proposals, listed below:
• Pacific Hydrotech ………………….……..$8,091,700
• Caliagua …………………………………. $8,463,700
• HPS Mechanical ……………………….... $8,975,000
• SCW Contracting Corp ………………..…$9,288,009
• Canyon Springs Enterprises …………….. $9,724,000
• Innovative Construction Solution ….…….$9,999,000
All six bidders were responsible and included all necessary documentation in the each proposal.

After a thorough review of the submitted proposals, staff confirmed that Pacific Hydrotec Corporation was the lowest responsive bidder for site improvements, construction of the potable water treatment plant, and Well equipping at the Grand Well site.

Pacific Hydrotech submitted a proposal for $8,091,700. To account for unforeseen conditions and ensure successful project completion, staff also recommend including a 5% contingency, bringing the total authorized amount to $8,496,285.

Currently, Pacific Hydrotech is constructing the Bath Treatment Plant in San Jacinto and working on multiple projects for neighboring water agencies in the valley. Pacific Hydrotech is a local company based in the City of Perris. The City of San Jacinto has a strong working relationship with Pacific Hydrotech, and staff is confident the project will continue that successful partnership.

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Approval of the contract is a critical step in addressing the community’s concerns regarding water quality and ensuring long-term reliability of the City’s water supply.

CALIFORNIA ENVIRONMENTAL QUALITY ACT:

The proposed project is exempt from environmental review under the California Environmental Quality Act (CEQA) in accordance with the California Code of Regulations, pursuant to State CEQA Guidelines (Cal. Code Regs., § 15000 et seq.). It qualifies for exemption under Section 15061(b)(2) as it falls within several categorical exemptions, including Section 15301 – Existing Facilities, Section 15302 – Replacement or Reconstruction, Section 15303 – New Construction or Conversion of Small Structures, Section 15304 – Minor Alterations to Land, and Section 15332 – In-Fill Development Projects. Additionally, it qualifies for exemption under Section 15061(b)(3) – Common Sense Exemption, as it can be determined with certainty that the project will not have a significant impact on the environment.

The Grand Well and Treatment Plant are intended to replace the aging treatment plant and a recently abandoned well, both located on the same parcel as the existing facilities. The new treatment plant will be situated approximately 100 feet west of an existing two-million-gallon reservoir on a site that has been previously and continuously disturbed. The site does not provide habitat for rare or endangered species. While construction activities will result in short-term noise disruptions, these impacts will be temporary and minimal. Furthermore, there are no sensitive receptors on or near the project site.

FISCAL IMPACT:

Approval of this item will not impact the City’s General Fund. The project will be funded through an installment sale agreement between the City and the City of San Jacinto Public Financing Authority (Authority), whereby the City will acquire the project from the Authority in exchange for periodic installment payments. Payments will be due semiannually, averaging $679,000/year for 20 years. The City’s liability is limited solely to net revenues of the water system. A rigorous assessment of the water system’s ability to repay has been performed internally, by the City’s municipal financial advisor, and by the lender, and in all cases, it was determined that sufficient net revenues currently exist to satisfy future obligations. Approval of this item does not impact water rates currently in effect. In other words, water bills will not increase as a result of approval of this action.

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April 1, 2025
TO: City Council
REQUESTED BY: Jessica Mendez, IT Analyst
APPROVED BY: Robert A. Johnson, City Manager
SUBJECT: Audio Video Media / Meeting Center
RECOMMENDATION:

Staff recommends that the City Council:
. Find that in accordance with Section 3.08.070(C)(2) of the City’s Municipal Code, there is no competitive advantage to be gained by bidding on this project since the City of Lawndale performed a competitive bid process, which is consistent with the City of San Jacinto standards, and is unlikely to yield better results for the City;

2. Authorize the City Manager to enter into an agreement to acquire an agenda management system called AgendaLink at a contracted price of $8,244. This price includes the yearly fee, support services, and a one-time onboarding cost of $2,000;

3. Approve a remodel of one of the offices at the Community Center to accommodate an audio/visual media room with an estimated cost of $11,800. As part of this project, authorize the update of the AV technology in the building, which includes $15,661 for the AV system and $12,457 for professional services, for a total AV update cost of $30,084;

4. Approve the purchase of updated equipment required for the AgendaLink application, which will include iPad Pros with keyboards for council members and selected staff. The cost will be $1,400 per iPad and $245 per keyboard. The purchase will include 9 iPads and 6 keyboards. The total cost for the agenda management system, construction, AV updates, and equipment will be $65,508; and

5. Authorize the City Manager to execute any necessary agreements and documents to complete these acquisitions and improvements, subject to review and approval by the City Attorney as to form.

DISCUSSION:

To improve operational processes and enhance public access to City Council meetings, the City is moving forward with the implementation of a new agenda management system and related infrastructure upgrades. The project includes the following key components:

1. Acquisition and Implementation of AgendaLink: The City will acquire the AgendaLink agenda management system for $8,244. The total amount covers the annual subscription,

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support services, and a one-time onboarding fee of $2,000. The system will improve the efficiency of preparing and managing meeting agendas while increasing transparency for the community.

AgendaLink stands out as one of the most adaptable and customizable agenda management platforms available. Designed with a focus on meeting the unique needs of its users, the software continuously evolves while maintaining an intuitive user experience. Its advanced live meeting capabilities are transforming how cities conduct public meetings. Features like on-screen digital agendas, electronic voting, audio/video control, streaming, and production are integrated seamlessly.

With over 25 years of expertise in audio and video technology, the AgendaLink team partners with leading hardware manufacturers to deliver unmatched functionality. This hands-on experience ensures the system works effortlessly, eliminating the hassle often associated with complex technology.

The platform also introduces cutting-edge features like historical data integration with AI search capabilities and SharePoint incorporation. A redesigned board member portal— soon to be released—will enhance the council's workflow. The portal will allow councilmembers to take notes on agenda items, annotate PDFs, and access these notes during meetings. Additionally, it will include a feature for requesting signatures directly within the portal, streamlining administrative tasks.

AgendaLink offers these advanced capabilities without hidden fees or incremental feature costs, providing powerful software at an affordable price point. The commitment to exceptional support and client care is evident in every aspect of the platform, ensuring a reliable and user-friendly

2. Community Center Modifications: To accommodate the new system, minor construction will be conducted at the Community Center. The work, quoted at $11,800, will ensure the facility is appropriately set up to support the upgraded technology.

3. AV System Enhancements: The audiovisual (AV) technology at the Community Center will be updated to improve the quality of public meetings. The improvements include $15,661 for new AV equipment, and $12,457 for professional services, bringing the total AV upgrade cost to $30,084. The microphone system will be improved for those using inside the community center and for those listening on-line.

4. Device Upgrades for Council and Staff: To facilitate access to the new agenda system, updated devices will be provided to council members and staff. This includes purchasing 9 iPad Pros at approximately $1,400 each and 6 keyboards at approximately $245 each.

The total cost for these devices will be $15,380.

FISCAL IMPACT:

The combined cost of the agenda management system, facility improvements, AV upgrades, and equipment totals $65,508. The total expenditure has been accounted for within the current budget and will be funded via the following sources:
• Agenda Management System (AgendaLink): one time cost of $2,000 and a recurring

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yearly cost of $6,244 (Account: 017-2290-418.34-05)
• Community Center Modifications: $11,800 (Account: 017-2290-418.40-45) • AV System Enhancements: $30,084 (Account: 017-2290-418.40-45) • Device Upgrades (iPads + Keyboards): $15,380 (Account: 017-2290-418.40-45) Authorize the City Manager to finalize and execute all necessary agreements to carry out these improvements, subject to review and approval by the City Attorney as to form.

ATTACHMENTS:

San Jacinto AgendaLink Quote
CONSTRUCTION ESTIMATE 154 CITY OF SAN JACINTO 10.31.24
San Jacinto City iPad 13 qty 9 Quote
City of San Jacinto AVIDEX Proposal

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San Jacinto City CouncilApril 1, 2025

San Jacinto City Council
April 1, 2025