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21-1101_SANTA MARGARITA WATER DISTRICT_Assumption of Debt Obligations Closing Index 4878-8836-3282/022030-0166 SANTA MARGARITA WATER DISTRICT ASSUMPTION OF DEBT OBLIGATIONS OF THE CITY OF SAN JUAN CAPISTRANO CLOSING INDEX A. 2014 LEASE 1. Western Alliance Acknowledgment of Assignment. 2. Assignment, Assumption and Amendment Agreement. 3. Stradling Opinion. 4. Event Notice Filing on EMMA. 5. Second Amendment to Operating Lease. 6. First Amendment to Property Lease. 7. First Amendment to Amended and Restated Lease Agreement. 8. Amended and Restated Project Implementation Agreement. B. 2014 BONDS 9. Wells Fargo Acknowledgment of Assignment. 10. Assignment, Assumption and Amendment Agreement. 11. Stradling Opinion. 12. Event Notice Filing on EMMA. C. 2017 INSTALLMENT PURCHASE AGREEMENT 13. City National Bank Acknowledgment of Assignment. 14. Assignment, Assumption and Amendment Agreement. 15. Stradling Opinion. 16. Event Notice Filing on EMMA. D. RESOLUTIONS 17. Santa Margarita Water District Resolution No. 2021-11-02 adopted November 3, 2021. 18. City of San Juan Capistrano Resolution No. 21-11-02-03 adopted November 2, 2021. 4878-8836-3282/022030-0166 19. San Juan Basin Authority Resolution No. 2020-08-01 adopted August 11, 2020. 4821-1084-8150v11/022030-0166 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT by and among SANTA MARGARITA WATER DISTRICT as Assignee and CITY OF SAN JUAN CAPISTRANO as Assignor and SAN JUAN BASIN AUTHORITY as Authority and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. as Trustee Dated as of November 1, 2021 relating to $20,361,090 SAN JUAN BASIN AUTHORITY LEASE REVENUE BONDS (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014 4821-1084-8150v11/022030-0166 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT This Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (this “Agreement”), is entered into by and among SANTA MARGARITA WATER DISTRICT, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California (the “Assignee”), the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California (the “Assignor”), the SAN JUAN BASIN AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”). RECITALS A. Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the Assignee has annexed the municipal water system of the Assignor as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the Assignee which will be designated after the Annexation Effective Date (as such term is defined below) as Improvement District No. 9, the “Water System”) and will assume ownership of the Water System effective November 15, 2021 or such later date as provided in the Annexation Agreement, dated as of January 21, 2020, by and between the Assignee and the Assignor, as the same may be amended (the “Annexation Effective Date”). B. The Assignor has entered into a Property Lease, dated as of December 1, 2002 (the “Property Lease”), by and between the Assignor and the Authority, under which the Assignor leased certain real property (“Property”) related to the Water System to the Authority. C. The Assignor has entered into an Amended and Restated Lease Agreement, dated as of November 1, 2014 (the “Lease”), by and between the Assignor and the Authority, under which the Authority leased the Property to the Assignor and the Assignor agreed to make Lease Payments and Additional Payments (as such terms are defined in the Lease) to the Authority. D. The Lease Payments and Additional Payments are payable from Revenues (as such term is defined in the Lease). E. The Lease Payments secure a portion of the Authority’s Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 (the “Bonds”). F. The Bonds were issued pursuant to the Trust Agreement, dated as of November 1, 2014 (the “Trust Agreement”), by and among the City, the Authority and the Trustee. G. The Assignor, as successor in interest to the Capistrano Valley Water District, and the Authority entered into an Operating Lease Agreement, dated as of December 1, 2002, as amended by the First Amendment to Operating Lease Agreement, dated as of December 1, 2002 (collectively, the “Operating Lease”).¶ H. Pursuant to the LAFCO Resolution, the Assignee will assume all obligations of the Assignor under the Property Lease, the Lease, the Operating Lease and the Trust Agreement on the 2 4821-1084-8150v11/022030-0166 Annexation Effective Date, including the obligation to make the Lease Payments and the Additional Payments from Revenues of the Water System. I. The Property will be conveyed by the Assignor to the Assignee in connection with the transfer of the Water System from the Assignor to the Assignee, with the exception of the following: (i) Lot 2 of Parcel A (Dance Hall) (“Lot 2 of Parcel A”), which will be retained by Assignor; and (ii) Parcel F (Kinoshita) (“Parcel F” and, together with Lot 2 of Parcel A, the “Excluded Parcels”), which will be retained by the Assignor. J. The parties hereto desire to amend the Property Lease, the Lease, the Operating Lease and the Trust Agreement to reflect the Assignee’s assumption of the obligations of the Assignor under the Property Lease, the Lease, the Operating Lease and the Trust Agreement as described herein, and this Agreement shall constitute a Supplemental Trust Agreement as described in the Trust Agreement. K. Capitalized terms that are used herein and not otherwise defined have the meanings that are assigned to such terms under the Lease or the Trust Agreement, as applicable. AGREEMENT SECTION 1. Assignment. (a) Effective as of the Annexation Effective Date, the Assignor, for good and valuable consideration in hand received, does hereby unconditionally assign and transfer to the Assignee without recourse, for the benefit of the Authority, all of its rights, title, interest, duties and obligations in and to the Property Lease, the Lease, the Operating Lease and the Trust Agreement, including the obligation to pay all Lease Payments and Additional Payments to the Authority. This assignment is absolute and is presently effective. (b) In connection with the matters described in subsection (a), the Assignee agrees to establish a “Revenue Fund” meeting the description thereof set forth in Section 1.1 of the Lease, on or before the Annexation Effective Date. SECTION 2. Acceptance. (a) The Assignee hereby accepts the foregoing assignment as of the Annexation Effective Date for the benefit of the Authority, and agrees thereafter to pay the Lease Payments and Additional Payments to the Authority and assume the other obligations of the Assignor as provided in the Property Lease, the Lease, the Operating Lease and the Trust Agreement. (b) From and after the Annexation Effective Date, the Assignee will assume the responsibilities of the Assignor with respect to compliance with applicable federal requirements for the tax-exempt status of the Bonds, in accordance with the Tax Certificate dated November 14, 2014 and executed by the Assignor in connection with the Bonds. SECTION 3. Amendment. (a) The definition of “City” in Section 1.1 of the Lease and Section 1.1 of the Trust Agreement is hereby amended as follows: 3 4821-1084-8150v11/022030-0166 ““City” means Santa Margarita Water District, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California.” (b) The definition of “Authorized Representative of the City” in Section 1.1 of the Lease and Section 1.1 of the Trust Agreement is hereby amended as follows: ““Authorized Representative of the City” means the General Manager or Assistant General Manager of Santa Margarita Water District, or any person designated by the General Manager or Assistant General Manager of Santa Margarita Water District to act on behalf of the General Manager or Assistant General Manager of Santa Margarita Water District.” (c) The definition of “City Council” in Section 1.1 of the Lease is hereby amended as follows: ““City Council” means the Board of Directors of Santa Margarita Water District.” (d) The definition of “Water System” in Section 1.1 of the Lease is hereby amended as follows: ““Water System” means the entire water system within the boundaries of a geographic area within the boundaries of Santa Margarita Water District which will be designated after the date hereof as Improvement District No. 9 (consisting of the service area annexed to Santa Margarita Water District pursuant to Resolution No. DA 20-01 dated August 19, 2021 of the Orange County Local Agency Formation Commission), including, without limitation, all real property and buildings, and including all improvements, works or facilities assessed, controlled or operated by Santa Margarita Water District within Improvement District No. 9 to provide water, as such improvements, works or facilities now exist, together with all improvements and extensions to said water system later acquired, constructed or organized.” (e) The notice address for the City set forth in Section 11.3 of the Lease and Section 8.8 of the Trust Agreement is hereby amended as follows: “Santa Margarita Water District 26111 Antonio Parkway Rancho Santa Margarita, California 92688 Attention: General Manager” (f) The description of the Property in Exhibit A of the Operating Lease, the Property Lease and the Lease is hereby amended to exclude the Excluded Parcels. 4 4821-1084-8150v11/022030-0166 SECTION 4. Filings. The Assignee agrees, at its own expense, to make any filings required by The Depository Trust Company, the Internal Revenue Service, the California Debt Investment Advisory Commission and any other federal or state administrative and regulatory bodies in order to evidence the matters set forth herein. SECTION 5. Attornment. Each of the Authority, the undersigned holder of all of the Bonds and the Trustee acknowledge and agree to the assignment set forth in Section 1 and agree to attorn to the Assignee from and after the Annexation Effective Date with respect to all matters related to the Property Lease, the Lease, the Operating Lease and the Trust Agreement. This Agreement shall confer no rights and impose no obligations upon the Authority or the Trustee beyond those expressly provided in the Property Lease, the Lease, the Operating Lease and the Trust Agreement. Western Alliance Business Trust, a Delaware statutory trust, a wholly-owned affiliate of Western Alliance Bank, an Arizona corporation, by its signature hereto, hereby certifies that it is the holder of 100% of the Bonds and waives any applicable notice periods for the amendments included herein. SECTION 6. Representations and Warranties. Each of the Assignee, the Assignor and the Authority represents and warrants that: (i) the execution, delivery and performance of this Agreement have been duly authorized by such party by all necessary action; (ii) this Agreement, assuming due execution by the other parties thereto, constitutes a valid, binding and enforceable obligation of such party, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; (iii) to the best of such party’s knowledge after due inquiry, this Agreement does not violate any law, regulation or order binding on such party; (iv) no consent or authorization of any third party is required in connection with the execution, delivery or performance by such party of this Agreement or, alternatively, all such consents and authorizations have been given; and (v) such party has the power to carry out the obligations imposed on such party by this Agreement. Each of the Assignee, the Assignor and the Authority represents and warrants that there is no claim, action or proceeding pending and notice of which has been received by such party, or to the knowledge of such party, threatened against such party before any court, arbitrator or governmental agency or regulatory or administrative agency or commission challenging the validity, enforceability or legality of this Agreement. Each of the Assignor and the Authority represents and warrants that no Event of Default has occurred and is continuing under the Trust Agreement, the Property Lease, the Lease or the Operating Lease as of the date of execution and delivery of this Agreement. In accordance with Section 6.13 of the Operating Lease and Section 7.14 of the Lease, each of the Assignee, the Assignor and the Authority represents and warrants that: (1) the exclusion of the Excluded Parcels from the Property Lease, the Lease and the Operating Lease, which are being assigned hereunder, will not impair the operation of the Water System or the Project (as such term is 5 4821-1084-8150v11/022030-0166 defined in the Operating Lease) or any part thereof which is necessary to secure adequate water services for the community; and (2) the Excluded Parcels are not needed for the efficient and proper operation of the Water System or the improvements on the Project. Western Alliance Business Trust, a Delaware statutory trust, a wholly-owned affiliate of Western Alliance Bank, an Arizona corporation, the holder of 100% of the Bonds, by its signature hereto, hereby acknowledges and agrees that: (I) the exclusion of the Excluded Parcels from the Property Lease, the Lease and the Operating Lease, which are being assigned hereunder, shall constitute a sale of the Excluded Parcels to the Assignor within the meaning of the Operating Lease and the Lease; and (II) the consideration for such sale consists of the assignment by the Assignor to the Assignee pursuant to Section 1 hereof, and there are no proceeds of such sale to be deposited in any funds or accounts established pursuant to the Operating Lease, the Lease, the Property Lease or the Trust Agreement. SECTION 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 Assignee, the Assignor, the Authority or the Trustee 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. The Assignee, the Assignor, the Authority and the Trustee hereby declare that they would have executed this Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 8. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. SECTION 9. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [Remainder of Page Intentionally Left Blank] 6 4821-1084-8150v9/022030-0166 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their officers thereunto duly authorized as of the day and year first written above. SANTA MARGARITA WATER DISTRICT By:________________________________________ Its: General Manager CITY OF SAN JUAN CAPISTRANO By:________________________________________ Its: City Manager SAN JUAN BASIN AUTHORITY By:________________________________________ Name: Norris Brandt Its: Administrator THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By:________________________________________ Its: Authorized Officer ___________________________________________________________________________________________________________________________________________________________________________ General Manager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tradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660-6422 949 725 4000 stradlinglaw.com NG-U9ZQVMF2/4845-8694-1846v4/022030-0166 November 15, 2021 San Juan Basin Authority Rancho Santa Margarita, California City of San Juan Capistrano San Juan Capistrano, California Western Alliance Business Trust Phoenix, Arizona The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Re: San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 – Amendments to Amended and Restated Lease Agreement and Trust Agreement Ladies and Gentlemen: We have examined certified copies of proceedings relating to the issuance of the above- referenced bonds (the “Bonds”) by the San Juan Basin Authority (the “Authority”). The Bonds were issued pursuant to a Trust Agreement, dated as of November 1, 2014 (the “Trust Agreement”), by and among the City of San Juan Capistrano (the “City”), the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Bonds are secured in part by Lease Payments and Additional Payments payable under an Amended and Restated Lease Agreement, dated as of November 1, 2014 (the “Lease”), by and between the City and the Authority. This opinion is being rendered to you pursuant to Section 8.2 of the Lease and Section 7.3 of the Trust Agreement. Capitalized terms that are used herein and not defined have the meanings that are set forth in the Trust Agreement. In rendering the opinions that are set forth herein, we have relied upon the accuracy of the representations that are set forth in the Recitals to the Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (the “Amendment”), by and among the City, the Authority, the Trustee and Santa Margarita Water District (the “District”). We have not undertaken to verify through independent investigation the accuracy of the opinions, representations and certifications that we relied upon or of the assumptions that we made in rendering our opinions as stated herein. In rendering the opinions that are set forth herein, we have also assumed that the Amendment will be executed in the form that has been presented to us. We have further assumed the genuineness of all documents and signatures that have been presented to us, the authenticity of documents San Juan Basin Authority City of San Juan Capistrano Western Alliance Business Trust The Bank of New York Mellon Trust Company, N.A. November 15, 2021 Page Two NG-U9ZQVMF2/4845-8694-1846v4/022030-0166 submitted as originals and the conformity to originals of documents submitted as copies. Furthermore, we have assumed compliance with all covenants and agreements of the Trust Agreement and the Lease. Based upon our examination of the foregoing, and in reliance thereon, and on all matters of fact as we deem relevant under the circumstances, upon consideration of applicable laws, we are of the opinion that: (i) The Amendment has been duly and lawfully entered into by the parties thereto and filed with the City and the Trustee in accordance with the provisions of the Trust Agreement, is authorized or permitted thereby and is valid and binding upon the parties thereto in accordance with its terms. (ii) Assuming that no Event of Default has occurred and is continuing under the Trust Agreement or the Lease, upon the execution and delivery of the Amendment by the parties thereto, the Amendment will be valid and binding upon the Authority, the City and the District in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; provided, however, that we express no opinion as to indemnification, penalty, contribution, choice of law, choice of forum or waiver provisions contained therein. (iii) The transfer of the Bond obligations and related Bond documents from the City to the District and the execution of the Amendment, and the performance by the parties thereunder, will not, in and of itself, adversely affect the exclusion from gross income for federal income tax purposes or for State of California personal income taxation of interest on the Bonds. In order for interest on the Bonds to be excluded from gross income for federal income tax purposes subsequent to the date of issuance of the Bonds, it is necessary that certain provisions of the Internal Revenue Code of 1986, as amended, must be complied with on a continuous basis. We have made no independent investigation as to whether there has been such compliance in the present case. Accordingly, we express no opinion as to whether interest on the Bonds is presently excluded from gross income for federal income tax purposes or is exempt from State of California personal income taxation as of the date of this opinion. This opinion does not constitute a reaffirmation of any opinions that were previously delivered with respect to the Trust Agreement, the Lease or the Bonds. The opinions that are expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions, and the foregoing opinions cover certain matters that are not directly addressed by such authorities. The only opinions rendered hereby shall be those that are expressly stated as such herein, and no opinions shall be implied or inferred as a result of anything contained herein or omitted herefrom. We call attention to the fact that such opinions may be affected by actions taken or events occurring (or not occurring) after the date hereof. 4856-6219-7252v1/022030-0166 NOTICE OF SIGNIFICANT EVENT (INCURRENCE OF FINANCIAL OBLIGATION) NAME OF OBLIGOR: Santa Margarita Water District NAME OF OBLIGATION: $53,895,000 Santa Margarita/Dana Point Authority Water and Wastewater Revenue Bonds, Series 2020A DATE OF DELIVERY: September 2, 2020 BASE CUSIP: 80224A NOTICE IS HEREBY GIVEN pursuant to Section 5(b)(viii) of that certain Continuing Disclosure Agreement, dated as of September 1, 2020, by and between Santa Margarita Water District (the “District”) and Digital Assurance Certification, L.L.C., as dissemination agent, relating to the above-referenced obligations, of the following: Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the District has annexed the municipal water system of the City of San Juan Capistrano (the “City”) as of November 15, 2021 (the “Effective Date”) as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the District which is designated as Improvement District No. 9, the “Water System”) and has assumed ownership of the Water System effective as of the Effective Date. The City had previously entered into an Amended and Restated Lease Agreement, dated as of November 1, 2014 (the “Lease”), by and between the City and the San Juan Basin Authority (the “Authority”), under which the Authority leased certain real property to the City and the City agreed to make Lease Payments and Additional Payments (as such terms are defined in the Lease) to the Authority. The Lease Payments and Additional Payments are payable from Revenues (as such term is defined in the Lease). The Lease Payments secure a portion of the Authority’s Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 (the “Bonds”). Pursuant to the LAFCO Resolution, the District has assumed all obligations of the City under the Lease on the Effective Date, including the obligation to pay the Lease Payments from Revenues of the Water System. The principal amount of Lease Payments that are currently outstanding under the Lease is $12,836,797. The interest rate that is payable on the Lease Payments is 3.85% per annum. Capitalized terms which are used herein and not otherwise defined have the meanings that are given such terms in the Lease. The terms of the Lease described herein are not to be considered a full statement of the terms of such agreement and, accordingly, such descriptions are qualified by reference to the Lease and are subject to the full text thereof. 2 4856-6219-7252v1/022030-0166 Term of the Lease The Lease Payments are payable on May 15 and November 15 of each year, with a final maturity on November 25, 2034. The amortization schedule for the Lease Payments is set forth in Exhibit A. Interest on the Lease Payments Interest on the Lease Payments is computed on the basis of a 360-day year of twelve 30-day calendar months at the rate of 3.85% per annum, payable semiannually on May 15 and November 15 of each year. Security for the Lease Payments The Lease Payments are secured by a pledge of and lien on Revenues of the Water System. “Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the Water 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 the District 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 Water System; (2) the earnings on and income derived from the investment of amounts described in clause (1) above and from District reserves; (3) the proceeds derived by the District directly or indirectly from the sale, lease or other disposition of a part of the Water System; and (4) payments under the Metropolitan Water Agreement; but excluding: (a) customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the District; and (b) any proceeds of taxes or assessments restricted by law to be used by the District to pay bonds or other obligations previously or later issued. As described above, “Water System” means only that portion of the District’s water system that is designated as Improvement District No. 9, consisting of the area formerly served by the City. Water revenues derived from other portions of the District’s water system are neither available for nor pledged to the payment of the Lease Payments. In order to carry out and effectuate the pledge and lien contained in the Lease, the District has unconditionally pledged the Revenues to the payment of the Lease Payments on a senior basis to its pledge of Net Revenues to the payment of Net Revenue Obligations up to the Maintenance and Operation Cap ($2,750,000, as such amount may be increased due to unforeseeable cost increases with respect to the Ground Water Recovery Plant) and unconditionally pledged Net Revenues to the payment of Lease Payments on a parity to its pledge of Net Revenues to the payment of Net Revenue Obligations. The District has covenanted to make no changes in the Net Revenue Obligation Documents or otherwise that impairs the priority of such pledge and such priority shall survive any partial payment or defeasance of the Net Revenue Obligations. See the caption “Junior Obligations” below for a description of outstanding Net Revenue Obligations. The obligation of the District to make the Lease Payments is absolute and unconditional and until such time as the Lease Payments have been paid in full (or provision for the payment thereof has been made pursuant to the Lease), the City will not discontinue or suspend any Lease Payments 3 4856-6219-7252v1/022030-0166 or Additional Payments required to be made by it under the Lease when due, whether or not the Water System or any part thereof is operating or operable or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments will not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever. The District has covenanted to take such action as may be necessary to include all Lease Payments and Additional Payments due under the Lease in its proposed annual budget and its final adopted annual budget and to make the necessary appropriations for any amount of Lease Payments and Additional Payments to be paid therefor. The District has agreed to maintain the Revenue Fund. All Revenues will be deposited when and as received by the District in the Revenue Fund. The District will transfer moneys from the Revenue Fund to pay Maintenance and Operation Costs, including without limitation the Lease Payments in accordance with the Lease and lease payments securing Parity Obligations (of which none are currently outstanding), if any. Any Revenues in excess of the amounts budgeted, as required, for the payment of the Lease Payments and Maintenance and Operation Costs will constitute surplus revenues in the Revenue Fund. After all covenants contained in the Lease have been duly performed each year, and provided that there are no amounts then owing to Authority or the Trustee by the City, such surplus revenues may be used for: (1) payment of Net Revenue Obligations; (2) extensions and betterments of the Water System; or (3) any lawful purpose of the City. “Maintenance Costs and Operation Costs” means costs spent or incurred for operation and maintenance of the Water System calculated in accordance with generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Water System in good repair and working order, and also means all costs of water purchased or otherwise acquired for delivery by the Water System (including the Lease Payments, any Parity Obligations and any interim or renewed arrangement for water purchase or acquisition); but excluding in all cases depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature and any amounts transferred to the Lease Revenue Bonds Rate Stabilization Reserve. Junior Obligations The Lease Payments are secured by a pledge of and lien on Revenues of the Water System on a senior basis to payments under the following Net Revenue Obligations: (i) the Water Revenue Refunding Bonds, Series 2014A, which are currently outstanding in the aggregate principal amount of $13,547,833 and which mature on December 1, 2034; and (ii) the Installment Purchase Agreement, dated as of December 1, 2017, by and between the District and Public Property Financing Corporation of California, which is currently outstanding in the aggregate principal amount of $7,225,000 and which matures on November 25, 2034. 4 4856-6219-7252v1/022030-0166 Prepayment Subject to the terms and conditions of the Lease, the Authority has granted an option to the District to prepay in whole or in part a principal portion of the Lease Payments, in whole or in part in increments of $1.00 on any date on or after November 15, 2024 hereafter at a prepayment price equal to the Lease Payments to be prepaid, without premium. The District is obligated to prepay the Lease Payments in whole or in part on any date, from and to the extent of any Net Insurance Proceeds theretofore transferred to the Insurance and Condemnation Account and not otherwise applied to the Project in accordance with the Lease. The District and the Authority have agreed that such proceeds will be credited towards the District’s obligations under the Lease with respect to the portion of the Project from which such proceeds were derived (except in the case of such prepayment of the Lease Payments in whole) such that approximately equal annual Lease Payments will prevail with respect to the Project following such prepayment. Certain Covenants Rate Covenant. The District will, to the maximum extent permitted by law, fix, prescribe and collect rates and charges for water service which will be at least sufficient to yield during each Fiscal Year Revenues equal to one 100% of Maintenance and Operation Costs paid in the immediately preceding Fiscal Year, provided that such costs will include the Lease Payments payable in such Fiscal Year, plus Additional Payments payable in such Fiscal Year. The City may make adjustments from time to time in such rates and charges and may make such classification thereof as it deems necessary, but will not reduce the rates and charges then in effect unless the Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements of this rate covenant. Additional Parity Obligations. The District has covenanted that, except for obligations issued to prepay all or a portion of the Lease Payments, it will issue obligations payable from Revenues on a parity basis with the Lease Payments only if the District delivers to the Trustee prior to the issuance of any Parity Obligations a certificate certifying that all of the following additional conditions are met: (a) The City is not in default under the terms of the Lease; and (b) the Revenues as shown by the books of the City for any 12 consecutive calendar months selected by the City within the 24 calendar months ending prior to the incurring of such additional obligations amount to at least 100% of Maintenance and Operation Costs, including without limitation Lease Payments, for such 12 calendar month period; for purposes of preparing the certificate or certificates described above, the City may rely upon financial statements prepared by the City, which have not been subject to audit by an Independent Certified Public Accountant if audited financial statements for the Fiscal Year or period are not available; (c) the estimated Revenues for the 12 calendar months following the date of incurring such Parity Obligations will be at least equal to 100% of all Maintenance and Operation Costs, including without limitation Lease Payments projected to be paid in the next succeeding Fiscal Year and payments in the next succeeding Fiscal Year on Parity Obligations to be outstanding 5 4856-6219-7252v1/022030-0166 immediately after the incurring of such Parity Obligations, and the Additional Payments paid in the prior Fiscal Year as of the date of incurring of such Parity Obligations; (d) for so long as any Net Revenue Bonds or Net Revenue Installment Payment obligations are outstanding, the Lease Payments plus lease payments securing all Parity Obligations, including without limitation the Parity Obligations proposed to be issued, do not in the aggregate exceed the Maintenance and Operation Cap. For purposes of the computations to be made as described in (b) above, the determination of the Revenues: (i) may take into account any increases in rates and charges which relate to the Water System and shall take into account any reduction in such rates and charges, which will be effective prior to or at the time of incurring such proposed additional obligations; (ii) may take into account an allowance for any estimated increase in such Revenues from any revenue producing additions to or improvements or extensions of the Water System to be made with the proceeds of such additional obligations or with the proceeds of obligations previously issued, as shown by a certificate of the City; and (iii) for the period contemplated by (c) above, Maintenance and Operation Costs of the Water System will be deemed to be the same as for the period for which a calculation is done pursuant to (b) above, but adjusted, if deemed necessary by the District, for any increased Maintenance and Operation Costs of the Water System which are, in the judgment of the City, essential to maintaining and operating the Water System. Nothing in the Lease precludes the District from issuing obligations which are subordinate to the payment of the Lease Payments. In the event the additional indebtedness bears interest at a variable rate, for purposes of the rate covenant and determining compliance with the tests for issuance of additional indebtedness under the Lease, debt service payable on variable rate additional indebtedness will be computed assuming such additional indebtedness bears interest at the rate quoted in The Bond Buyer 25 Revenue Bond Index for the last week of the month preceding the date when the City incurs such additional indebtedness, as published in The Bond Buyer, plus 0.50%, or if such index is no longer published, another similar index to be selected by the Authority, or if the Authority fails to select a replacement index, an interest rate equal to 80% of the yield for outstanding United States Treasury bonds having a maturity equivalent to that of the additional indebtedness proposed to be incurred, or if there are no such Treasury bonds having equivalent maturities, 80% of the lowest prevailing prime rate of any of the five largest commercial banks in the United States ranked by assets. Events of Default The following are Events of Default under the Lease: (1) Failure by the City to pay any Lease Payment or Additional Payment required to be paid under the Lease on the date such payment is due thereunder. (2) Failure by the City to observe and perform any warranty, covenant, condition or agreement on its part to be observed or performed in the Lease or otherwise with respect hereto or in 6 4856-6219-7252v1/022030-0166 the Property Lease, other than as referred to in clause (1), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the District by the Authority or the Trustee; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, then no Event of Default will have occurred for a period of 60 days after such applicable period so long as corrective action is instituted by the District within the applicable period and diligently pursued until the default is corrected. Notwithstanding the foregoing, an Event of Default will have occurred concurrent with any failure by the District to observe and perform any warranty, covenant, condition or agreement on its part to be observed or performed in the following Sections of the Lease 4.9 (rate covenant), 4.10 (no senior obligations permitted),4.12 (payment to the Trustee), 5.1 (maintenance of insurance on the Water System), 7.9 (disclaimer of warranties), 7.13 (no encumbrances on Water System) or 7.14 (no sale or disposition of Water System); (3) The filing by the District of a case in bankruptcy, or the subjection of any right or interest of the District under the Lease to any execution, garnishment or attachment, or adjudication of the District as a bankrupt, or assignment by the District for the benefit of creditors, or the entry by the District into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the District in any proceedings instituted under the provisions of the federal bankruptcy code, as amended, or under any similar act which may hereafter be enacted; (4) A material breach of any representation of the District under the Lease after written notice specifying such failure and requesting that it be remedied has been given to the District by the Authority or the Trustee; (5) The District abandons any part of the Property or the Property; (6) The assignment or transfer of the District’s interest in the Lease or any part thereof without the written consent of the Owners of 100% of the outstanding Bonds, either voluntarily or by operation of law or otherwise; and (7) Any court of competent jurisdiction finds or rules that the Lease is not a valid or binding agreement of the District. No Acceleration Acceleration of the payment of the Lease Payments is not an available remedy in an Event of Default under the Lease. No Rating The Lease Payments and the Bonds have not been assigned a credit rating. 7 4856-6219-7252v1/022030-0166 The filing of this notice does not constitute or imply any representation regarding any other financial, operating or other information about the District or its outstanding bonds or other indebtedness. This notice speaks only as of its date and does not imply that there is no change in any other information concerning the District or its outstanding bonds or other indebtedness that may have a bearing on the security therefor, or an investor’s decision to buy, sell, or hold such bonds or other indebtedness. Dated: November 18, 2021 SANTA MARGARITA WATER DISTRICT A-1 4856-6219-7252v1/022030-0166 EXHIBIT A AMORTIZATION SCHEDULE Lease Payment Date Principal Payment Interest Payment Total Lease Payment 11/15/2021 $1,433,622.00 $247,108.34 $1,680,730.34 5/15/2022 - 219,511.12 219,511.12 11/15/2022 1,489,567.00 219,511.12 1,709,078.12 5/15/2023 - 190,836.95 190,836.95 11/15/2023 1,548,915.00 190,836.95 1,739,751.95 5/15/2024 - 161,020.34 161,020.34 11/15/2024 1,606,548.00 161,020.34 1,767,568.34 5/15/2025 - 130,094.29 130,094.29 11/15/2025 567,401.00 130,094.29 697,495.29 5/15/2026 - 119,171.82 119,171.82 11/15/2026 588,996.00 119,171.82 708,167.82 5/15/2027 - 107,833.65 107,833.65 11/15/2027 609,672.00 107,833.65 717,505.65 5/15/2028 - 96,097.46 96,097.46 11/15/2028 634,394.00 96,097.46 730,491.46 5/15/2029 - 83,885.38 83,885.38 11/15/2029 658,068.00 83,885.38 741,953.38 5/15/2030 - 71,217.57 71,217.57 11/15/2030 685,654.00 71,217.57 756,871.57 5/15/2031 - 58,018.73 58,018.73 11/15/2031 712,052.00 58,018.73 770,070.73 5/15/2032 - 44,311.73 44,311.73 11/15/2032 737,216.00 44,311.73 781,527.73 5/15/2033 - 30,120.32 30,120.32 11/15/2033 766,099.00 30,120.32 796,219.32 5/15/2034 - 15,372.92 15,372.92 11/15/2034 798,593.00 15,372.92 813,965.92 Page 1 of 18 4863-1490-2017v2/022027-0000 AMENDED AND RESTATED PROJECT IMPLEMENTATION AGREEMENT SAN JUAN BASIN DESALTER PROJECT THIS AMENDED AND RESTATED PROJECT IMPLEMENTATION AGREEMENT for the SAN JUAN DEALTER PROJECT (“AGREEMENT”) is made this 22nd day of September 2021, by and among the San Juan Basin Authority, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “SJBA”) and the Santa Margarita Water District, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California (“SMWD”), and agreed to and accepted by the SJBA and SMWD are sometimes hereinafter referred to individually or collectively as “the PARTY” or “the PARTIES.” RECITALS A. On November 22, 1971, the SJBA was formed pursuant to Article I, Chapter 5, Division 7, Title 1 of Government Code of the State of California (Government Code 6500 et seq.) and established for the purpose of jointly funding certain water system facilities and water conservation projects necessary to conserve and make water resources available to the areas within the San Juan Creek Watershed serviced by the members of the SJBA. B. On February 5, 1991, SJBA, Capistrano Valley Water District (“CVWD”), Moulton Niguel Water District (“MNWD”), SMWD and Trabuco Canyon Water District entered into the San Juan Basin Projects Agreement (the “1991 Agreement”) for purposes including the development, conservation and management of imported water conjunctively with water produced locally. C. Pursuant to the 1991 Agreement, the CVWD, MNWD, SMWD, and the Trabuco Canyon Water District established several Project Committees to study and implement a water management and use program within the San Juan Creek Basin and tributaries (the “Basin”). The SJBA made a study of the feasibility of extracting water from the Basin, treating that water to improve its quality as Page 2 of 18 4863-1490-2017v2/022027-0000 appropriate, and supplying the resulting water to the then current members of the SJBA (i.e. CVWD, MNWD, SMWD, and Trabuco Canyon Water District) and other water users (the “San Juan Basin Ground Water Management and Facility Plan”, as revised). The SJBA then proceeded with a groundwater recovery project based upon this study and subsequent hydrologic, environmental and other work. D. On November 21, 1995, SJBA, CVWD and City of San Juan Capistrano (“City”) entered into the San Juan Basin Authority – Capistrano Valley Water District and City of San Juan Capistrano Agreement, which was thereafter amended on March 1, 1998 by the San Juan Basin Authority – Capistrano Valley Water District and City of San Juan Capistrano Amendment to Agreement. The November 21, 1995 agreement and March 1, 1998 amendment to agreement are hereinafter collectively referred to as the “1995 Agreement.” The purpose of the 1995 Agreement was to clarify the agreement between those parties with respect to the extraction of water from the San Juan Basin for CVWD and the City relative to SJBA’s extraction of water from the Basin for the project specified in that agreement. E. On October 27, 1998, SJBA, CVWD and SMWD (collectively, the “Participating Members” for reference purposes only to this Recital and Recital “F”, herein)1 entered into a Memorandum of Understanding (the “1998 MOU”), which provides among other items, that prior to commencing construction of the project specified in the MOU, the Participating Members allocated interest in the specified project’s water rights and water supplies will be established by a project implementation agreement among the Participating Members and SJBA. 1 MNWD is referenced in the 1998 MOU, but the 1998 MOU is not signed by MNWD. Investigation into the matter revealed that MNWD’s Board of Directors never approved the 1998 MOU. As a result, it is the position of the Parties hereto that MNWD is not a party to the 1998 MOU. Page 3 of 18 4863-1490-2017v2/022027-0000 F. On October 15, 2002, SJBA and the City entered into the Project Implementation Agreement San Juan Basin Desalter Project (“the 2002 Agreement”), the purpose of which Agreement was to i) comply with Section 7(a) of the 1991 Agreement, which requires a Project Lease Agreement whenever construction of a project is funded by a bond issue; ii) to comply with Section 7 of the 1998 MOU, which requires each Participating Member’s allocated interest in the Project’s water rights and water supplies to be established by a project implementation agreement among the Participating Members and SJBA; and, iii) to address provisions in the 1991 Agreement, 1995 Agreement and the 1998 MOU which are or may be affected by the 2002 Agreement. G. On September 3, 2002, the City approved a services contract with ECO Resources, Inc. to design, build, and operate Phase I (the only phase) of the San Juan Basin Authority Groundwater Recovery Project (the “Desalter Project”). Effective October 31, 2008, that services contract was terminated and operation of the Desalter Project was transferred to the City. The termination and transfer are described in a settlement agreement between the City and ECO Resources, dated November 15, 2008. The Desalter Project was designed to extract approximately 5,800 acre-feet of water annually to enable the production of approximately 4,800 acre-feet of potable water annually, all of which was delivered to CVWD’s and/or City’s potable water delivery system for use within CVWD’s and/or the City’s service area. H. On September 2, 1998, the Orange County Local Agency Formation Commission (“OCLAFCO”) adopted Resolution R096-15, whereby approving the merger of CVWD and the City and ordering the City to be the successor to the CVWD. I. In 2015, the City began to evaluate options to re-organize the City’s potable water system Page 4 of 18 4863-1490-2017v2/022027-0000 and recycled water system and wastewater system (the “Utilities Systems”). Based on such evaluation, in August 2016, the City submitted an application to OCLAFCO pursuant to Government Code section 56430 for a Municipal Service Review, to assess the potential transfer of the operation and facilities of the Utilities Systems to another public agency. J. On August 20, 2019 and August 23, 2019, the City Council of the City and the Board of Directors of SMWD, respectively, approved a memorandum of understanding that sets forth the intent of the two agencies to provide for transfer of the City’s Utility Systems to the SMWD. K. On October 1, 2019, the City provided notice of its intent to withdraw from the SJBA effective upon the date on which ownership of the City’s Utility Systems transfer to SMWD. L. On January 21, 2020, the City and SMWD entered into an Annexation Agreement (the “Annexation Agreement”) whereby the City’s Utilities Systems would be transferred to SMWD. On December 23, 2020, SMWD submitted to OCLAFCO an application and plan for services for a sphere of influence amendment and annexation (“LAFCO Application”). M. On August 19, 2021, OCLAFCO approved the LAFCO Application by Order No. DA 20- 01 (“LAFCO Order”); Resolution of the Orange County Local Agency Formation Commission Making Determinations and Approving the Santa Margarita Water District Annexation of the San Juan Capistrano Water and Wastewater Utilities and a Concurrent Amendment to the Santa Margarita Water District Sphere of Influence N. Pursuant to the Assignment, Assumption and Amendment Agreement Regarding Desalter Project Agreements dated October 27, 2021, the City and SMWD effectuated an assignment of the City’s rights and obligations under the 2002 Agreement, including but not limited to the City’s Page 5 of 18 4863-1490-2017v2/022027-0000 allocated interest in Permit 21074 (as defined in section 4(a) below), and the 1991 Agreement, 1995 Agreement and 1998 MOU, to SMWD. The 1991 Agreement, the 1995 Agreement, the 1998 MOU and the 2002 Agreement are collectively referred to herein as the “Desalter Project Agreements.” O. As of the date of the LAFCO Order, the current members of the SJBA were SMWD, MNWD, the City, and South Coast Water District (“SCWD”) (collectively referred to hereafter as the “Members”). Upon the City’s withdrawal from the SJBA and the effective date of this Agreement, the members of the SJBA are SMWD, MNWD, and South Coast Water District (“SCWD”). P. In light of the City’s assignment of the Desalter Project Agreements to SMWD, withdrawal from the SJBA and transfer of the City’s Utility Systems to SMWD, the Parties desire to amend and restate, via this Agreement, the 1995 Agreement, the 1998 MOU, and the 2002 Agreement. NOW THEREFORE, the Parties agree as follows: AGREEMENT 1. RECITALS. The Parties acknowledge that the above recitals (paragraphs A — P) preceding this paragraph 1 are true and correct, and are incorporated herein as material parts of this Agreement. 2. EFFECTIVE DATE. This Agreement shall become effective on the Annexation Effective Date, as that term is defined in the Annexation Agreement. In the event the Annexation Effective Date does not occur, this Agreement shall be null and void and shall have no effect whatsoever. Page 6 of 18 4863-1490-2017v2/022027-0000 3. DESALTER PROJECT LEASE AGREEMENTS. Attached hereto collectively as Exhibit “A” and incorporated by reference herein, are: (1) Amended and Restated Lease Agreement by and between City of San Juan Capistrano, as Lessee, and San Juan Basin Authority, as Lessor, dated as of November 1, 2014; (2) Assignment, Assumption and Amendment Agreement by and among Santa Margarita Water District, as Assignee and City of San Juan Capistrano, as Assignor, and San Juan Basin Authority, and The Bank of New York Mellon Trust Company, N.A. dated as of November 1, 2021; (3) Property Lease by and between City of San Juan Capistrano, as Lessor, and the San Juan Basin Authority, as Lessee, dated as of December 1, 2002; (4) Assignment, Assumption and Amendment Agreement Regarding Desalter Project Agreements by and among Santa Margarita Water District, as Assignee and City of San Juan Capistrano, as Assignor, and San Juan Basin Authority, dated as of October 27, 2021; and (5) Trust Agreement Relating to the San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014. The foregoing documents are collectively referred to as the “Desalter Project’s Leases and Trust Agreement.” The Parties agree that the Desalter Project’s Leases and Trust Agreement satisfy the requirements of Section 7(a) of the 1991 Agreement.2 4.SMWD’S ALLOCATED INTEREST IN DESALTER PROJECT. (a)SMWD’s allocated interest in the Desalter Project’s water rights and water supplies, which water rights are established by Amended Permit for Diversion and Use of Water No. 21074 (“Permit 21074”) issued for the Project by the State Water Resources Control Board (“State Water Board”), shall be in the amount of 5,800 acre-feet per year. SMWD’s allocation of 2 For ease of reference only, Section 7(a) of the 1991 Agreement states, “Members Obligation To Enter Project Lease Agreements. Whenever construction of project facilities for an authorized project shall be funded by a bond issue, each Member shall enter a Project Lease Agreement, which shall be substantially in the form of Attachment No. 4, attached hereto and incorporated herein by reference. Each Member further agrees to make all payments required by the Project Lease Agreement.” Page 7 of 18 4863-1490-2017v2/022027-0000 5,800 acre-feet is a per year allocation, SMWD’s allocation will not be credited or increased with any amounts of the allocation unused in previous years. SJBA and its member agencies, shall not have any obligation to provide SMWD with substitute water if SMWD is unable to extract or is otherwise prevented from extracting the allocated 5,800 acre-feet in any particular year. A portion of the Desalter Project water may be delivered from time-to-time to SJBA’s other member agencies on terms mutually agreeable to SMWD, SJBA and SJBA’s participating member agencies. For purposes of this Agreement, “extraction” or “extract” shall include diversion of surface or subsurface water from the Basin by any method; and “year” shall mean October 1— September 30. (b) Condition No. 7 of Permit 21074 states, in relevant part, “Allocation of the available water resources under this permit and any permits issued pursuant to Application 30337 of South Coast Water District and 30696 of Capistrano Valley Water District, et al. are governed by private agreements among the respective parties dated November 21, 1995 [referred to herein as the 1995 Agreement] and March 1, 1998 [an agreement that is not related to nor being replaced or modified in any way by this Agreement], and by their joint letter dated March 13, 1998.” The Parties acknowledge and agree that this Agreement is intended to comply with Condition No. 7 of Permit 21074 and that, other than substituting SMWD for the City/CVWD, this Agreement does not change the previously agreed to allocation of the water resources. (c) This Agreement does not supersede, establish or confirm the existence of or priority of, or in any way impact water rights that may exist separate and apart from this Agreement and Permit 21074 that SMWD might claim to have received from the City as a result of said agreements and the Annexation, except that SMWD shall not petition either the State Water Resources Control Board or a court of law to establish against SJBA or its Members the priority of the water rights Page 8 of 18 4863-1490-2017v2/022027-0000 claimed by the City that are described in Recital G of the November 21, 1995 Agreement between SJBA, the City and CVWD. (d) The Parties further acknowledge and agree that this Agreement has no impact or effect on any water rights that the Members may claim to have separate and apart from Permit 21074 and that this Agreement does not waive or prevent any of the Members from (i) bringing an action against SJBA, other Members, or third parties or (ii) participating in any action involving water rights in San Juan Creek, whether such action is administrative or legal, asserting impairment of any claimed water right. Nor shall anything in this agreement act as a waiver or otherwise prevent any Member from challenging compliance with Permit 21074 as related to groundwater quality and/or groundwater extracted by or on behalf of the SJBA, the City or the SMWD regardless of the location of the Authority’s extraction wells in or along the subterranean stream underlying San Juan Creek. 5. DECISIONS AND APPROVALS. The Parties agree that, since SMWD is the only SJBA member participating in the Desalter Project, major decisions and approvals concerning the Desalter Project, including construction, operation, maintenance and repair shall be made by SMWD in consultation with SJBA. Such decisions and approvals shall not materially impair the rights of SJBA in any subsequent expansion of the Desalter Project, nor cause SJBA to be in non- compliance with the provisions of Permit 21074 issued by the State Water Resources Control Board. SMWD will be a member of the SJBA Coordinating Committee established by the 1998 MWD Agreement. The subsidy described in the 1998 MWD Agreement shall be irrevocably committed to the Desalter Project and SJBA will not exercise its right to terminate the 1998 MWD Agreement without the prior written consent of SMWD. Notwithstanding the foregoing, neither SJBA nor its member agencies have any obligation to ensure any level of extraction from the Page 9 of 18 4863-1490-2017v2/022027-0000 Desalter Project pursuant to this Agreement. 6. OPERATION OF PROJECT FACILITIES. (a) SMWD will operate the Desalter Project as the contracted operator of SJBA during the Lease Term described in the Desalter Project’s Leases and Trust Agreement and Operating Lease Agreement, dated as of December 1, 2002, and First Amendment to Operating Lease Agreement, effective on or about September 10, 2013 (collectively the “Operating Lease”). SMWD’s contracted operation of the Desalter Project shall include the right to make alterations or improvements or attach fixtures or structures to the Desalter Project in consultation with SJBA if said alterations, improvements, fixtures and structures are necessary or reasonably beneficial for the use of the Desalter Project and are consistent with sound engineering and construction practices, where SMWD would be solely responsible for the cost and risk of the same. (b) SMWD will duly observe and comply with all applicable laws and regulations, whether Federal, State or local, and whether existing as of the Effective Date of this Agreement or as may be enacted in the future pertaining to: (1) the maintenance, repair, and operation of the wells and related facilities by SMWD, including wells and related facilities referenced on Exhibit A; (2) the control, carriage, handling, use, disposal, or distribution of water extracted by SMWD; and (3) SMWD’s maintenance, repair, and operation of the Desalter Project. SMWD shall be solely responsible for all costs and shall bear all responsibility for complying with applicable laws as required by this section. (c) SJBA and SMWD will comply with all conditions of approval and mitigation measures required by Permit 21074. The SJBA shall consult SMWD with respect to those actions or inactions that SJBA believes are necessary to comply with the requirements of Permit 21074. Page 10 of 18 4863-1490-2017v2/022027-0000 Notwithstanding the consultation requirement in the immediately preceding sentence, the Parties acknowledge and agree that the SJBA shall have sole discretion to determine what actions or inactions are necessary to comply with Permit 21074. (d) SMWD will comply with all conditions of the Adaptive Pumping Management (APM) Plan. The Parties acknowledge and agree that the APM Plan is subject to amendment and revision at any time in response to the Basin’s current hydrological condition. 7. RESPONSIBILITY FOR WELL FACILITIES. SMWD shall be responsible for maintaining, repairing, replacing and operating all of the wells referenced on Exhibit “B”, related facilities, and all replacement wells and related facilities, such that they are in good condition, and for keeping records thereof. SMWD will be solely responsible for and would bear the cost of keeping records for these wells, including complying with requirements for regulatory reports, including to the State Water Resources Control Board, the Department of Water Resources, and the San Diego Regional Water Quality Control Board. Any responsibility or cost for these records that is indirectly born by SJBA, as determined by SJBA, will be paid by SMWD and will not be the responsibility of SJBA or its member agencies. 8. RESPONSIBILITIES FOR DELIVERY AND DISTRIBUTION OF WATER. Neither the SJBA, MNWD, SCWD, nor any of their officers, agents or employees shall be liable for the control, carriage, handling, use, disposal, or distribution of water extracted by SMWD; nor for claims or damages of any nature whatsoever, including but not limited to property damage, personal injury or death, arising out of or connected with the control, carriage, handling, use, disposal or distribution of any such water beyond said point of delivery; and SMWD hereby agrees to jointly and severally defend, indemnify and hold harmless the Authority, the other Members Page 11 of 18 4863-1490-2017v2/022027-0000 and their officers, agents, and employees, from any such damages or claims of damages. 9. MUTUAL INDEMNIFICATION. (a) SMWD shall defend, indemnify, and hold harmless SJBA, SJBA’s member agencies, their respective elected and appointed officials, officers, employees, and agents from any and all actual or alleged claims, demands, causes of action, liability, loss, damage, or injury, to property or persons, including wrongful death, whether imposed by a court of law or by administrative action of any federal, state, or local governmental body or agency arising out of or incident to the performance of this Agreement and resulting from the negligence or wrongful act of SMWD’s elected and appointed officials, officers, agents, employees or invitees including, without limitation, any such claims, disputes, controversies or injury to property or persons arising from or in connection with: (1) the maintenance, repair, and operation of the wells and related facilities by SMWD, including wells and related facilities referenced on Exhibit A; (2) the control, carriage, handling, use, disposal, or distribution of water extracted by SMWD; (3) SMWD’s maintenance, repair, and operation of the Desalter Project, and (4) any obligations arising under the Desalter Project’s Leases and Trust Agreement. This indemnification includes, without limitation, the payment of all penalties, fines, judgments, awards, decrees, attorneys’ fees, and related costs or expenses, and the reimbursement of SJBA, SJBA’s member agencies, their respective elected officials, officers, employees, and/or agents for all legal expenses and costs incurred by each of them. (b) SJBA shall defend, indemnify, and hold harmless SMWD, its elected officials, officers, employees, and agents from any and all actual or alleged claims, demands, causes of action, liability, loss, damage, or injury, to property or persons, including wrongful death, whether imposed by a court of law or by administrative action of any federal, state, or local governmental Page 12 of 18 4863-1490-2017v2/022027-0000 body or agency, arising out of or incident to the performance of this Agreement and resulting from the negligence or wrongful act of SJBA, their respective elected and appointed officials, officers, agents, employees or invitees. This indemnification includes, without limitation, the payment of all penalties, fines, judgments, awards, decrees, attorneys’ fees, and related costs or expenses, and the reimbursement of SMWD, its elected officials, officers, employees, and/or agents for all legal expenses and costs incurred by each of them. SMWD acknowledges that neither MNWD nor SCWD have any obligation as members of the SJBA to contribute to the payment for any liability of the SJBA related to the Desalter Project except as for contractual obligations arising under the Joint Powers Agreement. 10. EFFECT OF INCONSISTENT PROVISIONS. This Agreement comprises the entire understanding of the Parties concerning the issues herein described, and supersedes all previous oral and written agreements, negotiations, communications, representations and commitments. To the extent the terms of this Agreement are inconsistent with the Desalter Project’s Leases and Trust Agreement the terms of the Desalter Project’s Leases and Trust Agreement shall prevail so long as the bonds issued under the Trust Agreement Relating to the San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 remain outstanding; provided however, that such Desalter Project’s Leases and Trust Agreement shall not result in the imposition of any financial liabilities on SJBA or its member agencies other than SMWD. 11. THE PARTIES’ TERMINATION OF PREVIOUS AGREEMENTS. The Parties intend for this Agreement to amend, restate, and replace in their entirety the 1995 Agreement, 1998 MOU, and 2002 Agreement. Upon the Effective Date of this Agreement this Agreement shall supersede and replace the 1995 Agreement, 1998 MOU, and 2002 Agreement and the 1995 Agreement, 1998 MOU, and 2002 Agreement are terminated by mutual consent of the Parties and Page 13 of 18 4863-1490-2017v2/022027-0000 shall have no further force or effect. 12. NOTICES. All notices, demands, requests, consents, or other communications permitted or required by this Agreement shall be personally delivered, sent by registered or certified mail, postage prepaid, return-receipt requested, or by facsimile, addressed to the respective Parties as follows: TO SJBA: San Juan Basin Authority 26111 Antonio Parkway Rancho Santa Margarita, California 92688 Attention: Administrator Phone: Fax: TO SMWD: Santa Margarita Water District 26111 Antonio Parkway Rancho Santa Margarita, California 92688 Attention: General Manager Phone: Fax: 13. AUTHORITY. Each of the individuals executing this Agreement verifies that each of them has the authority to enter into this Agreement, that the necessary resolutions or other consents have been passed or obtained, and that this Agreement shall be binding on the Party for whom each of them is signing. 14. TIME IS OF THE ESSENCE. Time is of the essence of all provisions of this Agreement where time is a factor. 15. GOVERNING LAW AND VENUE. The interpretation, validity and enforcement of this Agreement shall be governed by and construed under the laws of the State of California. Venue for any action brought to enforce or interpret this Agreement shall be brought in the appropriate Page 14 of 18 4863-1490-2017v2/022027-0000 federal or state court in or nearest to the South Orange County Judicial District, County of Orange. 16. AMENDMENT. This Agreement may not be modified orally or in any manner other than by an agreement in writing signed by the Parties or their respective successors in interest. No right or remedy will be waived unless the waiver is in writing and signed by the Party claimed to have made the waiver. One waiver will not be interpreted as a continuing waiver. 17. BINDING NATURE OF AGREEMENT. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective officers, governing bodies, contractors, agents, employees, successors and assigns. 18. LITIGATION. In the event that the LAFCO Order is declared by any court of competent jurisdiction in a final order or judgment to be invalid or illegal, or the entirety of this Agreement is declared by a court of competent jurisdiction in a final order or judgment to be invalid or illegal, then the Parties to this Agreement shall cooperate with each other to cure the defect identified in said order or judgment and reinstate this Agreement. In the event that only a portion of this Agreement is declared by any court of competent jurisdiction in a final order or judgment to be invalid, illegal, or unenforceable, such portion shall be severed from the Agreement, and the remaining parts hereof shall remain in full force and effect as fully as though such invalid, illegal, or unenforceable portion had never been part of the Agreement, provided that the Parties to this Agreement determine that the remaining Agreement can be reasonably and equitably enforced, which determination shall not be unreasonably withheld. 19. BREACH AND CURE. (a) Any Party to this Agreement may declare a breach hereof by serving written notice describing the nature of the breach to all Parties. The Party alleged to have breached the Agreement Page 15 of 18 4863-1490-2017v2/022027-0000 shall be afforded a reasonable period, not less than thirty (30) days from service of the notice of breach to take whatever steps are necessary to cure the breach. (b) All disputes arising out of or in connection with the interpretation or enforcement of this Agreement shall be submitted to mediation prior to the commencement of court proceedings at the request of any Party, by a retired judge from the panel of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”), with experience in the area of California water law. This provision shall be specifically enforceable. If the Parties to the dispute fail to agree upon a member of the JAMS panel, any Party may apply to the Presiding Judge of the Orange County Superior Court for appointment of a panel member consistent with provision to resolve the dispute. Upon completion of the mediation process described herein, any Party may pursue all remedies otherwise provided them by law, including the remedy of specific performance. (c) In the event any legal action or proceeding is commenced to interpret or enforce the terms of, or obligations arising out of, this Agreement, or to recover damages for the breach of this Agreement, the Party prevailing in any such action or proceeding shall be entitled to recover from the non-prevailing Party all reasonable attorney fees and expenses incurred by such prevailing Party. 20. COOPERATION. The Parties agree to execute such other and further documents, assignments and instruments and to take such other actions as are or may become necessary or convenient to carry out this Agreement. The Parties agree to cooperate and do all acts as may be reasonably required to implement the Desalter Project including SJBA’s financing and SMWD’s operation and maintenance of the Desalter Project. Page 16 of 18 4863-1490-2017v2/022027-0000 21. SECTION HEADINGS. All section headings are for convenience only and in no way define or limit the scope or interpretation of this Agreement. 22. INTERPRETATION. Each of the Parties acknowledges that it has reviewed this Agreement and has consulted legal counsel, and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Agreement or any amendments hereto. 23. ASSIGNMENT. Except as provided in paragraph 18 of this Agreement, no assignment or transfer of this Agreement or any part hereof, rights hereunder, or interest herein shall be valid unless and until it is approved by all Parties to this agreement in writing. 24. NO THIRD PARTY BENEFICIARIES. There are no intended third party beneficiaries of any right or obligation assumed by the Parties under this Agreement. 25. COMMENCEMENT AND TERMINATION OF AGREEMENT. The term of this Agreement shall commence upon the Annexation Effective Date and shall continue until this Agreement is terminated by mutual agreement of the Parties. 26. NOTIFICATION OF AMENDMENT AND TERMINATION OF AGREEMENT. The Parties shall provide notice to the General Manager of the Metropolitan Water District of Southern California, 700 North Alameda Street, Los Angeles, CA 90054 - 0153, upon any amendment or termination of this Agreement. EXHIBIT A-1 OHSUSA:754110187.8 AMENDED AND RESTATED LEASE AGREEMENT By and Between CITY OF SAN JUAN CAPISTRANO, as Lessee and SAN JUAN BASIN AUTHORITY, as Lessor Dated as of November 1, 2014 Relating to $20,361,090 SAN JUAN BASIN AUTHORITY LEASE REVENUE BONDS (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014 Amending and restating Lease Agreement, dated as of December 1, 2002, by and between the City of San Juan Capistrano as successor to Capistrano Valley Water District, as Lessee, and San Juan Basin Authority, as Lessor TABLE OF CONTENTS Page -i- OHSUSA:754110187.8 ARTICLE I DEFINITIONS AND EXHIBITS Section 1.1 Definitions and Rules of Construction ................................................................... 1 Section 1.2 Exhibits .................................................................................................................. 8 ARTICLE II 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 ............................. 11 ARTICLE III APPLICATION OF BONDS PROCEEDS Section 3.1 Deposit of Bond Proceeds .................................................................................... 12 Section 3.2 Redemption of 2002 Bonds ................................................................................. 12 ARTICLE IV AGREEMENT OF LEASE; TERM OF LEASE; LEASE PAYMENTS Section 4.1 Lease .................................................................................................................... 13 Section 4.2 Term ..................................................................................................................... 13 Section 4.3 Extension of Lease Term ..................................................................................... 13 Section 4.4 Lease Payments .................................................................................................... 13 Section 4.5 No Withholding ................................................................................................... 14 Section 4.6 Obligation Absolute ............................................................................................. 14 Section 4.7 Budget and Appropriation.................................................................................... 14 Section 4.8 Revenue Fund ...................................................................................................... 14 Section 4.9 Rates and Charges ................................................................................................ 14 Section 4.10 No Priority for Additional Obligations ................................................................ 15 Section 4.11 Limits on Additional Debt ................................................................................... 15 Section 4.12 Assignment of Lease Payments ........................................................................... 16 Section 4.13 Use and Possession .............................................................................................. 16 Section 4.14 Additional Payments ............................................................................................ 16 Section 4.15 Net-Net-Net Lease ............................................................................................... 17 Section 4.16 Further Assurances and Corrective Instruments .................................................. 17 Section 4.17 Financial Statements and Budgets ....................................................................... 17 Section 4.18 Notices ................................................................................................................. 17 Section 4.19 Litigation .............................................................................................................. 18 Section 4.20 Financial Statements ............................................................................................ 18 Section 4.21 Accuracy of Information ...................................................................................... 18 Table of Contents (continued) Page -ii- OHSUSA:754110187.8 ARTICLE V INSURANCE AND CONDEMNATION Section 5.1 Insurance .............................................................................................................. 19 Section 5.2 Cooperation .......................................................................................................... 19 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1 Application of Net Insurance Proceeds ................................................................ 20 Section 6.2 Eminent Domain Proceeds ................................................................................... 21 ARTICLE VII COVENANTS WITH RESPECT TO THE PROJECT Section 7.1 Use of the Project ................................................................................................. 21 Section 7.2 Leasehold Interest in the Project .......................................................................... 21 Section 7.3 Option to Prepay Lease Payments ....................................................................... 21 Section 7.4 Quiet Enjoyment .................................................................................................. 21 Section 7.5 Installation of City’s Personal Property ............................................................... 22 Section 7.6 Access to the Project ............................................................................................ 22 Section 7.7 Maintenance, Utilities, Taxes and Assessments .................................................. 22 Section 7.8 Modification of the Project .................................................................................. 23 Section 7.9 Liens ..................................................................................................................... 23 Section 7.10 Authority’s Disclaimer of Warranties .................................................................. 24 Section 7.11 City’s Right to Enforce Warranties of Manufacturers, Vendors or Contractors ........................................................................................................... 24 Section 7.12 Reconstruction; Application of Net Insurance Proceeds ..................................... 24 Section 7.13 Against Encumbrances......................................................................................... 24 Section 7.14 Against Sale or Other Disposition of Project ....................................................... 24 Section 7.15 Payment of Claims ............................................................................................... 25 Section 7.16 Compliance with Lease ........................................................................................ 25 Section 7.17 Compliance with Governmental Regulations ...................................................... 25 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1 Assignment by the Authority ............................................................................... 25 Section 8.2 Assignment and Subleasing by the City .............................................................. 25 Section 8.3 Amendments and Modifications .......................................................................... 26 Table of Contents (continued) Page -iii- OHSUSA:754110187.8 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.1 Events of Default Defined ................................................................................... 26 Section 9.2 Remedies on Default; No Acceleration ............................................................... 27 Section 9.3 No Remedy Exclusive.......................................................................................... 28 Section 9.4 Agreement to Pay Attorneys Fees and Expenses ................................................. 28 Section 9.5 No Additional Waiver Implied by One Waiver ................................................... 28 Section 9.6 Trustee to Exercise Rights ................................................................................... 28 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1 Security Deposit ................................................................................................... 28 Section 10.2 Mandatory Prepayment From Net Insurance Proceeds ....................................... 29 Section 10.3 Optional Prepayment ........................................................................................... 29 Section 10.4 Effect of Prepayment ........................................................................................... 29 ARTICLE XI MISCELLANEOUS Section 11.1 Liability of City Limited ...................................................................................... 30 Section 11.2 Waiver of Personal Liability ................................................................................ 30 Section 11.3 Notices ................................................................................................................. 30 Section 11.4 Binding Effect ...................................................................................................... 31 Section 11.5 Severability .......................................................................................................... 31 Section 11.6 Execution in Counterparts.................................................................................... 31 Section 11.7 Applicable Law .................................................................................................... 31 Section 11.8 Captions ............................................................................................................... 31 Section 11.9 No Merger ............................................................................................................ 31 Section 11.10 Amendment of Original Lease ............................................................................. 31 OHSUSA:754110187.8 LEASE AGREEMENT THIS AMENDED AND RESTATED LEASE AGREEMENT (this “Lease” or “Lease Agreement”), dated as of November 1, 2014, by and between the SAN JUAN BASIN AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California, as lessor (the “Authority”), and the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California, as lessee (the “City”), amending the Lease Agreement, dated as of December 1, 2002 (the “Original Lease”), between the Authority and the City as successor to the Capistrano Valley Water District (the “Water District”); W I T N E S S E T H: WHEREAS, pursuant to the laws of the State of California, the City may enter into leases and agreements relating to real property to be used by the City; and WHEREAS, the City has leased the Property (defined herein) to the Authority pursuant to that certain Property Lease by and between the Authority and the City dated December 1, 2002; and WHEREAS, the Authority and the Water District entered into the Original Lease pursuant to which the Water District leased the Property from the Authority; and WHEREAS, the Authority issued its San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project Bonds) Issue of 2002 (the “2002 Bonds”) secured by, among other things, lease payments made by the Water District under the Original Lease; and WHEREAS, the City is the successor to the Water District; and WHEREAS, the Authority has authorized the issuance of its San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 (the “Bonds”) for the purpose of refunding the 2002 Bonds; and WHEREAS, in connection with the issuance of the Bonds, the City and the Authority have agreed to amend the Original Lease by entering into this Lease Agreement; 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 I DEFINITIONS AND EXHIBITS Section 1.1 Definitions and Rules of Construction. Unless the context otherwise requires, the capitalized terms used herein shall, for all purposes of this Lease, have the meanings herein specified. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa. The terms “hereby,” “hereof,” “hereto,” 2 OHSUSA:754110187.8 “herein,” “hereunder” and any similar terms, as used in this Lease, refer to this Lease as a whole. Capitalized terms not otherwise defined herein shall have the meaning given to each such term in the Trust Agreement. “Additional Payments” shall have the meaning ascribed thereto in Section 4.14 hereof. “Applicable Environmental Laws” means and shall include, but shall not be limited to, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 USC Sections 9601 et seq.; the Resource Conservation and Recovery Act (“RCRA”), 42 USC Sections 6901 et seq.; the Federal Water Pollution Control Act, 33 USC Sections 1251 et seq.; the Clean Air Act, 42 USC Sections 7401 et seq.; the California Hazardous Waste /control Law (“HWCL”), California Health & Safety Code Sections 25100 et seq.; the Hazardous Substance Account Act (“HSAA”), California Health & Safety Code Sections 25300 et seq.; the Porter- Cologne Water Quality Control Act (the “Porter-Cologne Act”), California Water Code Sections 1300 et seq.; the Air Resources Act, California Health & Safety Code Sections 3900 et seq.; the Safe Drinking Water & Toxic Enforcement Act, California Health & Safety Code Sections 25249.5 et seq.; and the regulations under each thereof; and any other local, state, and/or federal laws or regulations, whether currently in existence or hereafter enacted, that govern: (a) the existence, cleanup, and/or remedy of contamination on property; (b) the protection of the environment from spilled, deposited, or otherwise emplaced contamination; (c) the control of hazardous wastes; or (d) the use, generation, transport, treatment, removal, or recovery of hazardous substances, including building materials. “Applicable Law” means (a) all applicable common law and principles of equity and (b) all applicable provisions of all (i) constitutions, statutes, rules, regulations and orders of all Governmental Authorities, (ii) Applicable Environmental Laws, (iii) applicable seismic building code requirements at the time of construction, and (iv) orders, decisions, judgments, writs, injunctions and decrees of all courts (whether at law or in equity) and arbitrators. “Authority” means the San Juan Basin Authority, a joint exercise of powers authority organized and existing pursuant to Chapter 5, Division 7, Title 1 of the Government Code of the State. “Authorized Representative of the City” means the City Manager of the City, the Public Works and Utilities Director of the City, the Chief Financial Officer/Treasurer of the City or any person or persons designated by the City Manager and authorized to act on behalf of the City by a written certificate signed on behalf of the City by the City Manager and containing the specimen signature of each such person. “Bond” or “Bonds” means any of the San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 issued pursuant to the Trust Agreement. 3 OHSUSA:754110187.8 “2002 Bonds” means the San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2002. “Bond Counsel” means a firm of nationally-recognized attorneys experienced in the issuance of tax-exempt obligations the interest on which is excludable from gross income under Section 103 of the Code. “City” means the City of San Juan Capistrano, California. “City Council” means the City Council of the City. “Closing Date” means the date on which the Bonds are delivered to the initial purchaser thereof. “Code” means the Internal Revenue Code of 1986, as amended and the United States Treasury Regulations proposed or in effect with respect thereto. “Costs of Issuance” means all expenses and costs of the Authority or the City incident to the performance of its obligations in connection with the authorization, execution, sale and delivery of the Bonds, including, but not limited to, printing costs, initial Trustee fees and expenses and fees and expenses of its counsel, fees and expenses of consultants and fees and expenses of bond counsel to the Authority or the City. “Costs of Issuance Account” means the account by that name established pursuant to Section 4.1 of the Trust Agreement. “Debt Service Payment Account” means the Debt Service Payment Account established in Section 4.1 of the Trust Agreement. “End of Term” shall have the meaning ascribed thereto in Section 4.2. “Escrow Agent” means The Bank of New York Mellon Trust Company, N.A., acting in it capacity as trustee and escrow agent under and pursuant to the Escrow Agreement, and its successor and assigns as provided in the Escrow Agreement. “Escrow Agreement” means that certain Escrow Agreement, dated as of November 1, 2014, by and among the City, the Authority and the Escrow Agent, providing for the refunding of the 2002 Bonds. “Events of Default” means events of default as set forth in Section 9.1. “Financing Authority” means the San Juan Capistrano Public Financing Authority. “Fiscal Year” means the twelve month fiscal period of the City which commences on July 1 in every year and ends on June 30 of the succeeding year. “GAAP” means generally accepted accounting principles. 4 OHSUSA:754110187.8 “Governmental Authority” means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, City 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. “Independent Counsel” means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee or officer of the Authority, the Trustee or the City. “Interest Payment Date” means June 1 and December 1 of each year commencing June 1, 2015. “Joint Exercise of Powers Agreement” means that certain Joint Exercise of Powers Agreement entered into by and among the Capistrano Beach County Water District, the Santa Margarita Water District, and Orange County Waterworks District No. 4 dated as of November 22, 1971, as amended effective October 16, 1979 by Amendment No. 1, September 1, 1987 by Addendum No. 1, August 1, 1989 by Addendum No. 2 and September 1, 2002 by Addendum No. 3, and as it may be subsequently amended in accordance with its terms. “Lease” or “Lease Agreement” means this Lease Agreement, between the City and the Authority, as amended and supplemented from time to time in accordance with its terms. “Lease Payment” means the amount to be paid by the City for the lease of the Project corresponding to the Lease Payment Date set forth in Section 4.4 and Exhibit B of this Lease Agreement. “Lease Payment Date” means the 15th day of the month preceding each Interest Payment Date (or if the 15th day of the month is not a Business Day, on the next succeeding Business Day). “Lease Termination” means any termination of this Lease pursuant to Section 4.17 hereof. “Maintenance and Operation Costs” means costs spent or incurred for operation and maintenance of the Water System calculated in accordance with generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Water System in good repair and working order, and also means all costs of water purchased or otherwise acquired for delivery by the Water System (including the Lease Payments, any Parity Obligations and any interim or renewed arrangement for water purchase or acquisition); but excluding in all cases depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature and any amounts transferred to the Lease Revenue Bonds Rate Stabilization Reserve. “Maintenance and Operation Cap” means annual costs not to exceed $2,750,000 for Lease Payments, as such costs may be increased due to currently unforeseeable cost increases 5 OHSUSA:754110187.8 which are out of the control of the City and of the owner, operator and lenders with respect to the Ground Water Recovery Plant. “Material Adverse Effect” 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 Water System, (b) the ability of the City to carry out its business in the manner conducted as of the date of this Lease or to meet or perform its obligations under this Lease on a timely basis, (c) the validity or enforceability of this Lease, or (d) the exclusion of the interest component of the Lease Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes, and shall include, amongst other events or occurrences, any material, adverse change to the rating by Moody’s Investors Service, Inc., Standard & Poor’s, a Standard & Poor’s Financial Services LLC business, or Fitch Ratings, Inc. of any debt securities issued by the City. “Material Litigation” means any action, suit, proceeding, inquiry or investigation against the City in any court or before any arbitrator of any kind or before or by any Governmental Authority, (i) if determined adversely to the City, may have a Material Adverse Effect, (ii) seek to restrain or enjoin any of the transactions contemplated by this Lease, or (iii) may adversely affect (A) the exclusion of the interest component of the Lease Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes, (B) the ability of the City to perform its obligations under this Lease, or (C) the operation of the Water System. “Metropolitan Water Agreement” means that certain 1998 San Juan Basin DeSalter Agreement between the Metropolitan City of Southern California (“MWD”), the Municipal City of Orange County (“MWDOC”), and the San Juan Basin Authority dated December 4, 1998, as amended effective October 15, 2002 by that certain First Amendment thereto by and between MWD, MWDOC, the Authority and the City. “Net Insurance Proceeds” means any insurance or condemnation proceeds paid with respect to the Project remaining after payment therefrom of all expenses incurred in the collection thereof. “Net Revenue Bond Indentures” means that certain Indenture, dated as of September 1, 2014, by and between the City and The Bank of New York Mellon Trust Company, N.A., as Trustee and any other indenture or trust agreement providing for the issuance of Net Revenue Bonds. “Net Revenue Bonds” means the City of San Juan Capistrano Water Revenue Refunding Bonds, Series 2014A, and any other bonds issued by the City payable from Net Revenues therewith and with the payment of Net Revenue Installment Payments. “Net Revenue Installment Agreements” means that certain Installment Purchase Agreement, dated as of April 1, 2009, by and between the City and the Financing Authority, and any other agreement providing for the payment by the City of Net Revenue Installment Payments from Net Revenues on a parity therewith and with the payment of principal and interest on Net Revenue Bonds. 6 OHSUSA:754110187.8 “Net Revenue Installment Payments” means the installment payments payable by the City from the net revenues of the Water System pursuant to a Net Revenue Installment Agreement. “Net Revenue Obligation Documents” means, collectively, Net Revenue Installment Agreements and Net Revenue Bond Indentures. “Net Revenue Obligations” means the obligations of the City to pay Net Reserve Bonds and Net Reserve Installment Payments. “Net Revenues” means the amounts of Revenues of the Water System remaining after payment therefrom of the Maintenance and Operation Costs. “Operating Lease” means that certain Operating Lease by and between the City and the Authority as amended and supplemented from time to time in accordance with its terms. “Original Lease” means that certain Lease Agreement, dated as of December 1, 2002, by and between the Authority and the City as successor to the Water District, which is being amended and restated by this Lease Agreement. “Original Purchaser” means TPB Investments, Inc., a wholly-owned subsidiary of Western Alliance Bank, an Arizona corporation, the first purchaser of the Bonds upon their delivery by the Trustee. “Parity Obligations” means any obligations secured on a parity with the Lease Payments which are incurred in accordance with the provisions of Section 4.11 hereof. “Permitted Encumbrances” means as of any particular time: (1) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to Section 7.7(c) hereof, permit to remain unpaid; (2) the Trust Agreement as it may be amended from time to time; (3) this Lease Agreement and the Property Lease as they may be amended from time to time; (4) any right or claim of any mechanic, laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law to the extent permitted under Section 7.8(b) hereof; (5) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date; (6) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Closing Date, to which the Authority and the City consent in writing and which the City certifies will not materially impair the use of the Project or real property substituted for the Project, as the case may be; and (7) liens created in connection with the issuance of Parity Obligations. “Project” means that Property and the improvements thereon. “Property” means the real property described from time to time in Exhibit A hereto. “Property Lease” means the Property Lease between the City, as lessor, and the Authority, as lessee, as amended and supplemented from time to time in accordance with its terms. 7 OHSUSA:754110187.8 “Purchase Option Price” means the amount to be paid pursuant to this Lease Agreement, as the same may be amended, less the amount of any funds held by the Trustee which are available for redemption of the Bonds plus interest on such principal to the redemption date and premium, if any. “Revenue Fund” means the enterprise fund of the City currently identified as the “Water Enterprise Fund” of the City, any successor fund or funds, and such other funds as the City Council shall establish as a part of the Revenue Fund which shall constitute the Revenue Fund maintained pursuant to this Lease Agreement and the “Revenue Fund” maintained pursuant to the Net Revenue Obligation Documents. “Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the Water 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 the 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 Water System; (2) the earnings on and income derived from the investment of amounts described in clause (1) above and from City reserves; (3) the proceeds derived by the City directly or indirectly from the sale, lease or other disposition of a part of the Water System; and (4) payments under Metropolitan Water Agreement; but excluding (a) customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the City; (b) any proceeds of taxes or assessments restricted by law to be used by the City to pay bonds or other obligations heretofore or hereafter issued. “S&P” or “Standard & Poor’s” means Standard & Poor’s Ratings Group, a municipal bond rating service with offices in New York, New York. “State” means the State of California. “Term” means the duration of this Lease Agreement pursuant to the provisions of Section 4.2 hereof. “Transaction Documents” means, collectively, this Lease Agreement, the Trust Agreement and the Property Lease. 8 OHSUSA:754110187.8 “Trust Agreement” means the Trust Agreement relating to the San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014, dated as of the date hereof entered into by and among the City, the Authority and the Trustee and any and all Supplemental Trust Agreements. “Trustee” means The Bank of New York Mellon Trust Company, N.A., and its successor or successors which may at any time be substituted in its place pursuant to the provisions of the Trust Agreement. “Water System” means the entire water system of the City, including, without limitation, all real property and buildings, and including all improvements, works or facilities assessed, controlled or operated by the City to provide water, as such improvements, works or facilities now exist, together with all improvements and extensions to said water system later acquired, constructed or organized. Section 1.2 Exhibits. The following Exhibits are attached to, and by reference made a part of, this Lease Agreement: Exhibit A: Description of the Property. Exhibit B: Schedule of Lease Payments. ARTICLE II 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) Due Organization and Existence. The City is a municipality duly organized and existing under and by virtue of the laws of the State, with the power and authority to own, lease and acquire real and personal property and equipment and to incur the obligations hereunder. (b) Authorization; Enforceability. The laws of the State authorize the City to enter into this Lease Agreement and to enter into the transactions contemplated by and to carry out its obligations under this Lease Agreement, and the City has duly authorized and executed this Lease Agreement. This Lease Agreement constitutes the legal, valid and binding obligation of the City, enforceable in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. (c) No Conflicts or Default; No Liens or Encumbrances. Neither the execution and delivery of this Lease Agreement, nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby, 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 is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any 9 OHSUSA:754110187.8 lien, charge or encumbrance whatsoever upon any of the property or assets of the City or upon the Project, except for Permitted Encumbrances. (d) Execution and Delivery. The City has duly authorized and executed this Lease Agreement in accordance with the laws of the State. (e) No Consent Required. There is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory authority having jurisdiction over the City required for the consummation by the City of the transactions contemplated by this Lease Agreement. (f) No Litigation. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public office or body, pending or threatened against the City affecting the existence of the City or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the City’s covenant to make Lease Payments or in any way contesting or affecting the validity or enforceability of this Lease Agreement or contesting the powers of the City or its authority to enter into, adopt or perform its obligations under this Lease Agreement. (g) Indemnification of Authority. To the extent permitted by law, the City covenants to defend, indemnify and hold harmless the Authority and its assigns (including specifically the Trustee), directors and employees (collectively, the “Indemnified Party”) against any and all losses, claims, damages or liabilities, joint or several, including fees and expenses incurred in connection therewith, to which such Indemnified Party may become subject under any statute or at law or in equity or otherwise in connection with the transactions contemplated by this Lease Agreement or the Trust Agreement, and shall reimburse any such Indemnified Party for any legal expenses reasonably incurred by it in connection with defending any actions, insofar as such losses, claims, damages, liabilities or actions arise out of the transactions contemplated by this Lease Agreement, the Trust Agreement or the Property Lease. In particular, without limitation, to the extent permitted by law, the City shall and hereby agrees to indemnify and save the Indemnified Party harmless from and against all claims, losses and damages, including legal fees and expenses, to the extent arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on, the Project by the City, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Lease Agreement or the Trust Agreement, (iii) any act of negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Project, (iv) any act of negligence of any assignee or sublessee of the City with respect to the Project or (v) the acceptance of, and performance of the duties of the Trustee under the Trust Agreement. No indemnification is made under this Section or elsewhere in this Lease Agreement for claims, losses or damages, including legal fees and expenses arising out of the willful misconduct, negligent acts or omissions, or breach of duty under this Lease Agreement, the Property Lease or the Trust Agreement by the Authority, its officers, directors, agents, employees, successors or assigns (including specifically the Trustee). The obligations of the City under Section 4.14 and this Section shall survive the resignation or removal of the Trustee and payment of the Bonds and termination of this Lease. 10 OHSUSA:754110187.8 (h) General Tax and Arbitrage Covenant. The City hereby covenants that, notwithstanding any other provision of this Lease Agreement, it shall not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of interest with respect to the Bonds under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”). The City shall not, directly or indirectly, use or permit the use of proceeds of the Bonds or the Project or any portion thereof, by any person other than a governmental unit (as such term is used in Section 141 of the 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 interest on the Bonds. The City shall not take any action, or fail to take any action, if any such action or failure to take action would cause the Bonds to be “private activity bonds” within the meaning of Section 141 of the Code, and in furtherance thereof, shall not make any use of the proceeds of the Bonds or the Project, or any portion thereof, or any other funds of the City, that would cause the Bonds to be “private activity bonds” within the meaning of Section 141 of the Code. To that end, so long as any Bonds are outstanding, the City, with respect to such proceeds and the Project and such other funds, will comply with applicable requirements of the Code and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code, to the extent such requirements are, at the time, applicable and in effect. The City shall not, directly or indirectly, use or permit the use of any proceeds of any Bonds or other funds of the City, or take or omit to take any action, that would cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code. To that end, the City shall comply with all requirements of Section 148 of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent such requirements are, at the time, in effect and applicable to the Bonds. The City shall not make any use of the proceeds of the Bonds or any other funds of the City, or take or omit to take any other action, that would cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code. (i) The Lease Payments as due and payable pursuant to Exhibit A hereto, do not in any year exceed the Maintenance and Operations Cap and, except as Lease Payments exceed the Maintenance and Operations Cap in any year due to acceleration thereof, shall constitute Maintenance and Operations Costs. (j) The City reasonably believes that sufficient funds can be obtained to make all Lease Payments and all other amounts required to be paid pursuant to this Lease Agreement. (k) The City has never non-appropriated or defaulted under any of its payment or performance obligations or covenants, either under any financing lease of the same general nature as this Lease Agreement, or under any of its bonds, notes, or other debt obligations. (l) The City is the owner in fee of title to the Property. No lien or encumbrance on the Property materially impairs the City’s use of the Property for the purposes for which it is, or may reasonably be expected to be, held. 11 OHSUSA:754110187.8 (m) The Property is not located in a 100-year flood zone and has never been subject to material damage from flooding. (n) The Project complies with all applicable restrictive covenants, zoning ordinances, building laws and other Applicable Laws (including without limitation, the Americans with Disabilities Act, as amended). 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; Enforceability. The Authority is a joint powers authority, duly organized, existing and in good standing under and by virtue of the laws of the State, has the power to enter into this Lease Agreement, the Property Lease and the Trust Agreement; is possessed of full power to own and hold real and personal property, and to lease and sell the same; and has duly authorized the execution and delivery of this Lease Agreement, the Property Lease and the Trust Agreement. This Lease Agreement, the Property Lease and the Trust Agreement constitute the legal, valid and binding obligations of the Authority, enforceable in accordance with their respective terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. (b) No Encumbrances. The Authority will not pledge the Lease Payments or Additional Payments or other amounts derived from the Project or from its other rights under this Lease Agreement or the Property Lease, except for Permitted Encumbrances and except as provided under the terms of this Lease Agreement and the Trust Agreement. (c) No Conflicts or Defaults; No Liens or Encumbrances. Neither the execution and delivery of this Lease Agreement, the Property Lease or the Trust Agreement 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 the Joint Exercise of Powers Agreement of the Authority or any restriction or any agreement or instrument to which the Authority is now a party or by which the Authority 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 or upon the Project, except for Permitted Encumbrances. (d) No Consent Required. There is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory authority having jurisdiction over the Authority required for the consummation by the Authority of the transactions contemplated by this Lease Agreement, the Trust Agreement or the Property Lease. (e) No Litigation. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public office or body, pending or threatened against the Authority affecting the existence of the Authority or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the Authority’s receipt of, or assignment to the Trustee of, Lease Payments or in any way contesting or affecting the validity or enforceability of this Lease Agreement, the Trust Agreement or the 12 OHSUSA:754110187.8 Property Lease or contesting the powers of the Authority or its authority to enter into, adopt or perform its obligations under this Lease Agreement, the Trust Agreement or the Property Lease or any amendment or supplement thereto, wherein an unfavorable decision, ruling or finding would materially adversely affect the Lease Agreement, the Trust Agreement or the Property Lease, or in which a final adverse decision could materially adversely affect the operations of the Authority. (f) Execution and Delivery. The Authority has duly authorized and executed this Lease Agreement, the Property Lease and the Trust Agreement in accordance with the Constitution and laws of the State. (g) General Tax and Arbitrage Covenant. The Authority covenants that, notwithstanding any other provision of this Lease Agreement, it will make no use of the proceeds of the Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action that may cause the obligations of the City under this Lease Agreement to be “arbitrage bonds” subject to federal income taxation by reason of Section 148 of the Code. In addition, the Authority covenants that it will not make any use of the proceeds of the obligations provided herein or in the Trust Agreement or of any other funds of the City or the Authority or take or omit to take any other action that would cause such obligations to be “private activity bonds” within the meaning of Section 141 of the Code, or “federally guaranteed” within the meaning of Section 149(b) of the Code. To that end, so long as necessary to maintain the exclusion from gross income for federal income tax purposes of the interest portion of the Lease Payments, the Authority will comply with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code, to the extent that such requirements are, at the time, applicable and in effect. (h) Maintenance of Corporate Existence. To the extent permitted by law, the Authority agrees that during the Term it will maintain its existence as a public entity, will not dissolve or otherwise dispose of all or substantially all of its assets. ARTICLE III APPLICATION OF BONDS PROCEEDS Section 3.1 Deposit of Bond Proceeds. On the Closing Date, the Authority agrees to deposit to the Refunding Account created under the Trust Agreement (the “Refunding Account”) the proceeds of the Authority’s sale of the Bonds in the amount specified in Section 4.1 of the Trust Agreement. Section 3.2 Redemption of 2002 Bonds. On the Closing Date, the Authority agrees to cause the Trustee to transfer amounts in the Refunding Account to the Escrow Agent for application to the redemption of the 2002 Bonds as provided in the Escrow Agreement. 13 OHSUSA:754110187.8 ARTICLE IV AGREEMENT OF LEASE; TERM OF LEASE; LEASE PAYMENTS Section 4.1 Lease. The Authority hereby leases the Property to the City upon the terms and conditions set forth herein. Section 4.2 Term. The Term of this Lease Agreement shall commence on the Closing Date and shall end on December 1, 2035, unless extended pursuant to Section 4.3 hereof (as so extended the “End of Term”), or unless terminated prior thereto upon the earlier of the following events: (a) Payment of All Lease Payments. The payment by the City of all Lease Payments required under Section 4.4 hereof and any Additional Payments required under Section 4.14 hereof; or (b) Prepayment. The optional prepayment of all Lease Payments in accordance with Section 10.3 hereof and the payment of all Additional Payments due through such prepayment date. Section 4.3 Extension of Lease Term. If on December 1, 2035 the Bonds shall not be fully paid, then the Term shall be extended until all Bonds shall be fully paid, except that the Term shall in no event be extended beyond December 1, 2045. Section 4.4 Lease Payments. (a) Time and Amount. Subject to the provisions of Article X hereof (regarding prepayment of Lease Payments), the City agrees to pay to the Authority, its successors and assigns, as annual rental for the use and possession of the Project, the Lease Payments to be due and payable in arrears on the days specified in Exhibit B hereto or if such a day is not a Business Day then on the next preceding Business Day (each such day a “Lease Payment Date”). (b) Priority Payment. The City hereby unconditionally pledges the Revenues to the payment of the Lease Payments on a senior basis to its pledge of Net Revenues to the payment of Net Revenue Obligations up to the Maintenance and Operation Cap and unconditionally pledges Net Revenues to the payment of Lease Payments on a parity to its pledge of Net Revenues to the payment of Net Revenue Obligations. The City covenants to make no changes in the Net Revenue Obligation Documents or otherwise that impairs the priority of such pledge and such priority shall survive any partial payment or defeasance of the Net Revenue Obligations. (c) Credits. Any amount held in the Debt Service Payment Account on any Lease Payment Date (other than amounts required for payment of past due principal or interest with respect to any Bonds that have matured or been called for redemption and have not been presented for payment or amounts which have been paid with respect to a prior Lease Payment Date but not yet distributed to Bond Owners) shall be credited toward the Lease Payment then due and payable. No Lease Payment need be made on any Lease Payment Date if the amounts 14 OHSUSA:754110187.8 then held in the Debt Service Payment Account (other than those amounts excluded under the prior sentence) are at least equal to the cumulative total of Lease Payments then required to be paid. (d) Rate on Overdue Payments. In the event the City should fail to make any Lease Payment required by this Section 4.4, or any portion of any such Lease Payment, the Lease Payment or portion in default shall continue as an obligation of the City until the amount in default shall have been fully paid, and the City agrees to pay the same with interest thereon, to the extent permitted by law, from the date such amount was originally payable at the rate equal to the highest stated interest rate on any of the Bonds as stated in the Trust Agreement. Section 4.5 No Withholding. Notwithstanding any dispute between the Authority and the City, the City shall make all Lease Payments when due and shall not withhold any Lease Payment pending the final resolution of such dispute. Section 4.6 Obligation Absolute. The obligation of the City to make the Lease Payments is absolute and unconditional and until such time as the Lease Payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Article X), the City will not discontinue or suspend any Lease Payments or Additional Payments required to be made by it under this Lease Agreement when due, whether or not the Water System or any part thereof is operating or operable or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever. Section 4.7 Budget and Appropriation. The City covenants to take such action as may be necessary to include all Lease Payments and Additional Payments due hereunder in its proposed annual budget and its final adopted annual budget and to make the necessary appropriations for any amount of Lease Payments and Additional Payments to be paid therefor. Section 4.8 Revenue Fund. The City agrees to maintain the Revenue Fund. All Revenues shall be deposited when and as received by the City in the Revenue Fund. The City shall transfer moneys from the Revenue Fund to pay Maintenance and Operation Costs, including without limitation the Lease Payments in accordance with Section 4.4 of this Lease Agreement and lease payments securing Parity Obligations, if any. Any Revenues in excess of the amounts budgeted, as required, for the payment of the Lease Payments and Maintenance and Operation Costs shall constitute surplus revenues in the Revenue Fund. After all covenants contained herein have been duly performed each year, and provided that there are no amounts then owing to Authority or the Trustee by the City, such surplus revenues may be used for: (1) payment of Net Revenue Obligations, (2) extensions and betterments of the Water System; or (3) any lawful purpose of the City. Section 4.9 Rates and Charges. The City shall, to the maximum extent permitted by law, fix, prescribe and collect rates and charges for water service which will be at least sufficient to yield during each Fiscal Year Revenues equal to one hundred percent (100%) of Maintenance and Operation Costs paid in the immediately preceding Fiscal Year, provided that such costs shall include the Lease Payments payable in such Fiscal Year, plus Additional Payments payable 15 OHSUSA:754110187.8 in such Fiscal Year. The City may make adjustments from time to time in such rates and charges and may make such classification thereof as it deems necessary, but shall not reduce the rates and charges then in effect unless the Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements of this rate covenant. Section 4.10 No Priority for Additional Obligations. The City covenants that no additional bonds, notes or obligations shall be issued or incurred by the City which will have any priority in payment out of the Revenues over the Lease Payments. Section 4.11 Limits on Additional Debt. The City covenants that, except for obligations issued to prepay all or a portion of the Lease Payments, it will issue obligations payable from Revenues on a parity basis with the Lease Payments only if the City delivers to the Trustee prior to the issuance of any Parity Obligations a certificate certifying that all of the following additional conditions are met: (a) The City is not in default under the terms of this Lease Agreement; and (b) the Revenues as shown by the books of the City for any twelve (12) consecutive calendar months selected by the City within the twenty-four (24) calendar months ending prior to the incurring of such additional obligations shall have amounted to at least one hundred percent (100%) of Maintenance and Operation Costs, including without limitation Lease Payments, for such twelve (12) calendar month period; for purposes of preparing the certificate or certificates described above, the City may rely upon financial statements prepared by the City, which have not been subject to audit by an Independent Certified Public Accountant if audited financial statements for the Fiscal Year or period are not available; (c) the estimated Revenues for the twelve (12) calendar months following the date of incurring such Parity Obligations will be at least equal to one hundred percent (100%) of all Maintenance and Operation Costs, including without limitation Lease Payments projected to be paid in the next succeeding Fiscal Year and payments in the next succeeding Fiscal Year on Parity Obligations to be outstanding immediately after the incurring of such Parity Obligations, and the Additional Payments paid in the prior Fiscal Year as of the date of incurring of such Parity Obligations; (d) for so long as any Net Revenue Bonds or Net Revenue Installment Payment obligations are outstanding, the Lease Payments plus lease payments securing all Parity Obligations, including without limitation the Parity Obligations proposed to be issued, do not in the aggregate exceed the Maintenance and Operation Cap. For purposes of the computations to be made as described in (b) above, the determination of the Revenues: (i) may take into account any increases in rates and charges which relate to the Water System and shall take into account any reduction in such rates and charges, which will be effective prior to or at the time of incurring such proposed additional obligations; 16 OHSUSA:754110187.8 (ii) may take into account an allowance for any estimated increase in such Revenues from any revenue producing additions to or improvements or extensions of the Water System to be made with the proceeds of such additional obligations or with the proceeds of obligations previously issued, as shown by a certificate of the City; and (iii) for the period contemplated by (c) above, Maintenance and Operation Costs of the Water System shall be deemed to be the same as for the period for which a calculation is done pursuant to (b) above, but adjusted, if deemed necessary by the City, for any increased Maintenance and Operation Costs of the Water System which are, in the judgment of the City, essential to maintaining and operating the Water System. Nothing herein shall preclude the City from issuing obligations which are subordinate to the payment of the Lease Payments. In the event the additional indebtedness bears interest at a variable rate, for purposes of the rate covenant (Section 4.9 above) and determining compliance with the tests for issuance of additional indebtedness under this Section 4.11, debt service payable on variable rate additional indebtedness shall be computed assuming such additional indebtedness bears interest at the rate quoted in The Bond Buyer 25 Revenue Bond Index for the last week of the month preceding the date when the City incurs such additional indebtedness, as published in The Bond Buyer, plus one-half of one percent (0.50%), or if such index is no longer published, another similar index to be selected by the Authority, or if the Authority fails to select a replacement index, an interest rate equal to eighty percent (80%) of the yield for outstanding United States Treasury bonds having a maturity equivalent to that of the additional indebtedness proposed to be incurred, or if there are no such Treasury bonds having equivalent maturities, eighty percent (80%) of the lowest prevailing prime rate of any of the five largest commercial banks in the United States ranked by assets. Section 4.12 Assignment of Lease Payments. Certain of the Authority’s rights under this Lease Agreement, including the right to receive and enforce payment of the Lease Payments to be made by the City hereunder, have been absolutely assigned by the Authority to the Trustee, subject to certain exceptions, pursuant to the Trust Agreement, to which assignments the City hereby consents. The Authority hereby directs the City, and the City hereby agrees, to pay to the Trustee at the Trustee’s corporate trust office, or to the Trustee at such other place as the Trustee shall direct in writing, all Lease Payments or prepayments thereof payable by the City hereunder. The Authority will not assign or pledge the Lease Payments or other amounts derived from the Project or from its other rights under this Lease Agreement except as provided under the terms of this Lease Agreement and the Trust Agreement, or its duties and obligations except as provided under the Trust Agreement. Section 4.13 Use and Possession. The total Lease Payments and Additional Payments due in any Fiscal Year shall be for the use and possession of the Project for such Fiscal Year. During the Term of this Lease Agreement, the City shall be entitled to the exclusive use of the Project subject only to the Permitted Encumbrances. Section 4.14 Additional Payments. In addition to the Lease Payments, the City shall also pay such amounts (“Additional Payments”) as shall be required for the payment of all 17 OHSUSA:754110187.8 administrative costs of the Authority relating to the Project, including without limitation all expenses including usual and ordinary legal fees and expenses, assessments, compensation and indemnification of the Authority and the Trustee, any amounts required to be rebated to the federal government in order to comply with the provisions of Section 148 of the Code, any amounts required to be paid to the Trustee to replenish the Reserve Account to the Reserve Requirement pursuant to Section 4.4(f) of the Trust Agreement, fees under any Alternative Reserve Account Security instruments, taxes of any sort whatsoever payable by the Authority as a result of its lease of the Project or undertaking of the transactions contemplated herein or in the Trust Agreement, fees of auditors, accountants, attorneys or engineers, insurance premiums required by Article V hereof, items required by Section 7.7 hereof and all other necessary administrative costs of the Authority or charges required to be paid by it in order to comply with the terms of the Bonds or of the Trust Agreement or to pay or indemnify the Trustee and its officers and directors. All such Additional Payments to be paid hereunder shall be paid when due directly by the City to the respective parties to whom such Additional Payments are owing. Section 4.15 Net-Net-Net Lease. This Lease Agreement shall be deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Lease Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever, except as expressly provided herein. Section 4.16 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 correcting any inadequate or incorrect description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease Agreement. Section 4.17 Financial Statements and Budgets. Within nine (9) months following the end of each Fiscal Year of the City during the Term of this Lease, the City shall furnish or cause to be furnished to the Owner of the Bonds, a copy of its audited financial statements for such Fiscal Year. The City shall furnish or cause to be furnished to the Owner of the Bonds a copy of its annual budgets and any then-available interim budget updates or modifications for each Fiscal Year of the City during the Term of this Lease within thirty (90) days of the end of each Fiscal Year. The City shall furnish or cause to be furnished to the Owner of the Bonds a copy of its unaudited financial results for such Fiscal Year within one hundred twenty (120) days following the end of each Fiscal Year. The City hereby agrees to provide the Owner of the Bonds with such other information as may be reasonably requested by the Owner of the Bonds. Any audited financial statements furnished to the Owner of the Bonds shall be prepared in accordance with generally accepted accounting principles, consistently applied, and shall fairly present the City’s financial condition as of the date of the statements. Section 4.18 Notices. During the Term of this Lease, the City shall provide to the Owner of the Bonds: (i) immediate notice by telephone, promptly confirmed in writing, of any event, action or failure to take any action which constitutes an event of default under this Lease, together with a detailed statement by a representative of the City of the steps being taken by the City to cure the effect of such Event of Default, (ii) prompt written notice of any Material Litigation or event causing a Material Adverse Effect, or any investigation, inquiry or similar 18 OHSUSA:754110187.8 proceeding by any Governmental Authority, and (iii) with reasonable promptness, such other information respecting the City, and the operations, affairs and financial condition of the City as the Owner of the Bonds may from time to time reasonably request. Section 4.19 Litigation. As of the Closing Date, other than as disclosed to the Original Purchaser, there was no action, suit, proceeding or investigation before or by any court, public board or body pending against the City or, to the best knowledge of the City, threatened against the City, (i) in any way questioning the titles of the officers of the City to their respective offices; (ii) seeking to restrain or enjoin the adoption of the resolution of the City Council authorizing the execution by the City of this Lease or the execution and delivery of or in any way contesting or affecting the validity of the Trust Agreement, this Lease or the Property Lease; (iii) wherein an unfavorable decision, ruling or finding would have a material adverse impact upon the ability of the City to perform its obligations under the Trust Agreement, the Lease or the Property Lease, and (iv) questioning the proceedings taken for the issuance of the Bonds, or restraining the power and the authority of the City to collect the Revenues, or affecting or contesting in any material way the City’s ability to impose rates and charges for the use of the Water System; nor, to the best knowledge of the City, was there any basis for any such action, suit, proceeding or investigation. Section 4.20 Financial Statements. The consolidated financial statements as of and for the year ended June 30, 2013, of the City, including its balance sheet as of such dates, fairly present the financial position of the Water System as of such date and the results of the operations of the Water System for such period, and have been prepared in accordance with generally accepted accounting principles consistently applied except as stated in the notes thereto. Except as disclosed to the Original Purchaser, since June 30, 2013, as of the Closing Date there had been no material adverse change in such position or in the operations, properties or condition (financial or otherwise) of the Water System. Section 4.21 Accuracy of Information. As of the Closing Date, all information, reports and other papers and data with respect to the City and the Water System furnished to the Original Purchaser were, at the time the same were so furnished, correct in all material respects. Any financial, budget and other projections furnished to the Purchaser as of the Closing Date were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair and reasonable in light of conditions existing at the time of delivery of such financial, budget or other projections, and represented, and as of the Closing Date, represented, the City’s best estimate of the future financial performance of the Water System. 19 OHSUSA:754110187.8 ARTICLE V INSURANCE AND CONDEMNATION Section 5.1 Insurance. The City will procure and maintain insurance on the Project with responsible insurers at reasonable cost in such amount and against such risks as are usually covered in connection with facilities similar to the Project, but not less than the lesser of the full replacement cost or the principal amount of Bonds then outstanding, so long as such insurance is available from reputable insurance companies. In the event of any damage to or destruction of the Project caused by the perils covered by such insurance, the Net Insurance Proceeds thereof shall be applied in accordance with Article VI hereof. The City shall provide adequate reserves to cover the amount of any deductible provisions of the insurance required to be maintained pursuant to this Section 5.1. Section 5.2 Cooperation. The Authority shall cooperate fully with the City at the expense of the City in filing any proof of loss with respect to any insurance policy maintained pursuant to this Article and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Project or any portion thereof. 20 OHSUSA:754110187.8 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1 Application of Net Insurance Proceeds. (a) Deposit in Insurance and Condemnation Account. The City and/or the Authority shall transfer to the Trustee any Net Insurance Proceeds received by the City and/or Authority in respect of any insurance required by Section 5.1 hereof or in the event of any taking by eminent domain or condemnation with respect to the Project, for deposit in the Insurance and Condemnation Account by the Trustee in accordance with the Trust Agreement. (b) Disbursement for Replacement or Repair of the Project. Upon receipt of the certification described in paragraph (i) below and the requisition described in paragraph (ii) below, the parties hereto agree that the Trustee shall disburse moneys in the Insurance and Condemnation Account to the person, firm or corporation named in the requisition. (i) Certification. The Authorized Representative of the City must provide to the Authority and the Trustee a certificate stating that the Net Insurance Proceeds available for such purpose, together with other funds, if any, supplied by the City for such purpose in its sole and absolute discretion, are sufficient to restore the Project to a value greater than or equal to the value thereof prior to the insured event, and (ii) Requisition. An Authorized Representative of the City must state with respect to each payment to be made (1) the requisition number, (2) the name and address of the person, firm or corporation to whom payment is due, (3) the amount to be paid and (4) that each obligation mentioned therein has been properly incurred, is a proper charge against the Insurance and Condemnation Account, has not been the basis of any previous withdrawal therefrom, and specifying in reasonable detail the nature of the obligation. Any balance of the Net Insurance Proceeds remaining after such replacement or repair has been completed as evidenced by a certificate of the City shall be disbursed as provided in subsection (c) below. In the event and to the extent the requirements of subsections (b)(i) and (b)(ii) above are satisfied, the City shall begin such reconstruction, repair or replacement promptly after such damage or destruction shall occur, and shall continue and properly complete such reconstruction, repair or replacement as expeditiously as possible, and shall pay out of such Net Insurance Proceeds and funds provided by it (if any) in its sole discretion all costs and expenses in connection with such reconstruction, repair or replacement so that the same shall be completed and the Project shall be free and clear of all claims and liens except as provided in Section 7.8. (c) Disbursement for Prepayment. If the Authorized Representative of the City notifies the Trustee in writing of the City’s determination that the certification provided in Section 6.1(b)(i) hereof cannot be made or replacement or repair of any portion of the Project is not economically feasible or in the best interest of the City, Net Insurance Proceeds will be applied to the prepayment of Lease Payments, provided that if available Net Insurance Proceeds 21 OHSUSA:754110187.8 exceed the amount necessary to prepay enough Lease Payments and any other amounts due or to become due under the Lease Agreement or the Trust Agreement, such that the value of the remaining portion of the Project is equal to or greater than the value of such portion of the Project prior to the insured event, excess proceeds shall be available to be expended by the City for any lawful purpose. Section 6.2 Eminent Domain Proceeds. If all or any part of the Project shall be taken by eminent domain proceedings rendering the Project substantially unavailable for use by the City, the Net Insurance Proceeds thereof shall be applied by the City to the prepayment of Lease Payments as provided in Article X and to such other fund or account as may be appropriate and used for the retirement of Bonds. ARTICLE VII COVENANTS WITH RESPECT TO THE PROJECT Section 7.1 Use of the Project. The City represents and warrants that it has an immediate need for all of the Project, which need is not expected to be temporary or to diminish in the foreseeable future. Section 7.2 Leasehold Interest in the Project. (a) Authority Holds Leasehold Interest During Term. During the Term, the Authority shall hold a leasehold interest in the Project pursuant to the Property Lease. The Authority shall take any and all actions reasonably required, including but not limited to executing and filing any and all documents, reasonably required to maintain and evidence the Authority’s leasehold interest in the Project at all times during the Term. (b) Leasehold Interest Transferred to Authority at End of Term. Upon the expiration of the Term as provided in Section 4.2, the City’s leasehold interest in the Project pursuant to this Lease shall terminate, provided that, concurrent with such termination, the leasehold interest of the City pursuant to the terms of the Operating Lease shall become effective without the necessity of any additional document of transfer. Section 7.3 Option to Prepay Lease Payments. The City may exercise an option to prepay all or a portion of the Lease Payments in accordance with Article X hereof and, by prepaying Lease Payments in the amounts necessary to cause the termination of the Term as provided in Section 4.2(b) (the “Purchase Option Price”), terminate the Authority’s leasehold interest in the Property under the Property Lease. Section 7.4 Quiet Enjoyment. Subject only to Permitted Encumbrances, during the Term the Authority shall provide the City with quiet use and enjoyment of the Project, and the City shall during such Term peaceably and quietly have and hold and enjoy the Project, without suit, trouble or hindrance from the Authority, or any person or entity claiming under or through the Authority except as expressly set forth in this Lease Agreement. The Authority will, at the request of the City, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority shall have the right of access to the Project as provided in Section 7.6. 22 OHSUSA:754110187.8 Section 7.5 Installation of City’s Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon any portion of the Project. All such items shall remain the sole personal property of the City, regardless of the manner in which the same may be affixed to such portion of the Project, in which neither the Authority nor the Trustee shall have any interest, and may be modified or removed by the City at any time; provided that the City shall repair and restore any and all damage to such portion of the Project resulting from the installation, modification or removal of any such items of equipment. Nothing in this Lease Agreement shall prevent the City from purchasing items to be installed pursuant to this Section 7.5, provided that no lien or security interest attaching to such items shall attach to any part of the Project. Section 7.6 Access to the Project. The City agrees that the Authority and the Authority’s successors or assigns shall have (1) the right at all reasonable times to enter upon the Project or any portion thereof to examine and inspect the Project, and (2) such rights of access to the Project as may be reasonably necessary to cause the proper maintenance of the Project in the event of failure by the City to perform its obligations hereunder. Section 7.7 Maintenance, Utilities, Taxes and Assessments. (a) Maintenance; Repair and Replacement. Throughout the Term of this Lease Agreement, as part of the consideration for the rental of the Project, all repair and maintenance of the Project shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Project resulting from ordinary wear and tear or want of care on the part of the City or any sublessee thereof. The City shall provide or cause to be provided all security service, custodial service, power, gas, telephone, light, heating and water, and all other public utility services for the Project. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Project. (b) Tax and Assessments; Utility Charges. The City shall also pay or cause to be paid all taxes and assessments, including but not limited to utility charges of any type or nature charged to the Authority or the City or levied, assessed or charged against any portion of the Project or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the Term of this Lease Agreement as and when the same become due. (c) Contests. The City may, at its expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom; provided that prior to such nonpayment it shall furnish the Authority and the Trustee with the opinion of an Independent Counsel to the effect that, by nonpayment of any such items, the interest of the Authority in such portion of the Project will not be materially endangered and that the Project will not be subject to loss or forfeiture or lien. Otherwise, the City shall promptly pay such taxes, assessments or charges or 23 OHSUSA:754110187.8 make provisions for the payment thereof in form satisfactory to the Authority. The Authority will cooperate fully in such contest, upon the request and at the expense of the City. Section 7.8 Modification of the Project. (a) Additions, Modifications and Improvements. The City shall, at its own expense, have the right to make additions, modifications or improvements to any portion of the Project if such additions, modifications or improvements are necessary or beneficial for the use of such portion of the Project. Such additions, modifications and improvements shall not in any way damage any portion of the Project or cause them to be used for purposes other than those authorized under the provisions of state and federal law or in any way which would impair the exclusion from gross income for federal income tax purposes of interest on the Bonds; and the Project, upon completion of any additions, modifications and improvements made pursuant to this Section 7.8, shall be of a value which is not less than the value of the Project immediately prior to the making of such additions, modifications or improvements. (b) No Liens. The City will not create, will use its best efforts to prevent the creation of, and will remove any mortgage or lien upon the Water System or any property essential to the proper operation of the Water System or to the maintenance of the Revenues, provided that, notwithstanding the foregoing, the City may encumber the Water System with mechanic’s or materialman’s liens, in connection with provision of administration buildings and operational facilities; and provided further, that the foregoing covenant shall not affect the Authority’s right to issue Parity Obligations in accordance with the Trust Agreement and this Lease Agreement. Except for Permitted Encumbrances, the City will not permit any mechanic’s or other lien to be established or remain against the Project for labor or materials furnished in connection with any additions, modifications or improvements made by the City pursuant to this Section 7.8; provided that if any such lien is established and the City shall first notify or cause to be notified the Authority of the City’s intention to do so, the City may in good faith contest any lien filed or established against the Project, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such lien, in form satisfactory to the Trustee of the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City. Section 7.9 Liens. Except as permitted by this Lease Agreement (including without limitation Section 7.8, Section 8.1 or Section 8.2 hereof), the City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, liens, charges, encumbrances or claims, as applicable, on or with respect to the Project, other than Permitted Encumbrances and other than the respective rights of the Authority and the City as herein provided. Except as expressly provided in this Article, the City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time; provided that the City may contest such lien or claim if it desires to do so, so long as such contest will not materially, adversely affect the rights of the City to the Project or the payment of Lease Payments hereunder. The City shall reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. 24 OHSUSA:754110187.8 Section 7.10 Authority’s Disclaimer of Warranties. THE AUTHORITY AND TRUSTEE MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE PROJECT OR ANY PORTION THEREOF. In no event shall the Authority or Trustee be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease Agreement, the Property Lease, or the Trust Agreement for the existence, furnishing, functioning or City’s use and possession of the Project. Section 7.11 City’s Right to Enforce Warranties of Manufacturers, Vendors or Contractors. The Authority hereby irrevocably appoints the City its agent and attorney-in-fact during the Term, so long as the City shall not be in default hereunder, to assert from time to time whatever claims and rights, including without limitation, warranty claims, claims for indemnification and claims for breach of any representations, with respect to the Project or the improvements to the Project which the Authority may have against any manufacturer, vendor or contractor, or any agents thereof. The City’s sole remedy for the breach of any such warranty, indemnification or representation shall be against the manufacturer, vendor or contractor with respect thereto, and not against the Authority, nor shall such matter have any effect whatsoever on the rights and obligations of the Authority with respect to this Lease Agreement, including the right to receive full and timely Lease Payments and to cause the City to make all other payments due hereunder. The City shall be entitled to retain any and all amounts recovered as a result of the assertion of any such claims and rights. The Authority shall, upon the City’s request and at the City’s expense, do all things and take all such actions as the City may request in connection with the assertion of any such claims and rights. The City expressly acknowledges that neither the Authority nor the Trustee makes, or has made, any representation or warranty whatsoever as to the existence or availability of such warranties of the manufacturer, vendor or contractor with respect to any of the improvements on the Project. Section 7.12 Reconstruction; Application of Net Insurance Proceeds. If any useful portion of the Project shall be destroyed or is damaged by fire or other casualty, or title to, or the temporary use of, such portion shall be taken under the exercise of the power of eminent domain, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair, reconstruction, restoration or replacement thereof, unless it is determined under the provisions of Section 6.1(c) hereof that such repair, reconstruction, restoration or replacement is not to be undertaken. Section 7.13 Against Encumbrances. The City will not make any pledge of or place any lien on the Revenues except as provided herein. The City may expend at any time, or from time to time, general fund revenues or may issue evidences of indebtedness or incur other obligations for any lawful purpose which are payable from and secured by a pledge of and lien on general fund revenues. Section 7.14 Against Sale or Other Disposition of Project. The City will not enter into any agreement or lease which impairs the operation of the Project or any part thereof necessary 25 OHSUSA:754110187.8 to secure adequate water services for the community. Any real or personal property which has become nonoperative or which is not needed for the efficient and proper operation of the improvements on the Project, or any material or equipment which has become worn out, may be sold if such sale will not impair the ability of the City to pay Lease Payments and if the proceeds of such sale are deposited in the Lease Payment Fund. Section 7.15 Payment of Claims. The City will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the Revenues or the funds or accounts created hereunder or on any funds in the hands of the City pledged to pay the Bonds prior or superior to the lien of the Trust Agreement or which might impair the security of the Bonds. Notwithstanding the foregoing, the City may pledge, encumber or otherwise secure its obligations with the Net Revenues; provided, that in all instances any such pledge, lien or security is wholly subordinate and junior to the obligations of the City contained in the Trust Agreement and this Lease Agreement. Section 7.16 Compliance with Lease. The City will neither take nor omit to take any action under any contract if the effect of such act or failure to act would in any manner impair or adversely affect the ability of the City to pay Lease Payments; and the City will comply with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied, required to be performed by it contained in all other contracts affecting or involving the Project, to the extent that the City is a party thereto. Section 7.17 Compliance with Governmental Regulations. The City will duly observe and comply with all valid regulations and requirements of any governmental authority relative to the operation of the improvements on the Project, or any part thereof, but the City shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith. ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1 Assignment by the Authority. Except as provided herein and in the Trust Agreement, the Authority will not assign this Lease Agreement, or any right, title or interest of the Authority in and to this Lease Agreement, to any other person, firm or corporation so as to impair or violate the representations, covenants and warranties contained in Section 2.2 hereof. Section 8.2 Assignment and Subleasing by the City. (a) Assignment. This Lease Agreement may not be assigned by the City unless the City receives (i) the written consent of the Owners of 100% of the outstanding Bonds and (ii) an opinion of Bond Counsel, stating that such assignment does not adversely affect the exclusion from gross income for federal income tax purposes or from State of California personal income taxes of interest on the Bonds. In the event that this Lease Agreement is assigned by the City, the obligation to make Lease Payments and perform the other covenants of the City hereunder shall remain the obligation of the City. 26 OHSUSA:754110187.8 (b) Sublease. The City may sublease any portion of the Project, with the prior written consent of the Authority, which consent shall not be unreasonably withheld, subject to all of the following conditions: (i) This Lease Agreement and the obligation of the City to make Lease Payments and perform the other covenants of the City hereunder shall remain obligations of the City; (ii) The City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease; (iii) No sublease by the City shall cause the Project to be used for a purpose other than a governmental or proprietary function authorized under the provisions of the laws of the State; and (iv) No sublease shall cause the interest on the Bonds to become subject to federal income taxes or State of California personal income taxes. Section 8.3 Amendments and Modifications. The terms of this Lease Agreement shall not be waived, altered, modified, supplemented or amended in any manner whatsoever except by written instrument signed by the Authority and the City, with the written consent of the Trustee subject to the same conditions as set forth in Sections 7.2, 7.3 and 7.4 of the Trust Agreement. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.1 Events of Default Defined. The following shall be “Events of Default” under this Lease Agreement and the terms “Events of Default” and “default” mean, whenever they are used in this Lease Agreement, any one or more of the following events: (a) Payment Default. Failure by the City to pay any Lease Payment or Additional Payment required to be paid hereunder on the date such payment is due hereunder. (b) Covenant Default. Failure by the City to observe and perform any warranty, covenant, condition or agreement on its part to be observed or performed herein or otherwise with respect hereto or in the Property Lease, other than as referred to in clause (a) of this Section, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority or the Trustee; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, then no Event of Default shall have occurred for a period of 60 days after such applicable period so long as corrective action is instituted by the City within the applicable period and diligently pursued until the default is corrected. Notwithstanding the foregoing, an Event of Default shall have occurred concurrent with any failure by the City to observe and perform any warranty, covenant, condition or agreement on its part to be observed or performed in Section 4.9, 4.10, 4.12, 5.1, 7.9, 7.13 or 7.14 hereof. 27 OHSUSA:754110187.8 (c) Bankruptcy or Insolvency. The filing by the City of a case in bankruptcy, or the subjection of any right or interest of the City under this Lease Agreement to any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the federal bankruptcy code, as amended, or under any similar act which may hereafter be enacted. (d) Breach of Representation. A material breach of any representation of the City or the Authority hereunder after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority or the Trustee. (e) Abandonment of Property. The City shall abandon any part of the Property or the Property. (f) Assignment of Lease. The assignment or transfer of the City’s interest in this Lease or any part thereof without the written consent of the Owners of 100% of the outstanding Bonds, either voluntarily or by operation of law or otherwise. (g) Invalidity of Lease. Any court of competent jurisdiction shall find or rule that this Lease is not a valid or binding agreement of the City. Section 9.2 Remedies on Default; No Acceleration. Whenever any Event of Default referred to in Section 9.1 hereof shall have happened and be continuing, it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or equity or granted pursuant to this Lease Agreement, including (a) by 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 which 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 City Council members, officers and employees to account as the trustee of an express trust. Notwithstanding the above, the Authority shall have no right to declare the unpaid Lease Payments to be due and payable immediately. Notwithstanding anything to the contrary contained in this Lease Agreement or any Transaction Document, none of the Authority, the Trustee or the Bondholders shall have the right hereunder to re-enter or re-let the Project under any circumstances unless otherwise permitted under the Transaction Documents. 28 OHSUSA:754110187.8 Notwithstanding anything contained herein, the Authority shall have no security interest in or mortgage on the Project, the Water System or other assets of the City and no default hereunder shall result in the loss of the Project, the Water System, or other assets of the City. Section 9.3 No Remedy Exclusive. Subject to the express limitation on remedies described in the last paragraph of Section 9.2 above, no remedy conferred herein 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 Lease 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 it shall not be necessary to give any notice, other than such notice as may be required in this Article or by law. Section 9.4 Agreement to Pay Attorneys Fees and Expenses. In the event either party to this Lease Agreement should default under any of the provisions hereof and the nondefaulting party should commence legal action or arbitration for the collection of moneys or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party the reasonable attorneys’ fees, court costs and legal expenses incurred by the nondefaulting party in such action or arbitration after payment of all fees and expenses of the Trustee. Section 9.5 No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Lease 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. Section 9.6 Trustee to Exercise Rights. Such rights and remedies as are given to the Authority under this Lease Agreement have been assigned by the Authority to the Trustee, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee subject to the terms of the Trust Agreement and this Lease Agreement. ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1 Security Deposit. Notwithstanding any other provision of this Lease Agreement, the City may, on any date, secure the payment of all unpaid Lease Payments as set forth in Exhibit B hereto by an irrevocable deposit by it with the Trustee of sufficient moneys and non-callable Investment Securities, issued by the United States of America and described in clause (A) of the definition thereof, the principal of and interest on which when due will provide money sufficient to pay all principal, prepayment premium, if any, and interest of such Lease Payments to and including their respective Lease Payment Dates or prepayment date or dates as the case may be. In such event, and provided that the City has made arrangements acceptable to the Trustee to pay any Additional Payments, all obligations of the City under this Lease 29 OHSUSA:754110187.8 Agreement, and all security provided by this Lease Agreement for said obligations, shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, Lease Payments from such deposit. On the date of said deposit the leasehold interest in the Project shall vest in the City automatically and without further action by the City or the Authority (except as provided herein); provided that the leasehold interest with respect to the Project shall be subject to the subsequent payment of all Lease Payments made from said deposit in full in accordance with the provisions hereof. Said deposit shall be deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with the provisions of this Lease Agreement. The Authority shall execute and deliver such further instruments and take such further action as may reasonably be requested by the City for carrying out the leasehold interest transfer of the Project. Section 10.2 Mandatory Prepayment From Net Insurance Proceeds. The City shall be obligated to prepay the Lease Payments in whole or in part on any date, from and to the extent of any Net Insurance Proceeds theretofore transferred to the Insurance and Condemnation Account and not otherwise applied to the Project in accordance with Article VI. The City and the Authority hereby agree that such proceeds shall be credited towards the City’s obligations hereunder with respect to the portion of the Project from which such proceeds were derived (except in the case of such prepayment of the Lease Payments in whole) such that approximately equal annual Lease Payments will prevail with respect to the Project following such prepayment. Section 10.3 Optional Prepayment. Subject to the terms and conditions of this Section, the Authority hereby grants an option to the City to prepay in whole or in part a principal portion of Lease Payments, in whole or in part in increments of $1.00 on any date on or after November 15, 2024 hereafter at a prepayment price equal to the principal portion to be redeemed. The City shall execute said option by giving written notice to the Trustee thereof at least 60 days prior to the date of redemption of Bonds from such prepayment and depositing with said notice cash in the minimum amount of (1) accrued interest on the principal portion of Lease Payments to be prepaid to the date of redemption of Bonds with the proceeds of such prepayment, plus (2) the principal portion of any Lease Payments to be prepaid, plus (3) the applicable prepayment premium described herein. Section 10.4 Effect of Prepayment. (a) In Whole. In the event that the City prepays all remaining Lease Payments pursuant to Section 10.3 or Section 10.2 hereof and has paid all Additional Payments due hereunder, the City’s obligations under this Lease Agreement shall thereupon cease and terminate, including but not limited to the City’s obligation to continue to pay Lease Payments hereunder. (b) In Part. In the event the City prepays less than all of the remaining principal portion of the Lease Payments pursuant to Section 10.2 or 10.3 hereof, the amount of such prepayment shall be applied to reduce the principal portion of the remaining Lease Payments corresponding to the resulting prepayment of the principal portion with respect to the Bonds. 30 OHSUSA:754110187.8 ARTICLE XI MISCELLANEOUS Section 11.1 Liability of City Limited. Notwithstanding anything contained herein, the City shall not be required to advance any money derived from any source of income other than the Revenues and the other funds provided herein for the payment of the Lease Payments or for the observance or performance of any agreements, conditions, covenants or terms contained herein; provided, that the City may advance funds for any such payment as long as such funds are derived from a source legally available for such purpose. The obligation of the City to make Lease Payments is a limited obligation of the City payable solely from the Revenues. Section 11.2 Waiver of Personal Liability. No City Council member, officer, agent or employee of the City or the City shall be individually or personally liable for the payment of Lease Payments hereunder or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law or by the Trust Agreement. Section 11.3 Notices. All notices, certificates or other communications hereunder to the Authority and City shall be sufficiently given and shall be deemed to have been received five (5) business days after deposit in the United States mail in certified form, postage prepaid, to the City or the Authority, as the case may be, at the following addresses: If to the City: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attention: City Manager and Chief Financial Officer/City Treasurer If to the Authority: San Juan Basin Authority 2611 Antonio Parkway Rancho Santa Margarita, CA 92688 Attention: Administrator If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 400 S. Hope Street, Ste 400 Los Angeles, CA 90071 Attention: Corporate Trust Department 31 OHSUSA:754110187.8 All notices, certificates and other communications to the Trustee shall be sufficiently given and shall be deemed to have been received five (5) days after deposit in the United States mail in registered or certified form, postage prepaid. Notices to the Trustee may be given initially either telephonically or by written telecommunication and shall then be confirmed in writing delivered by certified mail, return receipt requested. The Authority, the City and the Trustee, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. Section 11.4 Binding Effect. This Lease Agreement shall inure to the benefit of and shall be binding upon the Authority and the City and their respective successors and assigns (including without limitation the Trustee). Section 11.5 Severability. In the event any provision of this Lease Agreement shall be held invalid or unenforceable by a court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 11.6 Execution in Counterparts. This Lease Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 11.7 Applicable Law. This Lease Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.8 Captions. The captions or headings in this Lease Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Lease Agreement. Section 11.9 No Merger. The leasing by the Authority to the City of the Property shall not effect or result in a merger of the City’s leasehold estate pursuant to this Lease Agreement and pursuant to the Operating Lease and its fee estate as lessor under the Property Lease, and the Authority shall continue to have and hold a leasehold estate in said Property pursuant to the Property Lease throughout the term thereof and the term of this Lease Agreement. As to said Property, this Lease shall be deemed and constitute a sublease. Section 11.10 Amendment of Original Lease. This Lease Agreement amends the Original Lease as of November 1, 2014. A-1 OHSUSA:754110187.8 EXHIBIT A DESCRIPTION OF THE PROPERTY B-1 OHSUSA:754110187.8 EXHIBIT B SCHEDULE OF LEASE PAYMENTS Lease Payment Date Principal Payment Interest Payment Total Lease Payment 5/15/2015 $ 428,968.58 $ 428,968.58 11/15/2015 $ 1,109,882 391,950.98 1,501,832.98 5/15/2016 370,585.75 370,585.75 11/15/2016 1,187,143 370,585.75 1,557,728.75 5/15/2017 347,733.25 347,733.25 11/15/2017 1,232,473 347,733.25 1,580,206.25 5/15/2018 324,008.15 324,008.15 11/15/2018 1,281,398 324,008.15 1,605,406.15 5/15/2019 299,341.23 299,341.23 11/15/2019 1,328,794 299,341.23 1,628,135.23 5/15/2020 273,761.95 273,761.95 11/15/2020 1,384,603 273,761.95 1,658,364.95 5/15/2021 247,108.34 247,108.34 11/15/2021 1,433,622 247,108.34 1,680,730.34 5/15/2022 219,511.12 219,511.12 11/15/2022 1,489,567 219,511.12 1,709,078.12 5/15/2023 190,836.95 190,836.95 11/15/2023 1,548,915 190,836.95 1,739,751.95 5/15/2024 161,020.34 161,020.34 11/15/2024 1,606,548 161,020.34 1,767,568.34 5/15/2025 130,094.29 130,094.29 11/15/2025 567,401 130,094.29 697,495.29 5/15/2026 119,171.82 119,171.82 11/15/2026 588,996 119,171.82 708,167.82 5/15/2027 107,833.65 107,833.65 11/15/2027 609,672 107,833.65 717,505.65 5/15/2028 96,097.46 96,097.46 11/15/2028 634,394 96,097.46 730,491.46 5/15/2029 83,885.38 83,885.38 11/15/2029 658,068 83,885.38 741,953.38 5/15/2030 71,217.57 71,217.57 11/15/2030 685,654 71,217.57 756,871.57 5/15/2031 58,018.73 58,018.73 11/15/2031 712,052 58,018.73 770,070.73 5/15/2032 44,311.73 44,311.73 11/15/2032 737,216 44,311.73 781,527.73 5/15/2033 30,120.32 30,120.32 11/15/2033 766,099 30,120.32 796,219.32 5/15/2034 15,372.92 15,372.92 11/15/2034 798,593 15,372.92 813,965.92 $ 20,361,090 $ 7,200,981.48 $ 27,562,071.48 EXHIBIT A-2 Stradling Yocca Carlson & Rauth Draft of 11/4/21 4821-1084-8150v11/022030-0166 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT by and among SANTA MARGARITA WATER DISTRICT as Assignee and CITY OF SAN JUAN CAPISTRANO as Assignor and SAN JUAN BASIN AUTHORITY as Authority and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. as Trustee Dated as of November 1, 2021 relating to $20,361,090 SAN JUAN BASIN AUTHORITY LEASE REVENUE BONDS (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014 4821-1084-8150v11/022030-0166 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT This Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (this “Agreement”), is entered into by and among SANTA MARGARITA WATER DISTRICT, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California (the “Assignee”), the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California (the “Assignor”), the SAN JUAN BASIN AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”). RECITALS A. Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the Assignee has annexed the municipal water system of the Assignor as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the Assignee which will be designated after the Annexation Effective Date (as such term is defined below) as Improvement District No. 9, the “Water System”) and will assume ownership of the Water System effective November 15, 2021 or such later date as provided in the Annexation Agreement, dated as of January 21, 2020, by and between the Assignee and the Assignor, as the same may be amended (the “Annexation Effective Date”). B. The Assignor has entered into a Property Lease, dated as of December 1, 2002 (the “Property Lease”), by and between the Assignor and the Authority, under which the Assignor leased certain real property (“Property”) related to the Water System to the Authority. C. The Assignor has entered into an Amended and Restated Lease Agreement, dated as of November 1, 2014 (the “Lease”), by and between the Assignor and the Authority, under which the Authority leased the Property to the Assignor and the Assignor agreed to make Lease Payments and Additional Payments (as such terms are defined in the Lease) to the Authority. D. The Lease Payments and Additional Payments are payable from Revenues (as such term is defined in the Lease). E. The Lease Payments secure a portion of the Authority’s Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 (the “Bonds”). F. The Bonds were issued pursuant to the Trust Agreement, dated as of November 1, 2014 (the “Trust Agreement”), by and among the City, the Authority and the Trustee. G. The Assignor, as successor in interest to the Capistrano Valley Water District, and the Authority entered into an Operating Lease Agreement, dated as of December 1, 2002, as amended by the First Amendment to Operating Lease Agreement, dated as of December 1, 2002 (collectively, the “Operating Lease”).¶ H. Pursuant to the LAFCO Resolution, the Assignee will assume all obligations of the Assignor under the Property Lease, the Lease, the Operating Lease and the Trust Agreement on the 2 4821-1084-8150v11/022030-0166 Annexation Effective Date, including the obligation to make the Lease Payments and the Additional Payments from Revenues of the Water System. I. The Property will be conveyed by the Assignor to the Assignee in connection with the transfer of the Water System from the Assignor to the Assignee, with the exception of the following: (i) Lot 2 of Parcel A (Dance Hall) (“Lot 2 of Parcel A”), which will be retained by Assignor; and (ii) Parcel F (Kinoshita) (“Parcel F” and, together with Lot 2 of Parcel A, the “Excluded Parcels”), which will be retained by the Assignor. J. The parties hereto desire to amend the Property Lease, the Lease, the Operating Lease and the Trust Agreement to reflect the Assignee’s assumption of the obligations of the Assignor under the Property Lease, the Lease, the Operating Lease and the Trust Agreement as described herein, and this Agreement shall constitute a Supplemental Trust Agreement as described in the Trust Agreement. K. Capitalized terms that are used herein and not otherwise defined have the meanings that are assigned to such terms under the Lease or the Trust Agreement, as applicable. AGREEMENT SECTION 1. Assignment. (a) Effective as of the Annexation Effective Date, the Assignor, for good and valuable consideration in hand received, does hereby unconditionally assign and transfer to the Assignee without recourse, for the benefit of the Authority, all of its rights, title, interest, duties and obligations in and to the Property Lease, the Lease, the Operating Lease and the Trust Agreement, including the obligation to pay all Lease Payments and Additional Payments to the Authority. This assignment is absolute and is presently effective. (b) In connection with the matters described in subsection (a), the Assignee agrees to establish a “Revenue Fund” meeting the description thereof set forth in Section 1.1 of the Lease, on or before the Annexation Effective Date. SECTION 2. Acceptance. (a) The Assignee hereby accepts the foregoing assignment as of the Annexation Effective Date for the benefit of the Authority, and agrees thereafter to pay the Lease Payments and Additional Payments to the Authority and assume the other obligations of the Assignor as provided in the Property Lease, the Lease, the Operating Lease and the Trust Agreement. (b) From and after the Annexation Effective Date, the Assignee will assume the responsibilities of the Assignor with respect to compliance with applicable federal requirements for the tax-exempt status of the Bonds, in accordance with the Tax Certificate dated November 14, 2014 and executed by the Assignor in connection with the Bonds. SECTION 3. Amendment. (a) The definition of “City” in Section 1.1 of the Lease and Section 1.1 of the Trust Agreement is hereby amended as follows: 3 4821-1084-8150v11/022030-0166 ““City” means Santa Margarita Water District, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California.” (b) The definition of “Authorized Representative of the City” in Section 1.1 of the Lease and Section 1.1 of the Trust Agreement is hereby amended as follows: ““Authorized Representative of the City” means the General Manager or Assistant General Manager of Santa Margarita Water District, or any person designated by the General Manager or Assistant General Manager of Santa Margarita Water District to act on behalf of the General Manager or Assistant General Manager of Santa Margarita Water District.” (c) The definition of “City Council” in Section 1.1 of the Lease is hereby amended as follows: ““City Council” means the Board of Directors of Santa Margarita Water District.” (d) The definition of “Water System” in Section 1.1 of the Lease is hereby amended as follows: ““Water System” means the entire water system within the boundaries of a geographic area within the boundaries of Santa Margarita Water District which will be designated after the date hereof as Improvement District No. 9 (consisting of the service area annexed to Santa Margarita Water District pursuant to Resolution No. DA 20-01 dated August 19, 2021 of the Orange County Local Agency Formation Commission), including, without limitation, all real property and buildings, and including all improvements, works or facilities assessed, controlled or operated by Santa Margarita Water District within Improvement District No. 9 to provide water, as such improvements, works or facilities now exist, together with all improvements and extensions to said water system later acquired, constructed or organized.” (e) The notice address for the City set forth in Section 11.3 of the Lease and Section 8.8 of the Trust Agreement is hereby amended as follows: “Santa Margarita Water District 26111 Antonio Parkway Rancho Santa Margarita, California 92688 Attention: General Manager” (f) The description of the Property in Exhibit A of the Operating Lease, the Property Lease and the Lease is hereby amended to exclude the Excluded Parcels. 4 4821-1084-8150v11/022030-0166 SECTION 4. Filings. The Assignee agrees, at its own expense, to make any filings required by The Depository Trust Company, the Internal Revenue Service, the California Debt Investment Advisory Commission and any other federal or state administrative and regulatory bodies in order to evidence the matters set forth herein. SECTION 5. Attornment. Each of the Authority, the undersigned holder of all of the Bonds and the Trustee acknowledge and agree to the assignment set forth in Section 1 and agree to attorn to the Assignee from and after the Annexation Effective Date with respect to all matters related to the Property Lease, the Lease, the Operating Lease and the Trust Agreement. This Agreement shall confer no rights and impose no obligations upon the Authority or the Trustee beyond those expressly provided in the Property Lease, the Lease, the Operating Lease and the Trust Agreement. Western Alliance Business Trust, a Delaware statutory trust, a wholly-owned affiliate of Western Alliance Bank, an Arizona corporation, by its signature hereto, hereby certifies that it is the holder of 100% of the Bonds and waives any applicable notice periods for the amendments included herein. SECTION 6. Representations and Warranties. Each of the Assignee, the Assignor and the Authority represents and warrants that: (i) the execution, delivery and performance of this Agreement have been duly authorized by such party by all necessary action; (ii) this Agreement, assuming due execution by the other parties thereto, constitutes a valid, binding and enforceable obligation of such party, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; (iii) to the best of such party’s knowledge after due inquiry, this Agreement does not violate any law, regulation or order binding on such party; (iv) no consent or authorization of any third party is required in connection with the execution, delivery or performance by such party of this Agreement or, alternatively, all such consents and authorizations have been given; and (v) such party has the power to carry out the obligations imposed on such party by this Agreement. Each of the Assignee, the Assignor and the Authority represents and warrants that there is no claim, action or proceeding pending and notice of which has been received by such party, or to the knowledge of such party, threatened against such party before any court, arbitrator or governmental agency or regulatory or administrative agency or commission challenging the validity, enforceability or legality of this Agreement. Each of the Assignor and the Authority represents and warrants that no Event of Default has occurred and is continuing under the Trust Agreement, the Property Lease, the Lease or the Operating Lease as of the date of execution and delivery of this Agreement. In accordance with Section 6.13 of the Operating Lease and Section 7.14 of the Lease, each of the Assignee, the Assignor and the Authority represents and warrants that: (1) the exclusion of the Excluded Parcels from the Property Lease, the Lease and the Operating Lease, which are being assigned hereunder, will not impair the operation of the Water System or the Project (as such term is 5 4821-1084-8150v11/022030-0166 defined in the Operating Lease) or any part thereof which is necessary to secure adequate water services for the community; and (2) the Excluded Parcels are not needed for the efficient and proper operation of the Water System or the improvements on the Project. Western Alliance Business Trust, a Delaware statutory trust, a wholly-owned affiliate of Western Alliance Bank, an Arizona corporation, the holder of 100% of the Bonds, by its signature hereto, hereby acknowledges and agrees that: (I) the exclusion of the Excluded Parcels from the Property Lease, the Lease and the Operating Lease, which are being assigned hereunder, shall constitute a sale of the Excluded Parcels to the Assignor within the meaning of the Operating Lease and the Lease; and (II) the consideration for such sale consists of the assignment by the Assignor to the Assignee pursuant to Section 1 hereof, and there are no proceeds of such sale to be deposited in any funds or accounts established pursuant to the Operating Lease, the Lease, the Property Lease or the Trust Agreement. SECTION 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 Assignee, the Assignor, the Authority or the Trustee 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. The Assignee, the Assignor, the Authority and the Trustee hereby declare that they would have executed this Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 8. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. SECTION 9. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [Remainder of Page Intentionally Left Blank] 6 4821-1084-8150v9/022030-0166 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their officers thereunto duly authorized as of the day and year first written above. SANTA MARGARITA WATER DISTRICT By:________________________________________ Its: General Manager CITY OF SAN JUAN CAPISTRANO By:________________________________________ Its: City Manager SAN JUAN BASIN AUTHORITY By:________________________________________ Name: Norris Brandt Its: Administrator THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By:________________________________________ Its: Authorized Officer ___________________________________________________________________________________________________________________________________________________________________________ General Manager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his Assignment, Assumption and Amendment Agreement Regarding Desalter Project Agreements, dated as of October 27, 2021 ("Agreement"), is entered into by and among SANTA MARGARITA WATER DISTRICT, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California ("SMWD") and the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California ("City"). (The SMWD and the City shall be collectively referred to herein as the "Parties".) RECITALS A.On November 22, 1971, the San Juan Basin Authority ("SJBA") was formed pursuant to Article I, Chapter 5, Division 7, Title 1 of Government Code of the State of California (Government Code 6500 et seq.) and established for the purpose of jointly funding certain water system facilities and water conservation projects necessary to conserve and make water resources available to the areas within the San Juan Creek Watershed serviced by the members of the SJBA. B.On February 5, 1991, SJBA, Capistrano Valley Water District ("CVWD"), Moulton Niguel Water District ("MNWD"), SMWD and Trabuco Canyon Water District entered into the San Juan Basin Projects Agreement (the "1991 Agreement") for purposes including the development, conservation and management of imported water conjunctively with water produced locally. A true and correct copy of the 1991 Agreement is attached hereto as Exhibit A. C.On November 21, 1995, SJBA, CVWD and City entered into the San Juan Basin Authority -Capistrano Valley Water District and City of San Juan Capistrano Agreement, which was thereafter amended on March 1, 1998 by the San Juan Basin Authority-Capistrano Valley Water District and City of San Juan Capistrano Amendment to Agreement. The November 21, 1995 agreement and March 1, 1998 amendment to agreement are hereinafter collectively referred to as the "1995 Agreement." The purpose of the 1995 Agreement was to clarify the agreement between those parties with respect to the extraction of water from the San Juan Basin for CVWD and the City relative to SJBA's extraction of water from the Basin for the project specified in that agreement. A true and correct copy of the 1995 Agreement is attached hereto as Exhibit B. D.On October 27, 1998, SJBA, CVWD and SMWD entered into a Memorandum of Understanding (the "1998 MOU"), which, among other items, provides that prior to commencing construction of the project specified in the MOU, the participating members allocated interest in the specified project's water rights and water supplies will be established by a project implementation agreement among the participating members and SJBA. A true and correct copy of the 1998 MOU is attached hereto as Exhibit C. E.On October 15, 2002, SJBA, CVWD and SMWD entered into the Project Implementation Agreement San Juan Basin Desalter Project ("the 2002 Project Implementation Agreement"), whereby the City obtained an allocated interest in the San Juan Basin Authority's Groundwater Recovery Project ("Desalter Project")'s water rights in the amount of 5,800 acre-feet per year, which water rights are established by Permit No. 21074 ("Allocated Interest in Permit No. 21074"). The purpose of the 2002 Project Implementation Agreement is to i) comply with 22522184.3 10/27/21 Page 1 of6 Assignment, Assumption and Amendment Agreement re. Desalter Project Agreements (Water Rights Agreement No. 1) EXHIBIT A EXHIBIT B EXHIBIT C EXHIBIT D EXHIBIT E EXHIBIT F 22522871.3 10/27/21 Page 7 of 8 Agreement Regarding Water Rights Dedicated to Public Use (Water Rights Agreement No. 3) IN WITNESS WHEREOF, the Parties to this Agreement have caused the same to be executed by each of their duly authorized officers as follows: CITY OF SAN JUAN CAPISTRANO By: Benjamin Siegel City Manager ATTEST: Maria Morris City Clerk APPROVED AS TO FORM: Stephanie Osler Hastings Special Counsel SANTA MARGARITA WATER DISTRICT By: Charles T. Gibson President of Board of Directors ATTEST: Kelly Radvansky Board Secretary APPROVED AS TO FORM: Edward Casey Special Counsel EXHIBIT A EXHIBIT B EXHIBIT C EXHIBIT D EXHIBIT E EXHIBIT F Statement Number: 1 4 5 6 78 9 10 11 12 13 14 15 16Source: DiversionWorks Application Item Name: Christmas TreeHollywood 2AMission StreetNorth Open Space (NOS)Rosenbaum 1 CVWD #5A CVWD-1 Dance Hall Kinoshita SJBA-2 SJBA-4 South Cooks Tirador Cotton WellPoint of Diversion, California Coordinate System (NAD 83):2138990 N, 6128125 E2129988 N, 6129551 E2129774 N, 6130070 E2138449 N, 6128544 E2139400 N, 6128290 E2130627 N, 6136593 E2124788 N, 6128989 E2125525 N, 6130200 E2123821 N, 6128004 E2124539 N, 6129193 E2124148 N, 6129416 E2128703 N, 6134419 E2127700 N, 6133019 E2133408 N, 6141508 EAssessor's Parcel Number 650-023-09 121-142-01 649-281-08 121-050-19 650-073-90 666-092-02 668-511-89 668-101-10 unknown 668-521-02 668-521-04 666-011-18 666-011-05 664-111-06Assessor's Parcel No. Water Used125-172-24CountyOrange Orange Orange Orange Orange Orange Orange Orange Orange Orange Orange Orange Orange OrangePublic Land Description:Quarter-quarter --- NW ¼ of SE ¼NW ¼ of SE ¼--- --- SE ¼ of NE ¼NE ¼ of SW ¼SW ¼ of NE ¼SE ¼ of SW ¼NE ¼ of SW ¼NW ¼ of SE ¼SE ¼ of SW ¼NW ¼ of NW ¼Section25 1 1 25 25 6 12 12 12 12 12 6 7 32Township 7S 8S 8S 7S 7S 8S 8S 8S 8S 8S 8S 8S 8S 7SRange8W 8W 8W 8W 8W 7W 8W 8W 8W 8W 8W 7W 7W 7WBase and Meridian San BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoSan BernardinoTable A2. Diversion Works DescriptionStatement Number: 1 4 5 6 7 8 9 10 11 12 13 14 15 16Source: Trabuco CreekSan Juan CreekDiversionWorks Christmas TreeHollywood 2AMission StreetNorth Open Space (NOS)Rosenbaum 1 CVWD #5A CVWD-1 Dance Hall Kinoshita SJBA-2 SJBA-4 South Cooks Tirador Cotton WellName of Diversion Works Christmas Tree WellHollywood 2A WellMission Street WellNorth Open Space (NOS) WellRosen-baum 1 WellCVWD #5A WellCVWD-1 Well Dance Hall WellKinoshita WellSJBA-2 Well SJBA-4 Well South Cooks WellTirador Well Cotton WellYear in which diversion commencedunknown1987198920001957196119782003197020042004200919561995Related existing water rightsPermit 21074 Permit 21074 Permit 21074 Permit 21074Permit 21074 Permit 21074 Permit 21074 Permit 21074 S025596, S025600-S025610, S025646-S025648Type of diversion facility Well Pump Well Pump Well Pump Well Pump Well Pump Well Pump Well Pump Well Pump Well Pump Well Pump Well Pump Well Pump Well Pump Well PumpDo you directly divert water?YesYesYesYesYesYesYesYesYesYesYesYesYesYesCapacity of direct diversion worksunknown1450 gpm1400 gpm600 gpm460 gpm700 gpm2500 gpm1000 gpm900 gpm1400 gpm26 gpm800 gpm800 gpm300 gpmDo you divert water to storage?NoA. Capacity of storage diversion worksNAB. Capacity of storage tank or reservoirNATrabuco CreekSan Juan Creek Table A3. Measurement Device DescriptionStatement Number: 1 4 5 6 7 8 9 10 11 12 13 14 15 16Source: Trabuco CreekSan Juan Creek DiversionChristmas TreeHollywood 2AMission StreetNorth Open Space (NOS)Rosenbaum 1CVWD #5ACVWD-1Dance HallKinoshitaSJBA-2SJBA-4South CooksTiradorCotton Well8. Method used to measure water diverted:Water directly diverted was measured with a measuring device             Direct measurement using a device listed in Section 8a is not locally cost effective for water              8a. Types of Measuring Devices Propeller meterOther: Magnetic Flow MeterPropeller MeterAcoustic MeterOther: Magnetic Flow MeterOther: Magnetic Flow MeterOther: Magnetic Flow MeterOther: Magnetic Flow MeterOther: Magnetic Flow MeterOther: Magnetic Flow MeterOther: Magnetic Flow MeterOther: Magnetic Flow Meter8a. Indicate any add'l technology usedTotalizer, TelemetryTotalizer, TelemetryTotalizer, TelemetryTotalizer, TelemetryTotalizer, TelemetryTotalizer, TelemetryTotalizer, TelemetryTotalizer, TelemetryTotalizer, TelemetryTotalizer, TelemetryTotalizer, Telemetry8a. Indicate who installed your measuring device(s): Other: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractorOther: City contractor8a. Make, model number, and last calibration date of your measuring devicesBadgerM SeriesModel M3000McCrometerItem # L0235-10Serial # 14-17648Badger Meter Dynsonics TFX UltraEndress HauserProMag 53Serial No. D9017416000Calibrated 5/19/2016ABB / Fischer & PorterMagmasterSerial No. 03W017117Calibrated 5/19/2016ABB / Fischer & PorterMagmasterSerial No. 03W017112Calibrated 6/2/2016ABB / Fischer & PorterMagmasterSerial No. 03W017124Calibrated 5/19/2016ABB / Fischer & PorterMagmasterSerial No. 03W017116Calibrated 5/19/2016ABB / Fischer & PorterMagmasterSerial No. 03W017111Calibrated 5/19/2016Endress HauserProMag 53Serial No. D9017316000Calibrated 6/2/2016ABB / Fischer & PorterMagmasterSerial No. 03W017121Calibrated 5/19/20168b. Indicate why you concluded that direct measurement…is not locally cost effectiveDiversion is small; Diversions are infrequentNA8b. Indicate method(s) used as an alternative…Crop duty estimates/ consumptive use estimates/ remote satellite imagingNA8b. Explain your measurement alternatives:Diversions are based on crop water requirements and irrigated area.NA Attachment C. List of City-Owned Parcels with Riparian Water Use2004200520062007200820092010201120122013201420152016201720182019R216 125-172-27 Riparian Land Open space conservation 18.4 Non-Domestic 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 1.4 7.6 4.5 4.5 4.5 4.5 4.5R121650-023-09, 650-023-08Riparian Land Public park. 2.6 Non-Domesticn/a n/a n/a n/a n/a n/a n/a 3.6 3.8 4.2 4.3 4.0 4.0 4.0 4.0 4.0RYY125-172-26Riparian Land Creek bed 16.7 No water used.n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/aRZZ125-172-25Riparian Land Natual Open space 11.5 No water used.n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/aRxx125-172-24Riparian Land Public park 68.9 Non-Domestic Irrigation117.9 117.9 117.9 117.9 117.9 117.9 117.9 117.9 117.9 117.9 117.9 117.9 117.9 74.6 117.9 120.0Notes:(a) Map ID corresponds to the labelled areas on Attachment B. Adjacent parcels are grouped together by Map ID; water use is listed for each map area.(b) Domestic use = potable water used for domestic, landscape and irrigation uses. Non-domestic Irrigation = non-potable water used for irrigation.(c) From metered water use records, except for values in italics, which are estimated.n/a = quantity not estimatedYear AcquiredEst Annual UseWater Use Type(b)Annual Water Use(c) (ac-ft.)Map ID(a)Assessor's Parcel NumberLand Classification Predominant Type of UseArea (acres) Table D1. Annual Well Production. All values in acre-feet.Statement No.:145678910111213141516Source:San Juan CreekWellName:Year . Christmas TreeHollywood 2A(a), (b)Mission Street(a), (b)North Open Space (NOS)(a), (b)Rosenbaum 1(a), (b)CVWD #5A(a), (b)CVWD-1(a), (b)Dance Hall(b)Kinoshita(b)SJBA-2(a), (b)SJBA-4(b)South Cooks(b)Tirador(b)Total(c)Cotton2004n/a1,262.60977.81877.8062.22.911.86.266.2-16.54,284.02005n/a329.00446.1554.801,241.7504.7261.31,178.51,005.5-617.06,138.62006n/a260.40323.2410.001,102.3860.180.71,081.9924.5-796.25,839.32007n/a78.60207.3365.6041.3551.8465.7665.8616.1-407.33,399.52008n/a290.60344375.50390.028.557.7424.2478.7-71.12,460.32009n/a190.10265.621.10797.20.82.2779.6694.8-258.33,009.72010n/a094.115.30.00443.86.60.7805.8353.3-437.52,157.174.620113.60272.3238.0395.2485.4489.8183.2313.2683.8507.9377.23,742.6117.920123.80272.39.30.0858.8301.0968.3147.9432.6728.5789.8356.24,868.5117.920134.20293.200.0730.3959.9676.6318.7963.6767.8658.0258.05,630.3117.920144.3095.700.0467.7928.5549.5358.8817.3813.2415.5365.74,816.2117.920154.0067.4495.20.016.7577.9170.182.6646.3515.410.8104.42,690.8117.920162.890.0065.30365.08151.9652.84365.0417.31115.24294.35315.145.2018.371768.72117.920171.380.00386.04417.64138.181.47373.53186.59183.53491.10507.020.150.022686.6574.620180.550.00443.99396.27205.771.36279.40355.80327.40535.88496.020.050.053042.54117.920190.760.00254.03354.46204.6070.33484.48230.99244.81463.44616.391.83386.943313.0688.82020 (est.)1.000.00300.00400.00200.0010.00500.00250.00250.00500.00630.302.00400.003443.3090.0Notes:(a) Included as point of diversion in Amended Application No. 30696. (b) See also Permit 21074, subject to SWRCB approval.(c) Total is for listed quantities and does not include other pumping in the San Juan Basin.n/a = estimates not available.Table D2. Monthly Well Production for 2015. All values in acre-feet.WellName:Month . Christmas TreeHollywood 2A(a), (b)Mission Street(a), (b)North Open Space (NOS)(a), (b)Rosenbaum 1(a), (b)CVWD #5A(a), (b)CVWD-1(a), (b)Dance Hall(b)Kinoshita(b)SJBA-2(a), (b)SJBA-4(b)South Cooks(b)Tirador(b)Total(c)Cotton (d)January0.101.039.000.169.242.518.275.362.90.019.6327.93.10February0.203.259.000.273.135.65.978.665.50.421.1342.80.14March0.405.065.000.180.040.14.780.673.70.024.9374.511.58April0.406.158.000.160.835.434.670.159.00.520.8345.826.16May0.2012.555.301.746.34.30.359.750.40.43.7234.813.08June0.505.616.205.519.14.16.818.819.61.84.7102.713.08July0.500.00.000.00.00.10.00.00.00.10.00.710.11August0.608.233.005.838.46.210.748.236.93.25.1196.310.11September0.4013.246.302.032.70.70.044.630.21.91.0173.010.11October0.307.636.000.551.50.91.254.240.80.00.0193.010.11November0.203.442.400.553.40.30.058.739.22.63.4204.16.25December0.101.845.000.253.40.00.057.537.20.00.1195.34.10Total4.0067.4495.2016.7577.9170.182.6646.3515.410.8104.42,690.8117.93Notes:(a) Included as point of diversion in Amended Application No. 30696. (b) See also Permit 21074, subject to SWRCB approval.(c) Total is for listed quantities and does not include other pumping in the San Juan Basin.Trabuco Creek EXHIBIT G Via Email and Mail State Water Resources Control Board P.O. Box 100 Sacramento, CA 95812-0100 Re: Notice regarding Application No. 30696 Submitted by the City of San Juan Capistrano Dear State Water Resources Control Board, The City of San Juan Capistrano (“City”) and the Santa Margarita Water District (“SMWD”) send this letter to provide additional information regarding Application No. 30696 submitted by the City to the State Water Resources Control Board (“State Board”). Pursuant to Application No. 30696, the City claims the right to extract water from the San Juan Basin as a result of the City’s predecessors’ diversion of water for the reasonable and beneficial uses of the inhabitants of the community since at least 1776, the date of the founding of the Mission of San Juan Capistrano (“Pueblo Right”). Section 10 of Application No. 30696 describes the City’s existing water rights. This letter provides the following clarification to the State Board regarding Application No. 30696: • The water rights described in Section 10 of Application No. 30696 do not include the claimed right to return flow from imported water, but does include the City’s claim of a pre-1914 appropriative right to extract water from the San Juan Basin (“Pre-1914 Appropriative Right”). This letter further serves to notify the State Board that the City has (1) designated SMWD the City’s exclusive agent and trustee for the exercise of the Pueblo Right and (2) assigned the City’s Pre-1914 Appropriative Right to SMWD. Since SMWD has been designated as the City’s exclusive agent and trustee for the exercise of the Pueblo Right and the City’s Pre-1914 Appropriative Right has been assigned by the City to SMWD, SMWD is now a co-applicant on Application No. 30696. Sincerely, John Taylor Charles T. Gibson Mayor President of Board of Directors City of San Juan Capistrano Santa Margarita Water District EXHIBIT H QUITCLAIM DEED (Water Rights) FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, and pursuant to Section ____ of the [TITLE OF AGREEMENT] dated _____________,THE CITY OF SAN JUAN CAPISTRANO, a general law city created and existing under the California Constitution and the laws of the State of California, (“City”), does hereby remise, release, and forever quitclaim to SANTA MARGARITA WATER DISTRICT, a California water district organized under and existing pursuant to Section 34000 et seq. of the California Water Code, its successors and assigns (“District”), without representation or warranty whether as to use, right, perfection or existence of, the property described as follows: The City’s interest, if any, in any and all water rights derived from any dedication by any landowner to the City, Orange County Waterworks District No. 4 or Capistrano Valley Water District documented through a Tract Map, Parcel Map, or Development Agreement, whether such water right is appropriative, riparian, overlying, prescriptive or otherwise (“Dedicated RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: ASSESSOR PARCEL NO.: (Space Above This Line For Recorder's Use) This document is recorded at the request of and for the benefit of Santa Margarita Water District and is therefore exempt from the payment of the recording fee pursuant to Government Code Section 6103 and from the payment of the documentary transfer tax pursuant to Revenue and Taxation Code Section 11922. Water Rights”), including but are not limited to the maps listed on Exhibit “A” hereto. The Dedicated Water Rights do not include any pueblo water right or any riparian water right appurtenant to land that the City owns. IN WITNESS WHEREOF, the Parties to this Agreement have caused the same to be executed by each of their duly authorized officers as follows: Dated: CITY OF SAN JUAN CAPISTRANO By: John Taylor Mayor ATTEST: Maria Morris City Clerk APPROVED AS TO FORM: Stephanie Osler Hastings Special Counsel Dated: SANTA MARGARITA WATER DISTRICT By: Charles T. Gibson President of Board of Directors ATTEST: Kelly Radvansky Board Secretary APPROVED AS TO FORM: Edward Casey Special Counsel EXHIBIT A Tract or Parcel Number Instrument Number Orange County Official Records Book #, Page # Recordation Date Tract No. 7192 21266 Bk. 282, Pg. 31 July 26, 1971 Tract No. 7912 32347 Bk. 323, Pg. 38 May 30, 1973 Tract No. 7112 June 26, 1973 Tract No. 5126 Tract No. 7626 12179 Bk. 11117, Pg. 505 April 12, 1974 Tract No. 5996 11343 Bk. 352 Pg. 3 January 17, 1975 Tract No. 8786 14115 Bk. 364 Pg. 11 November 13, 1975 Tract No. 9181 761 Bk. 379 Pg. 37 July 1, 1976 Tract No. 9034 December 6, 1976 Tract No. 9373 35682 Bk. 411 Pg. 4 July 22, 1977 Tract No. 7654 28410 Bk. 441 Pg. 6 September 21, 1978 Tract No. 7673 27105 Bk. 426 Pg. 9 February 22, 1978 Tract No. 9339 28477 Bk, 467 Pg. 49 January 24, 1980 Tract No. 10564 14131 December 9, 1980 Tract No. 9784 22278 Bk. 482 Pg. 28 January 21, 1981 Parcel Map No. 80-851 11001 Bk. 164 Pg. 35 December 8, 1981 Tract No. 10318 82-252680 Bk. 504 Pg. 8 July 21, 1982 Tract No. 10319 82-252679 Bk. 504 Pg. 1 July 21, 1982 Parcel Map No. 83-863 84-186048 Bk. 188 Pg. 11 May 4, 1984 Tract No. 12737 86-584354 Bk. 579 Pg. 3 November 26, 1986 Tract No. 12738 86-659929 Bk. 572 Pg. 42 December 31, 1986 Tract No. 12739 86-649928 Bk. 572 Pg. 45 December 31, 1986 Tract No. 12740 86-659927 Bk. 573 Pg. 1 December 31, 1986 Tract No. 13026 Bk. 588 Pg. 19 October 28, 1987 Tract No. 13027 Bk. 587 Pg. 46 October 28, 1987 Tract No. 12633 Bk. 588 Pg. 7 October 29, 1987 Tract No. 12825 87-607949 Bk. 587 Pg. 28 October 30, 1987 Tract No. 12826 87-607950 Bk. 587 Pg. 31 October 30, 1987 Tract No. 12827 87-607713 Bk. 587 Pg. 34 October 30, 1987 Tract No. 13025 87-608080 Bk. 588 Pg. 11 October 30, 1987 Tract No. 13101 87-608081 Bk. 588 Pg. 27 October 30, 1987 Tract No. 12828 88-024286 Bk. 592 Pg. 29 January 19, 1988 Tract No. 12831 88-024379 Bk. 592 Pg. 32 January 19, 1988 Parcel Map No. 86-252 88-083139 Bk. 230 Pg. 9 February 25, 1988 Tract No. 12262 88-184820 Bk. 598 Pg. 38 April 22, 1988 Tract No. 12423 88-184837 Bk. 599 Pg. 1 April 22, 1988 Tract No. 12829 88-18454 Bk. 598 Pg. 43 April 22, 1988 Tract No. 12830 88-184889 Bk. 598 Pg. 34 April 22, 1988 Parcel Map No. 87-476 88-418503 Bk. 283 Pg. 35 August 23, 1988 Parcel Map No. 88-227 90-642622 Book 258 Pg. 47 December 6, 1990 Tract No. 13866 91-4623478 Bk 680 Pg. 9 August 27, 1991 Tract No. 13865 91-453340 Bk. 679 Pg. 34 August 22, 1991 Tract No. 13436 91-461540 Bk. 680 Pg. 1 August 27, 1991 Tract No. 13866 Amended 96-0341896 Bk. 737 Pg. 32 July 5, 1996 Tract No. 13437 1996-0519024 Bk. 743 Pg. 8 October 11, 1996 Tract No. 14379 19980648318 Bk. 774 Pg. 40 September 25, 1998 Parcel Map No. 96-159 19990200077 Bk. 306 Pg. 7 March 19, 1999 Parcel Map No. 92-125 19990600564 Bk. 309 Pg. 6 August 18, 1999 Tract No. 15858 20000393106 Bk. 802 Pg. 34 July 27, 2000 Tract No. 15998 2001-484975 Bk. 820 Pg. 42 July 18, 2001 Parcel Map No. 2001-143 20020150116 Bk. 324 Pg. 36 February 22, 2002 Tract No. 16802 2006000349683 Bk. 881 Pg. 20 May 24, 2006 Tract No. 16632 Bk. 884 P. 33 October 12, 2006 Tract No. 17027 2008000227147 Bk. 895 Pg. 26 May 13, 2008 Tract No. 17441 Tract No. 17713 Tract No. 16146 Tract No. 17655 2015000210772 Bk. 935 Pg. 36 April 24, 2015 EXHIBIT G LEGAL02/40262626v1 April __, 2021 Via Email and Mail State Water Resources Control Board P.O. Box 100 Sacramento, CA 95812-0100 Re: Notice regarding Permit No. 21074 Dear State Water Resources Control Board, The City of San Juan Capistrano (“City”) sends this letter to the State Water Resources Control Board (“State Board”) to provide additional information regarding Permit No. 21074 (“Permit”) owned by the San Juan Basin Authority (“Authority”). Section 7 of the Permit states that the allocation of the available water resources under the Permit are governed by private agreements among the parties to the Authority dated November 21, 1995 and March 1, 1998, and by their joint letter dated March 13, 1998 (collectively, the “Agreements”). The Agreements led to the creation of the 2002 Project Implementation Agreement among the parties to the Authority, whereby the City obtained an allocated interest of 5,800 acre-feet per year of the water rights established by Permit No. 21074. The City hereby notifies the State Board that it has assigned to the Santa Margarita Water District all of its rights, title, interest, duties and obligations in and to the 2002 Project Implementation Agreement, including the City’s allocated interest of 5,800 acre-feet per year of the water rights established by Permit No. 21074. Sincerely, John Taylor Mayor City of San Juan Capistrano EXHIBIT A-5 OHSUSA:754116349.7 TRUST AGREEMENT among CITY OF SAN JUAN CAPISTRANO and SAN JUAN BASIN AUTHORITY and THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee Dated as of November 1, 2014 RELATING TO $20,361,090 SAN JUAN BASIN AUTHORITY LEASE REVENUE BONDS (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014 TABLE OF CONTENTS Page -i- OHSUSA:754116349.7 ARTICLE I DEFINITIONS Section 1.1. Definitions.............................................................................................................. 1 Section 1.2. Rules of Construction ............................................................................................ 7 ARTICLE II ASSIGNMENT; DECLARATION OF TRUST; REPRESENTATIONS AND RECITALS Section 2.1. Assignment of Lease Agreement ........................................................................... 7 Section 2.2. Assignment of Property Lease ............................................................................... 8 Section 2.3. Declaration of Trust by Trustee ............................................................................. 8 Section 2.4. Deposit of Moneys ................................................................................................. 8 Section 2.5. Description of the Project ...................................................................................... 8 Section 2.6. Conditions Precedent Satisfied .............................................................................. 8 ARTICLE III BONDS, TERMS AND PROVISIONS Section 3.1. Preparation of Bonds.............................................................................................. 8 Section 3.2. Payments from Trust Estate Only; Distribution of Trust Estate ............................ 8 Section 3.3. The Bonds .............................................................................................................. 9 Section 3.4. Medium of Payment ............................................................................................. 12 Section 3.5. Execution ............................................................................................................. 12 Section 3.6. Negotiability, Transfer and Registry.................................................................... 12 Section 3.7. Regulations With Respect to Exchanges and Transfers ...................................... 12 Section 3.8. Bonds Mutilated, Destroyed, Stolen or Lost ........................................................ 13 Section 3.9. Temporary Bonds................................................................................................. 13 Section 3.10. Privilege of Redemption ...................................................................................... 13 Section 3.11. Selection of Bonds to be Redeemed .................................................................... 13 Section 3.12. Notice of Redemption .......................................................................................... 14 Section 3.13. Payment of Redeemed Bonds .............................................................................. 14 Section 3.14. Cancellation of Bonds .......................................................................................... 15 ARTICLE IV ESTABLISHMENT AND ADMINISTRATION OF FUNDS AND ACCOUNTS Section 4.1. Establishment of Project Trust Fund.................................................................... 15 Section 4.2. Refunding Account .............................................................................................. 15 Section 4.3. Debt Service Payment Account ........................................................................... 15 Section 4.4. Redemption Account ........................................................................................... 16 Section 4.5. Insurance and Condemnation Account ................................................................ 16 Section 4.6. Deposits of Money; Payment Procedure .............................................................. 16 TABLE OF CONTENTS (continued) Page -ii- OHSUSA:754116349.7 Section 4.7. Investment of Certain Accounts and Subaccounts............................................... 16 Section 4.8. Valuation and Sale of Investments ...................................................................... 18 Section 4.9. Costs of Issuance Account ................................................................................... 19 Section 4.10. Rebate Fund ......................................................................................................... 19 ARTICLE V COVENANTS, EVENTS OF DEFAULT, REMEDIES OF BONDOWNERS AND LIMITATIONS OF LIABILITY Section 5.1. Trustee to Enforce Lease Agreement and Property Lease ................................... 21 Section 5.2. Against Amendment or Termination of Property Lease ...................................... 21 Section 5.3. Amendment of Lease Agreement ........................................................................ 21 Section 5.4. Notice of Non-Payment ....................................................................................... 21 Section 5.5. Assignment of Rights ........................................................................................... 21 Section 5.6. Events of Default ................................................................................................. 22 Section 5.7. Application of Funds............................................................................................ 22 Section 5.8. Institution of Legal Proceedings .......................................................................... 23 Section 5.9. Non-Waiver.......................................................................................................... 23 Section 5.10. Remedies Not Exclusive ...................................................................................... 23 Section 5.11. Power of Trustee to Control Proceedings ............................................................ 23 Section 5.12. Limitation on Bondowners’ Right to Sue ............................................................ 23 Section 5.13. Reconstruction; Application of Insurance Proceeds ............................................ 24 Section 5.14. Accounts and Reports .......................................................................................... 24 Section 5.15. No Obligation by the City to Bondowners .......................................................... 25 Section 5.16. No Obligation With Respect to Performance by Trustee .................................... 25 Section 5.17. No Liability to Bondowners for Payment ............................................................ 25 Section 5.18. Possession and Enjoyment ................................................................................... 25 Section 5.19. Tax Covenants ..................................................................................................... 25 Section 5.20. Parity Obligations ................................................................................................ 26 ARTICLE VI CONCERNING THE TRUSTEE Section 6.1. Employment of Trustee........................................................................................ 26 Section 6.2. Trustee Acceptance of Duties .............................................................................. 26 Section 6.3. Evidence on Which Trustee May Act .................................................................. 27 Section 6.4. Obligations of Trustee.......................................................................................... 27 Section 6.5. Compensation ...................................................................................................... 27 Section 6.6. Resignation of Trustee ......................................................................................... 27 Section 6.7. Removal of Trustee .............................................................................................. 28 Section 6.8. Appointment of Successor Trustee ...................................................................... 28 Section 6.9. Transfer of Rights and Project to Successor Trustee ........................................... 28 Section 6.10. Merger or Consolidation ...................................................................................... 29 TABLE OF CONTENTS (continued) Page -iii- OHSUSA:754116349.7 Section 6.11. Adoption of Authorized Signature ....................................................................... 29 Section 6.12. Liability of the Trustee......................................................................................... 29 ARTICLE VII AMENDMENTS Section 7.1. Mailing ................................................................................................................. 31 Section 7.2. Powers of Amendment ......................................................................................... 31 Section 7.3. Consent of Bondowners ....................................................................................... 32 Section 7.4. Modifications by Unanimous Consent................................................................. 33 Section 7.5. Exclusion of Bonds .............................................................................................. 33 Section 7.6. Notation on Bonds ............................................................................................... 33 ARTICLE VIII MISCELLANEOUS Section 8.1. Defeasance ........................................................................................................... 34 Section 8.2. Evidence of Signatures of Bondowners and Ownership of Bonds ...................... 35 Section 8.3. Moneys Held for Particular Bonds ...................................................................... 35 Section 8.4. Preservation and Inspection of Documents.......................................................... 35 Section 8.5. Parties Interested Herein ...................................................................................... 36 Section 8.6. Severability of Invalid Provisions ........................................................................ 36 Section 8.7. Recording and Filing............................................................................................ 36 Section 8.8. Notices ................................................................................................................. 36 Section 8.9. California Law ..................................................................................................... 37 Section 8.10. Binding on Successors ......................................................................................... 37 Section 8.11. Headings .............................................................................................................. 37 Section 8.12. Execution in Counterparts.................................................................................... 37 Section 8.13. Actions Due on Saturdays, Sundays and Holidays .............................................. 37 Section 8.14. Force Majeure ...................................................................................................... 37 EXHIBIT A FORM OF BOND .................................................................................A-1 EXHIBIT B FORM OF COSTS OF ISSUANCE REQUISITION ...........................B-2 OHSUSA:754116349.7 TRUST AGREEMENT RELATING TO THE SAN JUAN BASIN AUTHORITY LEASE REVENUE BONDS (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014 THIS TRUST AGREEMENT RELATING TO THE SAN JUAN BASIN AUTHORITY, LEASE REVENUE BONDS (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014, dated as of November 1, 2014 (the “Trust Agreement”), by and among the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California (the “City”), THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”), and the SAN JUAN BASIN AUTHORITY, a joint powers authority (the “Authority”), W I T N E S S E T H: In consideration of the mutual agreements and covenants herein contained and for other valuable consideration, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions (A) The terms set forth in this section shall have the meanings ascribed to them for all purposes of this Trust Agreement unless the context clearly indicates some other meaning. Additional Payments means any amounts payable by the City under the terms of the Lease Agreement, other than the Lease Payments. Annual Debt Service means, for each Bond Year, the sum of (a) the interest payable on the Outstanding Bonds in such Bond Year, assuming that any Outstanding term Bonds are redeemed from mandatory sinking fund payments as scheduled and (b) the principal amount of the Outstanding Bonds scheduled to be paid or redeemed in such Bond Year. Authority means the San Juan Basin Authority, a joint powers authority. Authorized Representative of the Authority means the Chairman, Vice Chairman or a Co- Administrator of the Authority and any person or persons designated by the Chairman, Vice Chairman or a Co-Administrator of the Authority and authorized to act on behalf of the Authority as certified by a written certificate signed on behalf of the Authority by the Chairman, the Vice Chairman or a Co-Administrator of the Authority and containing the specimen signature of each such person. Authorized Representative of the City means the City Manager of the City, the Public Works and Utilities Director of the City, the Chief Financial Officer/Treasurer of the City or any 2 OHSUSA:754116349.7 person or persons designated by the City Manager of the City and authorized to act on behalf of the City by a written certificate signed on behalf of the City by the City Manager of the City and containing the specimen signature of each such person. Bond Counsel means a nationally-recognized firm of attorneys experienced in the issuance of tax-exempt obligations the interest on which is excludable from gross income under Section 103 of the Code. Bondowner or Owner of Bonds or Owner means the registered owner of any Bond or Bonds. Bond Year means the twelve month period which commences on December 2 in every year and ends on December 1 of the succeeding year. The first Bond Year shall commence on the Delivery Date and end on December 1, 2015. Bonds means the San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 issued pursuant to this Trust Agreement. 2002 Bonds means the San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2002. Business Day means any day other than (i) a Saturday or Sunday or legal holiday or a day on which banking institutions in the city in which the principal office of the Trustee is located are authorized to close or (ii) a day on which the New York Stock Exchange is closed. Certificate of Authorized Representative of the Authority means a certificate executed by an Authorized Representative of the Authority. Certificate of Authorized Representative of the City means a certificate executed by an Authorized Representative of the City. City means the City of San Juan Capistrano, California. Code means the Internal Revenue Code of 1986, as amended, and the United States Treasury Regulations proposed or in effect with respect thereto. Costs of Issuance means all expenses and costs of the Authority or the City incident to the performance of its obligations in connection with the authorization, issuance, sale and delivery of the Bonds, including, but not limited to, printing costs, initial Trustee fees and expenses and fees and expenses of its counsel, fees and expenses of consultants, fees and expenses of bond counsel to the Authority or the City and fees of counsel to the Original Puchaser. Costs of Issuance Account means the account by that name created pursuant to Section 4.1 hereof. Debt Service Payment Account means the Debt Service Payment Account established in Section 4.1 hereof. 3 OHSUSA:754116349.7 Delivery Date means the date of the initial issuance of the Bonds. Escrow Agent means The Bank of New York Mellon Trust Company, N.A., acting in its capacity as trustee and escrow agent under and pursuant to the Escrow Agreement, and its successors and assigns as provided in the Escrow Agreement. Escrow Agreement means that certain Escrow Agreement, dated as of November 1, 2014, by and among the City, the Authority and the Escrow Agent, providing for the refunding of the 2002 Bonds. Events of Default means events of default as set forth in Section 9.1 of the Lease Agreement. Fiscal Year means the twelve month fiscal period of the City which commences on July 1 in every year and ends on June 30 of the succeeding year. GAAP means generally accepted accounting principles. Interest Payment Date means June 1 and December 1 of each year commencing June 1, 2015. Investment Securities means and includes any of the following securities, if and to the extent the same are at the time legal for investment of Authority funds (the Trustee is entitled to rely upon investment direction of the City as a determination that such investment is a legal investment): A. For all purposes including defeasance investments. (1) Cash (insured at all times by the Federal Deposit Insurance Corporation), (2) 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, or (3) Senior debt obligations of other Government Sponsored Agencies. B. For all purposes other than defeasance investments in refunding escrow accounts. (1) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: -Export-Import Bank -Rural Economic Community Development Administration -U.S. Maritime Administration -Small Business Administration -U.S. Department of Housing & Urban Development (PHAs) -Federal Housing Administration -Federal Financing Bank 4 OHSUSA:754116349.7 (2) Direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: -Senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC). -Obligations of the Resolution Funding Corporation (REFCORP) -Senior debt obligations of the Federal Home Loan Bank System -Senior debt obligations of other Government Sponsored Agencies; (3) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks, including the Trustee 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 not more than 360 calendar days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank); (4) 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 calendar days after the date of purchase; (5) Investments in a money market fund rated “AAAm” or “AAAm-G” or better by S&P including such funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services or for which the Trustee or an affiliate of the Trustee serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from funds for services rendered, (ii) the Trustee collects fees for services rendered pursuant to this Trust Agreement, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Trust Agreement may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee; (6) 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 (A) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s or S&P or any successors thereto; or (B) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph A(2) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally 5 OHSUSA:754116349.7 recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (7) Municipal obligations rated “Aaa/AAA” or general obligations of States with a rating of “A2/A” or higher by both Moody’s and S&P; (8) Investment agreements supported by appropriate opinions of counsel, provided that, without limiting the foregoing, any such Investment Agreement shall (i) be from a provider rated by S&P or Moody’s at AA or Aa2 or above and (ii) expressly permit the withdrawal, without penalty, of any amounts necessary at any time to fund any deficiencies on account or debt service requirement s with respect to Bonds, together with such amendments as may be approved by the Authority, the City and the Trustee from time to time; and (9) The Local Agency Investment Fund established by the State of California, including investments in the name of the City. Lease Agreement means the Amended and Restated Lease Agreement, dated as of the date hereof, between the Authority and the City, and any and all modifications, alterations, amendments and supplements thereto made in accordance with the provisions of the Lease Agreement and the Trust Agreement. Lease Payment means the amount to be paid by the City for the lease of the Project corresponding to the Lease Payment Date set forth in Section 4.4 and Exhibit B of the Lease Agreement. Lease Payment Date means the 15th day of the month preceding each Interest Payment Date (or if the 15th day of the month is not a Business Day, on the next succeeding Business Day). Lease Term means the period during which the Lease Agreement is in effect as specified in the Lease Agreement. Moody’s means Moody’s Investors Service, Inc., a municipal bond rating service with offices in New York, New York. Net Insurance Proceeds means any insurance or condemnation proceeds paid with respect to the Project and remaining after payment therefrom of all expenses incurred in the collection thereof. Net Revenues means the amounts of Revenues (as defined in the Lease Agreement) remaining after payment therefrom of the Maintenance and Operation Costs. Original Purchaser means TPB Investments, Inc., a wholly-owned subsidiary of Western Alliance Bank, an Arizona corporation, the first purchaser of the Bonds upon their delivery by the Trustee. 6 OHSUSA:754116349.7 Outstanding, when used with reference to Bonds, means, as of any date, Bonds theretofore or thereupon being issued under this Trust Agreement, including Bonds that are “Outstanding” in accordance with Section 8.1(c), except: (a) Bonds canceled or delivered for cancellation by the Trustee on or prior to such date; (b) Bonds (or portions of Bonds) defeased as provided in Section 8.1 of this Trust Agreement; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been issued pursuant to Article III of this Trust Agreement. Project means, collectively, the Property and the improvements thereon, and any and all additions or modifications thereto made as provided in Section 7.8 of the Lease. Project Trust Fund means the fund so designated which is established in Section 4.1 hereof. Property means the real property described in the Lease Agreement. Property Lease means the Property Lease, dated as of December 1, 2002, between the City, as lessor, and the Authority, as lessee, as amended and supplemented from time to time in accordance with its terms. Rating Agencies means Moody’s and S&P, any successors thereto or any other nationally recognized rating service to the extent such rating agencies are maintaining a rating in connection with the Bonds as requested by or on behalf of the City. Rebatable Arbitrage shall have the meaning attributed to such term in Section 4.11(b). Rebate Fund means the account so designated established pursuant to Section 4.1 hereof. Rebate Regulations means the Regulations issued under Section 148(f) of the Code. Record Date means the fifteenth day of the calendar month preceding an Interest Payment Date. Redemption Account means the Redemption Account established in Section 4.1 hereof. Refunding Account means the account by that name established pursuant to Section 4.1 hereof. Revenue Fund means the fund by that name described in Section 4.8 of the Lease Agreement. S&P or Standard & Poor’s means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, a municipal bond rating service with offices in New York, New York. 7 OHSUSA:754116349.7 State means the State of California. Supplemental Trust Agreement means any agreement supplemental or amendatory of this Trust Agreement. Tax Certificate means the certificate by that name to be executed by the Authority and the City on the Delivery Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code. Trust Agreement means this Trust Agreement relating to the San Juan Basin Authority, Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014, dated as of November 1, 2014, entered into by and among the City, the Authority and the Trustee, and any and all Supplemental Trust Agreements. Trust Estate means all amounts received by the Trustee for the account of the City pursuant to or with respect to the Lease Agreement including, without limitation, the Lease Payments and all amounts from time to time deposited in the funds, accounts and subaccounts created pursuant to this Trust Agreement, including all investments and investment earnings thereon, excluding, however, all moneys deposited or required to be deposited in the Rebate Fund. Trustee means The Bank of New York Trust Company, N.A., national bank association, duly organized and existing under and by virtue of the laws of the United States of America, having a corporate trust office in Los Angeles, California, or such other offices as the Trustee may designate, or its successor as Trustee hereunder. Water System means the entire water system of the City, including, without limitation, all real property and buildings and, including all improvements, works or facilities assessed, controlled or operated by the City to provide water, as such improvements, works or facilities now exist, together with all improvements and extensions to said water system later acquired, constructed or organized. Section 1.2. Rules of Construction. Except where the context otherwise requires, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include firms, associations, corporations and other entities. ARTICLE II ASSIGNMENT; DECLARATION OF TRUST; REPRESENTATIONS AND RECITALS Section 2.1. Assignment of Lease Agreement. The Authority hereby absolutely assigns all of its rights, title and interest in the Lease Agreement to the Trustee for the benefit of the Bondowners, and the Authority retains no right, title or interest therein (other than its right to certain Additional Payments under Section 4.14 of the Lease Agreement). The City hereby consents to such assignment. 8 OHSUSA:754116349.7 Section 2.2. Assignment of Property Lease. The Authority hereby absolutely assigns, for so long as any Bond is Outstanding, all of its rights, title and interest in the Property Lease to the Trustee for the benefit of the Bondowners, and the Authority retains no right, title or interest therein (other than such right, title and interest as may exist from and after the payment in full, or defeasance pursuant to Section 8.1 hereof, of the Bonds). Section 2.3. Declaration of Trust by Trustee. The Trustee hereby declares that it holds and will hold the Trust Estate upon the trusts hereinafter set forth and for the use and benefit of the Bondowners. Section 2.4. Deposit of Moneys. In order to effect the refunding of the 2002 Bonds, the Authority has executed the Lease Agreement and caused the Trustee to authenticate and deliver the Bonds and from the proceeds of the sale of the Bonds, the Trustee shall deposit into the various accounts in the Project Trust Fund the amounts provided for in Section 4.1 hereof. Section 2.5. Description of the Project. The description of the Project to be leased to the City, as lessee, from the Authority, as lessor pursuant to the Lease Agreement is set forth in Exhibit A attached thereto and incorporated herein by reference. Section 2.6. Conditions Precedent Satisfied. The City and the Authority hereby declare that all acts, conditions and things required by law to exist, happen and be performed on their parts precedent to and in connection with the execution and entering into of this Trust Agreement have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly empowered to execute and enter into this Trust Agreement. ARTICLE III BONDS, TERMS AND PROVISIONS Section 3.1. Preparation of Bonds. (a) The Authority hereby directs the Trustee to authenticate and deliver to the Original Purchaser thereof, the Bonds in an aggregate principal amount of $20,361,090. The Bonds shall be and are special obligations of the Authority and are secured by an irrevocable pledge of, and are payable as to principal and interest from the Trust Estate. (b) The Trustee shall not at any time while any Bond is Outstanding authenticate and deliver additional bonds payable from the Lease Payments except as provided in Sections 3.5, 3.6, 3.7, 3.8, 3.9 and 3.13 hereof. Section 3.2. Payments from Trust Estate Only; Distribution of Trust Estate. (a) All amounts payable by the Trustee with respect to the Bonds pursuant to this Trust Agreement shall be paid only from the income of and proceeds from the Trust Estate and only to the extent that the Trustee shall have actually received sufficient income or proceeds from the Trust Estate to make such payments in accordance with the terms of Article IV hereof. Each Bondowner agrees to look solely to the income of and the proceeds from the Trust Estate to 9 OHSUSA:754116349.7 the extent available for distribution to such holder as herein provided, and each Bondowner agrees that the Trustee is not personally liable to any Bondowner for any amounts payable under this Trust Agreement or subject to any liability under this Trust Agreement except liability under this Trust Agreement as a result of negligence or willful misconduct by the Trustee. (b) So long as the Bonds shall be Outstanding, all amounts of Lease Payments (including without limitation prepayments), Additional Payments, indemnity payments and other payments of any kind constituting a part of the Trust Estate payable to the Trustee, shall be paid directly to the Trustee for distribution, in accordance with Article IV of this Trust Agreement, to or for the Bondowners. Section 3.3. The Bonds. (a) The Bonds shall mature on December 1, 2034. Interest on the Bonds shall be payable from the preceding Interest Payment Date to which interest was paid, provided, Bonds registered on or prior to May 15, 2015 shall have interest payable with respect thereto from the Delivery Date, and Bonds registered after a Record Date and on or prior to an Interest Payment Date shall have interest payable with respect thereto from such Interest Payment Date. (b) The Bonds shall bear interest at the rate of 3.85% per annum. (c) Interest due with respect to the Bonds shall be payable on each Interest Payment Date to and including the date of maturity or redemption, whichever is earlier. The interest to he paid to Bondowners on each Interest Payment Date shall be calculated on the basis of the rates per annum set forth in subsection (b) above. Interest shall be calculated on the basis of a 360 day year of twelve 30 day months. Interest with respect to any Bond shall be payable to the person appearing on the registration books of the Trustee as the Owner thereof, such interest to be paid by check mailed to such Owner on the Interest Payment Date by first class mail at his address as it appears on such registration books at the close of business on the Record Date. Payment of interest with respect to the Bonds may, at the option of any Owner, be transmitted by wire transfer to an account specified in writing to the Trustee on or before the applicable Record Date by said Owner. Any such written request shall remain in effect until rescinded in writing by the Owner. (d) The Bonds shall be delivered in fully registered form in the denomination of $250,000 or any integral multiple of $1.00 in excess thereof. Unless the Authority shall otherwise direct, in writing, the Bonds shall be lettered and numbered in such manner as the Trustee shall deem adequate and appropriate for record keeping purposes. Subject to the provisions of this Trust Agreement, the Bonds shall be substantially in the form set forth in Exhibit A hereof. The Trustee shall maintain, or cause to be maintained at its corporate trust office a system by which a record of the names and addresses of Bondowners as of any particular time can be kept, and the Trustee shall, upon request of the Authority or the City, furnish such information to the Authority or the City. 10 OHSUSA:754116349.7 (e) The principal of the Bonds shall be payable at the corporate trust office of the Trustee, or such other location as so designated by the Trustee. (f) The Bonds are subject to redemption as follows: (i) Extraordinary Redemption. The Bonds are subject to redemption in whole or in part, without premium, on any date in the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, upon the occurrence of damage, destruction or condemnation of the Project, or any portion thereof, which results in Net Insurance Proceeds to the extent required or permitted by the Lease Agreement to be applied to prepayment of Lease Payments. (ii) Optional Redemption. The Bonds are subject to optional redemption prior to maturity, at the option of the City pursuant to the Lease Agreement, as a whole or in part on any date on or after December 1, 2024 from available funds in the Redemption Account, at a redemption price equal to the principal amount to be redeemed plus accrued interest to the redemption date. (iii) Mandatory Term Bond Redemption. The Bonds are subject to mandatory redemption, by lot, in the principal amounts hereinafter set forth, without premium, on December 1 of each year, commencing on December 1, 2015 from the principal portion of the Lease Payments required to be on deposit in the Debt Service Payment Account on the Lease Payment Date immediately prior to December 1 of each of the years and in the amounts as follows: 11 OHSUSA:754116349.7 Year Principal Amount 2015 $ 1,109,882 2016 1,187,143 2017 1,232,473 2018 1,281,398 2019 1,328,794 2020 1,384,603 2021 1,433,622 2022 1,489,567 2023 1,548,915 2024 1,606,548 2025 567,401 2026 588,996 2027 609,672 2028 634,394 2029 658,068 2030 685,654 2031 712,052 2032 737,216 2033 766,099 2034 (Maturity) 798,593 (g) In the event redemption is made pursuant to Section 3.3(f) hereof, all Bonds called for redemption shall be paid in the following manner: (i) In the event of a redemption of Bonds pursuant to Section 3.3(f)(i) hereof, the Trustee shall deposit in the Redemption Account to be applied to the redemption on any date of Bonds and the payment of accrued interest on the Bonds to be redeemed, to the extent such interest is not paid out of the Debt Service Payment Account as provided in Section 4.3(b) hereof, the balance, if any, of Net Insurance Proceeds received by the Trustee pursuant to Section 5.3(b) of the Lease Agreement; (ii) In the event the City exercises its option to purchase the Project as provided in Section 7.3 of the Lease Agreement and there is a redemption of Bonds pursuant to Section 3.3(f)(ii) hereof, the Trustee shall transfer and deposit in the Redemption Account the amount received by Trustee from the City and all amounts then on deposit in all funds and accounts hereunder (excepting only the Rebate Fund) pursuant to Section 7.3 of the Lease Agreement which amount shall be applied to the redemption of Bonds on the earliest redemption date on which Bonds can be redeemed; and (iii) In the event sinking fund payments are due and payable, the Trustee shall transfer an amount equal to each such payment on or prior to the respective sinking fund payment date and deposit such amount into the Redemption Account, which amount shall be applied to the redemption of term Bonds pursuant to Section 3.3(f)(iii) hereof. 12 OHSUSA:754116349.7 Section 3.4. Medium of Payment. The Bonds shall be payable, with respect to interest and principal, and premium, if any, in lawful money of the United States of America. Section 3.5. Execution. (a) The Bonds shall be executed by the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors or by a Co-Administrator of the Authority by the facsimile or manual signature and authenticated in the name of, and by, the Trustee, as trustee under this Trust Agreement, by the manual signature of an authorized signatory of the Trustee. (b) Upon surrender of a Bond at the corporate trust office of the Trustee with a written instrument of transfer satisfactory to the Trustee, duly executed by the Bondowner or his duly authorized attorney, the Trustee shall, at the option of the Bondowner and upon payment by such Bondowner of any charges which the Trustee may make as provided in Section 3.7, exchange such Bond for an equal aggregate principal amount of Bonds of the same aggregate principal amount and maturity and interest rate. (c) The Bonds shall be sold and subsequently transferred only to a Qualified Institutional Buyer as defined in Rule 144A of the Securities Act of 1933 (“QIB”) or any affiliate or other party related to the Original Purchaser or a special purpose entity, a trust or custodial arrangement, from which the Bonds are not expected to be sold except to beneficial owners who are QIBs. Section 3.6. Negotiability, Transfer and Registry. (a) Each Bond shall be transferable only upon the books of the Trustee which shall be kept for that purpose at the corporate trust office of the Trustee, by the Bondowner in person or by his attorney duly authorized in writing, upon surrender thereof together with a written instrument of transfer satisfactory to the Trustee duly executed by the Bondowner or his duly authorized attorney. Upon the transfer of any such Bond the Trustee shall deliver in the name of the transferee a new Bond or Bonds of the same aggregate principal amount and maturity and interest rate as the surrendered Bond. (b) The Trustee may deem and treat the person in whose name any Bond shall be registered upon the books of the Trustee as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal, if any, of and interest with respect to such Bond and for all other purposes; and all such payments so made to any such Bondowner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid; and the Trustee shall not be affected by any notice to the contrary. Section 3.7. Regulations With Respect to Exchanges and Transfers. In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the Trustee shall authenticate and deliver Bonds in accordance with the provisions of this Trust Agreement. All Bonds surrendered in any such exchanges or transfers shall forthwith be canceled by the Trustee pursuant to Section 3.14 hereof. For every such exchange or transfer of Bonds, except an exchange of a temporary Bond for a definitive Bond, the Trustee may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to 13 OHSUSA:754116349.7 such exchange or transfer. The cost of printing any new Bonds and any services rendered or any expenses incurred by the Trustee in connection with any exchange or transfer shall be paid by the City (except governmental taxes and charges and the costs of replacing lost, stolen or mutilated Bonds which shall be paid by the Owner). The Trustee shall not be required to transfer or exchange any Bonds selected for redemption or within the 15 days before the selection of Bonds for redemption. Any request for a transfer of a Bond will be deemed a representation by the Owner that such transfer complies with the restrictions set forth in Section 3.5(c). Section 3.8. Bonds Mutilated, Destroyed, Stolen or Lost. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Trustee shall authenticate and deliver a new Bond of like maturity and principal amount as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond, upon surrender and cancellation of such mutilated Bond, or in lieu of and substitution for the Bond, destroyed, stolen or lost, upon receipt by the Trustee of evidence satisfactory to the Trustee that such Bond has been destroyed, stolen or lost and proof of ownership thereof, and upon furnishing the Trustee with indemnity satisfactory to the Trustee and complying with such other regulations as the Trustee may prescribe and paying such expenses as the Trustee may incur. All Bonds so surrendered to the Trustee shall be canceled by it pursuant to Section 3.14 hereof. Any such new Bonds issued pursuant to this Section in substitution for Bonds mutilated or alleged to be destroyed, stolen or lost shall be equally secured by and entitled to equal and proportionate benefits of, with all other Bonds delivered under this Trust Agreement, any moneys or securities held by the Trustee for the benefit of the Bondowners. Section 3.9. Temporary Bonds. Until the definitive Bonds are prepared, the Trustee may authenticate and deliver, in the same manner as is provided in Section 3.5, in lieu of definitive Bonds, one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in any authorized denomination, and with such omissions, insertions and variations as may be appropriate to temporary Bonds. The Trustee at the expense of the City shall authenticate and, upon the surrender of such temporary Bonds and the cancellation of such surrendered temporary Bonds, shall, without charge to the Owners thereof, in exchange therefor, deliver definitive Bonds, of the same aggregate principal amount and maturity as the temporary Bonds. Section 3.10. Privilege of Redemption. The Bonds shall be redeemable at such times, in such amount, upon such terms and upon such notice as are provided in this Article III. Section 3.11. Selection of Bonds to be Redeemed. If less than all of the Bonds of a single maturity shall be called for redemption, the particular Bonds or portions thereof to be redeemed shall be selected by the Trustee by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair. In selecting Bonds for redemption, the Trustee shall treat each Bond as representing that number of Bonds of $1.00 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $1.00. Unless the City directs the Trustee in writing as to any other method of redemption, whenever provisions are made for the redemption of Bonds in part, the Bonds to be redeemed will be redeemed from each maturity, with the mandatory redemption schedule set forth above to be adjusted accordingly. The City shall provide the Trustee with a revised mandatory redemption schedule. 14 OHSUSA:754116349.7 Section 3.12. Notice of Redemption. When redemption of Bonds is required, the Trustee shall, at the expense of the City, give notice of the redemption of such Bonds, the redemption date and the place or places where amounts due upon such redemption will be payable and, if less than all of the Bonds are to be redeemed, the letters and numbers of such Bonds so to be redeemed, and, in the case of Bonds to be redeemed in part only, such notice shall also specify the respective portions of the principal amount thereof to be redeemed. Such notice shall further state that on such date there shall become due and payable upon each Bond to be redeemed the principal amount to be redeemed, together with interest accrued to the redemption date, and that from and after such date interest on the principal amount redeemed shall cease to accrue and be payable. The Trustee shall mail a copy of such notice, postage prepaid, first class United States mail, not less than 30 days and not more than 60 days before the redemption date, to the Bondowners of any Bonds or portions of Bonds which are to be redeemed, at their addresses as the same appear upon the registry books, but neither the failure of a Bondowner to receive such notice nor any immaterial defect therein shall affect the validity of the proceedings for the redemption of Bonds. In the case of a redemption described in Section 3.3(f)(i) or (ii), the notice may state (i) that it is conditioned upon the deposit of money, in an amount equal to the amount necessary to effect the redemption, with the Trustee no later than the redemption date or (ii) that the Authority retains the right to rescind such notice on or prior to the scheduled redemption date (in either case, a “Conditional Redemption”), and such notice and optional redemption shall be of no effect if such money is not so deposited or if the notice is rescinded. Any Conditional Redemption may be rescinded in whole or in part at any time prior to the redemption date if the Authority delivers a Certificate of Authorized Representative of the Authority to the Trustee instructing the Trustee to rescind the redemption notice. The Trustee shall give prompt notice of such rescission to the affected Owners. Any Bonds subject to Conditional Redemption where redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event of Default. Further, in the case of a Conditional Redemption, the failure of the Authority to make funds available in part or in whole on or before the redemption date shall not constitute an Event of Default, and the Trustee shall give prompt notice to the affected Owners that the redemption did not occur and that the Bonds called for redemption and not so paid remain Outstanding. Section 3.13. Payment of Redeemed Bonds. Notice having been given in the manner provided in Section 3.12, and payment having been provided for, the Bonds or portions thereof so called for redemption shall become due and payable on the redemption date so designated at the principal amount to be redeemed plus interest accrued and unpaid to the redemption date, and, upon presentation and surrender thereof at the office specified in such notice, such Bonds, or portions thereof, the principal amount and interest shall be paid as provided in Section 3.3. If there shall be called for redemption less than all of a Bond, the Trustee shall execute and deliver, upon the surrender of such Bond, without charge to the Owner thereof, for the unredeemed balance of the principal amount of the Bond so surrendered, Bonds of like maturity in any of the authorized denominations, at the option of the Owner thereof. If, on the redemption date, moneys for the redemption of all the Bonds or portions thereof to be redeemed together with interest to the redemption date shall be held by the Trustee so as to be available therefor on said date; and if notice of redemption shall have been given to the Owners as aforesaid, then from and 15 OHSUSA:754116349.7 after the redemption date interest on the Bonds or portions thereof so called for redemption shall cease to accrue and become payable. Upon the payment of the redemption price of the Bonds being redeemed, each check or other transfer of funds issued for such purpose shall to the extent practicable by the Trustee bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. Section 3.14. Cancellation of Bonds. All Bonds paid or redeemed, either at or before maturity, shall be delivered to the Trustee when such payment or redemption is made, and such Bonds shall thereupon be promptly canceled. Bonds so canceled shall be destroyed by the Trustee and upon written request of the City a certificate of destruction shall be provided to the City. ARTICLE IV ESTABLISHMENT AND ADMINISTRATION OF FUNDS AND ACCOUNTS Section 4.1. Establishment of Project Trust Fund. There is hereby established with the Trustee a special trust fund to be designated as the “Project Trust Fund”; which shall be held in trust by the Trustee for the benefit of the Bondholders pending application of the funds on deposit therein as provided in this Trust Agreement. The Trustee shall keep the Project Trust Fund separate and apart from all other funds and moneys held by it. Within the Project Trust Fund there are hereby established the following accounts (the “Accounts”): (i) Debt Service Payment Account; (ii) Costs of Issuance Account; (iii) Refunding Account; (iv) Redemption Account; and (v) Insurance and Condemnation Account. There is established by Section 4.11 hereof with the Trustee a special trust fund to be designated as the “Rebate Fund”, which the Trustee shall maintain and manage pursuant to the provisions of Section 4.11 hereof. On the Delivery Date the Trustee shall deposit proceeds of the sale of the Bonds ($20,361,090), in the Project Trust Fund as follows. The Trustee shall deposit in the Accounts the following amounts: Costs of Issuance Account: an amount equal to $195,000.07 for the payment of Costs of Issuance. Refunding Account: an amount equal to $20,166,089.93 for the refunding of the 2002 Bonds. Section 4.2. Refunding Account. On the Delivery Date, the Trustee shall transfer $20,166,089.93 in the Refunding Account to the Escrow Agent for application as provided in the Escrow Agreement (and thereupon the Trustee shall close the Refunding Account). Section 4.3. Debt Service Payment Account. (a) In addition to the moneys required to be deposited in the Debt Service Payment Account pursuant to Sections 4.2, 4.4 and 4.7 hereof, all Lease Payments received by the Trustee shall be deposited by the Trustee in the Debt Service Payment Account immediately upon their receipt. The Trustee shall pay from the Debt Service Payment Account on each 16 OHSUSA:754116349.7 Interest Payment Date, the amount required for the interest payable on such date and the amount required for the principal payable, if any, on such date. Such amounts shall be applied by the Trustee on the due dates thereof. (b) The Trustee shall also transfer to the Redemption Account from the Debt Service Payment Account any amount available therein to pay principal, premium, if any, and the accrued interest on the Bonds redeemed pursuant to Section 3.3(f). Section 4.4. Redemption Account. (a) The Trustee shall apply moneys in the Redemption Account as provided in this Section 4.5 and Section 4.6. Amounts in the Redemption Account shall be applied to the redemption of Bonds in accordance with Section 3.3(f). Interest on Bonds so redeemed shall be paid from the Debt Service Payment Account, except to the extent Net Insurance Proceeds are used to pay such interest, and all expenses in connection with such redemption shall be paid by the City as Additional Payments. (b) The Trustee shall deposit in the Redemption Account as received, all moneys, if any, paid to it by the City for prepayment of Lease Payments pursuant to Sections 6.1(c) and 7.3 and Article X of the Lease Agreement. All of said moneys shall be set aside in the Redemption Account for the purpose of redeeming the Bonds in advance of their maturity and shall be applied on or after the date of redemption designated pursuant to Section 3.3(f) and Section 3.3(g) to the payment of principal, redemption premium, if any, and accrued interest, if any, with respect to the Bonds to be redeemed upon presentation and surrender of such Bonds. Section 4.5. Insurance and Condemnation Account. Subject to the provisions of Section 6.1(a) of the Lease Agreement, the proceeds of insurance maintained pursuant to the Lease Agreement against physical loss of or damage to the Project or any portion thereof shall be deposited in the Insurance and Condemnation Account immediately upon receipt and applied as provided in Article VI of the Lease Agreement. Section 4.6. Deposits of Money; Payment Procedure. All moneys required to be held by the Trustee under the provisions of this Trust Agreement shall be deposited with the Trustee. All moneys deposited under the provisions of this Trust Agreement with the Trustee shall be held in trust and applied only in accordance with the provisions of this Trust Agreement, and the Project Trust Fund shall be a trust fund for the purposes thereof. Section 4.7. Investment of Certain Accounts and Subaccounts. Subject to the requirements of Section 4.9 hereof, all moneys in the funds, accounts and subaccounts held by the Trustee hereunder shall be invested as follows: (a) Moneys held in the Debt Service Payment Account shall be invested and reinvested by the Trustee pursuant to this Section 4.7. Moneys held in the Insurance and Condemnation Account may be invested and reinvested in Investment Securities which mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from such Account. Moneys in the Redemption Account shall be invested only in Investment Securities which have a maturity no longer than 30 days. The Trustee shall make all 17 OHSUSA:754116349.7 such investments of moneys held by it in accordance with written instructions received from an Authorized Representative of the City at least two Business Days in advance of the investment. The Authorized Representative of the City may instruct the Trustee, in making any investment in any Investment Securities with moneys in any Account established under this Trust Agreement, to combine such moneys with moneys in any other Account, but solely for purposes of making such investment in such Investment Securities. In the absence of instructions from the City, the Trustee shall hold such funds uninvested. Absent negligence or willful misconduct on its part, the Trustee shall have no liability or responsibility for any loss resulting from any investment made in accordance with the provisions of this Section 4.7. The Trustee shall have no obligation to pay additional interest or maximize investment income on any funds held by it and neither the Authority, nor the Bond Owners shall have any claim of any kind against the Trustee in connection with such Investments. (b) Any income or interest earned by the Debt Service Payment Account due to the investment thereof shall be retained in the Debt Service Payment Account and applied as a credit against the Lease Payments due on the next occurring Lease Payment Date and deemed to be the payment of the interest portion thereof to the extent thereof and then to principal. (c) Moneys held in the Costs of Issuance Account shall be invested and reinvested by the Trustee in Investment Securities set forth in clause (B)(5) of the definition thereof. Any income or interest earned by the Costs of Issuance Account due to the investment thereof shall transferred to the Debt Service Payment Account. (d) Nothing herein shall prevent any Investment Securities acquired as investments of funds held hereunder from being issued or held in book-entry form on the books of the Department of the Treasury of the United States of America. (e) The Trustee or an affiliate may act as principal or agent in the acquisition or disposition of an investment and shall be entitled to its customary fees therefor pursuant to a prior written fee agreement with the Authority and the City. (f) If at any time after investment therein an investment ceases to meet the criteria set forth in the definition of Investment Securities as determined by a valuation of such investment and such obligation, aggregated with other non-conforming investments, exceeds ten percent (10%) of invested funds, such investment shall be sold or liquidated unless otherwise approved by the City. (g) Investments (except investment agreements) in Trust Agreement funds and accounts and subaccounts shall be valued by the Trustee as frequently as deemed necessary by the Authority, but not less often than semi-annually nor more often than monthly, at the fair market value thereof, exclusive of accrued interest. Deficiencies in the amount on deposit in any fund or account resulting from a decline in market value shall be restored not later than the next succeeding semiannual valuation date which is at least six months after the valuation date. Investments purchased with funds on deposit in the Reserve Account shall have an average aggregate weighted term to maturity not greater than five years. 18 OHSUSA:754116349.7 The Trustee shall terminate any repurchase agreement upon a failure of the counterparty thereto to maintain the requisite collateral percentage after the restoration period and, if not paid by the counterparty in federal funds against transfer of the repo securities, liquidate the collateral. The Trustee shall give notice to any provider of an investment agreement in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid. The Trustee shall, upon actual knowledge of the withdrawal or suspension of either of the ratings of an investment agreement provider or a drop in the ratings thereon below “A,” so notify the Authority and, if so directed by the Authority, shall demand further collateralization of the agreement or liquidation thereof. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City will not receive such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which the Trustee may make any investments hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder. Section 4.8. Valuation and Sale of Investments. Obligations purchased as an investment of moneys in any fund, account or subaccount created under the provisions hereof shall be deemed at all times to be a part of such fund, account or subaccount and any profit realized from the liquidation of such investment shall be credited to, and any loss resulting from the liquidation of such investment shall be charged to, the computation of net interest earned on the moneys and investments of such fund, account or subaccount. The value of the above investments shall be determined as provided in “Value” below. “Value,” which shall be determined as of the 10th day of March and September of each year unless otherwise directed in writing by the Authority, means that the value of any investments shall be calculated as follows: (a) as to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in The New York Times): the average of the bid and asked prices for such investments so published on or most recently prior to such time of determination; (b) as to investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times: the average bid price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service; (c) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest; 19 OHSUSA:754116349.7 (d) as to any investment not specified above: the value thereof established by prior agreement between the Authority, the Trustee and the City; and (e) alternatively, the Trustee shall determine the value based on accepted industry standards and from accepted industry providers. Except as otherwise provided herein, the Trustee shall sell or present for redemption or transfer as provided in the next sentence any obligation so purchased as an investment whenever it shall be requested in writing by an Authorized Representative of the City so to do or whenever it shall be necessary in order to provide moneys to meet any payment or transfer from any fund, account or subaccount held by it. In lieu of such sale or presentment for redemption, the Trustee may, in making the payment or transfer from any fund, account or subaccount mentioned in the preceding sentence, transfer such investment obligations or interest appertaining thereto if such investment obligations shall mature or be collectable at or prior to the time the proceeds thereof shall be needed and such transfer of investment obligations may be made in book entry form. Absent bad faith or willful misconduct or negligence on its part, the Trustee shall not be liable or responsible for making or liquidating any such investment in the manner provided above or for any loss resulting from any such investment. Section 4.9. Costs of Issuance Account. The Trustee shall deposit to the Costs of Issuance Account the amount required by Section 4.1 hereof. The Trustee shall disburse funds from the Costs of Issuance Account upon receipt by the Trustee of an executed Requisition in the form of Exhibit B hereto. Each such Requisition of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Any amounts remaining on deposit in the Costs of Issuance Account on May 1, 2015 shall be transferred to the Debt Service Payment Account. Section 4.10. Rebate Fund. (a) Establishment. The Trustee shall establish a special fund designated the “Rebate Fund” (the “Rebate Fund”). All amounts at any time on deposit in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the requirement to make rebate payments to the United States pursuant to Section 148 of the Code and the Treasury Regulations promulgated thereunder. Such amounts shall be free and clear of any lien under this Trust Agreement and shall be governed by this Section and Section 5.17 of this Trust Agreement and by the Tax Certificate executed by the City and Authority. The Trustee shall have no independent responsibility to, or liability resulting from its failure to, enforce compliance by the Authority with the Rebate Requirement. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust for payment to the United States Treasury. All amounts on deposit in the Rebate Fund for the Bonds shall be governed by this Section and the Tax Certificate for the Bonds, unless and to the extent that the Authority delivers to the Trustee an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected if such requirements are not satisfied. (i) Computation of Rebate Amount. Within 55 days of the end of the fifth Bond Year (as such term is defined in the Tax Certificate) and each five years thereafter, the Authority shall calculate or cause to be calculated the amount of “rebate 20 OHSUSA:754116349.7 amount,” in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Treasury Regulations (taking into account any applicable exceptions with respect to the computation of the “rebate amount,” described, if applicable, in the Tax Certificate (e.g., the temporary investment exceptions of Section 148(f)(4)(B) of the Code, the expenditure exception of Section 148(f)(4)(C) of the Code or Section 1.148-7(c) and (d) of the Treasury Regulations, the exception for certain “small governmental issuers” as set forth in Section 148(f)(4)(D) of the Code, and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1-1/2% Penalty”) has been made)), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Treasury Regulations. The Authority shall obtain expert advice as to the calculation of the “rebate amount” to comply with this Section. The Trustee may rely conclusively upon the City’s determinations, calculations and certifications required by this Section. The Trustee shall have no responsibility to independently make any calculation or determination or to review the City’s calculations hereunder. (ii) Transfer of Moneys. Within 55 days of the end of the fifth Bond Year and each five years thereafter, upon the written request of the Authority, an amount shall be deposited to the Rebate Fund by the Trustee from any legally available moneys for such purpose (as specified by the Authority in the aforesaid written request), if and to the extent required so that the balance in the Rebate Fund shall equal the “rebate amount” so calculated in accordance with this Section. In the event that immediately following the transfer required by the previous sentence, the amount then on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein, upon written request of the Authority, the Trustee shall withdraw the excess from the Rebate Fund and then credit the excess to the Debt Service Payment Fund. (iii) Timing of Rebate Payment to the Treasury. The Trustee shall pay, as directed by request of the Authority, to the United States Treasury, out of amounts in the Rebate Fund, (1) not later than 60 days after the end of (A) the fifth Bond Year, and (B) each applicable fifth Bond Year thereafter, an amount that, together with all previous rebate payments, is equal to at least 90% of the “rebate amount” calculated as of the end of such Bond Year; and (2) not later than 60 days after the payment of the Bonds or Parity Obligations of any series, as applicable, an amount equal to 100% of the “rebate amount” calculated as of the date of such payment (and any income attributable to the “rebate amount” determined to be due and payable) in accordance with Section 1.148-3 of the Treasury Regulations. Each payment required to be made pursuant to this Section shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T prepared by the Authority, or shall be made in such other manner as provided under the Code. 21 OHSUSA:754116349.7 (b) Deficiencies in the Rebate Fund. In the event that, prior to the time of any payment required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the Authority shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. (c) Disposition or Unexpended Moneys. Any moneys remaining in the Rebate Fund after redemption and payment of the Bonds and the payments described in this Section being made may be withdrawn by the Authority and utilized in any lawful manner by the Authority. (d) Record Keeping. The Authority shall retain records of all determinations made hereunder until six years after the complete retirement of the Bonds. (e) Survival of Defeasance. Notwithstanding anything in this Trust Agreement to the contrary, the obligation to comply with the requirements of this Section shall survive the payment in full or defeasance of the Bonds. ARTICLE V COVENANTS, EVENTS OF DEFAULT, REMEDIES OF BONDOWNERS AND LIMITATIONS OF LIABILITY Section 5.1. Trustee to Enforce Lease Agreement and Property Lease. The Trustee covenants and agrees with the Bondowners, subject to the provisions of the Trust Agreement to exercise the rights assigned to it under the Lease Agreement and the Property Lease as assignee of the Authority, and to enforce the Property Lease against the City as provided therein and the Lease Agreement against the City as provided therein, all subject to the provisions of Section 6.12 hereof. Section 5.2. Against Amendment or Termination of Property Lease. The Authority and the City hereby covenant and agree not to amend the Property Lease in a manner that materially adversely affects the security for the Bonds or to terminate the Property Lease so long as the Bonds remain Outstanding. Section 5.3. Amendment of Lease Agreement. The terms of the Lease Agreement shall not be waived, altered, modified, supplemented or amended in any manner whatsoever except by written instrument signed by the Authority and the City, subject to the same conditions as set forth in Section 7.2 hereof. Section 5.4. Notice of Non-Payment. In the event of delinquency in the payment of Lease Payments due by the City pursuant to the Lease Agreement, the Trustee shall promptly give written notice of the delinquency and the amount thereof to the City. Section 5.5. Assignment of Rights. Pursuant to this Trust Agreement, the Authority has transferred, assigned and set over to the Trustee all of the Authority’s rights in and to the Property Lease and the Lease Agreement including without limitation all of the Authority’s right to receive Lease Payments from the City under the Lease Agreement, its right to receive the 22 OHSUSA:754116349.7 proceeds of insurance or of an eminent domain award on the Project, its right to pursue the remedies to which it is entitled in the event of default by the City under the Lease Agreement (a “Lease Default Event”), its right to enforce payment of such Lease Payments when due, or otherwise protect its interests and enforce its rights under the Lease Agreement. Section 5.6. Events of Default. The following events shall be Events of Default hereunder: (a) Default in the due and punctual payment of the principal on any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise. (b) Default in the due and punctual payment of any installment of interest on any Bonds when and as the same shall become due and payable. (c) Default by the Authority in the observance of any of the other covenants, agreements or conditions on its part in this Trust Agreement or in the Bonds contained, if such default shall have continued for a period of thirty (30) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Authority by the Trustee; provided, however, that if in the reasonable opinion of the Authority the default stated in the notice can be corrected, but not within such thirty (30) day period, such default shall not constitute an Event of Default hereunder if the Authority shall commence to cure such default within such thirty (30) day period and thereafter diligently and in good faith cure such failure in a reasonable period of time. (d) The occurrence and continuation of a Lease Default Event. Notwithstanding anything in this Trust Agreement to the contrary, the Trustee shall have no right to declare the principal or interest on the Bonds to be due and payable immediately Section 5.7. Application of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article V or Article IX of the Lease Agreement shall be applied by the Trustee in the order following upon presentation of the several Bonds, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid - First, to the payment of the costs and expenses of the Trustee in declaring such Event of Default, including reasonable compensation to its or their agents, attorneys, consultants and counsel and any fees and expenses due or owing the Trustee, and then the payment of the costs and expenses of the Bondowners in declaring such Event of Default, including reasonable compensation to its or their agent, attorneys, consultants and counsel; Second, to the payment of the whole amount then owing and unpaid with respect to the Bonds for principal and interest and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid with respect to the Bonds, then to the payment of such principal and interest without preference or priority of principal over interest, or of interest over principal, or of any installment over any other installment of interest, ratably to the aggregate of such principal and interest. 23 OHSUSA:754116349.7 Section 5.8. Institution of Legal Proceedings. If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the Owners of a majority in principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners of Bonds as provided in the Lease Agreement or in this Trust Agreement. Section 5.9. Non-Waiver. Nothing in this Article V or in any other provision of this Trust Agreement or in the Bonds, shall affect or impair the obligation of City to pay or prepay the Lease Payments in accordance with and subject to the terms and provisions of the Lease Agreement, or affect or impair the right of action, which is also absolute and unconditional, of the Bondowners to institute suit to enforce and collect such payment. No delay or omission of the Trustee or of any Bondowners to institute suit to enforce and collect such payment and no delay or omission of the Trustee or of any Bondowner of any of the Bonds to exercise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and every power and remedy given by this Article V to the Trustee or to the Bondowner may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Bondowner. Section 5.10. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or the Bondowners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise. Section 5.11. Power of Trustee to Control Proceedings. Except as provided in Section 5.3, in the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Bondowners of a majority in principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, without the consent of a majority in aggregate principal amount of the Bonds Outstanding. Section 5.12. Limitation on Bondowners’ Right to Sue. Except as provided in Section 5.3, no Bondowner shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Trust Agreement, unless (a) such Bondowner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Bondowners of at least twenty-five percent (25%) in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers granted to the Trustee as assignee of the Authority or to institute such action, suit or proceeding in its own name; (c) said Bondowner shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. 24 OHSUSA:754116349.7 Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Bondowner of any remedy hereunder; it being understood and intended that no one or more Bondowners shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity with respect to an Event of Default shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Bondowners of the Outstanding Bonds. The right of any Bondowner of any Bond to receive payment of said Bondowner’s interest in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Bondowner, notwithstanding the foregoing provisions of this Section or any other provision of this Trust Agreement. Section 5.13. Reconstruction; Application of Insurance Proceeds. (a) If any useful portion of the Project shall be destroyed or is damaged by fire or other casualty, or title to, or the temporary use of, such portion shall be taken under the exercise of the power of eminent domain, the City shall as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair, reconstruction, restoration or replacement thereof, unless it is determined under the provisions of the Lease Agreement that such repair, reconstruction, restoration or replacement is not to be undertaken. The proceeds of any insurance paid on account of such damage or destruction, shall be held by the Trustee in the Insurance and Condemnation Account and made available for, and to the extent necessary be applied to, the cost of such repair, reconstruction, restoration or replacement. Such moneys deposited in the Insurance and Condemnation Account shall be applied and paid out by the Trustee as provided in the Lease Agreement. Pending such application, such proceeds shall be invested, upon direction of an Authorized Representative of the City, by the Trustee in Investment Securities which mature not later than such times as shall be necessary to provide moneys when needed to pay such cost of repair, reconstruction, restoration or replacement. The interest, as well as the gain, if any, on such investments shall remain a part of any such Insurance and Condemnation Account to be applied as provided in this Section. The proceeds of any insurance not applied within six months after receipt thereof by Trustee to repairing, reconstructing, restoring or replacing damaged or destroyed property, or in respect of which notice in writing of intention to apply the same to the work of repairing, reconstruction, restoring or replacing the property damaged or destroyed shall not have been given to the Trustee by City within such six months, or which City shall at any time notify the Trustee are not to be so applied, shall be deposited in the Redemption Account and applied to the redemption of Bonds pursuant to Section 3.3(f)(i). After the completion of any repair, reconstruction, restoration, any remaining insurance proceeds shall be deposited in the Redemption Account and applied to the redemption of Bonds pursuant to Section 3.3. Section 5.14. Accounts and Reports. (a) The Trustee shall keep proper books of record and account in which complete and correct entries shall be made of its transactions relating to each fund and account established under this Trust Agreement and the principal amount of the Bonds and which shall at 25 OHSUSA:754116349.7 all reasonable times upon reasonable prior notice be subject to the inspection of the City and Bondowners. (b) The Trustee shall provide the City, promptly after the end of each calendar month a statement of its transactions during such month relating to each fund, account or subaccount held by it under the Trust Agreement. Section 5.15. No Obligation by the City to Bondowners. Except for the payment of Lease Payments when due in accordance with the Lease Agreement and any other payment due and owing by the City under the Lease Agreement and the performance of the other covenants and agreements of the City contained in the Lease Agreement or hereunder, the City shall have no obligation or liability to any of the other parties or to the Bondowners with respect to this Trust Agreement or the terms, execution, delivery or transfer of the Bonds, or the distribution of Lease Payments to the Bondowners by the Trustee. Section 5.16. No Obligation With Respect to Performance by Trustee. The City or the Authority shall not have any obligation or liability to any of the other parties or to the Bondowners with respect to the performance by the Trustee of any duty imposed upon it under this Trust Agreement. Section 5.17. No Liability to Bondowners for Payment. Except as provided in this Trust Agreement, neither the Trustee nor the Authority shall have any obligation or liability to the Bondowners with respect to the payment of the Lease Payments by the City when due, or with respect to the performance by the City of any other covenant by it in the Lease Agreement. Section 5.18. Possession and Enjoyment. So long as no Lease Termination shall have occurred, the City shall during such Lease Term peaceably and quietly have and hold and enjoy the Project, without suit, trouble or hindrance from the Trustee, except as expressly set forth in the Lease Agreement. The Trustee will, at the written request of the City and at the City’s cost, join in any legal action in which the City asserts its right to such possession and enjoyment, to the extent Trustee lawfully may do so; provided, however, the Trustee may decline to join in such action if it believes it will be exposed to liability for which it has not been satisfactorily indemnified against. Section 5.19. Tax Covenants. Notwithstanding any other provision of this Trust Agreement, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds will not be adversely affected for federal income tax purposes, the Authority and the City covenant to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income and specifically covenant, without limiting the generality of the foregoing, as follows: (a) Private Activity. The Authority and the City will not take or omit to take any action or make any use of the proceeds of the Bonds, the Service Contract Project Improvements or of any other moneys or property which would cause the Bonds to be “private activity bonds” within the meaning of Section 141 of the Code. (b) Arbitrage. The Authority and the City will make no use of the proceeds of the Bonds, the Project or of any other amounts or property, regardless of the sources, or take or 26 OHSUSA:754116349.7 omit to take any action which would cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code; (c) Federal Guarantee. The Authority and the City will make no use of the proceeds of the Bonds, the Project, or take or omit to take any action that would cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code; (d) Information Reporting. The Authority and the City will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code; (e) Hedge Bonds. The Authority and the City will make no use of the proceeds of the Bonds, the Project, or any other amounts or property, regardless of the source, or take or omit to take any action that would cause the Bonds to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the Authority and the City take all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the Bonds for federal income tax purposes; and (f) Miscellaneous. The Authority and the City will take no action inconsistent with their expectations stated in the Tax Certificate and will comply with the covenants and requirements stated therein and incorporated by reference herein. Section 5.20. Parity Obligations. Neither the Authority nor the City shall issue or incur evidences of indebtedness or other obligations payable from the Lease Payments having any priority in payment over the Bonds. The City may at any time issue obligations secured on a parity with the Lease Payments which are incurred in accordance with Section 4.11 of the Lease. ARTICLE VI CONCERNING THE TRUSTEE Section 6.1. Employment of Trustee. The Authority hereby appoints The Bank of New York Mellon Trust Company, N.A., as Trustee. The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Trust Agreement, and no implied covenants or obligations shall be read into this Trust Agreement against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured in accordance herewith), exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. Section 6.2. Trustee Acceptance of Duties. The Trustee shall signify its acceptance of the duties and obligations imposed upon it hereby by executing and delivering this Trust Agreement; and by executing such acceptance the Trustee shall be deemed to have accepted such duties and obligations with respect to all the Bonds thereafter delivered, but only, however, upon the terms and conditions set forth herein. 27 OHSUSA:754116349.7 Section 6.3. Evidence on Which Trustee May Act. (a) The Trustee, upon receipt of any notice, resolution, request, consent, order, certificate, report, opinion, bond, or other paper or document furnished to it pursuant to any provision hereof, shall examine such instrument to determine whether it conforms to the requirements hereof and shall not be liable for acting upon any such instrument believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may or may not be counsel to the City, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Trustee may rely on and shall not be liable for acting upon the written instructions of the Authority and the City and such employees and representatives of the City as the City may hereinafter designate in writing. (b) Whenever the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be therein specifically prescribed) may be deemed to be conclusively proved and established by a certificate of an Authorized Representative of the City, and such certificate shall be full warrant for any action taken or suffered in good faith under the provisions hereof upon the terms hereof; but in its discretion the Trustee may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as to it may seem reasonable. (c) Except as otherwise expressly provided herein, any request, order, notice or other direction required or permitted to be furnished pursuant to any provision hereof by the Authority or the City to the Trustee shall be sufficiently executed in the name of the Authority or the City by an Authorized Representative of the Authority or the City, as appropriate. Section 6.4. Obligations of Trustee. Upon receipt of written notice of the termination of the Lease Agreement, the Trustee shall at the written request of the City convey any right, title or interest in the Project created by this Trust Agreement free and clear of all liens thereon which Trustee may have. Section 6.5. Compensation. The City has agreed in the Lease Agreement to pay to the Trustee compensation for all services rendered hereunder and also all expenses, charges, counsel fees and other disbursements, including those of its attorneys, agents, and employees, incurred in and about the performance of its powers and duties hereunder, at the rates and charges specified in a separate written fee agreement among the Authority, the City and the Trustee. The City shall reimburse the Trustee for any advances of its own funds to make payments for which the City and Authority is obligated hereunder, with interest at the maximum rate allowed by law. Section 6.6. Resignation of Trustee. The Trustee may at any time resign and be discharged of the duties and obligations created hereby by giving not less than 60 day’s written notice to the City and the Bondowners, specifying the date when such resignation shall take effect, and such resignation shall take effect upon the day specified in such notice unless previously a successor shall have been appointed by the City and the Authority or the Bondowners as provided in Section 6.8, in which event such resignation shall take effect immediately on the appointment of such successor; provided that in the event the City and the 28 OHSUSA:754116349.7 Authority are unable to appoint a successor on or before the date specified, the resigning Trustee shall continue to serve hereunder until a successor is appointed pursuant to Section 6.8. Section 6.7. Removal of Trustee. So long as no Event of Default has occurred and is continuing, the City may remove the Trustee upon 60 days’ written notice by an instrument in writing filed with the Trustee. The Trustee may be removed upon 60 days’ written notice by an instrument or concurrent instruments in writing filed with the Trustee and signed by the Owners of a majority in principal amount of the Bonds then Outstanding or their attorneys-in-fact duly authorized. Section 6.8. Appointment of Successor Trustee. (a) In case at any time the Trustee shall resign or shall be removed or shall become incapable of acting, or shall be adjudged as bankrupt or insolvent, or if a receiver, liquidator or conservator of the Trustee, or of its property, shall be appointed, or if any public officer shall take charge or control of the Trustee or of its property or affairs, a successor may be appointed by the Authority and the City. (b) If in a proper case no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section 6.8 within 45 days after the Trustee shall have given to the City written notice as provided in Section 6.6 or after a vacancy in the office of the Trustee shall have occurred by reason of its inability to act, the Trustee may petition at the expense of the City a court to appoint a successor Trustee. (c) Any Trustee appointed under the provisions of this Section 6.8 in succession to the Trustee shall be a commercial bank or trust company or national banking association, having capital stock and surplus aggregating at least $75,000,000 and authorized to exercise trust powers. (d) Notwithstanding any other provision of this Trust Agreement, no removal, resignation or termination of the Trustee shall take effect until a successor shall be appointed. Section 6.9. Transfer of Rights and Project to Successor Trustee. Any successor Trustee appointed under the Trust Agreement shall execute, acknowledge and deliver to its predecessor Trustee an instrument accepting such appointment, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become fully vested with all moneys, estates, properties, rights, powers, duties and obligations of such predecessor Trustee, with like effect as if originally named as Trustee; but the Trustee ceasing to act shall nevertheless, on the written request of the successor Trustee, execute, acknowledge and deliver such instrument of conveyance and further assurance and do such other things as may reasonably be required for more fully and certainly vesting and confirming in such successor Trustee all the right, title and interest of the predecessor Trustee in and to any property held by it under the Trust Agreement, and shall pay over, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Should any deed, conveyance or instrument in writing from the City or the Authority be required by such successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any such estates, rights, power and duties, any and all such deeds, conveyances and instruments in writing shall, on request, and 29 OHSUSA:754116349.7 so far as may be authorized by law, be executed, acknowledged and delivered by the City or the Authority. Section 6.10. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be a bank or trustee company organized under the laws of any state of the United States or a national banking association, shall meet the other requirements of Section 6.8(c), and shall be authorized by law to perform all the duties imposed upon it hereby, shall be the successor to the Trustee without the execution or filing of any paper or the performance of any further act. Section 6.11. Adoption of Authorized Signature. In case any of the Bonds contemplated to be delivered hereunder shall have been executed but not delivered, any successor Trustee may adopt the authorized signature of any predecessor Trustee so authenticating such Bonds and deliver such Bonds so executed; and in case any of the said Bonds shall not have been executed, any successor Trustee may authenticate such Bonds in the name of the successor Trustee, and in all such cases such authentication shall have the full force which it is anywhere in said Bonds or herein provided that the authentication of the Trustee shall have. Section 6.12. Liability of the Trustee. The recitals, statements and representations by the City or the Authority contained in this Trust Agreement or in the Bonds shall be taken and construed as made by and on the part of the City and Authority and not by the Trustee and the Trustee does not assume, and shall not have, any responsibility or obligations for the correctness of any thereof. The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder either directly or by or through attorneys or agents and shall be entitled to advice of counsel concerning all matters of trust and its duties hereunder and shall be absolutely protected in relying thereon. The Trustee shall not be responsible for the misconduct of such persons selected by it with reasonable care. No provision in this Trust Agreement shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not assured to it. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity and all persons, including without limitation the Owners and the City or the Authority, having any claim against the Trustee arising from this Trust Agreement shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided herein. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Bonds. 30 OHSUSA:754116349.7 The Trustee makes no representation or warranty, express or implied as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City or the Authority of the Project. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Lease Agreement or this Trust Agreement. The Trustee shall not be responsible for the sufficiency or enforceability of the Property Lease or the Lease Agreement or the assignment under the Trust Agreement of its rights to receive Lease Payments. The Trustee shall not be deemed to have knowledge of any Event of Default hereunder or under the Lease Agreement unless and until it shall have actual knowledge thereof. The Trustee shall not be accountable for the use or application by the City or the Authority or any other party of any funds which the Trustee has released under this Trust Agreement. The Trustee shall not be responsible for accounting for, or paying to, any party to this transaction, including but not limited to the City, the Authority, and the Bondowners, any return on or benefit from funds held for payment of unredeemed Bonds or outstanding checks and no calculation of the same shall affect, or result in any offset against, fees due to the Trustee under this Trust Agreement. The Trustee’s rights to immunities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and the final payment or the defeasance of the Bonds (or the discharge of the Bonds or the defeasance of the lien of this Trust Agreement). All indemnification and releases from liability granted to the Trustee herein or in the Lease Agreement shall extend to the directors, officers, employees, attorneys and agents of the Trustee. The Trustee shall have no responsibility, opinion, or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds except for information provided by the Trustee. Before taking any action under Article V hereof or this section at the request of Owners, the Trustee may require that a satisfactory indemnity bond be furnished by the Owners for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken. The Trustee agrees to accept and act upon instructions or directions pursuant to this Trust Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing 31 OHSUSA:754116349.7 specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the City elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The City agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. ARTICLE VII AMENDMENTS Section 7.1. Mailing. Any provision in this Article for the mailing of a notice or other paper to Bondowners shall be fully complied with if it is mailed first class United States mail, postage prepaid only (i) to each Owner of Bonds then Outstanding at his address, if any, appearing upon the registry books of the Trustee, and (ii) to the Trustee. Section 7.2. Powers of Amendment. This Trust Agreement and the rights and obligations provided may be modified or amended at any time by a Supplemental Trust Agreement, entered into among the Trustee, the Authority and the City but without the consent of any Bondowners, but only (a) to cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in this Trust Agreement, (b) to insert such provisions clarifying matters or questions arising hereunder as are necessary or desirable and are not contrary to or inconsistent herewith as theretofore in effect, (c) to provide for the authorization, execution and delivery of Parity Obligations, or (d) in regard to matters arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable which shall not in the opinion of Bond Counsel which may be supported by a certificate of an independent financial consultant materially adversely affect the interest of the Bondowners. Any other modification or amendment hereof and of the rights and obligations of the Trustee or of the Owners of the Bonds hereunder, in any particular, may be made by a Supplemental Trust Agreement, entered into among the Trustee, the Authority and the City with the written consent, given as provided in Section 7.3, of the Owners of at least sixty percent (60%) in principal amount of the Bonds Outstanding at the time such consent is given. No such modification or amendment shall permit a change in the terms of redemption or maturity of the principal with respect to any Outstanding Bonds or of any installment of interest with respect thereto or a reduction in the principal amount or the redemption price with respect thereto or in the rate of interest with respect thereto or 32 OHSUSA:754116349.7 which will have an adverse effect on the security interest of the Owner without the consent of the Owner of such Bond, or shall reduce the percentages or otherwise affect the classes of Bonds the consent of the Owners of which is required to effect any such modification or amendment, or shall change or modify any of the rights or obligations of the Trustee without the written assent of the Trustee. The Trustee may in its discretion determine whether or not, in accordance with the foregoing powers of amendment, Bonds of any particular maturity would be affected by any modification or amendment hereof, and any such determination shall be binding and conclusive on the Authority, the City and all Owners of Bonds. The Trustee may obtain an opinion of counsel that any such Supplemental Trust Agreement entered into by the Authority, the City and the Trustee complies with the provisions of this Section 7.2 and the Trustee may conclusively rely upon such opinion. The Authority shall be provided with a full original transcript of all proceedings relating to the execution of any amendatory or Supplemental Trust Agreement or Lease Agreement. Section 7.3. Consent of Bondowners. The Trustee, the Authority and the City may at any time enter into a Supplemental Trust Agreement making a modification or amendment permitted by the provisions of Section 7.2 to take effect when and as provided in this Section. A copy of such Supplemental Trust Agreement (or brief summary thereof), together with a request to Bondowners to approve the same shall be mailed to each Bondowner (but failure to mail such copy and request shall not affect the validity of the Supplemental Trust Agreement when consented to as in this Section 7.3 provided). Such Supplemental Trust Agreement shall not be effective unless and until (i) there shall have been filed with the Trustee (a) the written consents of Owners of the percentage of Outstanding Bonds specified in Section 7.2 and (b) an opinion of Bond Counsel stating that such Supplemental Trust Agreement has been duly and lawfully entered into by the parties thereto and filed with the City and the Trustee in accordance with the provisions hereof, is authorized or permitted hereby, and is valid and binding upon the parties thereto in accordance with its terms. Each such consent shall be effective only if accompanied by proof of the Owner, at the date of such consent, of the Bonds with respect to which such consent is given, which proof shall be such as is permitted by Section 8.2. The request for consent of Bondowners pursuant to this Section may provide a date by which such consents must be received to be effective. A certificate or certificates executed by the Trustee and filed with the City stating that it has examined such proof and that such proof is sufficient in accordance with Section 8.2 shall be conclusive that the consents have been given by the Owners of the Bonds described in such certificate or certificates of the Trustee. Any such consent shall be binding upon the holder of the Bonds giving such consent and, anything in Section 8.2 to the contrary notwithstanding, upon any subsequent Owner of such Bonds and of any Bonds issued in exchange therefor (whether or not such subsequent Owner thereof has notice thereof) unless such consent is revoked in writing by the Owner of such Bonds giving such consent or a subsequent Owner thereof by filing with the Trustee, prior to the time when the written statement of the Trustee hereinafter in this Section 7.3 provided for is filed. Such revocation and, if such Bonds are held by the signer of such revocation, proof of ownership shall be evidenced in the manner permitted by Section 8.2. The fact that a consent has not been revoked may likewise be proved by a certificate of the Trustee filed with the City to the effect that no revocation thereof is on file with the Trustee. At any time after the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Trust Agreement, the Trustee shall make and file with the City a written statement that the Owners of such required percentage of Bonds have filed such consents. Such written statements shall be conclusive that such consents have been so filed. 33 OHSUSA:754116349.7 At any time thereafter notice, stating in substance that the Supplemental Trust Agreement (which may be referred to as a Supplemental Trust Agreement entered into by the parties thereto on a stated date, a copy of which is on file with the Trustee) has been consented to by the Owners of the required percentages of Bonds and will be effective as provided in this Section, may be given to Bondowners by the City or the Trustee at the direction of the City, by mailing such notice pursuant to Section 7.1 hereof to Bondowners (but failure to receive such notice shall not prevent such Supplemental Trust Agreement from becoming effective and binding as in this Section provided). The City shall file with the Trustee proof of the mailing of such notice. A record, consisting of the certificates or statements required or permitted by this Section to be made by the Trustee, shall be proof of the matters therein stated. Such Supplemental Trust Agreement making such amendment or modification shall be deemed conclusively binding upon the City, the Trustee, the Authority and the Owners of all Bonds at the expiration of 40 days after the filing with the Trustee of the proof of the mailing of such last mentioned notice, except in the event of a final decree of a court of competent jurisdiction setting aside such Supplemental Trust Agreement in a legal action or equitable proceeding for such purpose commenced within such 40 day period; provided, however, that the Trustee, the Authority or the City during such 40 day period and any such further period during which any such action or proceeding may be pending shall be entitled in their absolute discretion to take such action, or to refrain from taking such action, with respect to such Supplemental Trust Agreement as they may deem expedient. Section 7.4. Modifications by Unanimous Consent. The terms and provisions hereof and the rights and obligations of the Trustee and of the Owners of the Bonds hereunder may be modified or amended in any respect upon entering into by the parties hereto of a Supplemental Trust Agreement with the unanimous consent of the Owners of all the Bonds then Outstanding, such consent to be given as provided in Section 7.3 except that no notice to Bondowners by mailing shall be provided and to the extent any such Supplemental Trust Agreement alters the rights and obligations of the Trustee the Trustee’s approval shall be required. Section 7.5. Exclusion of Bonds. Bonds owned or held by or for the account of the City shall not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding Bonds provided for in this Article or Section 6.7, and the City shall not be entitled with respect to such Bonds to give any consent or take any other action provided for in this Article or Section 6.7. At the time of any consent or other action taken under this Article or Section 6.7, the City shall furnish the Trustee a Certificate of Authorized Representative of the City, upon which the Trustee may rely, describing all Bonds so to be excluded. Section 7.6. Notation on Bonds. Bonds issued after the effective date of any action taken as provided in Article V or this Article provided may, and if the City so determines shall, bear a notation by endorsement or otherwise in form approved by the City and the Trustee as to such action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date and presentation of the Bond or Bonds for the purpose at the principal corporate trust office of the Trustee or upon any transfer or exchange of any Bond Outstanding at such effective date, suitable notation shall be made on such Bond or upon any Bonds issued upon any such transfer or exchange by the Trustee as to any such action. If the City and the Trustee shall so determine, new Bonds so modified as in the opinion of the Trustee and the City may be necessary to conform to such action shall be prepared, issued, and upon demand of the Owner of 34 OHSUSA:754116349.7 any Bond then Outstanding shall be exchanged, without cost to such Bondowner, for Bonds of the same maturity then Outstanding, upon surrender of such Bonds. ARTICLE VIII MISCELLANEOUS Section 8.1. Defeasance. (a) Outstanding Bonds shall be paid and discharged in any one or more of the following ways - (i) by paying or causing to be paid the principal of and interest with respect to said Outstanding Bonds, as and when the same become due and payable; or (ii) by depositing with the Trustee, in trust, cash or Investment Securities of the type set forth in part (A) of the definition thereof in such amount, including without limitation cash or Investment Securities of the type set forth in part (A) of the definition thereof then on deposit in the Debt Service Payment Account and Reserve Account applicable to the Outstanding Bonds, together with the interest to accrue with respect thereto, as will be sufficient, as shown on a certificate of a nationally recognized certified public accountant or firm of certified public accountants, to pay and discharge the Outstanding Bonds to be paid and discharged (including all principal, interest and premium, if any) at or before their respective maturity dates. In the event of a refunding, the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants (“Accountant”) verifying the sufficiency of the escrow established to pay the Bonds in full and (ii) an opinion of nationally recognized Bond Counsel to the effect that the Bonds are no longer “Outstanding” under the Trust Agreement, each of which shall be addressed to the City, the Trustee and the Authority. Notwithstanding that any Bonds shall not have been surrendered for payment, all obligations of Authority, the Trustee and the City under this Trust Agreement with respect to those Bonds paid, as provided in the above subsections (i) (ii) or (iii), and the trust created by this Trust Agreement shall cease and terminate, except only the obligation of the Trustee to pay or cause to be paid to the Owner of the Bonds not so surrendered and paid all sums due thereon, to transfer title to the City as provided in Section 7.3 of the Lease Agreement, and the obligation of City to cause rebates pursuant to Section 4.11 and the obligation of the Trustee to make transfers and exchanges of Bonds pursuant to Section 3.7. Notice of defeasance of the Bonds and the obligations under this Trust Agreement as provided in this Section shall be given by the Trustee in the manner provided in Section 3.12. The fees and charges of the Trustee (including reasonable counsel fees and expenses) must be paid in order to effect such discharge. The satisfaction and discharge of this Trust Agreement shall be without prejudice of the rights, if any, of the Trustee to charge and be reimbursed by the City for any expenditures which it may thereafter incur in connection therewith. Any funds held by the Trustee, at the time of one of the events described above in paragraphs (i), (ii) or (iii), shall have occurred, which are not required for the payment to be 35 OHSUSA:754116349.7 made to Owners, or for payments to be made to the Trustee by the City, or for payment to the United States under Section 4.11, shall be paid over to the City. (b) Anything in this Trust Agreement to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment of any of the Bonds which remain unclaimed for two years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the said date when such Bonds became due and payable, shall be repaid by the Trustee to the City, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bondowners shall look only to the City for the payment of such Bonds. Section 8.2. Evidence of Signatures of Bondowners and Ownership of Bonds. (a) Any request, consent, revocation of consent or other instrument which this Trust Agreement may require or permit to be signed and executed by the Bondowners may be in one or more instruments of similar tenor, and shall be signed or executed by such Bondowners in person or by their attorneys appointed in writing. Proof of (i) the execution of any such instrument, or of an instrument appointing any such attorney, or (ii) the ownership by any person of the Bonds, shall be sufficient for any purpose hereof (except as otherwise therein expressly provided) if made in the following manner, or in any other manner satisfactory to the Trustee, which may nevertheless in its discretion require further or other proof in cases where it deems the same desirable: the fact and date of the execution by any Bondowner or his attorney of such instruments may be proved by a guaranty of the signature thereon by a commercial bank or trust company or member firm of the New York Stock Exchange or by the certificate of any notary public or other officer authorized to take acknowledgments of deeds, that the person signing such request or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such signature guaranty, certificate or affidavit shall also constitute sufficient proof of his authority. (b) The ownership of Bonds and the amount, numbers and other identification, and date of owning the same shall be proved by the registry books of the Trustee. Section 8.3. Moneys Held for Particular Bonds. The amounts held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto. Section 8.4. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Trust Agreement shall be retained in its possession and shall be subject at all reasonable times to the inspection of the City, the Authority or any Bondowner and their agents and representatives, any of whom may make copies thereof. 36 OHSUSA:754116349.7 Section 8.5. Parties Interested Herein. Nothing in this Trust Agreement expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the City, the Authority, the Trustee and the registered Owners of the Bonds, any right, remedy or claim under or by reason of this Trust Agreement or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Trust Agreement contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the City, the Authority, the Trustee and the registered Owners of the Bonds. Section 8.6. Severability of Invalid Provisions. If any one or more of the covenants or agreements provided herein should be contrary to law, then such covenant or covenants or agreement or agreements shall be deemed severable from the remaining covenants and agreements, and shall in no way affect the validity of the other provisions hereof. Section 8.7. Recording and Filing. The City shall be responsible for the recording and filing of the Property Lease, Lease Agreement and financing statements (or continuation statements in connection therewith) or of any supplemental instruments or documents of further assurance as may be required by law in order to perfect the security interests created by the Property Lease or the Lease Agreement. The City and the Authority shall take such further actions as may be necessary to effectuate the transactions contemplated by this Trust Agreement, the Property Lease and the Lease Agreement. Section 8.8. Notices. All notices, certificates, requests or other communications (other than payments by City) hereunder shall be in writing and shall be sufficiently given and shall be deemed given when delivered or mailed by certified or first class mail, postage prepaid, to the parties at their respective places of business as follows: If to the City: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attention: City Manager and Chief Financial Officer/City Treasurer If to the Authority: San Juan Basin Authority 2611 Antonio Parkway Rancho Santa Margarita, CA 92688 Attention: Administrator If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 400 S. Hope Street, Ste 400 Los Angeles, CA 90071 Attention: Corporate Trust Department 37 OHSUSA:754116349.7 Section 8.9. California Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State of California. Section 8.10. Binding on Successors. This Trust Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Section 8.11. Headings. Headings preceding the text of the several Articles and Sections hereof, and the table of contents, are solely for convenience of reference and shall not constitute a part of this Trust Agreement or affect its meaning, construction or effect. Section 8.12. Execution in Counterparts. This Trust Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. Section 8.13. Actions Due on Saturdays, Sundays and Holidays. If any date on which a payment, notice or other action required by this Trust Agreement falls on other than a Business Day, then that action or payment need not be taken or made on such date, but may be taken or made on the next succeeding Business Day with the same force and effect as if made on such date. Section 8.14. Force Majeure. From the effective date of this Trust Agreement, the Trustee, or any successor in interest, shall not be considered in breach of or in default in its obligations with respect to any obligations created hereunder or progress in respect thereto, in the event of enforced delay (“unavoidable delay”) in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, acts of God, or of the public enemy, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee. A-1 OHSUSA:754116349.7 EXHIBIT A FORM OF BOND R-1 $20,361,090 UNITED STATES OF AMERICA STATE OF CALIFORNIA (COUNTY OF ORANGE) SAN JUAN BASIN AUTHORITY LEASE REVENUE BOND (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014 INTEREST RATE MATURITY DATE DATED DATE 3.85% December 1, 2034 November 14, 2014 REGISTERED OWNER: PRINCIPAL SUM: TWENTY MILLION THREE HUNDRED SIXTY-ONE THOUSAND NINETY AND NO/100 DOLLARS The SAN JUAN BASIN AUTHORITY, a public body, corporate and politic, duly organized and existing under and by virtue of the laws of the State of California (the “Authority”), for value received hereby promises to pay to the Registered Owner stated above, or registered assigns, on the Maturity Date stated above (subject to any right of prior redemption hereinafter provided for), the Principal Sum stated above, in lawful money of the United States of America, and to pay interest thereon in like lawful money from the preceding Interest Payment Date to which interest was paid, provided, Bonds registered on or prior to May 15, 2015 shall have interest payable with respect thereto from the Delivery Date, and Bonds registered after a Record Date (the fifteenth day of the calendar month preceding an Interest Payment Date) and on or prior to an Interest Payment Date shall have interest payable with respect thereto from such Interest Payment Date; provided, however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on this Bond, until payment of such Principal Sum in full, at the rate per annum stated above, payable semiannually on June 1 and December 1 in each year (each, an “Interest Payment Date”), commencing June 1, 2015, calculated on the basis of a 360-day year composed of twelve 30-day months. Principal hereof is payable upon presentation and surrender of this Bond at the corporate trust office of The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), in Los Angeles, California or such other location as designated by the Trustee. Interest hereon (including the final interest payment upon maturity or earlier redemption) is payable by check of the Trustee mailed on the Interest Payment Date by first class mail to the Registered Owner hereof at the Registered Owner’s address as it appears on the registration books maintained by the Trustee at the close of business on the Record Date next preceding such Interest Payment Date; provided, however, that upon the written request of any Registered A-2 OHSUSA:754116349.7 Owner received by the Trustee on or before such Record Date, payment shall be made by wire transfer in immediately available funds to an account designated by such Owner. This Bond is one of a duly authorized issue of Bonds of the Authority designated as “San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014” (the “Bonds”), in an aggregate principal amount of Twenty Million Three Hundred Sixty- One Thousand Ninety Dollars ($20,361,090), all of like tenor (except for such variation, if any, as may be required to designate varying series, numbers or redemption and other provisions) and all issued pursuant to the provisions of the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) including the Marks-Roos Local Bond Pooling Act (Government Code Sections 6584 et seq.) (the “Law”) and pursuant to a Trust Agreement, dated as of November 1, 2014, entered into by and among the Authority, the City of San Juan Capistrano (the “City”) and the Trustee (the “Trust Agreement”), authorizing the issuance of the Bonds. Reference is hereby made to the Trust Agreement (copies of which are on file at the office of the Trustee) and all trust agreements supplemental thereto and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Lease Payments, as that term is defined in the Trust Agreement, and the rights thereunder of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Authority thereunder, to all of the provisions of which Trust Agreement the Registered Owner of this Bond, by acceptance hereof, assents and agrees. The Bonds have been issued by the Authority to refund the San Juan Basin Authority Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2002. The Bonds are special obligations of the Authority and this Bond and the interest hereon and all other Bonds and the interest thereon (to the extent set forth in the Trust Agreement) are payable from, and are secured by the Lease Payments derived by the Authority from the City under the Amended and Restated Lease Agreement, dated as of November 1, 2014 (the “Lease Agreement”), by and between the Authority and the City. The Lease Payments are secured by a pledge of Revenues (as defined in the Trust Agreement) derived from the City’s Water System (as defined in the Trust Agreement). There has been created and will be maintained by the Trustee the Project Trust Fund within which there is the Debt Service Payment Account (as defined in the Trust Agreement) into which Lease Payments shall be deposited from which the Trustee shall pay the principal of and the interest and redemption premium, if any, on the Bonds when due. As and to the extent set forth in the Trust Agreement, all such Lease Payments are exclusively and irrevocably pledged to and constitute a trust fund for, in accordance with the terms hereof and the provisions of the Trust Agreement and the Law, the security and payment or redemption of, and for the security and payment of interest on, the Bonds and any Parity Obligations, authorized by the Trust Agreement to be issued on a parity therewith. In addition, the Bonds (and, if the indenture authorizing any loans, advances or indebtedness issued on a parity with the Bonds shall so provide, any such loan, advance or indebtedness) shall be additionally secured at all times by a first and exclusive pledge of and lien upon all of the moneys in the Project Trust Fund, including the Debt Service Payment Account and the Redemption Account (as such terms are defined in the Trust Agreement). Except for the Lease Payments and such moneys, no funds or properties A-3 OHSUSA:754116349.7 of the Authority or the City shall be pledged to, or otherwise liable for, the payment of principal of or interest on the Bonds. The Bonds are subject to redemption, in whole or in part, at the times, at the redemption prices, with the notice, and on the other terms set out in the Trust Agreement. The Bonds are subject to default as further described in the Lease Agreement and the Trust Agreement. The Bonds are issuable as fully registered Bonds without coupons in denominations of $250,000 and integral multiples of $1.00 in excess thereof. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Trust Agreement, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations and of the same maturity. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the corporate trust office of the Trustee, in Los Angeles, California, but only in the manner and subject to the limitations provided in the Trust Agreement, and upon surrender and cancellation of this Bond. Upon registration of such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. The Trustee shall not be required to register the transfer or exchange of any Bond (i) during the period established by the Trustee for selection of Bonds for redemption or (ii) selected for redemption. The Authority and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary. The rights and obligations of the Authority and the registered owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Trust Agreement, but no such modification or amendment shall extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided herein of any Bond without the express written consent of the registered owner of such Bond, reduce the percentage of Bonds required for the written consent to any such amendment or modification or, without its written consent thereto, modify any of the rights or obligations of the Trustee. This Bond is not a debt, liability or obligation of the City, the State of California, or any of its political subdivisions, and none of said City, said State, nor any of its political subdivisions is liable hereon, nor in any event shall this Bond be payable out of any funds or properties other than those of the Authority as set forth in the Trust Agreement. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have A-4 OHSUSA:754116349.7 happened or have been performed in due and regular time and manner as required by the Law and the laws of the State of California, and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Trust Agreement. This Bond shall not be entitled to any benefit under the Trust Agreement or become valid or obligatory for any purpose until the Trustee’s Certificate of Authentication hereon shall have been manually signed by the Trustee. A-5 OHSUSA:754116349.7 IN WITNESS WHEREOF, the San Juan Basin Authority has caused this Bond to be executed in its name and on its behalf with the manual signature of its Chairman of the Board of Directors, all as of the Dated Date. SAN JUAN BASIN AUTHORITY By: Chairman of the Board of Directors A-6 OHSUSA:754116349.7 [FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION] This is one of the Bonds described in the within-mentioned Trust Agreement. Authentication Date: _____ THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Authorized Officer A-7 OHSUSA:754116349.7 [FORM OF ASSIGNMENT] For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the bond register of the Trustee with full power of substitution in the premises. Dated: Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Signature Guaranteed: Note: Signature(s) must be guaranteed by an eligible guarantor institution. B-1 OHSUSA:754116349.7 EXHIBIT B FORM OF COSTS OF ISSUANCE REQUISITION SAN JUAN BASIN AUTHORITY LEASE REVENUE BONDS (GROUND WATER RECOVERY PROJECT) ISSUE OF 2014 REQUISITION FOR DISBURSEMENT OF COSTS OF ISSUANCE The undersigned hereby states and certifies: (i) that he is the duly appointed, qualified and acting _______________ of the City of San Juan Capistrano or his/her designee, a municipality organized and existing under the laws of the State of California (the “City”), and as such, is familiar with the facts herein certified and is authorized to certify the same; (ii) that, pursuant to Section 4.1 of that certain Trust Agreement, dated as of November 1, 2014, among the San Juan Basin Authority, the City and The Bank of New York Mellon Trust Company, N.A., (the “Trust Agreement”), the undersigned hereby requests the Trustee to pay from the Cost of Issuance Account, established by the Trust Agreement, to the parties listed in Schedule I attached hereto the amounts listed on such Schedule I. (iii) that each obligation to be incurred by the City from the foregoing Cost of Issuance Account transfer will be a proper charge against the Cost of Issuance Account. Dated: November __, 2014 CITY OF SAN JUAN CAPISTRANO By: S-1 OHSUSA:754116349.7 SCHEDULE I Party to Be Paid Amount Purpose EXECUTION VERSION 4841-0695-5670v11/022030-0166 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT by and among SANTA MARGARITA WATER DISTRICT as Assignee and CITY OF SAN JUAN CAPISTRANO as Assignor and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. as Trustee Dated as of November 1, 2021 relating to CITY OF SAN JUAN CAPISTRANO WATER REVENUE REFUNDING BONDS, SERIES 2014A 4841-0695-5670v11/022030-0166 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT This Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (this “Agreement”), is entered into by and among SANTA MARGARITA WATER DISTRICT, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California (the “Assignee”), the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California (the “Assignor”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”). RECITALS A. Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the Assignee has annexed the municipal water system of the Assignor as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the Assignee which will be designated after the Annexation Effective Date (as such term is defined below) as Improvement District No. 9, the “Water System”) and will assume ownership of the Water System effective November 15, 2021 or such later date as provided in the Annexation Agreement, dated as of January 21, 2020, by and between the Assignee and the Assignor, as the same may be amended (the “Annexation Effective Date”). B. The Assignor has entered into an Indenture, dated as of November 1, 2014 (the “Indenture”), by and between the Assignor and the Trustee, under which the Assignor issued its Water Revenue Refunding Bonds, Series 2014A (the “Bonds”). C. The Bonds are payable from Net Revenues (as such term is defined in the Indenture). D. Pursuant to the LAFCO Resolution, the Assignee will assume all obligations under the Indenture on the Annexation Effective Date, including the obligation to pay the Bonds from Net Revenues of the Water System. E. This Agreement constitutes a Supplemental Indenture within the meaning of the Indenture. F. Capitalized terms that are used herein and not otherwise defined have the meanings that are assigned to such terms under the Indenture. AGREEMENT SECTION 1. Assignment. (a) Effective as of the Annexation Effective Date, the Assignor, for good and valuable consideration in hand received, does hereby unconditionally assign and transfer to the Assignee without recourse, for the benefit of the Trustee, all of its rights, title, interest, duties and obligations in and to the Indenture, including the obligation to pay the Bonds. This assignment is absolute and is presently effective. 2 4841-0695-5670v11/022030-0166 (b) In connection with the matters described in subsection (a), the Assignee agrees to establish, on or before the Annexation Effective Date: (i) a “Revenue Fund” in which revenues of the Water System shall be deposited meeting the description thereof set forth in Section 1.01 of the Indenture, which the Assignee agrees shall be separate from other funds and accounts of the Assignee and pledged for the benefit of the owners of the Bonds pursuant to the terms of the Indenture; and (ii) such other funds as may be contemplated pursuant to Article IV of the Indenture. (c) In connection with the matters described in subsection (a), the Assignor agrees to transfer, or cause to be transferred, the amounts held in the 2014 Bonds Rate Stabilization Reserve, if any, to the Assignee upon the Annexation Effective Date, and the Assignee agrees to hold such moneys separate from other funds of the Assignee for the benefit of the owners of the Bonds. SECTION 2. Acceptance. (a) The Assignee hereby accepts the foregoing assignment as of the Annexation Effective Date for the benefit of the Trustee and the owners of the Bonds, and agrees thereafter to pay the Bonds from Net Revenues of the Water System and assume and perform all of the other obligations of the Assignor as provided in the Indenture. The Assignee agrees that the owners of the Bonds shall be entitled to a lien on moneys in the Revenue Fund and other funds established under the Indenture. (b) From and after the Annexation Effective Date, the Assignee will assume the responsibilities of the Assignor with respect to compliance with applicable federal requirements for the tax-exempt status of the Bonds, in accordance with the Tax Certificate dated November 14, 2014 and executed by the Assignor in connection with the Bonds. (c) The Trustee affirms that all moneys from the Revenue Fund and other funds established under the Indenture which are received by the Trustee shall be held for the benefit of the owners of the Bonds pursuant to the Indenture. The Trustee further affirms that the Debt Service Fund and the Redemption Fund are currently established and held by the Trustee and that such funds will continue to be held by the Trustee for the benefit of the owners of the Bonds. SECTION 3. Amendment. (a) The definition of “Certificate of the City” in Section 1.01 of the Indenture is hereby amended as follows: ““Certificate of the City” means an instrument in writing signed by the General Manager or Assistant General Manager of Santa Margarita Water District, or by any other officer of Santa Margarita Water District duly authorized by the Board of Directors of Santa Margarita Water District for that purpose.” (b) The definition of “City” in Section 1.01 of the Indenture is hereby amended as follows: ““City” means Santa Margarita Water District, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California.” 3 4841-0695-5670v11/022030-0166 (c) The definition of “City Council” in Section 1.01 of the Indenture is hereby amended as follows: ““City Council” means the Board of Directors of Santa Margarita Water District.” (d) The definition of “City Manager” in Section 1.01 of the Indenture is hereby amended as follows: ““City Manager” means the General Manager or Assistant General Manager of Santa Margarita Water District.” (e) The definition of “Water System” in Section 1.01 of the Indenture is hereby amended as follows: ““Water System” means the whole and each and every part of the water system within the boundaries of a geographic area within the boundaries of Santa Margarita Water District which will be designated after the date hereof as Improvement District No. 9 (consisting of the service area annexed to Santa Margarita Water District pursuant to Resolution No. DA 20-01 dated August 19, 2021 of the Orange County Local Agency Formation Commission), including all real property and buildings, including the portion thereof existing on the date hereof, and including all additions, betterments, extensions and improvements to such water system or any party thereof hereafter acquired or constructed.” (f) The notice address for the City set forth in Section 10.09 of the Indenture is hereby amended as follows: “Santa Margarita Water District 26111 Antonio Parkway Rancho Santa Margarita, California 92688 Attention: General Manager” SECTION 4. Filings. The Assignee agrees, at its own expense, to make any filings required by The Depository Trust Company, the Internal Revenue Service, the California Debt Investment Advisory Commission and any other federal or state administrative and regulatory bodies in order to evidence the matters set forth herein. SECTION 5. Attornment. Each of the Trustee and the undersigned holder of all of the Bonds acknowledges and agrees to the assignment set forth in Section 1 and agrees to attorn to the Assignee from and after the Annexation Effective Date with respect to all matters related to the Indenture. This Agreement shall confer no rights and impose no obligations upon the Trustee beyond those expressly provided in this Agreement and in the Indenture. Wells Fargo Equipment Finance, Inc., by its signature hereto, 4 4841-0695-5670v11/022030-0166 hereby certifies that it is the holder of 100% of the Bonds and waives any applicable notice periods for the amendments included herein. SECTION 6. Representations and Warranties. Each of the Assignee and the Assignor represent and warrant that: (i) the execution, delivery and performance of this Agreement have been duly authorized by such party by all necessary action; (ii) this Agreement, assuming due execution by the other parties thereto, constitutes a valid, binding and enforceable obligation of such party, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; (iii) to the best of such party’s knowledge after due inquiry, this Agreement does not violate any law, regulation or order binding on such party; (iv) no consent or authorization of any third party is required in connection with the execution, delivery or performance by such party of this Agreement or, alternatively, all such consents and authorizations have been given; (v) such party has the power to carry out the obligations imposed on such party by this Agreement; and (vi) there is no claim, action or proceeding pending and notice of which has been received by such party, or to the knowledge of such party, threatened against such party before any court, arbitrator or governmental agency or regulatory or administrative agency or commission challenging the validity, enforceability or legality of this Agreement. In addition, the Assignor represents and warrants that no Event of Default has occurred and is continuing under the Indenture as of the date of execution and delivery of this Agreement. SECTION 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 Assignee, the Assignor or the Trustee 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. The Assignee, the Assignor and the Trustee hereby declare that they would have executed this Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 8. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. SECTION 9. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [Remainder of Page Intentionally Left Blank] 5 4841-0695-5670v11/022030-0166 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their officers thereunto duly authorized as of the day and year first written above. SANTA MARGARITA WATER DISTRICT By:________________________________________ Its: General Manager CITY OF SAN JUAN CAPISTRANO By:________________________________________ Its: City Manager THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By:________________________________________ Its: Authorized Officer ACKNOWLEDGED AND AGREED: WELLS FARGO EQUIPMENT FINANCE, INC., as holder of 100% of the Bonds By:__________________________________ Its: Authorized Officer ________________________________________________________________________________________________________________________________ neral Manager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tradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660-6422 949 725 4000 stradlinglaw.com NG-U9ZQVMF2/4833-3726-3511v3/022030-0166 November 15, 2021 City of San Juan Capistrano San Juan Capistrano, California The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Wells Fargo Equipment Finance, Inc. Minneapolis, Minnesota Re: City of San Capistrano Water Revenue Refunding Bonds, Series 2014A – Amendment to and Assignment of Indenture Ladies and Gentlemen: We have examined certified copies of proceedings relating to the issuance of the above- referenced bonds (the “Bonds”) by the City of San Juan Capistrano (the “City”). The Bonds were issued pursuant to an Indenture, dated as of November 1, 2014 (the “Indenture”), by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). Capitalized terms that are used herein and not defined have the meanings that are set forth in the Indenture. In rendering the opinions that are set forth herein, we have relied upon the accuracy of the representations that are set forth in the Recitals to the Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (the “Amendment”), by and among the City, the Trustee and Santa Margarita Water District (the “District”). We have not undertaken to verify through independent investigation the accuracy of the opinions, representations and certifications that we relied upon or of the assumptions that we made in rendering our opinions as stated herein. In rendering the opinions that are set forth herein, we have also assumed that the Amendment will be executed in the form that has been presented to us. We have further assumed the genuineness of all documents and signatures that have been presented to us, the authenticity of documents submitted as originals and the conformity to originals of documents submitted as copies. Furthermore, we have assumed compliance with all covenants and agreements of the Indenture. Based upon our examination of the foregoing, and in reliance thereon, and on all matters of fact as we deem relevant under the circumstances, upon consideration of applicable laws, we are of the opinion that: (i) Assuming that no Event of Default has occurred and is continuing under the Indenture, upon the execution and delivery of the Amendment by the parties thereto, the Amendment City of San Juan Capistrano The Bank of New York Mellon Trust Company, N.A. Wells Fargo Equipment Finance, Inc. November 15, 2021 Page Two NG-U9ZQVMF2/4833-3726-3511v3/022030-0166 will be valid and binding upon the City and the District in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; provided, however, that we express no opinion as to indemnification, penalty, contribution, choice of law, choice of forum or waiver provisions contained therein. (ii) The transfer of the Bond obligations and related Bond documents from the City to the District and the execution of the Amendment, and the performance by the parties thereunder, will not, in and of itself, adversely affect the exclusion from gross income for federal income tax purposes or for State of California personal income taxation of interest on the Bonds. In order for interest on the Bonds to be excluded from gross income for federal income tax purposes subsequent to the date of issuance of the Bonds, it is necessary that certain provisions of the Internal Revenue Code of 1986, as amended, must be complied with on a continuous basis. We have made no independent investigation as to whether there has been such compliance in the present case. Accordingly, we express no opinion as to whether interest on the Bonds is presently excluded from gross income for federal income tax purposes or is exempt from State of California personal income taxation as of the date of this opinion. This opinion does not constitute a reaffirmation of any opinions that were previously delivered with respect to the Indenture or the Bonds. The opinions that are expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions, and the foregoing opinions cover certain matters that are not directly addressed by such authorities. The only opinions rendered hereby shall be those that are expressly stated as such herein, and no opinions shall be implied or inferred as a result of anything contained herein or omitted herefrom. We call attention to the fact that such opinions may be affected by actions taken or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken or occur (or are not taken or do not occur). Our engagement with respect to the matters that are set forth herein terminates as of the date hereof and we expressly disclaim any obligation to update this letter. No attorney-client relationship exists between us and the Trustee with respect to the Bonds. Our opinions are limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. We have not been engaged, nor have we undertaken, to advise any party or to opine as to any matters not specifically covered herein, including, but not limited to, matters relating to compliance with any securities laws. This opinion letter may be relied upon only by you and may not be circulated, quoted from or relied upon by any other party without our prior written consent. City of San Juan Capistrano The Bank of New York Mellon Trust Company, N.A. Wells Fargo Equipment Finance, Inc. November 15, 2021 Page Three NG-U9ZQVMF2/4833-3726-3511v3/022030-0166 NOTICE OF SIGNIFICANT EVENT (INCURRENCE OF FINANCIAL OBLIGATION) NAME OF OBLIGOR: Santa Margarita Water District NAME OF OBLIGATION: $53,895,000 Santa Margarita/Dana Point Authority Water and Wastewater Revenue Bonds, Series 2020A DATE OF DELIVERY: September 2, 2020 BASE CUSIP: 80224A NOTICE IS HEREBY GIVEN pursuant to Section 5(b)(viii) of that certain Continuing Disclosure Agreement, dated as of September 1, 2020, by and between Santa Margarita Water District (the “District”) and Digital Assurance Certification, L.L.C., as dissemination agent, relating to the above-referenced obligations, of the following: Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the District has annexed the municipal water system of the City of San Juan Capistrano (the “City”) as of November 15, 2021 (the “Effective Date”) as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the District which is designated as Improvement District No. 9, the “Water System”) and has assumed ownership of the Water System effective as of the Effective Date. The City had previously entered into an Indenture, dated as of November 1, 2014 (the “Indenture”), by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee, under which the City issued its Water Revenue Refunding Bonds, Series 2014A (the “Bonds”). Pursuant to the LAFCO Resolution, the District has assumed all obligations of the City under the Indenture and the Bonds on the Effective Date, including the obligation to pay the Bonds from Net Revenues (as such term is defined in the Indenture) of the Water System. The principal amount that is currently outstanding on the Bonds is $13,547,833. The interest rate that is payable on the Bonds is 3.68% per annum. Capitalized terms which are used herein and not otherwise defined have the meanings that are given such terms in the Indenture. The terms of the Indenture described herein are not to be considered a full statement of the terms of such agreement and, accordingly, such descriptions are qualified by reference to the Indenture and are subject to the full text thereof. Term of the Bonds The Bonds are payable on December 1 of each year, with a final maturity on December 1, 2034. The amortization schedule for the Bonds is set forth in Exhibit A. 2 Interest on the Bonds Interest on the Bonds is computed on the basis of a 360-day year of twelve 30-day calendar months at the rate of 3.68% per annum, payable semiannually on June 1 and December 1 of each year. Security for the Bonds The Bonds are secured by a pledge of and lien on Revenues of the Water System. “Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the Water 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 the District 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 Water System; (2) the earnings on and income derived from the investment of amounts described in clause (1) above and from District reserves held for the Water System; and (3) the proceeds derived by the District directly or indirectly from the sale, lease or other disposition of a part of the Water System; but excluding: (a) customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the District; and (b) any proceeds of taxes or assessments restricted by law to be used by the District to pay bonds or other obligations previously or later issued. As described above, “Water System” means only that portion of the District’s water system that is designated as Improvement District No. 9, consisting of the area formerly served by the City. Water revenues derived from other portions of the District’s water system are neither available for nor pledged to the payment of the Bonds. In order to carry out and effectuate the pledge and lien contained in the Indenture, the District has agreed and covenanted that all Revenues will be received by the District in trust and deposited when and as received in a special fund designated as the “Revenue Fund,” which fund the District has agreed and covenanted to maintain and to hold separate and apart from other funds so long as any Bonds remain Outstanding. Moneys in the Revenue Fund will be used and applied by the District as provided in the Indenture. The District will, from the moneys in the Revenue Fund, pay all Operation and Maintenance Costs (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Costs, the payment of which is not then immediately required, provided that no such reserves may be set aside for the Ground Water Recovery Plant) as they become due and payable. All remaining moneys in the Revenue Fund will be set aside by the District at the following times in the following respective special funds in the following order of priority and all moneys in each of such funds will be held in trust and applied, used and withdrawn only for the purposes authorized in the Indenture, including to pay debt service on the Bonds and parity obligations of the Water System on a pro rata basis. See the caption “Senior and Parity Obligations” below. “Operation and Maintenance Costs” means costs spent or incurred for Operation and Maintenance of the Water System calculated in accordance with generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and 3 other expenses necessary to maintain and preserve the Water System in good repair and working order and operations and electricity cost of the Phase I San Juan Basin Groundwater Recovery Plant (the “Ground Water Recovery Plant”), and also means all costs of water purchased or otherwise acquired for delivery by the Water System (including any interim or renewed arrangement for water purchase or acquisition, and also including annual costs not to exceed $2,000,000 for project lease payments, including principal and interest components, for the Ground Water Recovery Plant; but excluding in all cases depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature and any amounts transferred to Rate Stabilization Reserves. Senior and Parity Obligations The Bonds are secured by a pledge of and lien on Revenues of the Water System on a junior basis to payments under the Amended and Restated Lease Agreement, dated as of November 1, 2014, by and between the District and the San Juan Basin Authority, which is currently outstanding in the aggregate principal amount of $12,836,797 and which matures on November 15, 2034; and The Bonds are secured by a pledge of and lien on Revenues of the Water System on a parity basis to payments under the Installment Purchase Agreement, dated as of December 1, 2017, by and between the District and Public Property Financing Corporation of California, which is currently outstanding in the aggregate principal amount of $7,225,000 and which matures on November 25, 2034. Redemption The Bonds are subject to redemption prior to their stated maturity date at the option of the District, from any source of available funds, as a whole or in part on any date on or after December 1, 2024, at a redemption price equal to the principal amount of such Bonds called for redemption, together with accrued interest thereon to the date fixed for redemption, without premium. The Bonds are also subject to extraordinary redemption prior to their stated maturity date at the option of the District, from Net Proceeds of condemnation or insurance, as a whole or in part on any date, at a redemption price equal to the principal amount of such Bonds called for redemption, together with accrued interest thereon to the date fixed for redemption, without premium. The Bonds are also subject to mandatory sinking fund redemption as set forth in Exhibit A. Certain Covenants Rate Covenant. The District will, to the maximum extent permitted by law, fix, prescribe and collect rates and charges for the Water Service which will be at least sufficient to yield during each Fiscal Year Net Revenues equal to 100% of the Debt Service payable in such Fiscal Year, plus the amount by which the amount on deposit in the 2009 Certificates Rate Stabilization Reserve and the 2014 Bonds Rate Stabilization Reserve on the last day of the immediately preceding Fiscal Year was less than 25% of Maximum Annual Debt Service as of such day. The District may make adjustments from time to time in such rates and charges and may make such classification thereof as it deems necessary, but it will not reduce the rates and charges then in effect unless the Net Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements of the rate covenant. 4 Additional Parity Obligations. The District may at any time execute any Contract or issue any Bonds, as the case may be, in accordance herewith; provided: (a) there shall not have occurred and be continuing an Event of Default under the terms of the Indenture; and (b) the District obtains or provides a certificate or certificates prepared by an Independent Financial Consultant showing that: (i) the Net Revenues as shown by the books of the District for any 12 consecutive calendar months period selected by the District within the 24 calendar months ending prior to the incurring of such additional obligations amount to at least the sum of: (x) 100% of Debt Service for such 12 calendar month period; plus (y) the amount by which the amount on deposit in, the 2009 Certificates Rate Stabilization Reserve and the 2014 Bonds Rate Stabilization Reserve Fund on the date prior to the first day of such 12 calendar month period was less than 25% of Maximum Annual Debt Service; for purposes of preparing the certificate or certificates described above, the Independent Financial Consultant or Consultants may rely upon financial statements prepared by the District which have not been subject to audit by an Independent Certified Public Accountant if audited financial statements for the Fiscal Year or period are not available; (ii) the estimated Net Revenues for the 12 calendar months following the date of incurring such additional obligations will be at least equal to 100% of Maximum Annual Debt Service on all Bonds and Contracts to be outstanding immediately after the incurring of such additional obligations; and (iii) the sum of the amounts on deposit in the 2009 Certificates Rate Stabilization Reserve and the 2014 Bonds Rate Stabilization Reserve Fund on the date of incurring such additional obligations is at least equal to 25% of Maximum Annual Debt Service as of the date of incurring of such additional obligations. For purposes of the computations to be made as described in clause (ii), the determination of the Net Revenues: (1) may take into account any increases in rates and charges which relate to the Water System and shall take into account any reduction in such rates and charges, which will be effective prior to or at the time of incurring such proposed additional obligations; (2) may take into account an allowance for any estimated increase in such Net Revenues from any revenue producing additions to or improvements or extensions of the Water System to be made with the proceeds of such additional obligations or with the proceeds of obligations previously issued, as shown by a certificate of an Independent Financial Consultant; and (3) for the period contemplated by clause (ii), Operation and Maintenance Costs of the Water System shall be deemed to be the same as for the period for which a calculation is done pursuant to clause (i), but adjusted, if deemed necessary by the Independent Financial Consultant, for any increased Operation and Maintenance Costs of the Water System which are, in the judgment of the Independent Financial Consultant, essential to maintaining and operating the Water System. 5 The certificate or certificates described above are required if the additional obligations being incurred are for the purpose of refunding then Outstanding Bonds or Contracts and at the time of the incurring of such additional obligations a Certificate of the District shall be delivered showing that Maximum Annual Debt Service on all outstanding Bonds or Contracts after the incurring of such additional obligations will not exceed Maximum Annual Debt Service on all Bonds or Contracts outstanding prior to the incurring of such additional obligations. Notwithstanding the foregoing, Bonds issued or Contracts executed to refund Bonds or Contracts may be delivered without satisfying the conditions set forth above if Debt Service in each Fiscal Year after the Fiscal Year in which such Bonds are issued or Contracts executed is not greater than Debt Service would have been in each such Fiscal Year prior to the issuance of such Bonds or execution of such Contracts. Events of Default The following are Events of Default under the Indenture: (1) the District defaults in the due and punctual payment of the interest on or principal of any Bonds when and as the same become due and payable; (2) the District defaults in the performance of any of the agreements or covenants contained in the Indenture required to be performed by it, and such default continues for a period of 60 days after the District has been given notice in writing of such default by the Trustee; (3) the District files a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction approves a petition filed with or without the consent of the District seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, 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 District or of the whole or any substantial part of its properties; (4) a determination that any representation made in any document executed in connection with the Bonds was untrue in any material respect; and (5) payment of the principal of any parity Contract or Bond is accelerated in accordance with its terms. Acceleration Permitted as a Remedy Acceleration of the payment of the Bonds is an available remedy in an Event of Default under the Indenture. No Rating The Bonds have not been assigned a credit rating. 6 The filing of this notice does not constitute or imply any representation regarding any other financial, operating or other information about the District or its outstanding bonds or other indebtedness. This notice speaks only as of its date and does not imply that there is no change in any other information concerning the District or its outstanding bonds or other indebtedness that may have a bearing on the security therefor, or an investor’s decision to buy, sell, or hold such bonds or other indebtedness. Dated: November 18, 2021 SANTA MARGARITA WATER DISTRICT A-1 EXHIBIT A AMORTIZATION SCHEDULE Mandatory Redemption Date (December 1) Principal Amount 2021 $1,212,891 2022 741,287 2023 769,686 2024 801,785 2025 833,266 2026 868,220 2027 902,391 2028 940,505 2029 976,428 2030 1,016,298 2031 1,055,023 2032 1,097,560 2033 1,143,813 2034 1,188,680 EXECUTION VERSION 4818-3217-3973v11/022030-0166 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT by and among SANTA MARGARITA WATER DISTRICT as Assignee and CITY OF SAN JUAN CAPISTRANO as Assignor and PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA as Corporation Dated as of November 1, 2021 relating to $8,410,000 CITY OF SAN JUAN CAPISTRANO REFUNDING REVENUE INSTALLMENT AGREEMENT, SERIES 2017 4818-3217-3973v11/022030-0166 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT This Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (this “Agreement”), is entered into by and among SANTA MARGARITA WATER DISTRICT, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California (the “Assignee”), the CITY OF SAN JUAN CAPISTRANO, a municipality duly organized and existing under and by virtue of the laws of the State of California (the “Assignor”), and PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA, a nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the “Corporation”). RECITALS A. Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the Assignee has annexed the municipal water system of the Assignor as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the Assignee which will be designated after the Annexation Effective Date (as such term is defined below) as Improvement District No. 9, the “Water System”) and will assume ownership of the Water System effective November 15, 2021 or such later date as provided in the Annexation Agreement, dated as of January 21, 2020, by and between the Assignee and the Assignor, as the same may be amended (the “Annexation Effective Date”). B. The Assignor has entered into an Installment Purchase Agreement, dated as of December 1, 2017 (the “IPA”), by and between the Assignor and the Corporation, under which the Assignor agreed to make Series 2017 Installment Payments (as such term is defined in the IPA) to the Corporation. C. The Series 2017 Installment Payments are payable from Net Revenues (as such term is defined in the IPA). D. Pursuant to the LAFCO Resolution, the Assignee will assume all obligations under the IPA on the Annexation Effective Date, including the obligation to make the Series 2017 Installment Payments from Net Revenues of the Water System. E. Capitalized terms that are used herein and not otherwise defined have the meanings that are assigned to such terms under the IPA. AGREEMENT SECTION 1. Assignment. (a) Effective as of the Annexation Effective Date, the Assignor, for good and valuable consideration in hand received, does hereby unconditionally assign and transfer to the Assignee without recourse, for the benefit of the Corporation, all of its rights, title, interest, duties and obligations in and to the IPA, including the obligation to pay all Series 2017 Installment Payments to the Corporation. This assignment is absolute and is presently effective. 2 4818-3217-3973v11/022030-0166 (b) In connection with the matters described in subsection (a), the Assignee agrees to establish a “Revenue Fund” and a “Payment Fund,” in each case meeting the description thereof set forth in Section 5.2 of the IPA, on or before the Annexation Effective Date. (c) In connection with the matters described in subsection (a), the Assignor agrees to transfer the amounts held in the 2017 Rate Stabilization Fund, if any, to the Assignee upon the Annexation Effective Date, and the Assignee agrees to hold such moneys separate from other funds of the Assignee for the benefit of the Corporation. SECTION 2. Acceptance. (a) The Assignee hereby accepts the foregoing assignment as of the Annexation Effective Date for the benefit of the Corporation, and agrees thereafter to pay the Series 2017 Installment Payments to the Corporation and assume the other obligations of the Assignor as provided in the IPA. (b) From and after the Annexation Effective Date, the Assignee will assume the responsibilities of the Assignor with respect to compliance with applicable federal requirements for the tax-exempt status of the Series 2017 Installment Payments, in accordance with the Tax Compliance Certificate and Agreement dated December 15, 2017 and executed by the Assignor in connection with the IPA. SECTION 3. Amendment. (a) The definition of “City” in Section 1.1 of the IPA is hereby amended as follows: “City. The term “City” means Santa Margarita Water District, a California Water District duly organized and existing under Division 13 of the Water Code of the State of California.” (b) The definition of “Manager” in Section 1.1 of the IPA is hereby amended as follows: “Manager. The term “Manager” means the General Manager of Santa Margarita Water District, or any person designated by the General Manager of Santa Margarita Water District to act on behalf of the General Manager of Santa Margarita Water District.” (c) The definition of “Water System” in Section 1.1 of the IPA is hereby amended as follows: “Water System. The term “Water System” means the whole and each and every part of the water system within the boundaries of a geographic area within the boundaries of Santa Margarita Water District which will be designated after the date hereof as Improvement District No. 9 (consisting of the service area annexed to Santa Margarita Water District pursuant to Resolution No. DA 20-01 dated August 19, 2021 of the Orange County Local Agency Formation Commission), including all real property and buildings, including the portion thereof existing on the date hereof, and including all additions, betterments, extensions and improvements to 3 4818-3217-3973v11/022030-0166 such water system or any part thereof hereafter acquired or constructed.” (d) The notice address for the City set forth in Section 10.10 of the IPA is hereby amended as follows: “Santa Margarita Water District 26111 Antonio Parkway Rancho Santa Margarita, California 92688 Attention: General Manager” SECTION 4. Filings. The Assignee agrees, at its own expense, to make any filings required by The Depository Trust Company, the Internal Revenue Service, the California Debt Investment Advisory Commission and any other federal or state administrative and regulatory bodies in order to evidence the matters set forth herein. SECTION 5. Attornment. The Corporation acknowledges and agrees to the assignment set forth in Section 1 and agrees to attorn to the Assignee from and after the Annexation Effective Date with respect to all matters related to the IPA. This Agreement shall confer no rights and impose no obligations upon the Corporation beyond those expressly provided in the IPA. SECTION 6. Representations and Warranties. Each of the Assignee, the Assignor and the Corporation represents and warrants that: (i) the execution, delivery and performance of this Agreement have been duly authorized by such party by all necessary action; (ii) this Agreement, assuming due execution by the other parties thereto, constitutes a valid, binding and enforceable obligation of such party, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; (iii) to the best of such party’s knowledge after due inquiry, this Agreement does not violate any law, regulation or order binding on such party; (iv) no consent or authorization of any third party is required in connection with the execution, delivery or performance by such party of this Agreement or, alternatively, all such consents and authorizations have been given; (v) such party has the power to carry out the obligations imposed on such party by this Agreement; and (vi) there is no claim, action or proceeding pending and notice of which has been received by such party, or to the knowledge of such party, threatened against such party before any court, arbitrator or governmental agency or regulatory or administrative agency or commission challenging the validity, enforceability or legality of this Agreement. In addition, the Assignor and the Corporation represent and warrant that no Event of Default has occurred and is continuing under the IPA as of the date of execution and delivery of this Agreement. 4 4818-3217-3973v11/022030-0166 SECTION 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 Assignee, the Assignor or the Corporation 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. The Assignee, the Assignor and the Corporation hereby declare that they would have executed this Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 8. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. SECTION 9. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [Remainder of Page Intentionally Left Blank] 5 4818-3217-3973v11/022030-0166 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their officers thereunto duly authorized as of the day and year first written above. SANTA MARGARITA WATER DISTRICT By:________________________________________ Its: General Manager CITY OF SAN JUAN CAPISTRANO By:________________________________________ Its: City Manager PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA By:________________________________________ Its: Authorized Officer ACKNOWLEDGED AND AGREED: CITY NATIONAL BANK By:__________________________________ Its: Authorized Officer ______________________________________________________________________________________________________________________________________________________________________________________________________________ General Manager Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660-6422 949 725 4000 stradlinglaw.com NG-U9ZQVMF2/4846-3382-7735v3/022030-0166 November 15, 2021 City of San Juan Capistrano San Juan Capistrano, California Public Property Financing Corporation of California Westlake Village, California City National Bank Los Angeles, California Re: City of San Capistrano Refunding Revenue Installment Agreement, Series 2017 – Amendment to and Assignment of Installment Purchase Agreement Ladies and Gentlemen: We have examined certified copies of proceedings relating to the issuance of the above- referenced obligation (the “IPA”) by the City of San Juan Capistrano (the “City”). The IPA was dated as of December 1, 2017 and entered into by and between the City and Public Property Financing Corporation of California (the “Corporation”). Capitalized terms that are used herein and not defined have the meanings that are set forth in the IPA. In rendering the opinions that are set forth herein, we have relied upon the accuracy of the representations that are set forth in the Recitals to the Assignment, Assumption and Amendment Agreement, dated as of November 1, 2021 (the “Amendment”), by and among the City, the Corporation and Santa Margarita Water District (the “District”). We have not undertaken to verify through independent investigation the accuracy of the opinions, representations and certifications that we relied upon or of the assumptions that we made in rendering our opinions as stated herein. In rendering the opinions that are set forth herein, we have also assumed that the Amendment will be executed in the form that has been presented to us. We have further assumed the genuineness of all documents and signatures that have been presented to us, the authenticity of documents submitted as originals and the conformity to originals of documents submitted as copies. Furthermore, we have assumed compliance with all covenants and agreements of the IPA. Based upon our examination of the foregoing, and in reliance thereon, and on all matters of fact as we deem relevant under the circumstances, upon consideration of applicable laws, we are of the opinion that: (i) Assuming that no Event of Default has occurred and is continuing under the IPA, upon the execution and delivery of the Amendment by the parties thereto, the Amendment will be valid and binding upon the City and the District in accordance with its terms, except as the same may City of San Juan Capistrano Public Property Financing Corporation City National Bank November 15, 2021 Page Two NG-U9ZQVMF2/4846-3382-7735v3/022030-0166 be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California; provided, however, that we express no opinion as to indemnification, penalty, contribution, choice of law, choice of forum or waiver provisions contained therein. (ii) The transfer of the IPA obligations and related IPA documents from the City to the District and the execution of the Amendment, and the performance by the parties thereunder, will not, in and of itself, adversely affect the exclusion from gross income for federal income tax purposes or for State of California personal income taxation of interest payable with respect to the IPA. In order for interest payable with respect to the IPA to be excluded from gross income for federal income tax purposes subsequent to the date of execution of the IPA, it is necessary that certain provisions of the Internal Revenue Code of 1986, as amended, must be complied with on a continuous basis. We have made no independent investigation as to whether there has been such compliance in the present case. Accordingly, we express no opinion as to whether interest payable with respect to the IPA is presently excluded from gross income for federal income tax purposes or is exempt from State of California personal income taxation as of the date of this opinion. This opinion does not constitute a reaffirmation of any opinions that were previously delivered with respect to the IPA. The opinions that are expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions, and the foregoing opinions cover certain matters that are not directly addressed by such authorities. The only opinions rendered hereby shall be those that are expressly stated as such herein, and no opinions shall be implied or inferred as a result of anything contained herein or omitted herefrom. We call attention to the fact that such opinions may be affected by actions taken or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken or occur (or are not taken or do not occur). Our engagement with respect to the matters that are set forth herein terminates as of the date hereof and we expressly disclaim any obligation to update this letter. No attorney-client relationship exists between us and the Corporation with respect to the IPA. Our opinions are limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. We have not been engaged, nor have we undertaken, to advise any party or to opine as to any matters not specifically covered herein, including, but not limited to, matters relating to compliance with any securities laws. This opinion letter may be relied upon only by you and may not be circulated, quoted from or relied upon by any other party without our prior written consent. 4888-9141-8628v1/022030-0166 NOTICE OF SIGNIFICANT EVENT (INCURRENCE OF FINANCIAL OBLIGATION) NAME OF OBLIGOR: Santa Margarita Water District NAME OF OBLIGATION: $53,895,000 Santa Margarita/Dana Point Authority Water and Wastewater Revenue Bonds, Series 2020A DATE OF DELIVERY: September 2, 2020 BASE CUSIP: 80224A NOTICE IS HEREBY GIVEN pursuant to Section 5(b)(viii) of that certain Continuing Disclosure Agreement, dated as of September 1, 2020, by and between Santa Margarita Water District (the “District”) and Digital Assurance Certification, L.L.C., as dissemination agent, relating to the above-referenced obligations, of the following: Pursuant to Resolution No. DA 20-01 of the Orange County Local Agency Formation Commission dated August 19, 2021 (the “LAFCO Resolution”), the District has annexed the municipal water system of the City of San Juan Capistrano (the “City”) as of November 15, 2021 (the “Effective Date”) as described in the LAFCO Resolution (such water system, which will constitute the water system within the boundaries of a geographic area within the boundaries of the District which is designated as Improvement District No. 9, the “Water System”) and has assumed ownership of the Water System effective as of the Effective Date. The City had previously entered into an Installment Purchase Agreement, dated as of December 1, 2017 (the “IPA”), by and between the City and Public Property Financing Corporation of California (the “Corporation”), under which the City agreed to make Series 2017 Installment Payments (as such term is defined in the IPA) to the Corporation from Net Revenues (as such term is defined in the IPA). Pursuant to the LAFCO Resolution, the District has assumed all obligations of the City under the IPA on the Effective Date, including the obligation to pay the Series 2017 Installment Payments from Net Revenues of the Water System. The principal amount that is currently outstanding on the Bonds is $7,225,000. The interest rate that is payable on the Bonds is 3.20% per annum. Capitalized terms which are used herein and not otherwise defined have the meanings that are given such terms in the IPA. The terms of the IPA described herein are not to be considered a full statement of the terms of such agreement and, accordingly, such descriptions are qualified by reference to the IPA and are subject to the full text thereof. Term of the IPA The Series 2017 Installment Payments are payable on May 25 and November 25 of each year, with a final maturity on November 25, 2034. The amortization schedule for the Lease Payments is set forth in Exhibit A. 2 4888-9141-8628v1/022030-0166 Interest on the Series 2017 Installment Payments Interest on the Bonds is computed on the basis of a 360-day year of twelve 30-day calendar months at the rate of 3.20% per annum, payable semiannually on June 1 and December 1 of each year. Security for the Bonds The Bonds are secured by a pledge of and lien on Revenues of the Water System. “Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the Water 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 the District 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 Water System; (2) the earnings on and income derived from the investment of amounts described in clause (1) above and from District reserves; and (3) the proceeds derived by the District directly or indirectly from the sale, lease or other disposition of a part of the Water System; but excluding: (a) customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the District; and (b) any proceeds of taxes or assessments restricted by law to be used by the District to pay bonds or other obligations previously or later issued. As described above, “Water System” means only that portion of the District’s water system that is designated as Improvement District No. 9, consisting of the area formerly served by the City. Water revenues derived from other portions of the District’s water system are neither available for nor pledged to the payment of the Bonds. In order to carry out and effectuate the pledge and lien contained in the IPA, the District has agreed and covenanted that all Revenues will be received by the District in trust and deposited when and as received in a special fund designated as the “Revenue Fund,” which fund the District has agreed and covenanted to maintain and to hold separate and apart from other funds so long as any Installment Payments or Bonds remain unpaid. Moneys in the Revenue Fund will be used and applied by the District as provided in the IPA. The District will, from the moneys in the Revenue Fund, pay all Operation and Maintenance Costs (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Costs, the payment of which is not then immediately required, provided that no such reserves may be set aside for the Ground Water Recovery Plant) as they become due and payable. All remaining moneys in the Revenue Fund will be set aside by the District at the following times in the following respective special funds in the following order of priority and all moneys in each of such funds will be held in trust and applied, used and withdrawn only for the purposes authorized in the IPA, including to pay the Series 2017 Installment Payments and parity obligations of the Water System on a pro rata basis. See the caption “Senior and Parity Obligations” below. “Operation and Maintenance Costs” means costs spent or incurred for Operation and Maintenance of the Water System calculated in accordance with generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Water System in good repair and working 3 4888-9141-8628v1/022030-0166 order and operations, and also means all costs of water purchased or otherwise acquired for delivery by the Water System (including any interim or renewed arrangement for water purchase or acquisition, and also including annual costs not to exceed: (a) $2,750,000 for project lease payments, including principal and interest components, for the Phase I San Juan Basin Ground Water Recovery Plant (the “Ground Water Recovery Plant”); plus (b) $1,100,000 for other capital and operations costs of the Ground Water Recovery Plant increasing by 85% of CPI annually; plus (c) $1,200,000 for electricity costs of the Ground Water Recovery Plant, provided that (a), (b) and (c) above may be increased due to currently unforeseeable cost increases which are out of the control of the District and the owner, operator and lenders with respect to the Ground Water Recovery Plant); but excluding in all cases depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature and any amounts transferred to Rate Stabilization Reserves. Senior and Parity Obligations The Bonds are secured by a pledge of and lien on Revenues of the Water System on a junior basis to payments under the Amended and Restated Lease Agreement, dated as of November 1, 2014, by and between the District and the San Juan Basin Authority, which is currently outstanding in the aggregate principal amount of $12,836,797 and which matures on November 15, 2034; and The Bonds are secured by a pledge of and lien on Revenues of the Water System on a parity basis to the Water Revenue Refunding Bonds, Series 2014A, which are currently outstanding in the aggregate principal amount of $13,547,833 and which mature on December 1, 2034. Prepayment The Series 2017 Installment Payments are subject to prepayment prior to their stated maturity, and by lot within a maturity, date at the option of the District, from any source of available funds, as a whole or in part on any date on or after December 1, 2023, at a prepayment price equal to the principal amount of such Series 2017 Installment Payments called for prepayment, together with accrued interest with respect thereto to the date fixed for prepayment, without premium. The Series 2017 Installment Payments are also subject to extraordinary prepayment prior to their stated maturity date at the option of the District, from Net Proceeds of condemnation or insurance, as a whole or in part on any date, at a prepayment price equal to the principal amount of such Series 2017 Installment Payments called for prepayment, together with accrued interest with respect thereto to the date fixed for prepayment, without premium. Certain Covenants Rate Covenant. The District will, to the maximum extent permitted by law, fix, prescribe and collect rates and charges for the Water Service which will be at least sufficient to yield during each Fiscal Year Net Revenues equal to 100% of the Debt Service payable in such Fiscal Year, plus the amount by which the amount on deposit in the Rate Stabilization Reserves on the last day of the immediately preceding Fiscal Year was less than 25% of Maximum Annual Debt Service as of such day. The District may make adjustments from time to time in such rates and charges and may make such classification thereof as it deems necessary, but it will not reduce the rates and charges then in effect unless the Net Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements of the rate covenant. 4 4888-9141-8628v1/022030-0166 Additional Parity Obligations. The District may at any time execute any Contract or issue any Bonds, as the case may be, in accordance herewith; provided: (a) there shall not have occurred and be continuing an Event of Default under the terms of the Installment Purchase Agreement; and (b) the District obtains or provides a certificate or certificates prepared by an Independent Financial Consultant showing that: (i) the Net Revenues as shown by the books of the District for any 12 consecutive calendar months period selected by the District within the 24 calendar months ending prior to the incurring of such additional obligations amount to at least the sum of: (x) 100% of Debt Service for such 12 calendar month period; plus (y) the amount by which the amount on deposit in, the Rate Stabilization Reserves on the date prior to the first day of such 12 calendar month period was less than 25% of Maximum Annual Debt Service; for purposes of preparing the certificate or certificates described above, the Independent Financial Consultant or Consultants may rely upon financial statements prepared by the District which have not been subject to audit by an Independent Certified Public Accountant if audited financial statements for the Fiscal Year or period are not available; (ii) the estimated Net Revenues for the 12 calendar months following the date of incurring such additional obligations will be at least equal to 100% of Maximum Annual Debt Service on all Bonds and Contracts to be outstanding immediately after the incurring of such additional obligations; (iii) the sum of the amounts on deposit in the 2014 Bonds Rate Stabilization Reserve and the 2017 Rate Stabilization Reserve on the date of incurring such additional obligations is at least equal to 25% of Maximum Annual Debt Service as of the date of incurring of such additional obligations; and (iv) a rate stabilization reserve is established equal to 25% of maximum annual debt service on the Contract or Bond to be executed or issued, respectively. For purposes of the computations to be made as described in clause (ii), the determination of the Net Revenues: (1) may take into account any increases in rates and charges which relate to the Water System and shall take into account any reduction in such rates and charges, which will be effective prior to or at the time of incurring such proposed additional obligations; (2) may take into account an allowance for any estimated increase in such Net Revenues from any revenue producing additions to or improvements or extensions of the Water System to be made with the proceeds of such additional obligations or with the proceeds of obligations previously issued, as shown by a certificate of an Independent Financial Consultant; and (3) for the period contemplated by clause (ii), Operation and Maintenance Costs of the Water System shall be deemed to be the same as for the period for which a calculation is done pursuant to clause (i), but adjusted, if deemed necessary by the Independent Financial Consultant, for 5 4888-9141-8628v1/022030-0166 any increased Operation and Maintenance Costs of the Water System which are, in the judgment of the Independent Financial Consultant, essential to maintaining and operating the Water System. The certificate or certificates described above are not required if the additional obligations being incurred are for the purpose of refunding then Outstanding Bonds or Contracts and at the time of the incurring of such additional obligations a certificate of an Authorized Representative of the District shall be delivered showing that Maximum Annual Debt Service on all outstanding Bonds or Contracts after the incurring of such additional obligations will not exceed Maximum Annual Debt Service on all Bonds or Contracts outstanding prior to the incurring of such additional obligations. Notwithstanding the foregoing, Bonds issued or Contracts executed to refund Bonds or Contracts may be delivered without satisfying the conditions set forth above if Debt Service in each Fiscal Year after the Fiscal Year in which such Bonds are issued or Contracts executed is not greater than Debt Service would have been in each such Fiscal Year prior to the issuance of such Bonds or execution of such Contracts. Events of Default The following are Events of Default under the IPA: (1) the District defaults in the due and punctual payment of the interest on or principal of any Series 2017 Installment Payments or Contracts or Bonds when and as the same become due and payable; (2) the District defaults in the performance of any of the agreements or covenants contained in the IPA required to be performed by it, and such default continues for a period of 60 days after the District has been given notice in writing of such default by the Bank; (3) the District files a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction approves a petition filed with or without the consent of the District seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, 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 District or of the whole or any substantial part of its properties; and (4) payment of the principal of any parity Contract or Bond is accelerated in accordance with its terms. Acceleration Permitted as a Remedy Acceleration of the payment of the Series 2017 Installment Payments is an available remedy in an Event of Default under the IPA. No Rating The IPA has not been assigned a credit rating. 6 4888-9141-8628v1/022030-0166 The filing of this notice does not constitute or imply any representation regarding any other financial, operating or other information about the District or its outstanding bonds or other indebtedness. This notice speaks only as of its date and does not imply that there is no change in any other information concerning the District or its outstanding bonds or other indebtedness that may have a bearing on the security therefor, or an investor’s decision to buy, sell, or hold such bonds or other indebtedness. Dated: November 18, 2021 SANTA MARGARITA WATER DISTRICT A-1 4888-9141-8628v1/022030-0166 EXHIBIT A AMORTIZATION SCHEDULE Installment Payment Date (five days prior to the each of the following dates) Amount Attributable to Principal Amount Attributable to Interest Total Debt Service 12/1/2021 $415,000.00 $115,600.00 530,600.00 6/1/2022 - 108,960.00 108,960.00 12/1/2022 430,000.00 108,960.00 538,960.00 6/1/2023 - 102,080.00 102,080.00 12/1/2023 445,000.00 102,080.00 547,080.00 6/1/2024 - 94,960.00 94,960.00 12/1/2024 460,000.00 94,960.00 554,960.00 6/1/2025 - 87,600.00 87,600.00 12/1/2025 475,000.00 87,600.00 562,600.00 6/1/2026 - 80,000.00 80,000.00 12/1/2026 485,000.00 80,000.00 565,000.00 6/1/2027 - 72,240.00 72,240.00 12/1/2027 505,000.00 72,240.00 577,240.00 6/1/2028 - 64,160.00 64,160.00 12/1/2028 520,000.00 64,160.00 584,160.00 6/1/2029 - 55,840.00 55,840.00 12/1/2029 535,000.00 55,840.00 590,840.00 6/1/2030 - 47,280.00 47,280.00 12/1/2030 555,000.00 47,280.00 602,280.00 6/1/2031 - 38,400.00 38,400.00 12/1/2031 575,000.00 38,400.00 613,400.00 6/1/2032 - 29,200.00 29,200.00 12/1/2032 590,000.00 29,200.00 619,200.00 6/1/2033 - 19,760.00 19,760.00 12/1/2033 610,000.00 19,760.00 629,760.00 6/1/2034 - 10,000.00 10,000.00 12/1/2034 625,000.00 10,000.00 635,000.00