Exhibit 10.4

EXECUTION VERSION

$50,000,000

CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY

REVENUE BONDS

(SAN JOSE WATER COMPANY PROJECT)

SERIES 2010A

BOND PURCHASE CONTRACT

June 9, 2010

The Honorable Bill Lockyer

Treasurer of the State of California

915 Capitol Mall, Room 261

Sacramento, California 95814

California Pollution Control Financing Authority

915 Capitol Mall, Room 457

Sacramento, California 95814

Ladies and Gentlemen:

The undersigned, Goldman, Sachs & Co., as underwriter (the “Underwriter”),
hereby offers to enter into this Bond Purchase Contract, including the
appendices hereto (the “Purchase Contract”) with you, the Honorable Bill
Lockyer, Treasurer of the State of California (the “State Treasurer”), the
California Pollution Control Financing Authority (the “Authority”) and San Jose
Water Company (the “Borrower”), for the purchase by the Underwriter and the
issuance and sale by the Authority of the Bonds specified below. This offer is
made subject to acceptance by the State Treasurer, the Authority and the
Borrower prior to 11:59 p.m., California time, on the date hereof, and upon such
acceptance this Purchase Contract shall be in full force and effect in
accordance with its terms and shall be binding upon the State Treasurer, the
Authority, the Underwriter and the Borrower. Any capitalized term used herein
and not otherwise defined shall have the meaning given such term as set forth in
the Indenture hereinafter defined.

1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations set forth herein, the Underwriter hereby agrees to purchase, and
the Authority hereby agrees to deliver to the Underwriter, all (but not less
than all) of the $50,000,000 aggregate principal amount of California Pollution
Control Financing Authority Revenue Bonds (San Jose Water Company Project),
Series 2010A (the “Bonds”) to be dated as of the date of delivery thereof, to
bear interest at the rate of 5.10% per annum, to mature on June 1, 2040, and
otherwise as more fully described in the Indenture hereinafter defined. The
purchase price for the Bonds shall be $50,000,000, representing the aggregate
principal amount of the Bonds. Simultaneously with the delivery of the Bonds, a
fee in the aggregate amount of $312,500 will be paid to the Underwriter by the
Borrower in connection with the Underwriter’s offering and sale of the Bonds to
the public.

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2. The Bonds. The Bonds will be issued under the provisions of the California
Pollution Control Financing Authority Act, commencing with Section 44500 of the
California Health and Safety Code, as now in effect and as it may from time to
time hereafter be amended or supplemented (the “Act”). The Bonds shall be
substantially in the form and subject to redemption as described in, and shall
be issued and secured under and pursuant to the provisions of, an Indenture,
dated as of June 1, 2010 (the “Indenture”), by and between the Authority and
Wells Fargo Bank, National Association, as trustee (the “Trustee”). The Bonds
are secured by payments made by the Borrower to the Authority pursuant to a Loan
Agreement, dated as of June 1, 2010 (the “Loan Agreement”), by and between the
Authority and the Borrower. The proceeds of sale of the Bonds will be loaned to
the Borrower to and applied to (a) finance the Project (as such term is defined
in the Indenture), and (b) pay certain costs associated with the issuance of the
Bonds.

3. Official Statement. The Authority and the Borrower hereby ratify, confirm and
approve of the use and distribution by the Underwriter prior to the date hereof
of the Preliminary Official Statement relating to the Bonds (including the cover
page and all appendices thereto), dated May 27, 2010, together with any
supplements thereto (the “Preliminary Official Statement”). The Authority and
the Borrower shall deliver or cause to be delivered to the Underwriter a
reasonable number of copies of the final Official Statement, dated the date
hereof, relating to the Bonds, together with any amendments and supplements
thereto (the “Official Statement”), executed on behalf of the Authority by its
Executive Director, with the approval thereof by the Borrower. The Underwriter
agrees to: (a) provide the Authority with final pricing information on the Bonds
on a timely basis; (b) disseminate copies of the Official Statement including
any supplements prepared by the Authority and the Borrower, and (c) take any and
all other actions necessary to comply with applicable Securities and Exchange
Commission rules and Municipal Securities Rulemaking Board rules governing the
offering, sale and delivery of the Bonds to ultimate purchasers.

4. Representations, Warranties and Agreements of the Authority. The Authority,
subject to the limitations provided herein, warrants, represents to and agrees
with the Underwriter with respect to the Bonds that:

(a) The Authority is a public instrumentality and political subdivision of the
State of California authorized under the Act to issue the Bonds and to exercise
all rights and powers permitted under the Act;

(b) The Authority has complied with the provisions of the Act and all other
applicable laws, rules and regulations necessary, and has the requisite power
and authority, to (i) execute and deliver this Purchase Contract, the Indenture
and the Loan Agreement (collectively, the “Legal Documents”), (ii) issue and
deliver the Bonds as provided in this Purchase Contract, and (iii) consummate
the transactions on its part contemplated by, and perform its obligations under
the Legal Documents;

(c) By the adoption of its delegation resolution, dated May 26, 2010, and its
final resolution, dated May 26, 2010 (collectively, the “Authorizing
Resolution”), the Authority has duly authorized the distribution of the
Preliminary Official Statement and the Official Statement, and approved the
execution and delivery of, and the due performance by the Authority of the
obligations on its part contained in the Legal Documents and the Bonds and the
consummation by the Authority of the transactions contemplated thereby and
hereby;

 

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(d) When executed and delivered on the Closing Date (as hereinafter defined) in
accordance with the provisions of this Purchase Contract and assuming the due
authorization, execution, and delivery by the other respective parties thereto,
the Legal Documents and the Bonds will constitute valid and binding obligations
of the Authority enforceable against the Authority in accordance with their
respective terms, except as their enforceability may be limited by reasons of
bankruptcy, insolvency, reorganization or other laws generally affecting
creditors’ remedies; the application of equitable principles regardless of
whether equitable remedies are sought; by provisions of California law governing
claims against public agencies; and by matters of public policy;

(e) To the best knowledge of the Authority, the execution and delivery by the
Authority of the Legal Documents and the Bonds and compliance with the terms
thereof will not conflict with, or constitute a violation, breach of, or default
under, any loan agreement, indenture, bond, note, resolution or any other
agreement or instrument to which the Authority is a party or by which it is
bound, or any law or any rule, regulation, order or decree of any court or
governmental agency or body having jurisdiction over the Authority or any of its
activities or properties, or result in the creation or imposition of any
prohibited lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of the Authority, which conflict, violation, breach, default,
lien, charge or encumbrance would materially and adversely affect the
transactions contemplated hereby or which, in any way, would materially and
adversely affect the validity of the Bonds or any of the Legal Documents;
provided, however, that no representation is made regarding compliance with any
federal or state securities or “blue sky” laws;

(f) There is no action, suit, or proceeding at law or in equity before or by any
court, or any inquiry or investigation before or by any governmental agency,
public board, or body, with respect to which service of process on the Authority
has been completed or, to the best knowledge of the Authority, without
independent investigation, threatened against the Authority: (i) seeking to
prohibit, restrain, or enjoin the execution and delivery of the Bonds by the
Authority or the collection of revenues pledged or to be pledged to pay the
principal of and interest on the Bonds; (ii) contesting or seeking to affect the
validity or enforceability of the Bonds or the Legal Documents; or
(iii) contesting the power of the Authority to enter into, adopt, or perform its
obligations under any of the foregoing documents, wherein an unfavorable
decision, ruling, or finding would materially and adversely affect the
transactions contemplated hereby, or which would materially and adversely affect
the validity of the Bonds or the Legal Documents;

(g) No consent, approval, authorization, or other action by any governmental or
regulatory authority having jurisdiction over the Authority that has not been
obtained is or will be required for the execution and delivery of the Bonds or
the consummation by the Authority of the other transactions on its part
contemplated by this Purchase Contract, except as such may be required for the
state securities or “blue sky” laws, for final filings or notice to the
California Debt Limit Allocation Committee or the California Debt and Investment
Advisory Commission, and for filings to be made to the Internal Revenue Service
on Form 8038;

 

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(h) To the best knowledge of the Authority, without independent investigation,
(i) the Authority is not in breach of or in default under (A) any applicable law
or administrative regulation of the State of California or the United States or
any applicable judgment or decree, or (B) any loan agreement, indenture, bond,
note, resolution, agreement, or other instrument to which the Authority is a
party or is otherwise subject; and (ii) no event has occurred and is continuing
which, with the passage of time or the giving of notice or both, would
constitute an event of default under any such instrument, which breach or
default would materially and adversely affect the transactions contemplated
hereby and by the Official Statement or which, in any way would materially and
adversely affect the validity of the Bonds or the Legal Documents; provided that
no representation is made regarding compliance with any federal or state
securities or “blue sky” laws;

(i) As of the date hereof, the statements and information contained in the
Official Statement under the captions “THE AUTHORITY” and “ABSENCE OF MATERIAL
LITIGATION,” (solely as it relates to the Authority) do not contain any untrue
statement of a material fact or omit to state a material fact which is necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and

(j) The Authority agrees to cooperate with the Underwriter and its counsel in
endeavoring to qualify the Bonds for offering and sale under the securities or
blue sky laws of such jurisdictions of the United States as the Underwriter may
request; provided, however, that the Authority will not be required to execute a
consent to service of process or to qualify as a foreign corporation in
connection with any such qualification in any jurisdiction in which it is not
now so subject.

Any certificate signed by any officer of the Authority and delivered to the
Underwriter shall be deemed a representation and warranty of the Authority to
the Underwriter as to the statements made therein.

The execution and delivery of this Purchase Contract by the Authority shall
constitute a representation by the Authority to the Underwriter that the
representations and warranties contained in this Section 4 are true as of the
date hereof; provided, however, that the Authority makes no representations or
warranties as to the Borrower or any party to the agreements or instruments
described herein other than the Authority and does not represent or warrant in
any respect as to any of the statements, information (financial or otherwise),
action taken or to be taken, representations or certifications furnished, or to
be made and furnished, by the Borrower or any parties to the agreements or
instruments described herein other than the Authority in connection with the
execution and delivery of the Bonds or any such statements or information
(financial or otherwise) contained in the Official Statement or the Legal
Documents. Additionally, as to matters of law other than federal tax law the
Authority is relying on the advice of counsel to the Authority; and as to
matters of federal tax law the Authority is relying on the advice of Bond
Counsel (as hereinafter defined).

No member of the governing body of the Authority, or any officer or employee of
the Authority, shall be individually liable for the breach of any
representation, warranty, or agreement contained herein.

 

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5. Representations, Warranties and Agreements of Borrower. In order to induce
the State Treasurer, the Authority and the Underwriter to enter into the
Purchase Contract, the Borrower hereby represents, warrants, covenants and
agrees with each of such parties, as follows:

(a) The Borrower is a corporation duly organized and in good standing under the
laws of the State of California, and has full power and authority to enter into
this Purchase Contract, the Loan Agreement and the Continuing Disclosure
Agreement, dated as of June 1, 2010 (the “Continuing Disclosure Agreement”), by
and between the Trustee and the Borrower, (collectively, the “Borrower
Documents”) and to approve the Indenture, the Preliminary Official Statement,
and the Official Statement, and to carry out and consummate all transactions
contemplated by the Borrower Documents, the Indenture and the Official Statement
and by proper action has duly authorized the execution and delivery of the
Borrower Documents and the approval of the Indenture, the Preliminary Official
Statement and the Official Statement;

(b) Each officer of the Borrower executing the Borrower Documents and approving
the Indenture and the Official Statement is duly and properly authorized to
approve, execute, and deliver the same on behalf of the Borrower;

(c) All information provided by the Borrower and all representations made by the
Borrower in its application to the Authority are true and correct as of the date
hereof.

(d) The Indenture, the Preliminary Official Statement, and the Official
Statement have been duly approved by the Borrower; this Purchase Contract has
been duly authorized, executed, and delivered by the Borrower; the Loan
Agreement and the Continuing Disclosure Agreement, have each been duly
authorized and, at the Closing, will have been duly executed and delivered by
the Borrower; and (i) the Loan Agreement, when assigned to the Trustee pursuant
to the Indenture, will, to the extent of such assignment, constitute the valid
and binding agreement of the Borrower with the Trustee enforceable against the
Borrower in accordance with its terms for the benefit of the Owners of the
Bonds, and (ii) the Borrower Documents, to the extent that any rights of the
Authority and obligations of the Borrower thereunder are not so assigned to the
Trustee, will constitute the valid and binding agreements of the Borrower
enforceable against the Borrower in accordance with their respective terms;
except as enforcement of each of the above-named documents may be limited by
bankruptcy, insolvency, moratorium, and other laws affecting the enforcement of
creditors’ remedies and by the application of equitable principles, regardless
of whether equitable remedies are sought, or matters of public policy;

(e) Except as disclosed in the Official Statement, the Borrower is not in breach
of or default under (i) any applicable law or administrative regulation of the
State of California or the United States or any applicable judgment or decree or
(ii) any loan agreement, indenture, bond, note, resolution, agreement or other
instrument to which the Borrower is a party or is otherwise subject, and no
event has occurred and is continuing which, with the passage of time or the
giving of notice or both, would constitute an event of default under any such
instrument, which breach or default or event of default could materially
adversely affect the ability of the Borrower to repay the loan of the proceeds
of the Bonds and perform its obligations under the Borrower Documents;

 

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(f) The execution and delivery of this Purchase Contract; the approval of the
Indenture, the Preliminary Official Statement, and the Official Statement; the
execution and delivery of the Loan Agreement and the Continuing Disclosure
Agreement at the Closing; the consummation of the transactions contemplated by,
and the fulfillment of or compliance with the terms and conditions of, the
Borrower Documents will not conflict with or constitute a violation, breach of,
or default (with due notice or the passage of time or both) under the Articles
of Incorporation of the Borrower, its Bylaws, or any applicable law or
administrative rule or regulation, or any applicable court or administrative
decree or order, or any indenture, mortgage, deed of trust, loan agreement,
lease, contract or other agreement or instrument to which the Borrower is a
party or by which it or its properties are otherwise subject or bound, or result
in the creation or imposition of any prohibited lien, charge or encumbrance of
any nature whatsoever upon any of the property or assets of the Borrower, which
conflict, violation, breach, default, lien, charge or encumbrance might have
consequences that would materially and adversely affect the consummation of the
transactions contemplated by the Borrower Documents or the financial condition,
assets, properties or operations of the Borrower;

(g) No consent or approval of any trustee or holder of any indebtedness of the
Borrower, and no consent, permission, authorization, order or license of, or
filing or registration with, any governmental authority (except in connection
with “blue sky” laws) is necessary in connection with (i) the execution and
delivery of this Purchase Contract; (ii) the execution and delivery of the Loan
Agreement and the Continuing Disclosure Agreement at the Closing; (iii) the
approval of the Indenture and the Official Statement; or (iv) the consummation
of any transaction contemplated in the Borrower Documents, except as have been
obtained or made and as are in full force and effect (or, in case of the Loan
Agreement or the Continuing Disclosure Agreement, will be obtained or made and
will be in full force and effect at the Closing);

(h) Except as disclosed in the Official Statement, there is no action, suit,
proceeding, inquiry, or investigation before or by any court or federal, state,
municipal or other government authority pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or the assets, properties
or operations of the Borrower which, if determined adversely to the Borrower or
its interests, could have a material and adverse effect upon the consummation of
the transactions contemplated by the performance of or the validity of this
Purchase Contract, the Loan Agreement, the Official Statement or the Continuing
Disclosure Agreement, or the financial condition, assets, properties or
operations of the Borrower;

(i) The proceeds of the Bonds will be used in connection with the financing of a
“project” as defined in the Act, and as of the date hereof, the Borrower
together with its affiliates is a “small business,” as defined in Section 8020
of Title 4 of the California Code of Regulations, and the Borrower together with
its Participating Affiliates is a “participating party” under the Act.

(j) The Borrower has all necessary power and authority to conduct the business
now being conducted by it and as contemplated by the Borrower Documents and the
Official Statement to approve the Indenture, the Preliminary Official Statement,
and the Official Statement;

 

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(k) The Borrower has obtained, or will obtain as soon as reasonably practicable,
the necessary governmental agency approvals, all variances from applicable
zoning ordinances and all building permits and easements or licenses required
for the completion and equipping of the Project, and such governmental agency
approvals, variances, permits, easements, and licenses constitute all approvals
required to complete the Project, except as provided in the Official Statement.
The Project is not subject to change by any administrative or judicial body so
as to materially affect such completion;

(l) The Borrower has not incurred any material liability, direct or contingent,
nor has there been any material adverse change in the financial position,
results of operations or condition, financial or otherwise, of the Borrower from
that shown in the Official Statement which has not heretofore been described in
writing to the Authority, the State Treasurer and the Underwriter, whether or
not arising from transactions in the ordinary course of business;

(m) As of the date hereof, the Official Statement (including any financial and
statistical data contained in the Official Statement) as amended or supplemented
pursuant to this Purchase Contract, if applicable, does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no
representation is made as to the statements and information concerning the
book-entry only system and contained under the captions, “THE AUTHORITY,”
“ABSENCE OF MATERIAL LITIGATION (solely as it relates to the Authority),
“UNDERWRITING,” and “TAX MATTERS”;

(n) The balance sheets of the Borrower as of December 31, 2009 and 2008 and the
related statements of income and cash flows for each of the three years in the
period ended December 31, 2009, included in Appendix A to the Official
Statement, present fairly the financial position of the Borrower as of
December 31, 2009 and 2008, and the results of operations and cash flows for
each of the three years in the period ended December 31, 2009, and are in
conformity with generally accepted accounting principles applied on a consistent
basis, as required by generally accepted accounting principles;

(o) The Borrower agrees to indemnify and hold harmless each of the State
Treasurer, the Authority and the Underwriter, and each person, if any, who
controls (as such term is defined in Section 15 of the Securities Act of 1933,
as amended) any of them and the trustees, officers, members, agents and
employees of the Authority, the State Treasurer and the Underwriter
(collectively, the “Indemnitees”) against any and all losses, claims, damages,
liabilities and expenses arising out of any statement or information in the
Preliminary Official Statement (other than the information contained under the
captions “THE AUTHORITY,” and “ABSENCE OF MATERIAL LITIGATION” (solely as it
relates to the Authority) and, in the case of the Underwriter, other than the
information contained under the caption “UNDERWRITING”) or in the Official
Statement (other than the information contained under the captions “THE
AUTHORITY,” and “ABSENCE OF MATERIAL LITIGATION” (solely as it relates to the
Authority) and, in the case of the Underwriter, other than the information
contained under the caption “UNDERWRITING”) that is or is alleged to be untrue
or incorrect in any material respect or the omission or alleged omission
therefrom of any statement or information that should be stated therein or that
is necessary to make the statements therein not

 

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misleading in any material respect or from the failure or alleged failure to
register any security under the Securities Act of 1933, as amended, or to
qualify any indenture under the Trust Indenture Act of 1939, as amended, in
connection with the public offering and sale of the Bonds. In case any claim
shall be made or action brought against any Indemnitee based upon the Official
Statement for which indemnity may be sought against the Borrower, as provided
above, such Indemnitee shall promptly notify the Borrower in writing setting
forth the particulars of such claim or action and the Borrower shall assume the
defense thereof, including the retaining of counsel reasonably acceptable to
such Indemnitee and the payment of all expenses. Any Indemnitee shall have the
right at any time to retain separate counsel in any such action and to
participate in the defense thereof but shall bear the fees and expenses of such
counsel unless (i) the Borrower shall have specifically authorized the retaining
of such counsel, (ii) the Borrower has failed to assume the defense and employ
counsel reasonably acceptable to the Indemnitee, (iii) the Attorney General of
the State of California assumes the defense of the Authority, or (iv) the
parties to such suit include such Indemnitee, and the Borrower and such
Indemnitee have been advised by such counsel that one or more legal defenses may
be available to it which may not be available to the Borrower or that
representation of such Indemnitee and the Borrower by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case the Borrower shall
not have the right to assume the defense of such action on behalf of such
Indemnitee, but the Borrower shall not be liable for the fees and expenses of
more than one counsel for such Indemnitee) or the State Treasurer or any
Indemnitee of the Authority or the State Treasurer;

(p) In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in Section 5(o) hereof is applicable but
for any reason is held to be unavailable from the Borrower, the Borrower and the
Underwriter shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal, and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, to which the Borrower and the Underwriter may
be subject, but after deducting any contribution received by the Borrower from
persons who control the Borrower within the meaning of the Securities Act of
1933, as amended, or from the authorized representative of the Borrower who
signed the Official Statement, who may also be liable for contribution) in such
proportion that the Underwriter is responsible for that portion represented by
the percentage that the underwriting fee set forth in the Official Statement
bears to the public offering price appearing thereon and the Borrower is
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act of 1933, as amended) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5(p), each person, if any, who controls the Underwriter within the
meaning of the Securities Act of 1933, as amended, shall have the same rights to
contribution as the Underwriter and each person, if any, who controls the
Borrower within the meaning of the Securities Act of 1933, as amended, and the
authorized representative of the Borrower who shall have signed the Official
Statement shall have the same rights to contribution as the Borrower. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this
Section 5(p), notify such party or parties from whom contribution may be sought,
but the omission to so notify such party from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section 5(p). No party shall be liable for contribution with respect to any
action or claim settled without its consent;

 

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(q) The Borrower confirms that the Preliminary Official Statement is “final”
(except as permitted under Rule 15c2-12 under the Securities Exchange Act of
1934 (the “Rule”)) and the Official Statement is “complete” as of its date
within the meaning of the Rule. The use of the Official Statement by the
Underwriter is authorized by the Borrower; and

(r) The representations, warranties, agreements and indemnities herein shall
survive the Closing Date under the Purchase Contract and any investigation made
by or on behalf of any Indemnitee of any matters described in or related to the
transactions contemplated by this Purchase Contract, the Official Statement, the
Loan Agreement, the Indenture and the Continuing Disclosure Agreement.

6. Closing. At 8:00 a.m., California time, on June 16, 2010, or at such other
time or on such earlier or later date as the Authority, the Borrower and the
Underwriter mutually agree upon (the “Closing Date”), the Authority will deliver
or cause to be delivered to the Underwriter, who shall deliver or cause to be
delivered to The Depository Trust Company in New York, New York (“DTC”) (or such
other locations as may be designated by the Underwriter and approved by the
Authority), the Bonds in book-entry form, duly executed and authenticated, and
will deliver to the Underwriter at the Law Offices of Leslie M. Lava, 207 Second
Street, Suite A, Sausalito, California 94965 (or such other location as may be
designated by the Underwriter and approved by the Authority), the other
documents herein mentioned. The Underwriter will pay the purchase price of the
Bonds as set forth in Section 1 hereof by wire transfer to the order of the
Trustee for the account of the Authority and will accept delivery of the Bonds
as set forth below. This payment for and delivery of the Bonds, together with
the delivery of the documents, is herein called the “Closing” or the “Closing
Date.” CUSIP identification numbers shall be printed on the Bonds; however,
neither the failure to print CUSIP numbers on any Bond nor any error with
respect thereto shall constitute cause for a failure or refusal by the
Underwriter to accept delivery of and pay for the Bonds on the Closing in
accordance with the terms of this Purchase Contract. The Bonds shall be made
available to the Underwriter not less than one business day before the Closing
for purposes of inspection.

The Bonds shall be registered in the name of Cede & Co., as nominee of DTC and
shall be in the form of a single fully registered Bond for each maturity of the
Bonds. The Authority acknowledges that the services of DTC will be used
initially by the Underwriter in order to permit the issuance of the Bonds in
book-entry form, and agrees to cooperate with the Underwriter in employing such
services.

7. Underwriter’s Conditions to Closing. The Underwriter has entered into this
Purchase Contract in reliance upon the representations and agreements of the
Authority and the Borrower herein, the performance by the Authority and the
Borrower of their respective obligations hereunder, both as of the date hereof
and as of the Closing Date, the opinions of counsel to the Authority and the
Borrower. The Underwriter’s obligations under this Purchase Contract are and
shall be subject to the following further conditions:

(a) At the time of Closing, this Purchase Contract, the Indenture, the Loan
Agreement and the Continuing Disclosure Agreement shall each be in full force
and effect as valid and binding agreements between or among the various parties
thereto and said documents and the Official Statement shall not have been
amended, modified or supplemented except as may have been agreed to in writing
by the Underwriter and there shall be in full force and effect such resolutions
as, in the opinion of Leslie M. Lava, Esq. (“Bond Counsel”), shall be necessary
in connection with the transactions contemplated hereby;

 

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(b) The Bonds shall have been duly authorized, executed and authenticated in
accordance with the provisions of the Indenture;

(c) Between the date hereof and the Closing Date, the market price or
marketability, at the initial offering price set forth in the Official
Statement, of the Bonds shall not have been materially adversely affected, in
the reasonable judgment of the Underwriter (evidenced by a written notice to the
Authority and the Borrower, terminating the obligation of the Underwriter to
accept delivery of and pay for the Bonds), after consultation with the Borrower,
the Authority and the State Treasurer, by reason of any of the following:

(1) Legislation shall have been enacted by the Congress of the United States or
the Legislature of the State of California or favorably reported thereto for
passage by any committee to which such legislation has been referred for
consideration or be pending before any such committee or shall have been
recommended to the Congress of the United States for passage by the President of
the United States or recommended to the Legislature of the State of California
for passage by the Governor of the State of California, or a decision shall have
been rendered by a court of the United States, including the Tax Court of the
United States, or of the State of California, or a ruling or an official release
shall have been made or a regulation shall have been proposed or made by the
Treasury Department of the United States or the Internal Revenue Service or
other federal or State of California authority having jurisdiction over tax
matters, with respect to federal or State of California taxation upon revenues
or other income of the Authority or the Borrower or upon interest on obligations
of the general character of the Bonds, or other action or events shall have
transpired that would, in the reasonable judgment of the Underwriter, have the
purpose or effect, directly or indirectly, of changing the federal or State of
California tax consequences of any of the transactions contemplated in
connection herewith and that in the reasonable judgment of the Underwriter,
affects materially and adversely (i) the market price or marketability of the
Bonds or (ii) the ability of the Underwriter to enforce contracts for the sale
of the Bonds;

(2) Legislation enacted or introduced in the Congress or recommended for passage
by the President of the United States, or a decision rendered by a court
established under Article III of the Constitution of the United States or by the
Tax Court of the United States, or an order, ruling, regulation (final,
temporary or proposed) or official statement issued or made by or on behalf of
the Securities and Exchange Commission, or any other governmental agency having
jurisdiction of the subject matter, to the effect that obligations of the
general character of the Bonds, or the Bonds, including any or all underlying
arrangements, are not exempt from registration under the Securities Act of 1933,
as amended, or that the Indenture is not exempt from qualification

 

10

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under the Trust Indenture Act of 1939, as amended, or suspending the use of the
Official Statement or any amendment or supplement thereto or any proceeding for
that purpose shall have been initiated or threatened in any such court or by any
such authority;

(3) The outbreak or escalation of hostilities involving the United States, or
the declaration by the United States of a national emergency or war, or the
occurrence of any other national emergency or calamity relating to the effective
operation of the government of or the financial community in the United States
beyond that in effect at the date hereof;

(4) The declaration of a general banking moratorium by federal, New York or
California authorities, or the general suspension of trading on any national
securities exchange or any material disruption in securities settlement
services;

(5) The imposition by the New York Stock Exchange or other national securities
exchange, or any governmental authority, of any material restrictions not now in
force with respect to the Bonds or obligations of the general character of the
Bonds or securities generally, or the material increase of any such restrictions
now in force, including those relating to the extension of credit by, or the
charge to the net capital requirements of, underwriters;

(6) An order, decree or injunction of any court of competent jurisdiction, or
order, ruling, regulation or official statement by the Securities and Exchange
Commission, or any other governmental agency having jurisdiction of the subject
matter, issued or made to the effect that the issuance, offering or sale of
obligations of the general character of the Bonds, or the issuance, offering or
sale of the Bonds, including any or all underlying obligations, as contemplated
hereby or by the Official Statement, is or would be in violation of the federal
securities laws as amended and then in effect;

(7) The withdrawal or downgrading of the rating of the Bonds to less than “A” by
Standard and Poor’s or notice by Standard and Poor’s that it has such rating
under review with negative implications; or

(8) Any event occurring, or information becoming known which, in the reasonable
judgment of the Underwriter, makes untrue in any material respect any statement
or information contained in the Official Statement, or has the effect that the
Official Statement contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

(d) At or prior to the Closing, the Underwriter shall receive the following
documents with respect to the Bonds, in each case satisfactory in form and
substance to the Underwriter and Underwriter’s Counsel (as hereinafter defined):

(1) Certified copies of the Authorizing Resolution and any other resolutions
adopted by the Authority which relate to the Bonds;

 

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(2) The Indenture, the Loan Agreement and the Continuing Disclosure Agreement,
each duly executed and delivered by the respective parties thereto, together
with such amendments, modification or supplements as may have been agreed to in
writing by the Underwriter;

(3) Copies of the Official Statement, executed by the Executive Director of the
Authority or an authorized representative thereof, with the approval thereof
executed on behalf of the Borrower by an authorized representative thereof;

(4) The unqualified approving opinion of Bond Counsel, dated the Closing Date
and addressed to the Authority, in substantially the form attached as Appendix B
to the Official Statement, together with a reliance letter addressed to the
Underwriter;

(5) The supplemental opinion of Bond Counsel, dated the Closing Date and
addressed to the Authority and the Underwriter, in substantially the form
attached hereto as Exhibit A;

(6) The unqualified approving opinion of Special Tax Counsel, dated the Closing
Date and addressed to the Authority, the Underwriter and Bond Counsel, in
substantially the form attached as Appendix C to the Official Statement;

(7) The supplemental opinion of Special Tax Counsel, dated the Closing Date and
addressed to the Authority and the Underwriter, in substantially the form
attached hereto as Exhibit B;

(8) The opinion of the Attorney General of the State of California, counsel to
the Authority (“Authority Counsel”), addressed to the Authority, dated the
Closing Date, in substantially the form attached hereto as Exhibit C;

(9) Certificate of the Authority, dated the Closing Date, in substantially the
form attached hereto as Exhibit D;

(10) Copies of the Articles of Incorporation of the Borrower and a good standing
certificate of recent date, each certified by the Secretary of State; a good
standing certificate of recent date for the Borrower certified by the Franchise
Tax Board of the State and certified copies of the Borrower’s bylaws and
resolutions or unanimous written consents of the Board of Directors of the
Borrower authorizing the execution and delivery of the Loan Agreement, the
Continuing Disclosure Agreement and this Purchase Contract, approving the
Indenture and the Official Statement (and distribution thereof) and authorizing
the distribution of the Preliminary Official Statement;

(11) A certificate of an authorized representative of the Borrower acceptable to
the Underwriter and the Authority, dated the Closing Date, to the effect that:

(A) No litigation is pending or, to the knowledge of such officer, threatened
(i) to restrain or enjoin the issuance or delivery of any of the

 

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Bonds or the payments to be made by the Borrower under the Indenture or the Loan
Agreement, (ii) in any way contesting or affecting the authority for the
issuance or delivery of the Bonds or the validity of the Bonds, the Indenture,
the Loan Agreement, the Official Statement, the Continuing Disclosure Agreement
or this Purchase Contract, or the resolutions of the Borrower relating to the
financing of the Project and the Bonds, or (iii) in any way contesting the
corporate existence or powers of the Borrower;

(B) No event has occurred since the date of the Official Statement which either
makes untrue or incorrect in any material respect as of the Closing Date any
statement or information contained in the Official Statement or is not reflected
in the Official Statement but should be reflected therein in order to make the
statements and information contained therein not misleading in any material
respect; provided that no representation is made as to the statements and
information concerning the book-entry only system and contained under the
captions, “THE AUTHORITY,” “ABSENCE OF MATERIAL LITIGATION” (solely as it
relates to the Authority), “UNDERWRITING,” and “TAX MATTERS”;

(C) There has been no material adverse change in the business, properties or
financial condition of the Borrower from that shown in the Official Statement;
and

(D) The representations and warranties of the Borrower contained in this
Purchase Contract are true and correct in all material respects as of the
Closing Date as if made on and as of the Closing Date;

(12) The opinion of counsel to the Borrower (“Borrower’s Counsel”), addressed to
the Authority, the Trustee and the Underwriter, dated the Closing Date, in
substantially the form attached hereto as Exhibit E;

(13) An opinion of counsel to the Trustee addressed to the Authority and the
Underwriter, dated the Closing Date, to the effect that:

(A) The Trustee is a national banking association with trust powers and being
qualified to accept and administer funds, duly created and lawfully existing
under the laws of the United States of America and having the authority to
exercise trust powers in the State of California;

(B) The Trustee has duly authorized by all necessary corporate action the
execution, delivery, and performance of the Indenture;

(C) The Trustee has full power and corporate authority to accept the duties and
obligations imposed on it by the Indenture and to authenticate the Bonds and the
full legal power and authority to own its properties and to carry on its
business;

 

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(D) Upon execution and delivery of the Indenture, by a duly authorized officer
of the Trustee, the Indenture will constitute the valid and binding agreement of
the Trustee, enforceable against it in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, moratorium, and
other laws affecting the enforcement of creditors’ remedies generally and to the
application of equitable principles, regardless of whether equitable remedies
are sought; and

(E) No authorization, consent or other order of any State of California or
federal government authority or agency having jurisdiction in the matter is
required to be obtained by the Trustee for the valid authorization, execution,
delivery and performance by the Trustee of the Indenture;

(14) A certificate of the Trustee, dated the Closing Date, to the effect that:

(A) The Trustee is the Trustee under the Indenture, relative to the issuance and
delivery of the Bonds;

(B) The Trustee is duly organized, validly existing, in good standing under the
laws of the United States of America, and has the authority to exercise trust
powers in the State of California, and is empowered, authorized, and duly
qualified to serve as trustee and registrar pursuant to the Indenture and the
other documents relating to the issuance of the Bonds;

(C) The Indenture and the Continuing Disclosure Agreement have been duly
executed, acknowledged, and delivered on behalf of the Trustee by an authorized
officer;

(D) The Bonds have been duly authenticated and delivered by the Trustee, acting
as registrar pursuant to the Indenture;

(E) The Trustee has received executed counterparts of the Indenture, the Loan
Agreement, the Tax Certificate and the Continuing Disclosure Agreement; and

(F) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body,
pending or to the best of the Trustee’s knowledge, threatened against the
Trustee affecting the existence of the Trustee or the titles of its officers to
their respective offices or seeking to prohibit, restrain or enjoin the
authentication of the Bonds by the Trustee, or contesting the powers of the
Trustee or its authority to perform its obligations under the Indenture, the
Continuing Disclosure Agreement or the Bonds.

(15) An agreed upon procedures letter from KPMG to the Underwriter in form and
substance satisfactory to the Underwriter;

 

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(16) An opinion of counsel to the Underwriter, addressed to the Underwriter,
dated the Closing Date, in form and substance satisfactory to the Underwriter;

(17) The Tax Certificate and Agreement executed by the Authority and the
Borrower in form and substance acceptable to Bond Counsel and the Underwriter;

(18) An executed copy of the DTC Blanket Letter of Representations;

(19) Evidence from Standard and Poor’s that the Bonds have been rated “A”;

(20) Evidence of required filings with the California Debt and Investment
Advisory Commission and any other applicable governmental filings;

(21) The engineering report of BECON Corporation in form and substance
satisfactory to the Underwriter, Bond Counsel and Special Tax Counsel; and

(22) Such additional legal opinions, certificates, proceedings, instruments and
other documents as Bond Counsel and Counsel to the Authority may reasonably
request to evidence compliance by the Authority and the Borrower with legal
requirements, the truth and accuracy, as of the time of Closing, of the
representations contained herein and in the Official Statement and the due
performance or satisfaction by the Authority and the Borrower, at or prior to
such time, of all agreements then to be performed and all conditions then to be
satisfied.

(e) All matters relating to this Purchase Contract, the Bonds and the offering
and sale thereof, the Indenture, the Loan Agreement and the consummation of the
transactions contemplated by this Purchase Contract shall have been approved or
waived by the Underwriter.

8. Authority’s Conditions to Closing. The Authority’s obligations hereunder with
respect to the Bonds shall be subject to the following conditions:

(a) The performance by the Borrower of its obligations, to be performed
hereunder at or prior to the Closing; and

(b) No order, decree, injunction, ruling or regulation of any court, regulatory
agency, public board or body shall have been issued, nor shall any legislation
have been enacted, with the purpose or effect, directly or indirectly, of
prohibiting the offering, sale or issuance of the Bonds as contemplated hereby
or by the Official Statement.

(c) At or before the Closing, the Authority shall have received:

(i) Executed counterparts of the Legal Documents;

(ii) Duly executed originals or conformed copies, as may be determined by the
Authority, of the letters, documents, certificates and opinions referred to in
Section 7(d) hereof and such other certificates, opinions and documents
reasonably required by the Authority; and

 

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(iii) Evidence of payment or provision for payment of the fees of the State
Treasurer as agent for sale, and the California Debt Limit Allocation Committee.

In addition, not later than 10 days after the Closing, the Underwriter shall
submit to the Authority the report(s) required by Section 1899.532 of Article 4
of Subchapter 4 of Chapter 4 of Division 2 of Title 2 of the California Code of
Regulations, in substantially the form attached hereto as Exhibit F.

9. Supplements to Official Statement. Before the “End of Underwriting Period,”
which will be deemed the Closing Date unless notified otherwise by the
underwriter prior to closing and in no event longer than 25 days after the
Closing Date, (a) the Authority will not adopt any amendment of or supplement to
the Official Statement to which the Underwriter shall object in writing or which
shall be disapproved by Underwriter’s counsel and (b) if any event relating to
or affecting the Authority or the Borrower shall occur as a result of which it
is necessary, in the opinion of Underwriter’s counsel, after consultation with
the Authority, to amend, or supplement the Official Statement in order to make
the Official Statement not misleading in the light of the circumstances existing
at the time it is delivered to the initial purchasers of the Bonds, the
Authority and the Borrower will forthwith prepare and furnish to the Underwriter
a reasonable number of copies of an amendment of or supplement to the Official
Statement (in form and substance satisfactory to Underwriter’s counsel, and at
the expense of the Borrower) which will amend or supplement the Official
Statement so that it will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time the Official Statement is
delivered to the initial purchasers of the Bonds, not misleading. For the
purposes of this section, the Authority and the Borrower will each furnish such
information with respect to themselves as the Underwriter may from time to time
request.

10. Expenses. (a) The Underwriter shall be under no obligation to pay, and the
Borrower, pursuant to this Purchase Contract, shall pay all expenses and costs
incident to the performance by the Authority of its obligations in connection
with the authorization, issuance and delivery of the Bonds to the Underwriter.
The Borrower shall pay all costs of issuance associated with the Bonds including
the costs of preparing the Preliminary Official Statement and the Official
Statement (and any amendment or supplement prepared pursuant to this Purchase
Contract); and the fees and expenses of Bond Counsel, Authority Counsel,
Borrower’s Counsel and Underwriter’s Counsel, any or all of which may be paid
out of Bond proceeds; provided however that the Borrower’s obligations hereunder
will not be limited by the availability of Bond proceeds.

(b) The Borrower shall pay all expenses reasonably incurred by the Underwriter
in connection with the offering and distribution of the Bonds, including but not
limited to: (i) all advertising expenses in connection with the offering of the
Bonds; (ii) all reasonable out-of-pocket disbursements and expenses incurred by
the Underwriter in connection with the offering and distribution of the Bonds;
(iii) the fees payable to the California Debt and Investment Advisory Committee;
and (iv) the costs of ordering CUSIP numbers and qualifying the Bonds with DTC.

 

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11. Notices. Any notice or other communication to be given under this Purchase
Contract:

(a) To the State Treasurer may be given by delivering the same in writing to the
Treasurer of the State of California, 915 Capitol Mall, Room 261, Sacramento,
California 95814;

(b) To the Authority may be given by delivering the same in writing to the
California Pollution Control Financing Authority, 915 Capitol Mall, Room 457,
Sacramento, California 95814, Attention: Executive Director;

(c) To the Underwriter may be given by delivering the same in writing to
Goldman, Sachs & Co., 200 West St., 33rd Floor, New York, New York 10282,
Attention: R. Thornton Lurie, Managing Director; and

(d) To the Borrower may be given by delivering the same in writing to San Jose
Water Company, 110 West Taylor Street, San Jose, California 95110, Attention:
Executive Vice President - Finance.

All notices or communications hereunder by any party shall be given and served
upon each other party. The approval of the Underwriter when required hereunder
or the determination of satisfaction as to any document referred to herein shall
be in writing signed by the Underwriter and delivered to the party requesting
such approval or determination of satisfaction.

12. Parties In Interest; Survivability of Representations, Warranties and
Agreements. This Purchase Contract shall be binding upon and inure solely to the
benefit of each of the State Treasurer, the Authority, the Underwriter, and the
Borrower and, to the extent set forth herein, persons controlling any of such
parties, and their respective trustees, officers, members, employees, agents and
personal representatives, successors and assigns, and no other person or firm
shall acquire or have any right under or by virtue of this Purchase Contract.
All representations, warranties and agreements of the Authority, the
Underwriter, and the Borrower in this Purchase Contract shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Underwriter and shall survive the delivery of and payment for the
Bonds.

13. Representations, Warranties and Agreements of Underwriter. The Underwriter
represents and warrants to and agrees with the Authority and the State Treasurer
that it is authorized to take any action under this Purchase Contract required
to be taken by it and that this Purchase Contract is a binding contract of the
Underwriter enforceable against the Underwriter in accordance with its terms.
The Underwriter also represents that all information in the Official Statement
under the heading “UNDERWRITING” was as of its date and is as of the date hereof
true, accurate and correct.

 

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14. Execution in Counterparts. This Purchase Contract may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

15. Governing Law. This Purchase Contract shall be governed exclusively by and
construed in accordance with the applicable laws of the State applicable to
contracts made and performed in the State. This Purchase Contract shall be
enforceable in the State and any action arising out of this Purchase Contract
shall be filed with and maintained in Sacramento County Superior Court,
Sacramento County, California, unless the Authority waives this requirement in
writing.

[Signature Page of Bond Purchase Contract Follows]

 

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The parties agree that the terms and conditions of this Purchase Contract
supersede those of all previous agreements between the parties with respect to
the subject matter hereof, and that this Purchase Contract contains the entire
agreement between the parties hereto with respect to such subject matter.

 

Very truly yours,

/s/    Goldman, Sachs & Co.

GOLDMAN, SACHS & CO.

 

Accepted:

TREASURER OF THE STATE OF CALIFORNIA

By:

 

/s/    Julie Giordano

 

Deputy Treasurer

For California State Treasurer Bill Lockyer

CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY

By:

 

/s/    Michael Paparian

 

Executive Director

Agreed to and accepted by:

SAN JOSE WATER COMPANY

By:

 

/s/    Angela Yip

 

Authorized Officer

Signature Page to Bond Purchase Contract

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EXHIBIT A

FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL

[Closing Date]

California Pollution Control

  Financing Authority

915 Capitol Mall, Room 457

Sacramento, California 95814

Goldman, Sachs & Co.,

  as the underwriter

200 West Street, 31st Floor

New York, New York 10282

 

Re:

  

$50,000,000

  

California Pollution Control Financing Authority

  

Revenue Bonds

  

(San Jose Water Company Project)

  

Series 2010A                                                     

(Supplemental Opinion)

Ladies and Gentlemen:

This letter is addressed to you pursuant to Section 7(d)(5) of the Bond Purchase
Contract, dated June 9, 2010 (the “Purchase Contract”), among Goldman, Sachs &
Co. (the “Underwriter”), the Treasurer of the State of California (the
“Treasurer”) and the California Pollution Control Financing Authority (the
“Authority”), and approved by San Jose Water Company (the “Borrower”), providing
for the purchase of $50,000,000 principal amount of California Pollution Control
Financing Authority Revenue Bonds (San Jose Water Company Project) Series 2010A
(the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of
June 1, 2010 (collectively, the “Indenture”), between the Authority and Wells
Fargo Bank, National Association, as trustee. Capitalized terms not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Indenture or, if not defined in the Indenture, in the Purchase Contract.

I have delivered my final legal opinion as bond counsel concerning the validity
of the Bonds and certain other matters, dated the date hereof and addressed to
the Authority. The Underwriter may rely on such opinion as though the same were
addressed to the Underwriter.

In connection with my role as bond counsel, I have reviewed the Purchase
Contract, the Indenture, the Loan Agreement, the Tax Certificate, opinions of
counsel to the Authority, the Trustee and the Borrower, the opinion of special
tax counsel to the Authority, certificates of the Authority, the Trustee, the
Borrower and others, and such other documents, opinions and matters to the
extent I deemed necessary to render the opinions set forth herein.

 

A-1

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The opinions or conclusions expressed herein are based on an analysis of
existing laws, regulations, rulings and court decisions and cover certain
matters not directly addressed by such authorities. Such opinions may be
affected by actions taken or omitted or events occurring after the date hereof.
I have not undertaken to determine, or to inform any person, whether any such
actions or events are taken or omitted or do occur, or whether any other matters
come to my attention, after the date hereof, and I have no obligation to update
this opinion. I have assumed the genuineness of all documents and signatures
presented to me (whether as originals or as copies) and the due and legal
execution and delivery by, and validity against, any parties other than the
Authority. I have not undertaken to verify independently, and have assumed, the
accuracy of the factual matters represented, warranted or certified in the
documents, and of the legal conclusions contained in the opinions, referred to
in the third paragraph hereof. I have further assumed compliance with all
covenants and agreements contained in such documents. In addition, I call
attention to the fact that the rights and obligations under the Bonds, the
Indenture, the Loan Agreement, the Tax Certificate and the Purchase Contract are
subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium and other laws relating to or affecting creditors’
rights, to the application of equitable principles, to the exercise of judicial
discretion in appropriate cases and to the limitations on legal remedies against
governmental entities in the State of California. I express no opinion with
respect to any indemnification, contribution, choice of law, choice of forum or
waiver provisions contained therein. Finally, I have undertaken no
responsibility for the accuracy, completeness or fairness of the Official
Statement or other offering material relating to the Bonds and, except as
provided in paragraph 3 below, express no opinion with respect thereto.

Based on and subject to the foregoing, and in reliance thereon and on the
assumptions and limitations set forth in my final legal opinion, as of the date
hereof, I am of the following opinions or conclusions:

1. The Bonds are not subject to the registration requirements of the Securities
Act of 1933, as amended, and the Indenture is exempt from qualification pursuant
to the Trust Indenture Act of 1939, as amended.

2. The Purchase Contract has been duly authorized, executed and delivered by the
Authority and (assuming due authorization, execution and delivery by and
validity against the Underwriter) is a valid and binding agreement of the
Authority.

3. The statements contained in the Official Statement, dated June 9, 2010 with
respect to the Bonds (the “Official Statement”), under the captions “The Bonds”
(except for the section entitled “DTC and the Book-Entry Only System”),
“Security and Sources of Payment for the Bonds”, “The Loan Agreement”, “The
Indenture” and “Tax Matters”, insofar as such statements expressly summarize
certain provisions of the Bonds, the Indenture and the Loan Agreement and my
opinion concerning certain federal tax matters relating to the Bonds, are
accurate in all material respects.

This letter is furnished by me as bond counsel. No attorney-client relationship
has existed or exists between my firm and the Underwriter in connection with the
Bonds or by virtue of this letter, and I have no obligation to update this
letter. This letter is delivered to the Underwriter and the

 

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Authority as underwriter and issuer, respectively, of the Bonds, is solely for
your benefit as such underwriter and issuer, respectively, and is not to be
used, circulated, quoted or otherwise referred to or relied upon for any other
purpose or by any other person, except that reference may be made to it in the
Purchase Contract or in any list of closing documents pertaining to the offering
of the Bonds covered by the Official Statement. This letter is not intended to,
and may not, be relied upon by owners of Bonds.

Very truly yours,

 

A-3

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EXHIBIT B

FORM OF SUPPLEMENTAL OPINION OF SPECIAL TAX COUNSEL

[Closing Date]

 

California Pollution Control

    Financing Authority

915 Capitol Mall, Room 457

Sacramento, California 95814

 

Re:

 

$50,000,000 California Pollution Control Financing Authority Revenue Bonds

 

(San Jose Water Company) Series 2010A

Ladies and Gentlemen:

We acted as Special Tax Counsel in connection with the issuance by the
California Pollution Control Financing Authority (the “Authority”) of
$50,000,000 aggregate principal amount of its Revenue Bonds (San Jose Water
Company) Series 2010A (the “Bonds”). The Bonds are being issued on the date
hereof pursuant to an Indenture dated as of June 1, 2010 between the Authority
and Wells Fargo Bank, National Association, as Trustee. The Authority will loan
the proceeds of the Bonds to San Jose Water Company (the “Borrower”), a
California corporation, pursuant to a Loan Agreement, dated as of June 1, 2010
(the “Loan Agreement”), between the Authority and the Borrower, for the purpose
of financing certain capital costs of the construction, acquisition, and
installation of (i) improvements to the structures and facilities that are
integral to the supply of water throughout the water supply system owned by the
Borrower (the “Water System”), including the replacement of wells, storage
tanks, reservoir, motor control center, pump motors, water treatment equipment
and pump stations, (ii) improvements to the distribution system, including
replacement of existing distribution main, and (iii) the acquisition of
equipment for the Water System, including hydrants, meters and related
installation, facility retirements and customer information system; and other
capital projects functionally related and subordinate to such facilities; all
located in one or more of the following areas: the Borrower’s certificated
service area in portions of the Cities of San Jose, Santa Clara, Cupertino,
Campbell, Saratoga, Monte Sereno, and Los Gatos and in contiguous areas in the
County of Santa Clara, California.

In our capacity as Special Tax Counsel we have delivered an opinion (the
“Special Tax Counsel Opinion”) dated the date hereof to the Authority and other
named parties with respect to the exclusion of interest on the Bonds from gross
income for Federal income tax purposes.

In our capacity as Special Tax Counsel we have examined such documents, records
of the Authority and other instruments as we deemed necessary to enable us to
express the opinions set forth below, including executed counterparts of the
Indenture, the Loan Agreement, the Tax Certificate and Agreement and the other
documents listed in the closing memorandum in respect of the Bonds.

 

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Based on and subject to the foregoing, and in reliance thereon and on the
assumptions and limitations set forth in our opinion, as of the date hereof, it
is our opinion that the statements contained in the Official Statement, dated
June 9, 2010 with respect to “Tax Matters,” insofar as such statements expressly
summarize certain provisions of the Bonds, the Indenture and the Loan Agreement
and our Special Tax Counsel Opinion concerning certain federal tax matters
relating to the Bonds, are accurate in all material respects.

Very truly yours,

 

B-2

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EXHIBIT C

FORM OF OPINION OF COUNSEL TO THE AUTHORITY

[Closing Date]

California Pollution Control Financing Authority

Sacramento, California

 

RE:

 

$50,000,000 California Pollution Control Financing Authority Revenue Bonds

 

(San Jose Water Company Project) Series 2010A

Ladies and Gentlemen:

This opinion is delivered to you in connection with the issuance by the
California Pollution Control Financing Authority (the “Authority”) of its
Revenue Bonds (San Jose Water Company Project) Series 2010A in the aggregate
principal amount of $50,000,000 (the “Bonds”). This opinion is delivered to you
pursuant to Section 7(d)(8) of a Bond Purchase Contract, dated June 9, 2010 (the
“Purchase Contract”), among the Treasurer of the State of California, the
Authority, and Goldman, Sachs & Co. (the “Underwriter”), and approved by San
Jose Water Company (the “Borrower”).

The Bonds are being issued pursuant to the provisions of the California
Pollution Control Financing Authority Act, Division 27 of the Health and Safety
Code (commencing with section 44500) (the “Act”). The Bonds are being issued
pursuant to an Indenture, dated as of June 1, 2010 (the “Indenture”), by and
between the Authority and Wells Fargo Bank, National Association, as trustee
(the “Trustee”).

The proceeds of the Bonds are being loaned by the Authority to the Borrower
pursuant to a Loan Agreement, dated as of June 1, 2010 (the “Loan Agreement”),
between the Authority and the Borrower. Capitalized terms used herein and not
otherwise defined shall have the meanings given such terms in the Indenture.

The Authority’s only sources of payment for the principal of, premium, if any,
or interest on the Bonds are Revenues from payments by the Borrower and from
certain other limited sources provided for and described in the Indenture. The
Authority is not obligated to pay the principal of, premium, if any, or interest
on the Bonds except from such Revenues and other limited sources provided for
and described in the Indenture. Neither the faith and credit nor the taxing
power of the State of California or any subdivision thereof, or any local
agency, is pledged to the payment of the principal of, premium, if any, or
interest on the Bonds. The Authority has no taxing power with which to provide
for payment of the principal of, premium, if any, or interest on the Bonds, nor
does it have the power to commit the faith and credit or the taxing power of the
State of California or any subdivision thereof, or any local agency, to payment
of the principal of, premium, if any, or interest on the Bonds.

 

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As to questions of fact material to this opinion, we have relied upon
representations contained in the Indenture, the Loan Agreement and the Purchase
Contract (“Authority Documents”) and in certain certificates, documents,
records, statements, and opinions furnished by, or on behalf of, the Authority
and the Borrower, without undertaking to verify such facts by independent
investigation. We have reviewed the Authority Documents, certificates of the
Authority and others, certain parts of the Official Statement, as defined below,
under the headings, “THE AUTHORITY” and “ABSENCE OF MATERIAL LITIGATION” (solely
as it relates to the Authority), and such other documents, opinions and matters
to the extent deemed necessary to render the opinions set forth herein. In
addition, we have assumed compliance with the covenants and agreements contained
in the Authority Documents.

The opinions expressed herein are based on an analysis of existing laws,
regulations, rulings and court decisions and cover certain matters not directly
addressed by such authorities. Such opinions may be affected by actions taken or
omitted or events occurring after the date hereof. We have not undertaken to
determine, or to inform any person, whether any such actions are taken or
omitted or events do occur or any other matters come to our attention after the
date hereof, and we disclaim any obligation to update this opinion. We have
assumed the genuineness of all documents and signatures presented to us (whether
as originals or as copies) and the due and legal execution and delivery thereof
by, and validity against, any parties other than the Authority. We have not
undertaken to verify independently, and have assumed, the accuracy of the
factual matters represented, warranted or certified in the documents, and of the
legal conclusions contained in the opinions, referred to in the preceding fifth
paragraph hereof.

We express no opinion as to whether interest on the Bonds is excluded from gross
income for federal income tax purposes or exempt from State of California
personal income taxes or as to any other tax consequences related to the
ownership or disposition of, or the accrual or receipt of interest on, the
Bonds. We express no opinion regarding the Tax Certificate (including as it may
be referenced in any Authority Document). We take no responsibility for the
accuracy, completeness or fairness of the Official Statement, as defined below,
or other offering material relating to the Bonds and express no opinion with
respect thereto, except as expressly set forth in numbered paragraph 2 below.

Based upon and subject to the foregoing, and in reliance thereon, as of the date
hereof, we are of the opinion that:

1. The Authority is a public instrumentality duly organized and validly existing
under the Constitution and laws of the State of California.

2. The official statement dated             , 2010 relating to the Bonds (the
“Official Statement”) has been duly authorized, executed and delivered by the
Authority, and the information contained in the Official Statement under the
headings “THE AUTHORITY” and “ABSENCE OF MATERIAL LITIGATION” (solely as it
relates to the Authority) is correct and does not omit any statement which, in
our opinion, should be included or referred to therein.

 

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3. “Resolution of the California Pollution Control Financing Authority
Delegating Certain Powers Related to Bond Financings to the Executive Director
and the Deputy Executive Director” and Final Resolution No. 501 of the
Authority, each adopted on May 26, 2010, approving and authorizing the execution
and delivery of the Authority Documents, and the Bonds and the Official
Statement, were duly adopted at a meeting of the governing body of the Authority
which was called and held pursuant to law and with all public notice required by
law and at which a quorum was present and acting throughout.

4. There is no action, suit or proceeding pending (with service of process
against the Authority having been accomplished) before any court, governmental
agency, public board or body, or to our knowledge threatened, against the
Authority to restrain or enjoin the issuance or delivery of the Bonds, the
collection of Revenues pledged under the Indenture, the assignment of the Loan
Agreement under the Indenture or the loaning of the proceeds of the Bonds to the
Borrower under the Loan Agreement, or contesting any authority for the issuance
of the Bonds, the validity of the Bonds, or the Authority Documents, or
contesting the existence or powers of the Authority with respect to the issuance
of the Bonds or the security therefore wherein an unfavorable decision, ruling
or finding would have a material adverse effect on the transactions contemplated
by the Authority Documents or the validity of the Bonds (it being understood
that we have made no docket search of state or federal courts nor any other
similar inquiry regarding such matters).

5. The execution and delivery of the Bonds and the Authority Documents by the
Authority and the Authority’s compliance with the provisions thereof under the
circumstances contemplated thereby do not and will not conflict with or
constitute on the part of the Authority a breach of or default under any
agreement or other instrument known to us to which the Authority is a party or
by which it is bound, or under any existing law, regulation, court order or
consent decree to which the Authority is subject, which conflict, breach or
default would have a material adverse effect on the validity of the Bonds or the
Authority Documents; provided that no representation is made regarding
compliance with any federal or state securities or “blue sky” laws.

6. The Authority Documents have been duly authorized, executed, and delivered by
the Authority and, assuming due authorization, execution and delivery by the
other parties thereto, are valid and binding obligations of the Authority
enforceable in accordance with their respective terms, subject to the laws
relating to bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium and other laws related to or affecting creditors’
remedies generally and to the application of equitable principles as the court
having jurisdiction may impose, regardless of whether such enforceability is
considered in a proceeding in equity or law, to the exercise of judicial
discretion in appropriate cases and to the limitations on legal remedies against
governmental entities in the State of California. We express no opinion with
respect to any indemnification, contribution, penalty, choice of law, choice of
forum, choice of venue, severability, or waiver provisions contained in the
Authority Documents.

7. The representations of the Authority set forth in Section 4 of the Purchase
Contract are, as to all matters of law, true and accurate in all material
respects at and as of the date hereof as though made on this date; and such
representations are, as to all other matters, to our knowledge, true and
accurate in all material respects at and as of the date hereof as though made on
this date.

 

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We are furnishing this letter to you as your counsel. It is being delivered to
you as issuer of the Bonds, is solely for your benefit as such issuer, and is
not to be used, circulated, quoted or otherwise referred to or relied upon for
any other purpose or by any other person. This letter is not intended to, and
may not, be relied upon by owners of the Bonds or by any other party to whom it
is not specifically addressed.

Sincerely,

 

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EXHIBIT D

FORM OF CERTIFICATE OF AUTHORITY

Closing Certificate

The undersigned BETTINA C. REDWAY, a Deputy Treasurer of the State of
California, and MICHAEL PAPARIAN, Executive Director of the California Pollution
Control Financing Authority (the “Authority”), a public instrumentality of the
State of California, hereby certify to the following in connection with the
issuance by the Authority on this date of the $50,000,000 California Pollution
Control Financing Authority Revenue Bonds (San Jose Water Company Project)
Series 2010A (the “Bonds”) and the loan of the proceeds therefrom to San Jose
Water Company (the “Borrower”); however, as to all matters of law, the Authority
is relying on the advice of the Attorney General of the State of California,
counsel to the Authority.

1. Michael Paparian is now, and at all times since at least the date shown
opposite his name on the last page of this Certificate has been, the duly
appointed and qualified officer of the Authority, holding the office of the
Authority set forth below opposite his name. Bettina C. Redway is now, and at
all times since at least the date shown opposite her name on the last page of
this Certificate has been, a duly appointed and qualified deputy of the
Treasurer of the State of California. Each of the undersigned by his or her
signature confirms that the signature of the other undersigned is his or her
genuine signature and that the signature of Julie Giordano set forth below is
her genuine signature.

2. Bill Lockyer, Treasurer of the State of California and Chairman of the
Authority, was duly authorized by the Authority to execute the Bonds, and
pursuant to such authority each of the Bonds has been executed by his facsimile
signature, which signature on the each of the specimen Bonds attached hereto as
Exhibit A the undersigned Deputy Treasurer hereby confirms is genuine.

3. The seal printed upon the specimen Bonds attached hereto and impressed upon
this Certificate below is the legally adopted and official seal of the Authority
and such seal has been imprinted upon the Bonds. The specimen Bond attached
hereto is identical in all respects with the Bonds this day delivered to the
Trustee, on behalf of The Depository Trust Company, on behalf of Goldman,
Sachs & Co., as the underwriter of the Bonds, and the Bonds are substantially in
the form prescribed by the Indenture (as hereinafter defined).

4. The following individuals are now, and at all times since at least May 26,
2010 have been, the duly appointed and qualified officers and members of the
Authority and the persons holding the offices set forth opposite their
respective names and all action that has to be taken for such persons to qualify
for such offices, including without limitation any and all filings, have been
taken.

 

D-1

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Name

  

Authority

Position

  

Office

Bill Lockyer

  

Chairman

  

Treasurer of the State of California

John Chiang

  

Member

  

Controller of the State of California

Ana J. Mantosantos

  

Member

  

Director of Finance of the State of California

The following members of the Authority who, as of May 26, 2010, were state
officials did, in accordance with Section 7.9 of the Government Code and
Section 44515 of the Health and Safety Code of the State of California, duly
designate the following persons to act for and represent said respective
officials at the meeting of the Authority at which the Final Resolution (as
hereinafter defined) was adopted:

 

Name

  

Authority

Position

  

Representative

Bill Lockyer

  

Chairman

  

Bettina C. Redway

John Chiang

  

Member

  

Ruth Holton-Hodson

Ana J. Mantosantos

  

Member

  

Cynthia Bryant

Bettina C. Redway, as Deputy Treasurer of the State of California, is authorized
to act on behalf of the State Treasurer of the State of California as the
Chairman of the Authority, including without limitation, the authority to
execute and deliver the Authority Documents (as hereinafter defined).

5. The undersigned Executive Director certifies that:

(a) the resolution attached hereto as Exhibit B is a full, true and correct copy
of Initial Resolution No. 10-04 (the “Initial Resolution”), which was duly
adopted at a regular meeting of the Authority held on March 24, 2010, of which
meeting all of the members of the Authority had due notice and at which meeting
a quorum was present and voting throughout;

(b) the resolution attached hereto as Exhibit C is a full, true and correct copy
of the resolution of the Authority entitled “Resolution of the California
Pollution Control Financing Authority Delegating Certain Powers and Authorizing
Certain Actions Related to Bond Financings (the “Delegation Resolution”), which
was duly adopted at regular meeting of the Authority held on May 26, 2010, of
which meeting all of the members of the Authority had due notice and at which
meeting a quorum was present and voting throughout;

 

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(c) the resolution attached hereto as Exhibit D is a full, true, complete and
correct copy of Resolution No. 501, which was duly adopted at a regular meeting
of the Authority held on May 26, 2010 (the “Final Resolution” and, together with
the Delegation Resolution, collectively referred to herein as the
“Resolutions”), of which meeting all of the members of the Authority had due
notice and at which meeting a quorum was present and voting throughout;

(d) the Resolutions have not been amended, modified or rescinded in any manner
except as set forth therein since the respective dates of their adoption and the
same are now in full force and effect; and

(e) the minutes attached hereto as Exhibit E are true, complete and correct
copies of minutes of the meeting of the Authority held on May 26, 2010 at which
the Final Resolution was adopted, as such minutes appear of record in the minute
book of the Authority.

6. Pursuant to the Resolutions, Bill Lockyer, as Treasurer of the State of
California, the Chairman of the Authority, or any of his Deputies, and Michael
Paparian, Executive Director of the Authority, have been authorized to execute
and deliver, on behalf of the Authority, the following documents except as
otherwise set forth below; pursuant to such authority they have executed and
delivered said documents or said documents have been executed and delivered on
their behalf; and, assuming due authorization, execution and delivery by the
other parties thereto, documents (a)-(f) below (collectively the “Authority
Documents”) are in full force and effect:

(a) Indenture, dated as of June 1, 2010 (the “Indenture”), by and between the
Authority and Wells Fargo Bank, National Association, as trustee (the
“Trustee”);

(b) Loan Agreement, dated as of June 1, 2010 (the “Loan Agreement”), by and
between the Authority and the Borrower;

(c) Tax Certificate and Agreement, dated June 16, 2010, by and between the
Authority and the Borrower;

(d) Bond Purchase Contract, dated June 9, 2010 (the “Purchase Contract”), by and
among the Authority, the Treasurer of the State of California and the
Underwriter, as approved by the Borrower (Michael Paparian, Executive Director,
is the only signatory on behalf of the Authority);

(e) Blanket Issuer Letter of Representations to The Depository Trust Company;

(f) Official Statement for the Bonds, dated June 9, 2010 (Michael Paparian,
Executive Director, is the only signatory on behalf of the Authority); and

(g) Internal Revenue Service Form 8038.

 

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7. Bill Lockyer, as Treasurer of the State of California and as agent for sale
of the Bonds, has been authorized to execute and deliver the Purchase Contract
as said agent for sale; pursuant to such authority, Julie Giordano, a duly
appointed and qualified deputy of the Treasurer of the State of California, who
is authorized to act on behalf of the Treasurer of the State of California, as
agent for sale of the Bonds, executed and delivered the Purchase Contract.

8. The Bonds have been duly authorized, executed and delivered by the Authority
and imprinted with the official seal of the Authority, and, assuming due
authentication and delivery of the Bonds by the Trustee, are in full force and
effect.

9. To the best knowledge of the undersigned after reasonable investigation, the
Authority has fulfilled or performed each of its obligations contained in the
Authority Documents required to be fulfilled or performed by it as of the date
hereof.

10. The representations and warranties made by the Authority in the Indenture,
the Loan Agreement and the Purchase Contract are true and correct in all
material respects as of the date hereof, with the same effect as if made on, and
with respect to the facts as of, the date hereof.

[REST OF PAGE INTENTIONALLY LEFT BLANK]

 

D-4

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Dated and sealed as of the 16th day of June, 2010.

(Seal)

 

Name

 

Appointment Date

 

Office

 

Signature

Bettina C. Redway

  1/8/07  

Deputy Treasurer

 

 

Michael Paparian

  1/23/07  

Executive

Director

 

 

Julie Giordano hereby confirms that she is now, and at all times since at least
the date shown opposite her name set forth below, has been, a duly appointed and
qualified deputy of the Treasurer of the State of California and that the
signature set forth below is her genuine signature.

 

Name

 

Appointment Date

 

Office

 

Signature

Julie Giordano

  11/30/09  

Deputy Treasurer

 

 

 

D-5

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EXHIBIT E

FORM OF OPINION OF COUNSEL TO THE BORROWER

[Closing Date]

California Pollution Control Financing Authority

[Address]

Wells Fargo Bank, National Association

[Address]

Goldman, Sachs & Co.

[Address]

 

Re:

 

$50,000,000

   

California Pollution Control Financing Authority

   

Revenue Bonds

   

(San Jose Water Company Project)

   

Series 2010A                                                     

   

(Opinion of [Special] Counsel to Borrower)

 

Ladies and Gentlemen:

This opinion letter is addressed to you pursuant to Section 7(d)(12) of the Bond
Purchase Contract, dated June 9, 2010 (the “Purchase Contract”), among Goldman,
Sachs & Co. (the “Underwriter”), the Treasurer of the State of California (the
“Treasurer”) and the California Pollution Control Financing Authority (the
“Authority”), and approved by San Jose Water Company (the “Borrower”), providing
for the purchase of $50,000,000 principal amount of California Pollution Control
Financing Authority Revenue Bonds (San Jose Water Company Project) Series 2010A
(the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of
June 1, 2010 (the “Indenture”), between the Authority and Wells Fargo Bank,
National Association, as trustee. Capitalized terms not otherwise defined herein
shall have the respective meanings ascribed thereto in the Indenture or, if not
defined in the Indenture, in the Purchase Contract. We have acted as [special]
counsel to the Borrower in connection with the Bond Purchase Contract and the
Loan Agreement, dated as of June 1, 2010 (the “Loan Agreement”), between the
Authority and the Borrower.

In connection with this opinion letter, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the articles of
incorporation, as amended (the “Articles of Incorporation”), and bylaws, as
amended (the “Bylaws”), of the Borrower and such other documents and records,
and other instruments as we have deemed appropriate for purposes of the

 

E-1

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opinions set forth herein, including the following documents (the documents
referred to in clauses (a) through (d) below are referred to herein as the “Bond
Documents”):

 

  (a)

the Purchase Contract;

 

  (b)

the Indenture;

 

  (c)

the Loan Agreement;

 

  (d)

the Continuing Disclosure Agreement; and

 

  (e)

the Official Statement.

We have assumed the genuineness of all signatures (other than those of the
Borrower), the legal capacity of natural persons, the authenticity of the
documents submitted to us as originals, the conformity to the original documents
of all documents submitted to us as certified, facsimile or photostatic copies,
and the authenticity of the originals of all documents submitted to us as
copies. We have also assumed that the Bond Documents constitute valid and
binding obligations of each party thereto other than the Borrower.

As to any facts that are material to the opinions hereinafter expressed that we
did not independently establish or verify, we have relied without investigation
upon the representations of the Borrower contained in the Bond Documents and
upon certificates of officers of the Borrower.

In rendering the opinions set forth herein, whenever a statement or opinion set
forth therein is qualified by “to our knowledge,” “known to us” or by words of
similar import, it is intended to indicate that, during the course of our
representation of the Borrower in the subject transaction, no information has
come to the attention of those lawyers in our firm who have rendered legal
services in connection with such transaction that gives us actual knowledge of
the inaccuracy of such statement or opinion. We have not undertaken any
independent investigation to determine the accuracy of facts material to any
such statement or opinion, and no inference as to such statement or opinion
should be drawn from the fact of our representation of the Borrower.

We have relied upon a certificate of the [Executive Vice President of Finance]
of the Borrower dated the date hereof, certifying that the items listed in such
certificate are (i) all of the indentures, loan or credit agreements, leases,
guarantees, mortgages, security agreements, bonds, notes, other agreements or
instruments (the “Other Borrower Agreements”), and (ii) all of the judicial or
administrative orders, writs, judgments, awards, injunctions and decrees (the
“Borrower Orders”), which as to any matter in (i) or (ii) affect or purport to
affect the Borrower’s right to borrow money or perform its obligations under the
Loan Agreement.

Based upon and subject to the foregoing, and to the limitations and
qualifications described below, we are of the opinion that:

 

  1.

The Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of California, with the corporate power and
authority to own its properties and to conduct its current business as
contemplated by the Official Statement.

 

E-2

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  2.

The Borrower together with its affiliates is a “small business” as defined in
Section 8020 of Title 4 of the California Code of Regulations.

 

  3.

The Project as described in Exhibit A of the Loan Agreement is a “project” and
the Borrower together with its Participating Affiliates is a “participating
party” under California Pollution Control Financing Authority Act, commencing
with Section 44500 of the California Health and Safety Code, as now in effect.

 

  4.

The Loan Agreement, the Continuing Disclosure Agreement and the Purchase
Contract have been duly authorized, executed and delivered by the Borrower and
each is a valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms.

 

  5.

No authorization, approval, consent or license of any regulatory body or
authority of the United States or the State of California not already obtained
is required for the authorization, execution, delivery and performance of the
Loan Agreement, the Continuing Disclosure Agreement or the Purchase Contract.

 

  6.

The execution and delivery of the Loan Agreement, the Continuing Disclosure
Agreement, the Official Statement and the Purchase Contract, and the performance
by the Borrower of the Loan Agreement, the Continuing Disclosure Agreement and
the Purchase Contract by the Borrower, will not result in (i) a violation of the
Articles of Incorporation or Bylaws, (ii) a breach or a default under any Other
Borrower Agreement, (iii) a violation of any Borrower Order, or (iv) a violation
of any law, rule or regulation of any administrative or governmental body having
jurisdiction over the Borrower or its property.

 

  7.

Except as disclosed in the Official Statement, (i) to our knowledge, there are
no pending or threatened lawsuits or other proceedings against the Borrower
(1) which seek to restrain or enjoin the issuance or delivery of the Bonds, or
the collection of the payments to be made pursuant to the Indenture or the Loan
Agreement, (2) in any way contest or affect the authority for the issuance and
delivery of the bonds or the validity of the Purchase Contract, the Bonds, the
Indenture, the Loan Agreement, the Continuing Disclosure Agreement, the Official
Statement or the resolutions of the Borrower relating to the financing of the
Project and the Bonds, (3) contest the corporate existence or powers of the
Borrower; or (4) contest or affect the powers of the Borrower to enter into or
perform its obligations or consummate the transactions contemplated under any of
the foregoing; and (ii) to our knowledge, the Borrower is not in default with
respect to any

 

E-3

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order or decree of any court or any order, regulation or demand of any federal,
state, municipal or other governmental authority, which default would materially
and adversely affect the consummation of the transactions contemplated by the
Purchase Contract, the Bonds, the Indenture, the Loan Agreement, the Continuing
Disclosure Agreement or the financial condition, assets, properties or
operations of the Borrower.

The opinions expressed above are subject to the following limitations,
exceptions, qualifications and assumptions:

A. The opinions expressed herein are subject to bankruptcy, insolvency,
fraudulent transfer and other similar laws affecting the rights and remedies of
creditors generally and general principles of equity, including concepts of
materiality, reasonableness, good faith and fair dealing.

B. Provisions of the Bond Documents relating to indemnification or exculpation
may be limited by public policy or by law.

C. The opinions expressed in this opinion letter are limited to the laws of the
State of California and the federal laws of the United States of America, and we
express no opinion with respect to the laws of any other state or jurisdiction.

D. For purposes of our opinions in paragraphs 1 hereof as to the due
incorporation, valid existence and good standing of the Borrower, we have relied
solely upon good standing or similar certificates issued by the appropriate
authorities in the subject jurisdictions.

E. Certain waivers by the Borrower in the Bond Documents may relate to matters
that cannot, as a matter of law, be effectively waived.

F. The enforceability of the Bond Documents, may be limited by the
unenforceability under certain circumstances of provisions imposing penalties,
forfeitures, late payment charges or an increase in interest rate upon
delinquency in payment or an occurrence of default.

G. For purposes of the opinion in paragraph 6(ii), where any Other Borrower
Agreement states that it is governed by laws of a state other than the laws of
California, we have not made any investigation of the laws of such other state
but have merely assumed that they would be interpreted in accordance with their
plain meaning. We have not reviewed the covenants in the Other Borrower
Agreements that contain financial ratios and other similar financial
restrictions, and no opinion is provided with respect thereto.

H. For purposes of the opinion in paragraph 6(v), we have considered only such
laws and regulations that in our experience are typically applicable to a
transaction of the nature contemplated by the Bond Documents.

I. We express no opinion as to the enforceability of any provision of the Bond
Documents permitting modification thereof only by means of an agreement in
writing signed by the parties thereto.

 

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The purpose of our professional engagement was not to establish or confirm
factual matters set forth in the Official Statement, and we have not undertaken
any obligation to verify independently any of the factual matters set forth in
the Official Statement. Moreover, many of the determinations required to be made
in the preparation of Official Statement involve matters of a non-legal nature.
In addition, we note that we have not advised the Borrower with regard to
California public utilities matters.

Subject to the foregoing, we confirm to you that, on the basis of the
information we gained in the course of performing the services referred to
above, nothing came to our attention that caused us to believe that the
disclosures in in Official Statement (except information concerning DTC and the
book-entry only system and disclosures contained under the captions “THE
AUTHORITY”, “ABSENCE OF MATERIAL LITIGATION” (solely as it relates to the
Authority), “UNDERWRITING” and “TAX MATTERS”) as of the date of the Official
Statement and as of the date hereof contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
that (a) we do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Official Statement, and (b) we do
not express any belief with respect to the financial statements, schedules,
notes, other financial and accounting data and statistical data derived
therefrom, and information about internal control over financial reporting,
contained in the Official Statement.

This opinion letter is effective only as of the date hereof. We do not assume
responsibility for updating this opinion letter as of any date subsequent to its
date, and we assume no responsibility for advising you of any changes with
respect to any matters described in this opinion letter that may occur
subsequent to the date of this opinion letter or from the discovery, subsequent
to the date of this opinion letter, of information not previously known to us
pertaining to the events occurring prior to such date.

This opinion letter is furnished by us solely for the benefit of the Authority,
the Underwriter and the Trustee, and this opinion letter may not be relied upon
by such parties for any other purpose or by any other person or entity for any
purpose whatsoever; however, Leslie M. Lava, Esq., Bond Counsel to the
Authority, may rely on paragraph 4 hereof. This opinion letter is not to be
quoted in whole or in part or otherwise referred to or used or furnished to any
other person, except as may be required by any governmental authority or
pursuant to legal process, without our express written consent, except that
reference may be made to this opinion letter in the closing memorandum relating
to the Bonds and this opinion letter may be included in the related closing
transcripts.

Very truly yours,

 

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EXHIBIT F

UNDERWRITER’S REPORT TO THE AUTHORITY

STATE OF CALIFORNIA

CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY

TARGET BUSINESS ENTERPRISE

PARTICIPATION IN PROFESSIONAL BOND SERVICES REPORT

NEGOTIATED SALE

(Completed by the Senior Manager)

Issuer: CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY

Issue Description:

 

Amount:

 

Sale Date:

 

Closing Date:

Senior Manager:

   

Contact Person:

   

 

1. SUMMARY OF GROSS SPREAD:

        

    (Paid from Other Sources)

                  

Per

        $1,000         

  

Gross

        Amount         

  

% of Total

            Issue             

  

Management Fee

           

Takedown

           

Risk

           

Expenses

                              Total Spread                            2.
MANAGEMENT FEE                                Total:                   

DVBE*

Firm?

        Yes/No         

  

Management

        Fee         

  

% of

        Total         

  

Senior Manager:

           

Co-Senior Manager:

           

Co-Managers:

        

 

* DVBE means Disabled Veteran Business Enterprises as defined in Military and
Veterans Code Section 999.

 

F-1

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California Pollution Control Financing Authority

DVBE Bond Report

Page 2

3. TAKEDOWN

 

a. Gross Takedown

  

     Less: Indentified Concessions

       

     Net Takedown

          

b. Takedown by Senior Manager / Co-Managers / Syndicate member / Selling group
member (including income derived from designated and group sales):

  

 

Firm

   DVBE
Firm?
Yes/No         Takedown
Excluding
Identified
Concessions    % of
Total

 

2. RISK                                         
                                   Total:            

 

     DVBE
Firm?
Yes/No        

                             

    

Senior Manager:

           

Co-Senior Manager:

           

Co-Managers:

           

 

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California Pollution Control Financing Authority

DVBE Bond Report

Page 3

5. EXPENSES:

 

a.

 

Summary of Expenses:

                              Paid From
Bond
Proceeds    Percent
of Issue         Paid From
Other
Sources         Percent
of Issue       

Underwriter’s expenses

                      

Other Costs of issuance

                                                

Total Expenses:

                                              

b.

 

Breakdown of Expenses:

                                             Paid from:          Firm        
DVBE
Firm?
Yes/No              Bond
Proceeds    Other
Sources

Underwriter’s Expenses:

                      

CDIAC Fees

                      

BECON

                      

Day Loan

                      

State Municipal Advisory

                      

BMA Fee

                      

CUSIP Costs

                      

DTC

                      

Travel

                      

Other

                                             Total Underwriter’s Expenses      
                                    

 

* Indicates underwriter’s expenses that were paid from bond proceeds but not
included in the gross spread.

 

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California Pollution Control Financing Authority

DVBE Bond Report

Page 4

5. EXPENSES (continued):

 

                                                             Paid from:       
        DVBE
Firm?    Bond              Other

Costs of Issuance:

  

Firm

  

Yes/No

  

Proceeds

             Sources   

Issuer’s Counsel

           

Bond Counsel

           

Tax Counsel

           

Underwriter’s Counsel

           

Trustee/Tender Agent

           

Trustee’s Counsel

           

Rating Agency

           

Accountant

           

Underwriter’s Fee

           

Borrower’s counsel

           

Borrower’s Co-Counsel

             

Official Statement Printing

           

STO Agent for Sale

  

State Treasurer

            CDLAC Fees (net of initial application fee)   

CDLAC

                                    

    Subtotal Financing Costs

                                      

First Year’s LOC Fee

           

LOC Issuance Fee

           

Bank Counsel

           

Appraisal, Environmental

           

Miscellaneous

                                  

    Subtotal Bank Costs

                                      

Total Costs of Issuance (Per the Indenture & Tax Agreement)

                                 

6. GRAND TOTAL (ALL COSTS)

 

        

(i)

   CPCFA subsidy item;
total subsidy =      

of the Bond Size

  

 

7. For Variable Rate Issues, Indicate:

     

a.

      Annual Remarketing Agent Fee   

of Outstanding Principal

  

b.

      Index or Method of
Calculation:   

Prepared by:

        

Date:

 

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