Exhibit 10.9

EXECUTION VERSION

$70,000,000
CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY
REVENUE BONDS
(SAN JOSE WATER COMPANY PROJECT)
SERIES 2016
BOND PURCHASE CONTRACT
December 15, 2016
The Honorable John Chiang
Treasurer of the State of California
915 Capitol Mall, Room 261
Sacramento, California 95814

California Pollution Control Financing Authority
915 Capitol Mall, 5th Floor
Sacramento, California 95814

Ladies and Gentlemen:
The undersigned, Morgan Stanley & Co. LLC and RBC Capital Markets, LLC, as
underwriters (collectively, the “Underwriters”), hereby offer to enter into this
Bond Purchase Contract, including the appendices hereto (the “Purchase
Contract”) with you, the Honorable John Chiang, Treasurer of the State of
California (the “State Treasurer”), as agent for sale, the California Pollution
Control Financing Authority (the “Authority”) and San Jose Water Company (the
“Borrower”), for the purchase by the Underwriters 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 Underwriters
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, each Underwriter hereby agrees, severally and
not jointly, to purchase from the State Treasurer, as agent for sale on behalf
of the Authority, and the State Treasurer, as agent for sale on behalf of the
Authority, hereby agrees to deliver to the Underwriters, at a purchase price of
100% of the principal amount thereof, the percentage of aggregate principal
amount of California Pollution Control Financing Authority Revenue Bonds (San
Jose Water Company Project) Series 2016 (the “Bonds”) set forth opposite such
Underwriter’s name in Schedule I hereto, to be dated as of the date of delivery
thereof and as more fully described in the Indenture hereinafter defined. The
purchase price for the Bonds shall be $70,000,000, representing the aggregate
principal

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amount of the Bonds. Simultaneously with the delivery of the Bonds, a fee in the
aggregate amount of $245,000 will be paid to the Underwriters in connection with
the Underwriters’ offering and sale of the Bonds to the public.
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 December 1, 2016 (the “Indenture”), by and between the Authority and
The Bank of New York Mellon Trust Company, N.A., 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 December 1, 2016 (the “Loan Agreement”), by and
between the Authority and the Borrower. The proceeds of sale of the Bonds will
be loaned to the Borrower and applied to (a) finance the Project, 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 Underwriters prior to the date
hereof of the Preliminary Official Statement relating to the Bonds (including
the cover page and all appendices thereto), dated December 7, 2016, together
with any supplements thereto (the “Preliminary Official Statement”). The
Authority and the Borrower shall deliver or cause to be delivered to the
Underwriters 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 or its Deputy Executive Director, with the
approval thereof by the Borrower. The Underwriters agree 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. The Borrower will execute a
certificate to provide continuing disclosure pursuant to an agreement to be
dated the Closing Date (the “Continuing Disclosure Agreement”) in substantially
the form attached as Exhibit D to the Official Statement.
4.    Representations, Warranties and Agreements of the Authority. The
Authority, subject to the limitations provided herein, warrants, represents to
and agrees with the Underwriters 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

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(iii) consummate the transactions on its part contemplated by, and perform its
obligations under the Legal Documents;
(c)    By the adoption of its resolution, dated December 6, 2016 (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;
(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 pledged to pay the principal of and interest
on the Bonds, 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;

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(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 financing 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;
(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 Underwriters and their 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 Underwriters
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
Underwriters shall be deemed a representation and warranty of the Authority to
the Underwriters 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 Underwriters 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

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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.
5.    Representations, Warranties and Agreements of Borrower. In order to induce
the State Treasurer, the Authority and the Underwriters 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, the Tax Certificate and the
Continuing Disclosure Agreement (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, the Tax Certificate 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 such equitable principles,
regardless of whether equitable remedies are sought;
(e)    Except as disclosed in the Official Statement, to the best knowledge of
the Borrower, after due inquiry, 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

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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;
(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, the Tax Certificate 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, after due inquiry, 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)     Except for certain consents, permissions, authorizations, discretionary
permits, or licenses in connection with the acquisition and construction of the
Project, which will be obtained on a timely basis and which have been disclosed
in writing to the Authority and the Underwriters, 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, the Tax
Certificate 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, the Tax Certificate 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 Tax Certificate, the Official
Statement or the Continuing Disclosure Agreement, or the financial condition,
assets, properties or operations of the Borrower;

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(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;
(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 Underwriters,
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, 2015 and 2014 and
the related statements of income and cash flows for each of the three years in
the period ended December 31, 2015, included in Appendix A to the Official
Statement, present fairly the financial position of the Borrower as of December
31, 2015 and 2014, and the results of operations and cash flows for each of the
three years in the period ended December 31, 2015, 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 Underwriters, 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 Underwriters
(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

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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 Underwriters, 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
Underwriters, 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 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 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 the State
Treasurer or the trustees, officers, members, agents and employees of the
Authority or the State Treasurer, or (iv) the parties to such suit include such
Indemnitee and the Borrower, and such Indemnitee has 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 the Indemnitee, but the Borrower shall not be liable
for the fees and expenses of more than one counsel for each Indemnitee);
(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 Underwriters 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 Underwriters
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 Underwriters are jointly 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,

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if any, who controls each of the Underwriters within the meaning of the
Securities Act of 1933, as amended, shall have the same rights to contribution
as the Underwriters 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;
(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, the Tax Certificate or the Continuing Disclosure
Agreement.    
6.    Closing. At 8:00 a.m., California time, on December 20, 2016, or at such
other time or on such earlier or later date as the Authority, the Borrower and
the Underwriters mutually agree upon (the “Closing Date”), the Authority will
deliver or cause to be delivered to the Underwriters, 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 Underwriters and approved
by the Authority), the Bonds in book-entry form, duly executed and
authenticated, and will deliver to the Underwriters at the Law Offices of Leslie
M. Lava, 1 Blackfield Drive, #143, Tiburon, California 94920 (or such other
location as may be designated by the Underwriters and approved by the
Authority), the other documents herein mentioned. The Underwriters 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 Underwriters 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 Underwriters not less than one business day before the
Closing for purposes of inspection and packaging.
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

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acknowledges that the services of DTC will be used initially by the Underwriters
in order to permit the issuance of the Bonds in book-entry form, and agrees to
cooperate with the Underwriters in employing such services.
7.    Underwriters’ Conditions to Closing. The Underwriters have 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, and the opinions of counsel to the Authority and the
Borrower. The Underwriters’ 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 Underwriters 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;
(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 Underwriters (evidenced by a written notice to
the Authority, the State Treasurer and the Borrower, terminating the obligation
of the Underwriters 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 Underwriters, 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 Underwriters,
affects materially and adversely (i) the market price or

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marketability of the Bonds or (ii) the ability of the Underwriters to enforce
contracts for the sale of the Bonds;
(2)    Legislation enacted in the Congress, 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 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;
(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
(8)    Any event occurring, or information becoming known which, in the
reasonable judgment of the Underwriters, makes untrue in any material respect
any statement or information contained in the Official Statement, or has the
effect that the Official Statement

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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 Underwriters shall receive the following
documents with respect to the Bonds, in each case satisfactory in form and
substance to the Underwriters and Underwriters’ Counsel (as hereinafter
defined):
(1)    Certified copies of the Authorizing Resolution and any other resolutions
adopted by the Authority which relate to the Bonds;
(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 Underwriters;
(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
Underwriters;
(5)    The supplemental opinion of Bond Counsel in a form acceptable to the
Authority and the Underwriters and addressed to the Authority and the
Underwriters, dated the Closing Date, to the effect that:
(A)    The statements contained in the Official Statement, dated December 15,
2016 with respect to the Bonds (the “Official Statement”), under the captions
“THE BONDS” (except for (i) the last two sentences contained in the first
paragraph of the subsection thereunder entitled “General”, (ii) the second
paragraph of the subsection thereunder entitled “Notice of Redemption” and (iii)
the subsection thereunder 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, the Loan Agreement or the
opinion of Bond Counsel concerning certain federal tax matters relating to the
Bonds, are accurate in all material respects;
(B)    The Bonds are not subject to the registration requirements of the
Securities Act of 1933, and the Indenture is exempt from qualification pursuant
to the Trust Indenture Act of 1939; and
(C)    The Purchase Contract has been duly authorized, executed and delivered by
the Authority and, assuming due authorization, execution and

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delivery by and validity against each of the Underwriters and acceptance and
agreement by the Borrower and the State Treasurer, is a valid and binding
agreement of the Authority, subject to the laws relating 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;
(6)    The unqualified approving opinion of Special Tax Counsel, dated the
Closing Date and addressed to the Authority, the Underwriters and Bond Counsel,
in substantially the form attached as Appendix C to the Official Statement;
(7)    The opinion of the Attorney General of the State of California, counsel
to the Authority, addressed to the Authority, dated the Closing Date, in
substantially the form attached hereto as Exhibit A;
(8)    A certificate of the Authority, dated the Closing Date substantially in
the form attached hereto as Exhibit B;
(9)    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 Tax
Certificate, 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;
(10)    A certificate of an authorized representative of the Borrower acceptable
to the Underwriters 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 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 Tax Certificate, the Continuing Disclosure Agreement, the
Official Statement or this Purchase Contract, or the resolutions of the Borrower
relating to 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;

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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”; and
(C)    The representations and warranties of the Borrower contained in this
Purchase Contract are true and correct as of the Closing Date as if made on and
as of the Closing Date;
(11)    The opinion of Ballard Spahr LLP, counsel to the Underwriters
(“Underwriters’ Counsel”), dated the Closing Date and addressed to the
Underwriters in form and substance satisfactory to the Underwriters;
(12)    The opinion of counsel to the Borrower, addressed to the Authority, the
Trustee, Bond Counsel and the Underwriters, dated the Closing Date, collectively
to the effect that:
(A)    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; the Borrower together with its
affiliates is a “small business,” as defined in Section 8020 of Title 4 of the
California Code of Regulations; the Project is a “project” and the Borrower
together with its Participating Affiliates is a “participating party” under the
California Pollution Control Financing Authority Act, commencing with Section
44500 of the California Health and Safety Code, as now in effect;
(B)    The Loan Agreement, the Tax Certificate, the Continuing Disclosure
Agreement and this 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, except
as their enforceability may be limited by reasons of bankruptcy, insolvency,
reorganization or other laws generally affecting creditors’ remedies or the
application of equitable principles regardless of whether equitable remedies are
sought, or matters of public policy;
(C)    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 valid authorization, execution, delivery and performance of
the Loan Agreement, the Tax Certificate, the Continuing Disclosure Agreement and
this Purchase Contract. The execution and delivery of the Loan Agreement, the
Tax Certificate, the Continuing Disclosure Agreement, the Official Statement and
this Purchase Contract, and compliance therewith by the Borrower, will not
result in (i) a violation of the Articles of Incorporation of the Borrower or
bylaws of the Borrower, (ii) a breach or a default under any indenture,
mortgage, deed of trust or other agreement or instrument to which the Borrower
is a party or by which it or

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any of its property is bound, (iii) a violation of any law, rule or regulation
of any administrative or governmental body having jurisdiction over the Borrower
or its property or (iv) a violation of any judgment, order or decree of any
court, government, or government agency or body having jurisdiction over the
Borrower or any of its properties; and
(D)    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 seeks 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 contests or affects the authority for the
issuance and delivery of the bonds or the validity of this Purchase Contract,
the Bonds, the Indenture, the Loan Agreement, the Tax Certificate, the
Continuing Disclosure Agreement, the Official Statement or the resolutions of
the Borrower relating to the Project and the Bonds, (3) contests the corporate
existence or powers of the Borrower, or (4) contests or affects 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 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 this Purchase Contract, the
Bonds, the Indenture, the Loan Agreement, the Tax Certificate, the Continuing
Disclosure Agreement or the financial condition, assets, properties or
operations of the Borrower
(13)    A letter from counsel to the Borrower addressed to the Authority, the
Trustee, Bond Counsel and the Underwriters, dated the Closing Date, stating that
nothing has come to the attention of counsel to the Borrower which would lead
such counsel to believe that the statements and information contained in the
Official Statement (except 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”) as
of the date of the Official Statement and as of the Closing Date 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
(14)    An opinion of counsel to the Trustee addressed to the Authority and the
Underwriters, dated the Closing Date, to the effect that:
(A)    The Trustee is a national banking association with trust powers,
qualified to accept and administer funds, duly created and lawfully existing
under the laws of the United States of America and has the authority to exercise
trust powers in the State of California;

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(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;
(D)    Upon execution and delivery of the Indenture, by a duly authorized
officer of the Trustee, assuming due authorization, execution and delivery by
the Authority, 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 by 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;
(15)    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, has the authority to exercise trust
powers in the State of California, and is empowered, authorized, and is 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 has 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;
(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

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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 or the Bonds.
(16)    An agreed upon procedures letter from KPMG to the Underwriters in form
and substance satisfactory to the Underwriters;
(17)    The Tax Certificate executed by the Authority and the Borrower in form
and substance satisfactory to Bond Counsel, Underwriters’ Counsel and the
Underwriters;
(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; and
(21)    Such additional legal opinions, certificates, proceedings, instruments
and other documents as Bond Counsel, Counsel to the Authority and Underwriters’
Counsel 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 Underwriters.
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;

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(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
(iii) Evidence of payment or provision for payment of the fees of the Authority,
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 Underwriters 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 C.
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 Underwriters shall object in writing or
which shall be disapproved by Underwriters’ 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 Underwriters’ 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 Underwriters a reasonable number of copies of an amendment of or supplement
to the Official Statement (in form and substance satisfactory to Underwriters’
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 Underwriters may from
time to time request.
10.    Expenses. (a) The Underwriters 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
Underwriters. 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 Underwriters’ Counsel and
Counsel to the Authority 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 Underwriters shall pay all expenses reasonably incurred by the
Underwriters 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 Underwriters in connection with the offering

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and distribution of the Bonds; (iii) the fees payable to the California Debt and
Investment Advisory Committee; (iv) the costs of ordering CUSIP numbers and
qualifying the Bonds with DTC and (v) all other expenses incurred by the
Underwriters in connection with the offering and distribution of the Bonds.
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, 5th Floor,
Sacramento, California 95814, Attention: Executive Director;
(c)    To the Underwriters may be given by delivering the same in writing to
Morgan Stanley & Co. LLC, 1585 Broadway, 16th Floor, New York, New York 10036;
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: Chief Financial Officer with copy to General Counsel.
All notices or communications hereunder by any party shall be given and served
upon each other party. The approval of the Underwriters when required hereunder
or the determination of satisfaction as to any document referred to herein shall
be in writing signed by the Underwriters 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 Underwriters, 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
Underwriters, 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 Underwriters and shall survive the delivery of and payment for the
Bonds.
13.    Representations, Warranties and Agreements of Underwriters. The
Underwriters represent and warrant to and agrees with the Authority and the
State Treasurer that they are authorized to take any action under this Purchase
Contract required to be taken by them and that this Purchase Contract is a
binding contract of the Underwriters enforceable against the Underwriters in
accordance with its terms. The Underwriters 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.    Arm’s Length Transaction. The State Treasurer, the Authority and the
Underwriters acknowledge and agree that (i) the purchase and sale of the Bonds
pursuant to this Purchase Contract is an arm’s-length, commercial transaction
among the State Treasurer, the Authority and the Underwriters in which the
Underwriters are acting solely as a principal and are not acting as an agent,
advisor or fiduciary of the State Treasurer or the Authority, (ii) the
Underwriters have not assumed any advisory or fiduciary responsibility to the
State Treasurer or the Authority with respect to this Purchase Contract, the
offering of the Bonds and the discussions, undertakings and procedures leading
thereto (irrespective of whether the Underwriters, or any affiliate of the
Underwriters, have provided other services or are currently providing other
services to the State Treasurer or the Authority on other matters), (iii) the
only contractual obligations the Underwriters have to the State Treasurer and
the Authority with respect to the transactions contemplated hereby are those set
forth in this Purchase Contract, (iv) the Underwriters have financial and other
interests that differ from those of the State Treasurer and the Authority,  and
(v) the State Treasurer and the Authority have consulted with their own legal,
accounting, tax, financial and other advisors, as applicable, to the extent they
have deemed appropriate.  Nothing in the foregoing paragraph is intended to
limit the Underwriters’ obligations of fair dealing under MSRB Rule G-17.
15.    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.
16.    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.
The parties agree that the terms and conditions of this Purchase Contract
supersede those of all previous agreements between the parties relating to the
subject matter hereof, and that this Purchase Contract contains the entire
agreement among the parties hereto relating to the subject matter hereof.

[Signature Page of Bond Purchase Contract Follows]

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IN WITNESS WHEREOF, this Purchase Contract has been executed as of the date
first set forth above.
Very truly yours,
MORGAN STANLEY & CO. LLC

By: /s/ F. J. Sweeney
Name: F. J. Sweeney
Title: Managing Director
RBC CAPITAL MARKETS, LLC

By: /s/ Tim Williams
Name: Tim Williams
Title: Managing Director

Accepted and Agreed:

TREASURER OF THE STATE OF CALIFORNIA
By: /s/ Blake Fowler
Deputy Treasurer
For California State Treasurer John Chiang
CALIFORNIA POLLUTION CONTROL
FINANCING AUTHORITY
By:    /s/ Reneé Webster-Hawkins
Executive Director
SAN JOSE WATER COMPANY, BORROWER
By:     /s/ James P. Lynch
Authorized Representative

[Signature Page to Bond Purchase Contract for San Jose Water Company]

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Schedule I
Underwriters
 
Percentage Liability
Morgan Stanley & Co.
LLC..............................................................
 
60%
RBC Capital Markets,
LLC...............................................................
 
40%
 
 
 
             Total.................................................................................
 
100%

Sch. 1

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EXHIBIT A
FORM OF OPINION OF COUNSEL TO THE AUTHORITY

December 20, 2016

California Pollution Control Financing Authority
801 Capitol Mall, Second Floor
Sacramento, CA 95814

$70,000,000
California Pollution Control Financing Authority
Revenue Bonds
(San Jose Water Company Project)
Series 2016

Ladies and Gentlemen:
This opinion is delivered to you in connection with the issuance of the
above-referenced bonds (the “Bonds”) pursuant to Section 7(d)(7) of a bond
purchase contract, dated December 15, 2016 (the “Purchase Contract”), among the
California Pollution Control Financing Authority (the “Authority”), the
Treasurer of the State of California, as agent for sale on behalf of the
Authority, Morgan Stanley & Co. LLC and RBC Capital Markets, LLC, as
underwriters, and approved by San Jose Water Company, as borrower (the
“Borrower”).
The Bonds are being issued pursuant to the California Pollution Control
Financing Authority Act, Division 27 of the Health and Safety Code (commencing
with section 44500) (the “Act”) and an Indenture, dated as of December 1, 2016
(the “Indenture”), by and between the Authority and The Bank of New York Mellon
Trust Company, N.A., 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 December 1, 2016 (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 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

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or any subdivision thereof, or any local agency, to payment of the principal of,
premium, if any, or interest on the Bonds.
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 relating to the
Bonds dated December 15, 2016 (the “Official Statement”) 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 immediately
preceding 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 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 validly existing under the
Constitution and laws of the State of California.
2.    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 true and correct.

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3.    Resolution of the California Pollution Control Financing Authority
Delegating Certain Powers and Authorizing Certain Actions Related to Bond
Financings, adopted on January 19, 2016 and Final Resolution No. -- of the
Authority, adopted on December 6, 2016, approving and authorizing the execution
and delivery of the Authority Documents, the Bonds and the Official Statement,
were duly adopted at meetings of the governing body of the Authority which were
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 therefor 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, and the Bonds have been
duly authorized, executed and delivered by the Authority and, assuming due
authentication by the Trustee, constitute the valid and binding limited
obligations of the Authority, subject to the laws relating to receivership,
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, liquidated damages, penalty (including any remedy
deemed to constitute a penalty), right of set-off, arbitration, judicial
reference, choice of law, choice of forum, non-exclusivity of remedies,
severability, or waiver provisions contained in the Authority Documents.

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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.
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,

________________________
Deputy Attorney General

For    KAMALA D. HARRIS
Attorney General

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EXHIBIT B
FORM OF CERTIFICATE OF AUTHORITY
The undersigned STEVE JUAREZ, a Deputy Treasurer of the State of California, and
RENEE’ WEBSTER-HAWKINS, 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 $70,000,000 California Pollution Control
Financing Authority Revenue Bonds (San Jose Water Company Project) Series 2016
(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 counsel to the Authority.

1.    Renee’ Webster-Hawkins is now, and at all times since at least the date
shown opposite her 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 her name. Steve Juarez is now, and at all
times since at least the date shown opposite his 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 Blake Fowler set forth below is his genuine
signature.

2.    John Chiang, 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 the Bonds have been executed by his facsimile
signature, which signature on 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 Morgan
Stanley & Co. LLC and RBC Capital Markets, LLC, as the underwriters 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
December 6, 2016 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 actions that have to be taken for such persons to
qualify for such offices, including without limitation any and all filings, have
been taken.

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Name
 
Authority
Position
 

Office
 
 
 
 
 
John Chiang
 
Chairman
 
Treasurer of the State of California
 
 
 
 
 
Betty T. Yee
 
Member
 
Controller of the State of California
 
 
 
 
 
Michael Cohen
 
Member
 
Director of Finance of the State of California

The following members of the Authority who, as of December 6, 2016, 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
 
 
 
 
 
John Chiang
 
Chairman
 
Alan Gordon
 
 
 
 
 
Betty T. Yee
 
Member
 
Karen Greene-Ross
 
 
 
 
 
Michael Cohen
 
Member
 
Eraina Ortega

Steve Juarez, 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,
as reinstated, amended and extended on August 16, 2016, of which meetings all of
the members of the Authority had due notice and at each of which meetings 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 a regular meeting of the Authority held
on January 19, 2016, 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. 559, which was duly adopted at a regular meeting
of the Authority held on December 6, 2016 (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.

6.    Pursuant to the Resolutions, John Chiang, as Treasurer of the State of
California, the Chairman of the Authority, or any of his Deputies, and Renee’
Webster-Hawkins, 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 December 1, 2016 (the “Indenture”), by and
between the     Authority and The Bank of New York Mellon Trust Company, N.A.,
as trustee     (the     “Trustee”);

(b)        Loan Agreement, dated as of December 1, 2016 (the “Loan Agreement”),
    by     and     between the Authority and the Borrower;

(c)        Tax Certificate and Agreement, dated December 20, 2016, by and
between the     Authority and the Borrower;

(d)        Bond Purchase Contract, dated December 15, 2016 (the “Purchase
Contract”),     by and among the Authority, the Treasurer of the State of
California and the     Underwriters, as approved by the Borrower (Renee’
Webster-Hawkins,     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 December 15, 2016 (Renee’
Webster-    Hawkins,     Executive Director, is the only signatory on behalf of
the Authority);     and

(g)        Internal Revenue Service Form 8038.
    

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7.    John Chiang, 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, Blake Fowler, 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]
    

EXHIBIT C
UNDERWRITERS’ REPORT TO THE AUTHORITY

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