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SAN JOSE WATER COMPANY

$80,000,000

4.29% Senior Notes, Series M, due 2049

______________

NOTE PURCHASE AGREEMENT

______________

Dated March 28, 2019

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4817-6506-2287.v2

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TABLE OF CONTENTS
SECTION
HEADING
PAGE

 
 
 
SECTION 1.
AUTHORIZATION OF NOTES
1

 
 
 
SECTION 2.
SALE AND PURCHASE OF NOTES
1

 
 
 
SECTION 3.
CLOSING
1

 
 
 
SECTION 4.
CONDITIONS TO CLOSING
2

 
 
 
Section 4.1.
Representations and Warranties
2

Section 4.2.
Performance; No Default
2

Section 4.3.
Compliance Certificates
2

Section 4.4.
Opinions of Counsel
2

Section 4.5.
Purchase Permitted by Applicable Law, Etc
3

Section 4.6.
Sale of Other Notes
3

Section 4.7.
Private Placement Number
3

Section 4.8.
Changes in Corporate Structure
3

Section 4.9.
Funding Instructions
3

Section 4.10.
Consent of Holders of Other Securities
3

Section 4.11.
Proceedings and Documents
3

Section 4.12.
Governmental Authorizations, Etc.
4

 
 
 
SECTION 5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4

 
 
 
Section 5.1.
Organization; Power and Authority
4

Section 5.2.
Authorization, Etc
4

Section 5.3.
Disclosure
4

Section 5.4.
No Subsidiaries
5

Section 5.5.
Financial Statements; Material Liabilities
5

Section 5.6.
Compliance with Laws, Other Instruments, Etc
5

Section 5.7.
Governmental Authorizations, Etc
5

Section 5.8.
Litigation; Observance of Agreements, Statutes and Orders
6

Section 5.9.
Taxes
6

Section 5.10.
Title to Property; Leases
6

Section 5.11.
Licenses, Permits, Etc
7

Section 5.12.
Compliance with Employee Benefit Plans
7

Section 5.13.
Private Offering by the Company
8

Section 5.14.
Use of Proceeds; Margin Regulations
8

Section 5.15.
Existing Indebtedness
8

Section 5.16.
Foreign Assets Control Regulations, Etc
9

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Section 5.17.
Status under Certain Statutes
9

Section 5.18.
Environmental Matters
9

 
 
 
SECTION 6.
REPRESENTATIONS OF THE PURCHASERS
10

 
 
 
Section 6.1.
Purchase for Investment
10

Section 6.2.
Source of Funds
10

Section 6.3.
Accredited Investor
12

 
 
 
SECTION 7.
INFORMATION AS TO COMPANY
12

 
 
 
Section 7.1.
Financial and Business Information
12

Section 7.2.
Officer’s Certificate
14

Section 7.3.
Visitation
15

Section 7.4.
Electronic Delivery
16

 
 
 
SECTION 8.
PAYMENT AND PREPAYMENT OF THE NOTES
17

 
 
 
Section 8.1.
Maturity
17

Section 8.2.
Optional Prepayments in the Event of Condemnation without Make-Whole Amount
17

Section 8.3.
Optional Prepayments
17

Section 8.4.
Allocation of Partial Prepayments
18

Section 8.5.
Maturity; Surrender, Etc.
18

Section 8.6.
Purchase of Notes
18

Section 8.7.
Make-Whole Amount
18

Section 8.8.
Payments Due on Non-Business Days
20

 
 
 
SECTION 9.
AFFIRMATIVE COVENANTS.
20

 
 
 
Section 9.1.
Compliance with Laws
20

Section 9.2.
Insurance
21

Section 9.3.
Maintenance of Properties
21

Section 9.4.
Payment of Taxes
21

Section 9.5.
Corporate Existence, Etc
21

Section 9.6.
Books and Records
22

Section 9.7.
Subsidiary Guarantors
22

 
 
 
SECTION 10.
NEGATIVE COVENANTS.
23

 
 
 
Section 10.1.
Merger, Consolidations and Sales of Assets
23

Section 10.2.
Line of Business
26

Section 10.3.
Economic Sanctions, Etc
26

Section 10.4.
Limitation on Liens
26

Section 10.5.
Limitations on Indebtedness
29

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Section 10.6.
Guaranties
30

Section 10.7.
Investments
30

Section 10.8.
Restricted Payments
31

Section 10.9.
Transactions with Affiliates
32

Section 10.10.
Hazardous Materials
33

 
 
 
SECTION 11.
EVENTS OF DEFAULT
33

 
 
 
SECTION 12.
REMEDIES ON DEFAULT, ETC
36

 
 
 
Section 12.1.
Acceleration
36

Section 12.2.
Other Remedies
36

Section 12.3.
Rescission
36

Section 12.4.
No Waivers or Election of Remedies, Expenses, Etc
37

 
 
 
SECTION 13.
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
37

 
 
 
Section 13.1.
Registration of Notes
37

Section 13.2.
Transfer and Exchange of Notes
37

Section 13.3.
Replacement of Notes
38

 
 
 
SECTION 14.
PAYMENTS ON NOTES
38

 
 
 
Section 14.1.
Place of Payment
38

Section 14.2.
Payment by Wire Transfer
38

Section 14.3.
FATCA Information
39

 
 
 
SECTION 15.
EXPENSES, ETC
39

 
 
 
Section 15.1.
Transaction Expenses
39

Section 15.2.
Certain Taxes
40

Section 15.3.
Survival
40

 
 
 
SECTION 16.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
40

 
 
 
SECTION 17.
AMENDMENT AND WAIVER
41

 
 
 
Section 17.1.
Requirements
41

Section 17.2.
Solicitation of Holders of Notes
41

Section 17.3.
Binding Effect, Etc
42

Section 17.4.
Notes Held by Company, Etc
42

 
 
 
SECTION 18.
NOTICES
42

 
 
 

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SECTION 19.
REPRODUCTION OF DOCUMENTS
43

 
 
 
SECTION 20.
CONFIDENTIAL INFORMATION
43

 
 
 
SECTION 21.
SUBSTITUTION OF PURCHASER
44

 
 
 
SECTION 22.
MISCELLANEOUS
45

 
 
 
Section 22.1.
Successors and Assigns
45

Section 22.2.
Accounting Terms: Change in GAAP
45

Section 22.3.
Severability
46

Section 22.4.
Construction, Etc
46

Section 22.5.
Counterparts
46

Section 22.6.
Governing Law
46

Section 22.7.
Jurisdiction and Process; Waiver of Jury Trial
46

 
 
 

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Schedule A    —    Defined Terms

Schedule 1    —    Form of Notes

Schedule 3    —    Form of Funds Delivery Instruction Letter

Schedule 4.4(a)     —     Form of Opinion of Morgan, Lewis & Bockius LLP,
Counsel for the Company

Schedule 4.4(b)    —    Form of Opinion of Special Counsel to the Purchasers

Schedule 5.3    —    Disclosure Materials

Schedule 5.5    —    Financial Statements

Schedule 5.14    —    Use of Proceeds

Schedule 5.15    —    Existing Indebtedness

Schedule 10.4    —    Existing Liens

Schedule 13.2    —    Form of Transferee Wire Instructions

Purchaser Schedule    —    Information Relating to Purchasers

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San Jose Water Company
110 West Taylor Street
San Jose, California 95110

4.29% Senior Notes, Series M, due 2049

March 28, 2019

TO EACH OF THE PURCHASERS LISTED IN
THE PURCHASER SCHEDULE HERETO:
Ladies and Gentlemen:
San Jose Water Company, a California corporation (the “Company”), agrees with
each of the Purchasers as follows:
SECTION 1.
AUTHORIZATION OF NOTES.

The Company will authorize the issue and sale of $80,000,0000 aggregate
principal amount of its 4.29% Senior Notes, Series M, due 2049 (the “Notes”).
The Notes shall be substantially in the form set out in Schedule 1. Certain
capitalized and other terms used in this Agreement are defined in Schedule A
and, for purposes of this Agreement, the rules of construction set forth in
Section 22.4 shall govern.
SECTION 2.
SALE AND PURCHASE OF NOTES .

Subject to the terms and conditions of this Agreement, the Company will issue
and sell to each Purchaser and each Purchaser will purchase from the Company, at
the Closing provided for in Section 3, Notes in the principal amount specified
opposite such Purchaser’s name in the Purchaser Schedule at the purchase price
of 100% of the principal amount thereof. The Purchasers’ obligations hereunder
are several, and not joint, obligations and no Purchaser shall have any
liability to any Person for the performance or non-performance of any obligation
by any other Purchaser hereunder.
SECTION 3.
CLOSING.

The sale and purchase of the Notes to be purchased by each Purchaser shall occur
at the offices of Pillsbury Winthrop Shaw Pittman LLP, 1540 Broadway, New York,
New York 10036, at 10:00 a.m. New York City time, at a closing (the “Closing”)
on March 28, 2019. At the Closing the Company will deliver to each Purchaser the
Notes to be purchased by such Purchaser, as set forth opposite such Purchaser’s
name in the Purchaser’s Schedule, in the form of a single Note (or

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such greater number of Notes in denominations of at least $100,000 as such
Purchaser may request) dated the date of the Closing and registered in such
Purchaser’s name (or, in each case, in the name of such Purchaser’s nominee),
against delivery by such Purchaser to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds to the Company’s account in accordance with Schedule
3.
If at the Closing the Company shall fail to tender such Notes to any Purchaser
as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such
Purchaser shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights such Purchaser may have by
reason of such failure by the Company to tender such Notes or any of the
conditions specified in Section 4 not having been fulfilled to such Purchaser’s
satisfaction.
SECTION 4.
CONDITIONS TO CLOSING.

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such
Purchaser at the Closing is subject to the fulfillment to such Purchaser’s
satisfaction, prior to or at the Closing, of the following conditions:
Section 4.1.    Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be correct at the Closing
(except with respect to representations and warranties made as of a specific
date, in which case they shall be correct as of such date).
Section 4.2.    Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at the Closing. Before and
after giving effect to the issue and sale of the Notes (and the application of
the proceeds thereof as contemplated by Section 5.14), no Default or Event of
Default shall have occurred and be continuing.
Section 4.3.    Compliance Certificates.
(a)    Officer’s Certificate. The Company shall have delivered to such Purchaser
an Officer’s Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.2 and 4.8 have been fulfilled.
(b)    Secretary’s Certificate. The Company shall have delivered to such
Purchaser a certificate of the Secretary or Assistant Secretary of the Company,
dated the date of the Closing, certifying as to (i) the resolutions attached
thereto and any other corporate proceedings relating to the authorization,
execution and delivery of the Notes and this Agreement and (ii) the Company’s
organizational documents as then in effect.
Section 4.4.    Opinions of Counsel. Such Purchaser shall have received opinions
in form and substance satisfactory to such Purchaser, dated the date of the
Closing (a) from Morgan, Lewis & Bockius LLP, counsel for the Company, covering
the matters set forth in Schedule 4.4(a) and covering such other matters
incident to the transactions contemplated hereby as such Purchaser or

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its counsel may reasonably request (and the Company hereby instructs such
counsel to deliver such opinion to the Purchasers) and (b) from Pillsbury
Winthrop Shaw Pittman LLP, special counsel to the Purchasers in connection with
such transactions, substantially in the form set forth in Schedule 4.4(b) and
covering such other matters incident to such transactions as such Purchaser may
reasonably request.
Section 4.5.    Purchase Permitted by Applicable Law, Etc. On the date of the
Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including Regulation T, U or X of the Board of Governors of
the Federal Reserve System) and (c) not subject such Purchaser to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
such Purchaser, such Purchaser shall have received an Officer’s Certificate
certifying as to such matters of fact as such Purchaser may reasonably specify
to enable such Purchaser to determine whether such purchase is so permitted.
Section 4.6.    Sale of Other Notes. Contemporaneously with the Closing the
Company shall sell to each Purchaser and each Purchaser shall purchase the Notes
to be purchased by such Purchaser at the Closing as specified in the Purchaser
Schedule.
Section 4.7.    Private Placement Number. A Private Placement Number issued by
S&P Global Market Intelligence’s CUSIP Global Services (in cooperation with the
SVO) shall have been obtained for the Notes.
Section 4.8.    Changes in Corporate Structure . The Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation or succeeded to all or any substantial part of the liabilities of
any other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5, except as permitted pursuant to Section
10.1.
Section 4.9.    Funding Instructions. At least three (3) Business Days prior to
the date of the Closing, each Purchaser shall have received written instructions
signed by a Responsible Officer on letterhead of the Company confirming the
information specified in Section 3 in the form of Schedule 3.
Section 4.10.    Consent of Holders of Other Securities. Any consents or
approvals required to be obtained from any holder or holders of any outstanding
Security of the Company and any amendments of agreements pursuant to which any
Securities may have been issued that shall be necessary to permit the
consummation of the transactions contemplated by this Agreement shall have been
obtained, and all such consents, approvals or amendments shall be reasonably
satisfactory in form and substance to the Purchasers and special counsel to the
Purchasers.
Section 4.11.    Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and

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instruments incident to such transactions shall be satisfactory to such
Purchaser and special counsel to the Purchasers, and such Purchaser and special
counsel to the Purchasers shall have received all such counterpart originals or
certified or other copies of such documents as such Purchaser or special counsel
to the Purchasers may reasonably request.
Section 4.12.    Governmental Authorizations, Etc. All consents, approvals and
authorizations of, notices to, and registrations, filings and declarations with,
or other actions by, any Governmental Authority required for the valid
execution, delivery or performance by the Company of this Agreement or the
Notes, including Decision 15-12-028 dated December 17, 2015 of the Public
Utilities Commission of the State of California (the “Approval”), shall have
been obtained and the Approval shall be in full force and effect on or before
the date of the Closing and all periods of appeal and rehearing by third parties
which have not stipulated to such Approval as issued shall have expired and all
conditions contained in such Approval that are to be fulfilled on or prior to
the date of the Closing shall have been fulfilled.
SECTION 5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Purchaser that:
Section 5.1.    Organization; Power and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the Notes and to
perform the provisions hereof and thereof.
Section 5.2.    Authorization, Etc. This Agreement and the Notes have been duly
authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes, and upon execution and delivery thereof each Note
will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 5.3.    Disclosure. The Company, through its agent, J.P. Morgan
Securities LLC, has made the Disclosure Documents available to each Purchaser.
This Agreement, the documents listed in Schedule 5.5 and the documents,
certificates or other writings delivered or made available to the Purchasers by
or on behalf of the Company, or to which the Purchasers were directed or
referred by or on behalf of the Company, prior to the date hereof, in connection
with the transactions contemplated hereby and identified in Schedule 5.3 (this
Agreement and such documents, certificates or other writings and such financial
statements delivered or made available to each Purchaser being referred to,
collectively, as the “Disclosure Documents”), taken as a

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whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as disclosed in or
contemplated by the Disclosure Documents, since December 31, 2018, there has
been no change in the financial condition, operations, business or properties of
the Company except changes that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 5.4.    No Subsidiaries. The Company has no Subsidiaries.
Section 5.5.    Financial Statements; Material Liabilities. (a) The Company,
through its agent, J.P. Morgan Securities LLC, has made available to each
Purchaser copies of the financial statements of the Company listed on Schedule
5.5. All of such financial statements (including in each case the related
schedules and notes) fairly present in all material respects the financial
position of the Company as of the respective dates specified in such Schedule
and the results of its operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).
(b)    The Company does not have any Material liabilities that are not disclosed
in or contemplated by the Disclosure Documents.
Section 5.6.    Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will not
(a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company
under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter, regulations or by-laws, shareholders
agreement or any other agreement or instrument to which the Company is bound or
by which the Company or any of its properties may be bound or affected,
(b) conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority applicable to the Company or (c) violate any provision of
any statute or other rule or regulation of any Governmental Authority applicable
to the Company. The representation by the Company to each Purchaser in
subsection (c) of this Section 5.6 is made in reliance upon and subject to the
accuracy of such Purchaser’s representation in Section 6.1 as to its purchase
for investment and purchaser status.
Section 5.7.    Governmental Authorizations, Etc. (a) No consent, approval or
authorization of, or registration, filing or declaration with, or other action
by, any Governmental Authority (other than the Approval, which Approval has been
obtained by the Company and shall be in full force and effect as of the Closing)
is required in connection with the valid execution, delivery or performance by
the Company of this Agreement or the Notes, except such as may have been
obtained or may be required under state securities or blue sky laws; provided,
however, that the representation by the Company to each Purchaser in this
Section 5.7 is made in reliance upon and subject to the accuracy of such
Purchaser’s representation in Section 6.1 as to its purchase for investment and
purchaser status.

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(b)    The Application 15-08-016 filed August 21, 2015 by the Company before the
Public Utilities Commission of the State of California, and the Exhibits
attached thereto, do not contain any untrue statement of a material fact or omit
a material fact necessary to make the statements contained therein not
misleading. There is no fact peculiar to the Company that has not been disclosed
to the Public Utilities Commission of the State of California that materially
affects adversely or, so far as the Company can now foresee, could, individually
or in the aggregate, materially affect adversely the ability of the Company to
comply with and perform the terms of the Approval, or which would provide the
Public Utilities Commission of the State of California with a basis for
rescinding, revoking, modifying or amending the Approval.
Section 5.8.    Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in or contemplated by the Disclosure Documents, there
are no actions, suits, investigations or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
property of the Company in any court or before any arbitrator of any kind or
before or by any Governmental Authority that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b)    Except as disclosed in or contemplated by the Disclosure Documents, the
Company is not (i) in default under any agreement or instrument to which it is a
party or by which it is bound, (ii) in violation of any order, judgment, decree
or ruling of any court, any arbitrator of any kind or any Governmental Authority
or (iii) in violation of any applicable law, ordinance, rule or regulation of
any Governmental Authority (including Environmental Laws, the USA PATRIOT Act or
any of the other laws and regulations that are referred to in Section 5.16),
which default or violation would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
Section 5.9.    Taxes. The Company has filed all tax returns that are required
to have been filed in any jurisdiction, and have paid all taxes shown to be due
and payable on such returns and all other taxes and assessments payable by them,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the amount
of which, individually or in the aggregate, is not Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company has established
adequate reserves in accordance with GAAP. The charges, accruals and reserves on
the books of the Company in respect of U.S. federal, state or other taxes for
all open years, and for its current fiscal year, are adequate. The U.S. federal
income tax liabilities of the Company have been finally determined (whether by
reason of completed audits or the statute of limitations having run) for all
fiscal years up to and including the fiscal year ended December 31, 2014.
Section 5.10.    Title to Property; Leases. The Company has good and sufficient
title to its Material properties, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company after such date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement, except for those defects in title and Liens
that, individually or in the aggregate, would not have a Material Adverse
Effect. All Material leases are valid and subsisting and are in full force and
effect in all material respects.

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Section 5.11.    Licenses, Permits, Etc. The Company owns or possesses all
licenses, permits, franchises, authorizations, patents, copyrights, proprietary
software, service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict with the
rights of others, except for those conflicts that, individually or in the
aggregate, would not have a Material Adverse Effect.
Section 5.12.    Compliance with Employee Benefit Plans. (a) The Company and
each ERISA Affiliate have operated and administered each Plan in compliance with
all applicable laws except for such instances of noncompliance as have not
resulted in and could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.  Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that would, individually or in the aggregate, reasonably
be expected to result in the incurrence of any such liability by the Company or
any ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to Section 430(k) of the Code or to any
such penalty or excise tax provisions under the Code or federal law or Section
4068 of ERISA or by the granting of a security interest in connection with the
amendment of a Plan, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b)    As of January 1, 2019, the present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer Plans), determined
as of the end of such Plan’s most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such Plan’s most recent
actuarial valuation report, did not exceed the aggregate current value of the
assets of such Plan allocable to such benefit liabilities by an amount that
would reasonably be expected to have a Material Adverse Effect. The term
“benefit liabilities” has the meaning specified in Section 4001 of ERISA and the
terms “current value” and “present value” have the meaning specified in
Sections 3(26) and 3(27) of ERISA, respectively.
(c)    The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d)    As of January 1, 2019, the expected postretirement benefit obligation
(determined as of the last day of the Company’s most recently ended fiscal year
in accordance with Financial Accounting Standards Board Accounting Standards
Codification Topic 715-60, without regard to liabilities attributable to
continuation coverage mandated by Section 4980B of the Code) of the Company is
not Material.
(e)    The execution and delivery of this Agreement and the issuance and sale of
the Notes at the Closing will not involve any transaction that is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company to each Purchaser in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of such Purchaser’s

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representation in Section 6.2 as to the sources of the funds to be used to pay
the purchase price of the Notes to be purchased by such Purchaser.
(f)    The Company does not have any Non-U.S. Plans.
Section 5.13.    Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered the Notes or any similar Securities for sale
to, or solicited any offer to buy the Notes or any similar Securities from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Purchasers and not more than 10 other Institutional Investors, each of
which has been offered the Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the registration requirements
of Section 5 of the Securities Act or to the registration requirements of any
Securities or blue sky laws of any applicable jurisdiction.
Section 5.14.    Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Notes hereunder as set forth in Schedule 5.14. No
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
Securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 25% of the value of the assets of the Company and the
Company does not have any present intention that margin stock will constitute
more than 25% of the value of such assets. As used in this Section, the terms
“margin stock” and “purpose of buying or carrying” shall have the meanings
assigned to them in said Regulation U.
Section 5.15.    Existing Indebtedness.     (a) Except as described therein,
Schedule 5.15 sets forth a complete and correct list of all outstanding
Indebtedness of the Company as of the date indicated in such Schedule 5.15
(including descriptions of the obligors and obligees, principal amounts
outstanding, any collateral therefor and any Guaranty thereof), since which date
there has been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Indebtedness of the Company. The
Company is not in default, and no waiver of default is currently in effect, in
the payment of any principal or interest on any Indebtedness of the Company and
no event or condition exists with respect to any Indebtedness of the Company
that would permit (or that with notice or the lapse of time, or both, would
permit) one or more Persons to cause such Indebtedness to become due and payable
before its stated maturity or before its regularly scheduled dates of payment.
(b)    The Company is not a party to, or otherwise subject to any provision
contained in, any instrument evidencing Indebtedness of the Company, any
agreement relating thereto or any other agreement (including its charter or any
other organizational document) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Indebtedness of the Company, except as
disclosed in Schedule 5.15.

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Section 5.16.    Foreign Assets Control Regulations, Etc. (a) Neither the
Company nor any Controlled Entity (i) is a Blocked Person, (ii) has been
notified that its name appears or may in the future appear on a State Sanctions
List or (iii) is a target of sanctions that have been imposed by the United
Nations or the European Union.
(b)    Neither the Company nor any Controlled Entity (i) has violated, been
found in violation of, or been charged or convicted under, any applicable U.S.
Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws or
(ii) to the Company’s knowledge, is under investigation by any Governmental
Authority for possible violation of any U.S. Economic Sanctions Laws, Anti-Money
Laundering Laws or Anti-Corruption Laws.
(c)    No part of the proceeds from the sale of the Notes hereunder:
(i)    constitutes or will constitute funds obtained on behalf of any Blocked
Person or will otherwise be used by the Company or any Controlled Entity,
directly or indirectly, (A) in connection with any investment in, or any
transactions or dealings with, any Blocked Person, (B) for any purpose that
would cause any Purchaser to be in violation of any U.S. Economic Sanctions Laws
or (C) otherwise in violation of any U.S. Economic Sanctions Laws;
(ii)    will be used, directly or indirectly, in violation of, or cause any
Purchaser to be in violation of, any applicable Anti-Money Laundering Laws; or
(iii)    will be used, directly or indirectly, for the purpose of making any
improper payments, including bribes, to any Governmental Official or commercial
counterparty in order to obtain, retain or direct business or obtain any
improper advantage, in each case that would be in violation of, or cause any
Purchaser to be in violation of, any applicable Anti-Corruption Laws.
(d)    The Company has established procedures and controls which it reasonably
believes are adequate (and otherwise comply with applicable law) to ensure that
the Company and each Controlled Entity is and will continue to be in compliance
with all applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws and
Anti-Corruption Laws.
Section 5.17.    Status under Certain Statutes. The Company is not subject to
regulation under the Investment Company Act of 1940, the Public Utility Holding
Company Act of 2005, the ICC Termination Act of 1995, or the Federal Power Act.
Section 5.18.    Environmental Matters. The Company is not in violation of any
applicable federal, state or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposal to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or
urea formaldehyde, to the treatment, storage, disposal or management of
hazardous substances (including, without limitation, petroleum, crude oil or any
fraction thereof, or other hydrocarbons), pollutants or contaminants, to
exposure to toxic, hazardous or other controlled, prohibited or regulated
substances which

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violation could, individually or in the aggregate, have a Material Adverse
Effect. The Company has no liability or class of liability under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Section 9601 et seq.), or the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et seq.).
SECTION 6.
REPRESENTATIONS OF THE PURCHASERS    .

Section 6.1.    Purchase for Investment. Each Purchaser severally represents
that it is purchasing the Notes for its own account or for one or more separate
accounts maintained by such Purchaser or for the account of one or more pension
or trust funds and not with a view to the distribution thereof, provided that
the disposition of such Purchaser’s or their property shall at all times be
within such Purchaser’s or their control. Each Purchaser understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes under the Securities Act or list
the Notes on any national securities exchange.
Section 6.2.    Source of Funds. Each Purchaser severally represents that at
least one of the following statements is an accurate representation as to each
source of funds (a “Source”) to be used by such Purchaser to pay the purchase
price of the Notes to be purchased by such Purchaser hereunder:
(a)    the Source is an “insurance company general account” (as the term is
defined in the United States Department of Labor’s Prohibited Transaction
Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as
defined by the annual statement for life insurance companies approved by the
NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by
or on behalf of any employee benefit plan together with the amount of the
reserves and liabilities for the general account contract(s) held by or on
behalf of any other employee benefit plans maintained by the same employer (or
affiliate thereof as defined in PTE 95-60) or by the same employee organization
in the general account do not exceed 10% of the total reserves and liabilities
of the general account (exclusive of separate account liabilities) plus surplus
as set forth in the NAIC Annual Statement filed with such Purchaser’s state of
domicile; or
(b)    the Source is a separate account that is maintained solely in connection
with such Purchaser’s fixed contractual obligations under which the amounts
payable, or credited, to any employee benefit plan (or its related trust) that
has any interest in such separate account (or to any participant or beneficiary
of such plan (including any annuitant)) are not affected in any manner by the
investment performance of the separate account and that therefore the Source is
not and does not include “plan assets” as defined in Section 3(42) of ERISA; or
(c)    the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within
the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the
Company in

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writing pursuant to this Section 6.2(c), no employee benefit plan or group of
plans maintained by the same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled separate account or
collective investment fund; or
(d)    the Source constitutes assets of an “investment fund” (within the meaning
of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM
Exemption), no employee benefit plan’s assets that are managed by the QPAM in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or
by the same employee organization and managed by such QPAM, represent more than
20% of the total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a Person
controlling or controlled by the QPAM maintains an ownership interest in the
Company that would cause the QPAM and the Company to be “related” within the
meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM
and (ii) the names of any employee benefit plans whose assets in the investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within the
meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization, represent 10% or more of the assets of such investment
fund, have been disclosed to the Company in writing pursuant to this Section
6.2(d);or
(e)    the Source constitutes assets of a “plan(s)” (within the meaning of Part
IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset
manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption),
the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a Person controlling or controlled by the INHAM (applying
the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10%
or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this Section 6.2(e); or
(f)    the Source is a governmental plan that is covered neither by ERISA nor
Section 4975 of the Code and neither the purchase of, nor the subsequent holding
of, the Notes will result in, arise from, constitute or involve a transaction
that is prohibited under applicable state or local law; or
(g)    the Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this Section 6.2(g); or
(h)    the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA and not subject to Section 4975 of
the Code.

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As used in this Section 6.2, the terms “employee benefit plan,” “governmental
plan,” and “separate account” shall have the respective meanings assigned to
such terms in Sections 3(3), 3(32) and 3(17) of ERISA, respectively.
Section 6.3.    Accredited Investor. Each Purchaser severally represents that it
is an “accredited investor” as such term is defined in Regulation D promulgated
pursuant to the Securities Act.
SECTION 7.
INFORMATION AS TO COMPANY.    

Section 7.1.    Financial and Business Information. The Company shall deliver to
each holder of a Note that is an Institutional Investor:
(a)    Quarterly Statements — within sixty (60) days (or such shorter period as
is the earlier of (x) 15 days greater than the period applicable to the filing
of the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC
regardless of whether the Company is subject to the filing requirements thereof
and (y) the date by which such financial statements are required to be delivered
under any Material Credit Facility or the date on which such corresponding
financial statements are delivered under any Material Credit Facility if such
delivery occurs earlier than such required delivery date) after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,
(i)    a consolidated and consolidating balance sheet of the Company and its
Restricted Subsidiaries as at the end of such quarter, and
(ii)    consolidated and consolidating statements of income, changes in
shareholders’ equity and cash flows of the Company and its Restricted
Subsidiaries, for such quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments;
(b)    Annual Statements — within one hundred five (105) days (or such shorter
period as is the earlier of (x) 15 days greater than the period applicable to
the filing of the Company’s Annual Report on Form 10-K (the “Form 10-K”) with
the SEC regardless of whether the Company is subject to the filing requirements
thereof and (y) the date by which such financial statements are required to be
delivered under any Material Credit Facility or the date on which such
corresponding financial statements are delivered under any Material Credit
Facility if such delivery occurs earlier than such required delivery date) after
the end of each fiscal year of the Company, duplicate copies of
    

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(i)    a consolidated and consolidating balance sheet of the Company and its
Restricted Subsidiaries as at the end of such year, and
(ii)    consolidated and consolidating statements of income, changes in
shareholders’ equity and cash flows of the Company and its Restricted
Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon (without a “going concern” or similar
qualification or exception and without any qualification or exception as to the
scope of the audit on which such opinion is based) of independent public
accountants of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the circumstances;
(c)    SEC and Other Reports — promptly upon their becoming available, one copy
of (i) each financial statement, report, notice, proxy statement or similar
document sent by the Corporation, the Company or any Subsidiary to its public
Securities holders generally, (ii) each regular or periodic report, each
registration statement that shall have become effective (without exhibits except
as expressly requested by such Purchaser or such holder), and each final
prospectus and all amendments thereto filed by the Corporation or the Company or
any Subsidiary with the SEC, (iii) each annual report filed with the Public
Utilities Commission of the State of California; and (iv)(A) any orders in any
proceedings to which the Company or any of its Subsidiaries is a party, issued
by any Governmental Authority, federal or state, having jurisdiction over the
Company or any of its Subsidiaries and (B) any reports, applications or other
documents filed with the Public Utilities Commission of the State of California
or any other Governmental Authority, federal or state, which (in the case of
each of the matters referred to in subclause (A) and (B)) individually or in the
aggregate, could have, or reflect facts or circumstances which could have, a
Material Adverse Effect; provided, however, that during any periods when the
Corporation is not required to file financial statements with the SEC, the
Corporation shall then furnish to each holder of a Note that is an Institutional
Investor consolidated quarterly and annual financial statements of the
Corporation and its Subsidiaries within the respective periods provided in
Section 7.1(a) and Section 7.1(b);
(d)    Notice of Default or Event of Default — promptly, and in any event within
five (5) Business Days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default, a written notice specifying the
nature and period of existence thereof and what action the Company is taking or
proposes to take with respect thereto;
(e)    Employee Benefits Matters — promptly, and in any event within ten (10)
days after a Responsible Officer becoming aware of any of the following, a
written notice

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setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
(i)    with respect to any Plan, any reportable event, as defined in
section 4043(c) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof that would reasonably be expected to have a Material Adverse Effect;
(ii)    the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan;
(iii)    any event, transaction or condition that could result in the incurrence
of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV
of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant to Title I
or IV of ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then existing,
would reasonably be expected to have a Material Adverse Effect; or
(iv)    receipt of notice of the imposition of a Material financial penalty
(which for this purpose shall mean any tax, penalty or other liability, whether
by way of indemnity or otherwise) with respect to one or more Non-U.S. Plans;
(f)    Resignation or Replacement of Auditors — within ten (10) days following
the date on which the Company’s auditors resign or the Company elects to change
auditors, as the case may be, notification thereof, together with such further
information as the Required Holders may request; and
(g)    Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of the Company or any of its Subsidiaries (including actual
copies of the Form 10‑Q and the Form 10‑K, if applicable) or relating to the
ability of the Company to perform its obligations hereunder and under the Notes
as from time to time may be reasonably requested by any such holder of a Note.
Section 7.2.    Officer’s Certificate. Each set of financial statements
delivered to a holder of a Note pursuant to Section 7.1(a) or Section 7.1(b)
shall be accompanied by a certificate of a Senior Financial Officer:
(a)    Covenant Compliance — setting forth the information from such financial
statements that is required in order to establish whether the Company was in
compliance with the requirements of Section 10 during the quarterly or annual
period covered by the

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financial statements then being furnished (including with respect to each such
provision that involves mathematical calculations, the information from such
financial statements that is required to perform such calculations) and detailed
calculations of the maximum or minimum amount, ratio or percentage, as the case
may be, permissible under the terms of such Section, and the calculation of the
amount, ratio or percentage then in existence. In the event that the Company or
any Subsidiary has made an election to measure any financial liability using
fair value (which election is being disregarded for purposes of determining
compliance with this Agreement pursuant to Section 22.2) as to the period
covered by any such financial statement, such Senior Financial Officer’s
certificate as to such period shall include a reconciliation from GAAP with
respect to such election;
(b)    Event of Default — certifying that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the financial statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto; and
(c)    Subsidiary Guarantors – setting forth a list of all Subsidiaries that are
Subsidiary Guarantors and certifying that each Subsidiary that is required to be
a Subsidiary Guarantor pursuant to Section 9.7 is a Subsidiary Guarantor, in
each case, as of the date of such certificate of Senior Financial Officer.
Section 7.3.    Visitation. The Company shall permit the representatives of each
holder of a Note that is an Institutional Investor:
(a)    No Default — if no Default or Event of Default then exists, at the
expense of such Purchaser or such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with the
Company’s officers, and (with the consent of the Company, which consent will not
be unreasonably withheld) to visit the other offices and properties of the
Company and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; provided, that such visits shall not occur more
frequently than once per calendar year; and
(b)    Default — if a Default or Event of Default then exists, at the expense of
the Company to visit and inspect any of the offices or properties of the Company
or any Subsidiary, to examine all their respective books of account, records,
reports and other papers, to make copies and extracts therefrom, and to discuss
their respective affairs, finances and accounts with their respective officers
and independent public accountants (and by this provision the Company authorizes
said accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be reasonably
requested.

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Section 7.4.    Electronic Delivery. Financial statements, opinions of
independent certified public accountants, other information and Officer’s
Certificates that are required to be delivered by the Company pursuant to
Sections 7.1(a), (b), (c), (d), (e) or (f) and Section 7.2 shall be deemed to
have been delivered if the Company satisfies any of the following requirements
with respect thereto:
(a)    such financial statements satisfying the requirements of Section 7.1(a)
or (b) and related Officer’s Certificate satisfying the requirements of Section
7.2 and any other information required under Section 7.1(c), (d), (e) or (f) are
delivered to each holder of a Note by e-mail at the e-mail address set forth in
such holder’s Purchaser Schedule or as communicated from time to time in a
separate writing delivered to the Company;
(b)    the Company or the Corporation (as applicable) shall have timely filed
such Form 10–Q or Form 10–K, satisfying the requirements of Section 7.1(a) or
Section 7.1(b), as the case may be, with the SEC on EDGAR and shall have made
such form and the related Officer’s Certificate satisfying the requirements of
Section 7.2 available on its home page on the internet, which is located at
https://www.sjwater.com/ as of the date of this Agreement;
(c)    such financial statements satisfying the requirements of Section 7.1(a)
or Section 7.1(b) and related Officer’s Certificate(s) satisfying the
requirements of Section 7.2 and any other information required under Section
7.1(c), (d), (e) or (f) are timely posted by or on behalf of the Company on
IntraLinks or on any other similar website to which each holder of Notes has
free access; or
(d)    the Company or the Corporation (as applicable) shall have timely filed
any of the items referred to in Section 7.1(c) or (f) with the SEC on EDGAR and
shall have made such items available on its home page on the internet or on
IntraLinks or on any other similar website to which each holder of Notes has
free access (including, for the avoidance of doubt, with respect to Section
7.1(f), the filing of a Current Report on Form 8-K prepared in accordance with
the requirements of Form 8-K for disclosing the resignation or replacement of
auditors);
provided however, that in no case shall access to such financial statements,
other information and Officer’s Certificates be conditioned upon any waiver or
other agreement or consent (other than confidentiality provisions consistent
with Section 20 of this Agreement); provided further, that in the case of any of
clauses (b), (c) or (d), the Company shall give each holder of a Note written
notice within the required time period, which may be by e-mail or in accordance
with Section 18, of such posting or filing in connection with each delivery,
provided further, that upon request of any holder to receive paper copies of
such forms, financial statements, other information and Officer’s Certificates
or to receive them by e-mail, the Company will promptly e-mail them or deliver
such paper copies, as the case may be, to such holder.

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SECTION 8.
PAYMENT AND PREPAYMENT OF THE NOTES    .

Section 8.1.    Maturity. As provided therein, the entire unpaid principal
balance of each Note shall be due and payable on the Maturity Date thereof.
Section 8.2.    Optional Prepayments in the Event of Condemnation without
Make-Whole Amount    . The Company may, at its option, upon notice as provided
below, prepay at any time all, or from time to time any part of the Notes, in an
amount not less than $100,000 in aggregate principal amount in the case of a
partial prepayment, in the event of a condemnation (or sale in anticipation of
condemnation) of all or any part of the property of the Company pursuant to the
exercise of the power of eminent domain by any Governmental Authority by
application of the proceeds of such sale or condemnation. Any such prepayment
shall be at a price equal to 100% of the principal amount so prepaid, and
accrued and unpaid interest thereon to the date of such prepayment, without any
Make-Whole Amount or other premium. The Company will give each holder of Notes
written notice of each optional prepayment under this Section 8.2 not less than
ten (10) days and not more than sixty (60) days prior to the date fixed for such
prepayment unless the Company and the Required Holders agree to another time
period pursuant to Section 17. Each such notice shall specify such date (which
shall be a Business Day), the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.4), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid.
Section 8.3.    Optional Prepayments. (a) The Company may, at its option, upon
notice as provided in this Section 8.3(a), prepay at any time prior to October
1, 2048 (six months prior to the Maturity Date)(the “Par Call Date”), all, or
from time to time any part of the Notes, in an amount not less than $100,000 in
aggregate principal amount of the Notes in the case of a partial prepayment, at
100% of the principal amount so prepaid, together with accrued and unpaid
interest thereon to the date of such prepayment, and the Make-Whole Amount
determined for the prepayment date with respect to such principal amount. The
Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.3(a) not less than ten (10) days and not more
than sixty (60) days prior to the date fixed for such prepayment unless the
Company and the Required Holders agree to another time period pursuant to
Section 17. Each such notice shall specify such date (which shall be a Business
Day), the aggregate principal amount of the Notes to be prepaid on such date,
the principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.4), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Senior Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth the details
of such computation. Two (2) Business Days prior to such prepayment, the Company
shall deliver to each holder of Notes a certificate of a Senior Financial
Officer specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.

(b) The Company may also, at its option, upon notice as provided in this Section
8.3(b), prepay at any time on or after the Par Call Date all, or from time to
time any part of the Notes, in an amount not less than $100,000 in aggregate
principal amount of the Notes in the case

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of a partial prepayment, at 100% of the principal amount so prepaid, together
with accrued and unpaid interest thereon to the date of such prepayment. The
Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.3(b) not less than ten (10) days and not more
than sixty (60) days prior to the date fixed for such prepayment unless the
Company and the Required Holders agree to another time period pursuant to
Section 17. Each such notice shall specify such date (which shall be a Business
Day), the aggregate principal amount of the Notes to be prepaid on such date,
the principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.4) and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid.
Section 8.4.    Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes pursuant to Section 8.2 or Section 8.3, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
Section 8.5.    Maturity; Surrender, Etc. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the Make-Whole Amount, if any. From and after such date, unless the Company
shall fail to pay such principal amount when so due and payable, together with
the interest and Make-Whole Amount, if any, as aforesaid, interest on such
principal amount shall cease to accrue. Any Note paid or prepaid in full shall
be surrendered to the Company and cancelled and shall not be reissued, and no
Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.6.    Purchase of Notes. The Company will not and will not permit any
Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with this Agreement and the Notes or
(b) pursuant to an offer to purchase made by the Company or an Affiliate pro
rata to the holders of all Notes at the time outstanding upon the same terms and
conditions. Any such offer shall provide each holder with sufficient information
to enable it to make an informed decision with respect to such offer, and shall
remain open for at least fifteen (15) Business Days. If the holders of more than
10% of the principal amount of the Notes then outstanding accept such offer, the
Company shall promptly notify the remaining holders of Notes of such fact and
the expiration date for the acceptance by holders of Notes of such offer shall
be extended by the number of days necessary to give each such remaining holder
of Notes at least five (5) Business Days from its receipt of such notice to
accept such offer. The Company will promptly cancel all Notes acquired by it or
any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant
to this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
Section 8.7.    Make-Whole Amount.

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The term “Make-Whole Amount” means, with respect to any Note or any part or
portion thereof, an amount equal to the excess, if any, of the Discounted Value
of the Remaining Scheduled Payments with respect to the Called Principal of such
Note over the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:
“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.3 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.
“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
“Reinvestment Yield” means, with respect to the Called Principal of any Note,
the sum of (a) 0.50% (50 basis points) plus (b) the yield to maturity implied by
the “Ask Yield(s)” reported as of 10:00 a.m. (New York City time) on the second
Business Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as “Page PX1” (or such other display as may
replace Page PX1) on Bloomberg Financial Markets for the most recently issued
actively traded on-the-run U.S. Treasury securities (“Reported”) having a
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. If there are no such U.S. Treasury securities Reported having a
maturity equal to such Remaining Average Life, then such implied yield to
maturity will be determined by (i) converting U.S. Treasury bill quotations to
bond equivalent yields in accordance with accepted financial practice and
(ii) interpolating linearly between the “Ask Yields” Reported for the applicable
most recently issued actively traded on-the-run U.S. Treasury securities with
the maturities (1) closest to and greater than such Remaining Average Life and
(2) closest to and less than such Remaining Average Life. The Reinvestment Yield
shall be rounded to the number of decimal places as appears in the interest rate
of the applicable Note.
If such yields are not Reported or the yields Reported as of such time are not
ascertainable (including by way of interpolation), then “Reinvestment Yield”
means, with respect to the Called Principal of any Note, the sum of (x) 0.50%
(50 basis points) plus (y) the yield to maturity implied by the U.S. Treasury
constant maturity yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (or any comparable successor publication) for the U.S. Treasury constant
maturity having a term equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. If there is no such U.S. Treasury constant
maturity having a term equal to such Remaining Average Life, such implied yield
to maturity will be determined by interpolating linearly between (1) the U.S.
Treasury constant maturity so reported with the term closest to and greater than
such Remaining Average Life and (2) the U.S. Treasury constant maturity so
reported with the term closest to and less than such Remaining

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Average Life. The Reinvestment Yield shall be rounded to the number of decimal
places as appears in the interest rate of the applicable Note.
“Remaining Average Life” means, with respect to any Called Principal, the number
of years obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of
years, computed on the basis of a 360-day year comprised of twelve 30-day months
and calculated to two decimal places, that will elapse between the Settlement
Date with respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under such Note, then the amount of the next succeeding
scheduled interest payment will be reduced by the amount of interest accrued to
such Settlement Date and required to be paid on such Settlement Date pursuant to
Section 8.3 or Section 12.1.
“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.3 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
Section 8.8.    Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding, (x) except as set forth in clause
(y), any payment of interest on any Note that is due on a date that is not a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day; and (y) any payment of principal of or Make-Whole
Amount on any Note (including principal due on the Maturity Date of such Note)
that is due on a date that is not a Business Day shall be made on the next
succeeding Business Day and shall include the additional days elapsed in the
computation of interest payable on such next succeeding Business Day.
SECTION 9.
AFFIRMATIVE COVENANTS.    

The Company covenants that, so long as any of the Notes are outstanding:
Section 9.1.    Compliance with Laws. Without limiting Section 10.3, the Company
will, and will cause each of its Restricted Subsidiaries to, comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject (including the Occupational Safety and Health Act of 1970, as amended,
ERISA, Environmental Laws, the USA PATRIOT Act and the other laws and
regulations that are referred to in Section 5.16) and will obtain and maintain
in effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect

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such licenses, certificates, permits, franchises and other governmental
authorizations would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 9.2.    Insurance. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated. Nothing contained in this Section 9.2 shall
prevent the Company or any Restricted Subsidiary from self-insuring against any
such risk so long as (i) any such self-insurance does not exceed prudent levels
for a company the size of the Company and its Restricted Subsidiaries taken as a
whole, and operating in its industry, (ii) at any time an Event of Default
exists, no such self-insurance shall be increased from the self-insurance in
effect immediately prior to the occurrence of such Event of Default including
any increase resulting from lowering coverage limits or increasing deductible
amounts and (iii) the Company, pursuant to a plan maintained in accordance with
GAAP, maintains accounting reserves that are adequate for the type and amount of
self-insurance; provided, however, that the level of self-insurance shall not
exceed an amount which would require such reserves in excess of 5% of
Consolidated Net Worth.
Section 9.3.    Maintenance of Properties. The Company will, and will cause each
of its Restricted Subsidiaries to, maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times, provided that
this Section 9.3 shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 9.4.    Payment of Taxes. The Company will, and will cause each of its
Restricted Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges or levies
payable by any of them, to the extent the same have become due and payable and
before they have become delinquent, provided that neither the Company nor any
Restricted Subsidiary need pay any such tax, assessment, charge or levy if
(i) the amount, applicability or validity thereof is contested by the Company or
such Restricted Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Restricted Subsidiary has established adequate
reserves therefor in accordance with GAAP on the books of the Company or such
Restricted Subsidiary or (ii) the nonpayment of all such taxes, assessments,
charges and levies would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 9.5.    Corporate Existence, Etc. Subject to Section 10.1, the Company
will at all times preserve and keep its corporate existence in full force and
effect. Subject to Section 10.1, the Company will at all times preserve and keep
in full force and effect the corporate (or

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equivalent) existence of each of its Restricted Subsidiaries (unless merged into
the Company or a Restricted Subsidiary) and all rights and franchises of the
Company and its Restricted Subsidiaries unless, in the good faith judgment of
the Company, the termination of or failure to preserve and keep in full force
and effect such corporate existence, right or franchise would not, individually
or in the aggregate, have a Material Adverse Effect.
Section 9.6.    Books and Records. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain proper books of record and account in
conformity with GAAP in all material respects and all applicable requirements of
any Governmental Authority having legal or regulatory jurisdiction over the
Company or such Restricted Subsidiary, as the case may be. The Company will, and
will cause each of its Restricted Subsidiaries to, keep books, records and
accounts which, in reasonable detail, accurately reflect all transactions and
dispositions of assets. The Company and its Restricted Subsidiaries have devised
a system of internal accounting controls sufficient to provide reasonable
assurances that their respective books, records, and accounts accurately reflect
all transactions and dispositions of assets and the Company will, and will cause
each of its Restricted Subsidiaries to, continue to maintain such system.
Section 9.7.    Subsidiary Guarantors. (a)     The Company will cause each of
its Restricted Subsidiaries that guarantees or otherwise becomes liable at any
time, whether as a borrower or an additional or co-borrower or otherwise, for or
in respect of any Indebtedness under any Material Credit Facility to
concurrently therewith:
(i)    enter into an agreement in form and substance satisfactory to the
Required Holders providing for the guaranty by such Restricted Subsidiary, on a
joint and several basis with all other such Restricted Subsidiaries, of (x) the
prompt payment in full when due of all amounts payable by the Company pursuant
to the Notes (whether for principal, interest, Make-Whole Amount or otherwise)
and this Agreement, including all indemnities, fees and expenses payable by the
Company thereunder and (y) the prompt, full and faithful performance, observance
and discharge by the Company of each and every covenant, agreement, undertaking
and provision required pursuant to the Notes or this Agreement to be performed,
observed or discharged by it (a “Subsidiary Guaranty”); and
(ii)    deliver the following to each holder of a Note:
(A)    an executed counterpart of such Subsidiary Guaranty;
(B)    a certificate signed by an authorized responsible officer of such
Restricted Subsidiary containing representations and warranties on behalf of
such Restricted Subsidiary to the same effect, mutatis mutandis, as those
contained in Sections 5.1, 5.2, 5.6 and 5.7 of this Agreement (but with respect
to such Restricted Subsidiary and such Subsidiary Guaranty rather than the
Company);
(C)    all documents as may be reasonably requested by the Required Holders to
evidence the due organization, continuing existence and, where applicable, good
standing of such Restricted Subsidiary and the due authorization

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by all requisite action on the part of such Restricted Subsidiary of the
execution and delivery of such Subsidiary Guaranty and the performance by such
Restricted Subsidiary of its obligations thereunder; and
(D)    an opinion of counsel reasonably satisfactory to the Required Holders
covering such matters relating to such Restricted Subsidiary and such Subsidiary
Guaranty as the Required Holders may reasonably request.
(b)    At the election of the Company and by written notice to each holder of
Notes, any Subsidiary Guarantor may be discharged from all of its obligations
and liabilities under its Subsidiary Guaranty and shall be automatically
released from its obligations thereunder without the need for the execution or
delivery of any other document by the holders, provided that (i) if such
Subsidiary Guarantor is a guarantor or is otherwise liable for or in respect of
any Material Credit Facility, then such Subsidiary Guarantor has been released
and discharged (or will be released and discharged concurrently with the release
of such Subsidiary Guarantor under its Subsidiary Guaranty) under such Material
Credit Facility, (ii) at the time of, and after giving effect to, such release
and discharge, no Default or Event of Default shall be existing, (iii) no amount
is then due and payable under such Subsidiary Guaranty, (iv) if in connection
with such Subsidiary Guarantor being released and discharged under any Material
Credit Facility, any fee or other form of consideration is given to any holder
of Indebtedness under such Material Credit Facility for such release, the
holders of the Notes shall receive equivalent consideration substantially
concurrently therewith and (v) each holder shall have received a certificate of
a Responsible Officer certifying as to the matters set forth in clauses (i)
through (iv).
SECTION 10.
NEGATIVE COVENANTS.    

The Company covenants that, so long as any of the Notes are outstanding:
Section 10.1.    Merger, Consolidations and Sales of Assets. (a) The Company
will not, and will not permit any Restricted Subsidiary to, (i) consolidate with
or be a party to a merger with any other Person or (ii) sell, lease or otherwise
dispose of all or any substantial part (as defined in paragraph (d) of this
Section 10.1) of the assets of the Company and its Restricted Subsidiaries,
provided, however, that:
(A)    any Restricted Subsidiary may merge or consolidate with or into the
Company or any other Restricted Subsidiary so long as in any merger or
consolidation involving the Company, the Company shall be the surviving or
continuing corporation;
(B)    any Restricted Subsidiary may merge or consolidate with any other
corporation so long as the surviving or continuing corporation shall be a
Restricted Subsidiary;
(C)    the Company may consolidate or merge with any other corporation so long
as (i) the corporation which results from such merger or consolidation shall

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be incorporated under the laws of the United States or any state thereof, have
substantially all of its assets and the assets of its Subsidiaries located
within the United States and be engaged principally in the ownership and
operation of a regulated public utility, (ii) the resulting corporation, if
other than the Company, shall execute and deliver to the holders of the Notes an
agreement satisfactory in form and substance to such holders ratifying and
confirming this Agreement and the Notes and expressly assuming the due and
punctual payment of the principal and Make‑Whole Amount, if any, and interest on
all of the Notes, according to their tenor, and the due and punctual performance
and observance of all of the covenants in the Notes and this Agreement to be
performed and observed by the Company, (iii) at the time of such consolidation
or merger and after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing, (iv) after giving effect to such consolidation
or merger, the surviving corporation would be permitted to incur at least $1.00
of additional Funded Debt pursuant to paragraph (iv) of Section 10.5(a) and
(v) the surviving corporation shall deliver to the holders of the Notes an
opinion, satisfactory in form and substance to the holders of the Notes, of
counsel satisfactory to the holders of the Notes, to the effect that all
requirements of this Section 10.1(a)(C) have been satisfied; and
(D)    nothing contained herein shall apply to or operate to prevent the sale of
any property of the Company or any Restricted Subsidiary taken by eminent domain
or sold in lieu of, and in reasonable anticipation of, a taking by eminent
domain.
(b)    Except for the purpose of qualifying directors, the Company will not
permit any Restricted Subsidiary to issue or sell (i) any shares of Preferred
Stock of such Restricted Subsidiary or any Indebtedness of such Restricted
Subsidiary to any Person other than the Company or another Restricted Subsidiary
or (ii) any shares of common stock of such Restricted Subsidiary to any Person
other than the Company, another Restricted Subsidiary or another Person who was
a holder of such common stock at the time such Restricted Subsidiary became a
Restricted Subsidiary and who holds validly pre-existing preemptive rights to
acquire such common stock and to whom such common stock is issued (x) solely in
satisfaction of such pre-existing preemptive rights and (y) solely in connection
with the simultaneous issuance of stock to the Company and/or a Restricted
Subsidiary whereby the Company and/or such Restricted Subsidiary maintain their
same proportionate interest in such Restricted Subsidiary, or (iii) any shares
of stock of any other class (including as “stock” for the purposes of this
Section 10.1(b), any warrants, rights or options to purchase or otherwise
acquire stock or other securities exchangeable for or convertible into stock).
(c)    Except as otherwise expressly provided in Section 10.1(e) the Company
will not sell, transfer or otherwise dispose of any shares of stock of any
Restricted Subsidiary (except for directors’ qualifying shares) or any
Indebtedness of any Restricted Subsidiary, and will not permit any Restricted
Subsidiary to sell, transfer or otherwise dispose of (except to the Company or a
Restricted Subsidiary) any shares of stock or any Indebtedness of any other
Restricted Subsidiary, unless:

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(i)    simultaneously with such sale, transfer, or disposition, all shares of
stock and all Indebtedness of such Restricted Subsidiary at the time owned by
the Company and by every other Restricted Subsidiary shall be sold, transferred
or disposed of as an entirety;
(ii)    the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that the retention of said shares of stock
and Indebtedness is no longer in the best interests of the Company;
(iii)    said shares of stock and Indebtedness are sold, transferred or
otherwise disposed of to a Person for a cash consideration and on terms
reasonably deemed by the Board of Directors to be adequate and satisfactory;
(iv)     the Restricted Subsidiary being disposed of shall not have any
continuing investment in the Company or any other Restricted Subsidiary not
being simultaneously disposed of; and
(v)    such sale or other disposition does not involve a substantial part (as
hereinafter defined) of the assets of the Company and its Restricted
Subsidiaries.
(d)    As used in this Section 10.1, a sale, lease or other disposition of stock
of a Restricted Subsidiary or assets shall be deemed to be a “substantial part”
of the assets of the Company and its Restricted Subsidiaries if either:
(i)    after eliminating the portions of Consolidated Net Income (excluding
losses) which were contributed, during the four quarterly fiscal periods
immediately preceding such sale, lease or other disposition for which figures
are available, by (x) such Restricted Subsidiary or assets, (y) each other
Restricted Subsidiary which has been disposed of during such four quarterly
fiscal periods and (z) other assets of the Company and its Restricted
Subsidiaries disposed of during such four quarterly fiscal periods (other than
the sale, abandonment or other disposition of inventory in the ordinary course
of business), the Company could not have incurred $1.00 of additional Funded
Debt pursuant to paragraph (iv) of Section 10.5(a) or declared or made a
Restricted Payment pursuant to Section 10.8 as of the last day of such four
quarterly fiscal periods; or
(ii)    the book value of the stock of such Restricted Subsidiary or such
assets, when added to the book value of all other assets sold, leased or
otherwise disposed of by the Company and its Restricted Subsidiaries (other than
in the ordinary course of business) during the 12-month period ending on the
date of such proposed sale, lease or other disposition, exceeds 10% of
Consolidated Total Assets, determined as of the end of the immediately preceding
fiscal year.
(e)    The provisions of this Section 10.1 shall not apply or operate to prevent
any sale or other disposition of a substantial part of the assets of the Company
and its Restricted Subsidiaries if written notice to the holders of the Notes is
given within sixty (60) days

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after the effective date of such sale or other disposition (the “Sale Date”)
describing such sale or other disposition in reasonable detail and setting forth
a computation of the net proceeds which have been received by the Company and
either:
(i)    the Company offers to apply such net proceeds, if any, to the pro rata
redemption of the Notes and other senior Funded Debt of the Company on that date
(the “Redemption Date”) which is not more than one hundred twenty (120) days
after the Sale Date at the price required by Section 8.3 together with accrued
interest thereon to the Redemption Date and makes the tendered redemption of all
Notes and other senior Funded Debt of the Company held by holders who have
accepted such tender by notice in writing given to the Company not less than
thirty (30) days prior to the Redemption Date, or
(ii)    within one hundred eighty (180) days after the Sale Date, the Company
reinvests such net proceeds in other properties or assets that are not
encumbered by Liens that are not permitted under Section 10.4 and which are to
be used by, or are useful to, the Company or a Restricted Subsidiary in its
normal business activities, provided that if the assets as sold were
unencumbered, the assets purchased with such net proceeds shall be unencumbered.
Section 10.2.    Line of Business. Neither the Company nor any Restricted
Subsidiary will engage in any business if, as a result, the general nature of
the business (including but not limited to water reclamation and sewage
treatment), taken on a consolidated basis, which would then be engaged in by the
Company and its Restricted Subsidiaries would be substantially changed from the
general nature of the business engaged in by the Company and its Restricted
Subsidiaries as of the Closing.
Section 10.3.    Economic Sanctions, Etc. The Company will not, and will not
permit any Controlled Entity to, (a) become (including by virtue of being owned
or controlled by a Blocked Person), own or control a Blocked Person or (b)
directly or indirectly have any investment in or engage in any dealing or
transaction (including any investment, dealing or transaction involving the
proceeds of the Notes) with any Person if such investment, dealing or
transaction (i) would cause any holder or any affiliate of such holder to be in
violation of, or subject to sanctions under, any law or regulation applicable to
such holder, or (ii) is prohibited by or subject to sanctions under any U.S.
Economic Sanctions Laws.
Section 10.4.    Limitation on Liens. The Company will not, and will not permit
any Restricted Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Restricted Subsidiary to acquire, any property or
assets upon conditional sales agreements or other title retention devices,
without making effective provisions whereby all of the Notes shall be directly
secured equally and ratably with all of the other obligations secured thereby
(and providing to the holders of the Notes an opinion satisfactory in form and
substance to the

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holders of the Notes from counsel satisfactory to the holders of the Notes to
the effect that the Notes are so secured) except:
(a)     Liens for property taxes and assessments or governmental charges or
levies and Liens securing claims or demands of mechanics and materialmen,
provided that payment thereof is not at the time required by Section 9.4;
(b)     Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in respect
of which the Company or a Subsidiary shall at any time in good faith be
prosecuting an appeal or proceeding for a review and in respect of which a stay
of execution pending such appeal or proceeding for review shall have been
secured;
(c)    Liens incidental to the conduct of business or the ownership of
properties and assets (including but not limited to warehousemen's and
attorneys' liens and statutory landlords' liens) and specific Liens including
but not limited to pledges of Securities to secure deposits, and other Liens
incurred in the ordinary course of business and not in connection with the
borrowing of money; provided in each case the obligation secured is not overdue
or, if overdue, is being contested in good faith by appropriate actions or
proceedings the effect of which is to stay or prevent enforcement of such Lien;
(d)    minor survey exceptions or minor encumbrances, easements or reservations,
or rights of others for rights-of-way, utilities and other similar purposes, or
zoning or other restrictions as to the use of real properties, which are
necessary for the conduct of the activities of the Company and its Subsidiaries
or which customarily exist on properties of corporations or other business
entities engaged in similar activities and similarly situated and which do not
in any event, individually or in the aggregate, materially impair their use in
the operation of the business of the Company and its Restricted Subsidiaries;
(e)     Liens existing on fixed assets at the time of acquisition thereof by the
Company or a Subsidiary or Liens existing on fixed assets owned by a business
entity at the time such entity is acquired by the Company or a Subsidiary;
provided that (i) any such Lien shall attach only to the fixed assets so
acquired or to the fixed assets owned by the business entity so acquired, as the
case may be, (ii) the Lien and the Indebtedness secured thereby shall not have
been incurred in contemplation of the acquisition, and (iii) all Indebtedness
secured by any such Lien shall have been incurred within the applicable
limitations of Section 10.5;
(f)     in the event of a consolidation or merger of the Company in compliance
with Section 10.1(c) where the surviving corporation is not the Company (the
surviving corporation being the “Acquiring Corporation”), Liens existing on
assets of the Acquiring Corporation and its subsidiaries at the time of the
consolidation or merger, as the case may be, so long as (i) the Lien shall
attach only to the assets to which the Lien was attached at the time of the
consolidation or merger, and (ii) the Lien and the Indebtedness secured thereby
shall not have been incurred in contemplation of such consolidation or merger;

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(g)    Liens securing Indebtedness of a Restricted Subsidiary to the Company;
(h)    Liens existing as of the date of the Closing and set forth on Schedule
10.4;
(i)    Liens incurred after the date of the Closing given to secure the payment
of the purchase price incurred in connection with the acquisition of fixed
assets useful and intended to be used in carrying on the business of the Company
or a Restricted Subsidiary, including Finance Leases; provided that (i) the Lien
shall attach solely to the fixed assets purchased, (ii) at the time of
acquisition of such fixed assets, the aggregate amount remaining unpaid on all
Indebtedness secured by Liens on such fixed assets whether or not assumed by the
Company or a Restricted Subsidiary shall not exceed an amount equal to 100% of
the lesser of the total purchase price or fair market value at the time of
acquisition of such fixed assets (as determined in good faith by the Board of
Directors of the Company), (iii) the aggregate of all amounts so financed
outstanding at any time on and after the date of the Closing by the Company and
its Restricted Subsidiaries shall not exceed the greater of (A) $10,000,000 or
(B) 10% of Consolidated Net Worth, and (iv) all such Indebtedness shall have
been incurred within the applicable limitations provided in Section 10.5;
(j)    Liens on the property of the Company securing its mortgage bonds issued
pursuant to a mortgage bond indenture or other governing instrument; provided,
that (A) such mortgage bond indenture or governing instrument shall have been
consented to in writing by the Required Holders and (B) provision shall have
been made concurrently with the issuance of any such mortgage bonds for the
Notes to be equally and ratably secured by the Lien securing such mortgage
bonds; and
(k)    renewals and extensions of Liens permitted pursuant to clauses (a)
through (j) of this Section 10.4 given to secure the renewal, extension or
replacement of the Indebtedness secured thereby without increase in the
principal amount of such Indebtedness outstanding at the time of such renewal,
extension or replacement, which Liens attach solely to the property theretofore
securing such Indebtedness.
Notwithstanding the foregoing provisions of this Section 10.4, the Company shall
not, and shall not permit any Restricted Subsidiary to, create or incur, or
suffer to be incurred or to exist, any Lien securing obligations owing under any
Material Credit Facility on or with respect to any property or asset (including,
without limitation, any document or instrument in respect of goods or accounts
receivable) of the Company or any Restricted Subsidiary, whether now owned or
held or hereafter acquired, or any income or profits therefrom, unless the
Company or such Restricted Subsidiary makes effective provision whereby the
Notes shall be equally and ratably with all such obligations pursuant to such
agreements (including, without limitation, an intercreditor agreement),
certificates, legal opinions, showings and other instruments reasonably
satisfactory to the holders as such holders may reasonably require to evidence
and retain the pari passu ranking of the obligations of the Company with respect
to the Notes and such Material Credit Facility.

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Section 10.5.    Limitations on Indebtedness. (a) The Company will not, and will
not permit any Restricted Subsidiary to, create, assume, incur or guarantee or
in any manner be or become liable in respect of any Indebtedness, except:
(i)    Indebtedness evidenced by the Notes;
(ii)    Debt of the Company and its Restricted Subsidiaries outstanding as of
the date of the Closing as described in Schedule 5.15;
(iii)    unsecured Current Debt of the Company (A) under a bank credit facility
or (B) to the Corporation or any subsidiaries of the Corporation; provided, that
if at the time any such Current Debt is incurred and after giving effect to such
incurrence, the outstanding Additional Funded Debt of the Company, if any, shall
be increased, the increased amount of such Additional Funded Debt would be
allowed to be incurred under clause (iv) of this Section 10.5(a);
(iv)    any other Funded Debt of the Company, provided that at the time of
issuance thereof and after giving effect to the issuance thereof and to the
application of the proceeds thereof:
(A)    Consolidated Funded Debt shall not exceed 66-2/3% of Total
Capitalization; and
(B)    Consolidated Net Income Available for Interest Charges for any period of
12 consecutive calendar months within the 15 consecutive calendar months
immediately preceding the issuance of such Funded Debt shall be equal to or
exceed 175% of Pro Forma Interest Charges;
(v)    Debt of a Restricted Subsidiary to the Company;
(vi)    any other Debt of Restricted Subsidiaries; provided that at the time of
issuance thereof and after giving effect to the issuance thereof and to the
application of the proceeds thereof, the aggregate unpaid principal amount of
all Debt of Restricted Subsidiaries other than Debt of Restricted Subsidiaries
to the Company, shall not exceed 10% of Consolidated Debt;
(vii)    any other Indebtedness of the Company which is not Debt;
(viii)    any other Indebtedness of Restricted Subsidiaries which is not Debt;
and
(ix)    Indebtedness incurred to refinance or refund the Indebtedness allowed
under clauses (i) to (vi) of this Section 10.5(a) provided that at the time of
issuance thereof and after giving effect to the issuance thereof and to the
application of proceeds thereof, such refinancing or refunding will not increase
the previously existing principal amount of the Indebtedness outstanding.

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(b)    Any corporation which becomes a Restricted Subsidiary after the date of
the Closing shall for all purposes of this Section 10.5 be deemed to have
created, assumed, guaranteed or incurred at the time it becomes a Restricted
Subsidiary all Indebtedness of such corporation existing immediately after it
becomes a Restricted Subsidiary.
Section 10.6.    Guaranties. The Company will not, and will not permit any
Restricted Subsidiary to, become or be liable in respect of any Guaranty except
Guaranties by the Company or a Restricted Subsidiary (so long as Section 10.5 is
complied with) which are limited in amount to a stated maximum dollar exposure
and included in Consolidated Indebtedness.
Section 10.7.    Investments. The Company will not, and will not permit any
Restricted Subsidiary to, make or have outstanding any Investments, other than:
(a)Investments by the Company and its Restricted Subsidiaries in and to
Restricted Subsidiaries, including any Investment in a corporation which
concurrently with such Investment, will become a Restricted Subsidiary;
(b)Investments in direct obligations of the United States of America or any
agency or instrumentality of the United States of America, the payment or
guarantee of which constitutes a full faith and credit obligation of the United
States of America, in either case, maturing in 12 months or less from the date
of acquisition thereof;
(c)Investments in certificates of deposit maturing within one year from the date
of acquisition thereof, issued by a bank or trust company organized under the
laws of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $200,000,000 and whose long-term
certificates of deposit are, at the time of acquisition thereof, rated “A” or
better by S&P or “A2” or better by Moody's;
(d)Investments in commercial paper maturing in two hundred seventy (270) days or
less from the date of issuance which, at the time of acquisition by the Company
or any Restricted Subsidiary, is accorded the highest rating by S&P or Moody's
or is issued by a corporation organized under the laws of the United States or
any state thereof with outstanding corporate debt obligations which are rated
“AA” or better by S&P, or “Aa2” or better by Moody's;
(e)receivables arising from the sale of goods and services in the ordinary
course of business of the Company and its Restricted Subsidiaries;
(f)Investments in Securities received in settlement of any Indebtedness arising
in the ordinary course of business of the Company or any Restricted Subsidiary;
provided that the aggregate amount of all such Investments at any time
outstanding shall not exceed the greater of (A) $5,000,000 or (B) 5% of
Consolidated Net Worth;
(g)Investments in (i) money market mutual funds, (ii) mutual funds invested
primarily in corporate debt obligations which are rated “AA” or better by S&P or
“Aa2” or better by Moody's, and (iii) corporate debt obligations rated “AA” or
better by S&P or

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“Aa2” or better by Moody's, or preferred stock of a Person with the ratings
described for corporate debt; provided, that in no event shall (x) any such
corporate debt obligations held outside a mutual fund be in the form of
adjustable or variable rate securities and (y) more than 5% of the assets of any
such mutual fund be in the form of adjustable or variable rate securities; and
provided, further, that the aggregate of all Investments referred to in this
Section 10.7(g) shall not exceed 7.5% of Consolidated Net Worth; and
(h)other Investments (in addition to those permitted by the foregoing provisions
of this Section 10.7); provided that at the time of acquisition thereof the
aggregate amount of all such other Investments owned by the Company and its
Restricted Subsidiaries shall not exceed an amount equal to 10% of Consolidated
Net Worth.
In addition to the foregoing restrictions, the Company will not, and will not
permit any Restricted Subsidiary to, make any Investments, other than
Investments described in clauses (a) through (f) of this Section 10.7, if, after
giving effect thereto, a Default or an Event of Default shall have occurred and
be continuing.
In valuing any Investments for the purpose of applying the limitations set forth
in this Section 10.7, such Investments shall be taken at the original cost
thereof, without allowance for any subsequent write-offs or appreciation or
depreciation therein, but less any amount repaid or recovered on account of
capital or principal, except that for purposes of computing Consolidated Net
Worth and Consolidated Total Assets, Investments shall be valued in accordance
with GAAP.
For purposes of this Section 10.7, at any time when a corporation or other
business entity becomes a Restricted Subsidiary, all Investments of such
corporation or other business entity at such time shall be deemed to have been
made by such corporation or other business entity, as a Restricted Subsidiary,
at such time; provided, however, that the Investments of a corporation or other
business entity that becomes a Restricted Subsidiary existing at such time that
it becomes a Restricted Subsidiary shall not be prohibited under this Section
10.7 until the later to occur of sixty (60) days after such corporation or other
business entity becomes a Restricted Subsidiary or the stated maturity of such
Investment.
Section 10.8.    Restricted Payments The Company will not and will not permit
any of its Restricted Subsidiaries to:
(a)    declare or pay any dividend or other distribution, either in cash or
property, on any shares of its capital stock of any class (except dividends or
other distributions payable solely in shares of capital stock of the Company or
any dividends or distributions payable by a Restricted Subsidiary to a
Wholly-Owned Restricted Subsidiary or to the Company);
(b)    directly or indirectly, or through any Subsidiary, purchase, redeem,
retire or acquire any shares of its capital stock of any class or any warrants,
rights or options to purchase or acquire any shares of its capital stock (other
than repurchases of capital stock of the Company from employees who leave or
retire from the Company or any Restricted Subsidiary); or

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(c)    directly or indirectly, or through any Subsidiary, defease, redeem,
repurchase or otherwise acquire or retire prior to maturity any Indebtedness
ranked subordinate in right of payment to the Notes; or
(d)    make any other payment or distribution, either directly or indirectly or
through any Subsidiary, in respect of its capital stock (except as permitted in
clauses (a) or (b) of this Section 10.8);
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, such defeasances,
redemptions, repurchases, acquisitions or retirements of Indebtedness and all
such other payments or distributions being herein collectively called
“Restricted Payments”) if after giving effect thereto the aggregate amount of
Restricted Payments after December 31, 1991 to and including the date of the
making of the Restricted Payment in question would exceed (i) 100% of
Consolidated Net Income for such period, computed on a cumulative basis for said
entire period, plus (ii) the aggregate net proceeds received by the Company from
the sale subsequent to the date of the Closing of shares of its capital stock or
conversion of its Securities into such shares, plus (iii) $20,000,000.
Nothing contained in the foregoing provisions of this Section 10.8 shall
prohibit the Company from making scheduled payments of dividends on and
redemptions of Preferred Stock of the Company, provided that no Default or Event
of Default shall have occurred and be continuing, but all such payments shall be
taken into account in calculating the permitted amount of Restricted Payments
which the Company or its Restricted Subsidiaries may make from time to time.
The Company will not declare any dividend which constitutes a Restricted Payment
payable more than ninety (90) days after the date of declaration thereof.
In addition to the foregoing restrictions, the Company will not declare or make
any Restricted Payment either in cash or property nor will the Company pay
dividends on or redeem any of its Preferred Stock if, after giving effect
thereto, a Default or an Event of Default shall have occurred and be continuing.
For the purposes of this Section 10.8, the amount of any Restricted Payment
declared, paid or distributed in property shall be deemed to be the greater of
the book value or fair market value (as determined in good faith by the Board of
Directors of the Company) of such property at the time of the making of the
Restricted Payment in question.
Section 10.9.    Transactions with Affiliates. The Company will not, and will
not permit any Restricted Subsidiary to, enter into or be a party to any
transaction, arrangement or understanding with any Affiliate (including, without
limitation, the purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliate), except on reasonable terms
no less favorable to the Company or such Restricted Subsidiary than would be
obtained in a comparable arm’s-length transaction with a Person other than an
Affiliate.

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Section 10.10.    Hazardous Materials. Neither the Company nor any Subsidiary
shall cause or permit any Hazardous Material to exist on or discharge from any
property owned or used by the Company or any Subsidiary which would result in
any Lien upon any of its properties (whether originating thereon or migrating to
such property from other property). The Company shall promptly: (a) pay any
claim against the Company or any Subsidiary or any of such properties,
(b) remove any Lien upon any such property, and (c) indemnify and hold each
Purchaser harmless from any and all loss, damage or expense, including the fees
and expenses of any environmental engineering or clean-up firm, resulting from
any Hazardous Material which exists on or is discharged from any such
properties. The Company shall notify each Purchaser of any condition or
occurrence at, on, or arising from any such properties that results in
noncompliance with any Environmental Law within ten (10) days after the Company
first has knowledge of such condition or occurrence. The Company and each
Subsidiary shall comply, and cause each of its properties to comply with all
Environmental Laws, and shall promptly undertake or cause to be undertaken any
cleanup, removal, remedial or other action required by Hazardous Material
discharged from any of its properties. Notwithstanding the foregoing provisions
of this Section 10.10, none of the aforementioned events or circumstances shall
constitute a default by the Company in its obligations hereunder unless such
event or circumstance could have a Material Adverse Effect. In addition, nothing
in this Section 10.10 shall be deemed to prevent the Company from contesting any
such claim or Lien in good faith by appropriate proceedings which will prevent
the forfeiture or sale of any property of the Company or any Subsidiary or any
material interference with the use thereof by the Company or such Subsidiary.
SECTION 11.    EVENTS OF DEFAULT.
An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:
(a)    the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b)    the Company defaults in the payment of any interest on any Note for more
than ten (10) days after the same becomes due and payable; or
(c)    the Company defaults in the performance of or compliance with any term
contained in Section 7.1(d) or Sections 10.1, 10.4, 10.5, 10.6, 10.7 or 10.8,
other than any such default which is cured no later than five (5) Business Days
after such default shall first become known to any Responsible Officer of the
Company; or
(d)    the Company or any Subsidiary Guarantor defaults in the performance of or
compliance with any term contained herein (other than those referred to in
Sections 11(a), (b) and (c)) or in any Subsidiary Guaranty and such default is
not remedied within thirty (30) days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any such
written notice to be identified as a “notice of default” and to refer
specifically to this Section 11(d)); or

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(e)    (i) any representation or warranty made in writing by or on behalf of the
Company or by any officer of the Company in this Agreement or any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made or
(ii) any representation or warranty made in writing by or on behalf of any
Subsidiary Guarantor in any Subsidiary Guaranty or made in any writing by or on
behalf of any Subsidiary Guarantor or by any officer of any Subsidiary Guarantor
furnished in connection with the transactions contemplated thereby proves to
have been false or incorrect in any material respect on the date as of which
made; or
(f)    (i) the Company or any Restricted Subsidiary is in default (as principal
or as guarantor or other surety) in the payment of any principal of or premium
or make-whole amount or interest on any Indebtedness (other than the Notes) that
is outstanding in an aggregate principal amount of at least $5,000,000 (or its
equivalent in the relevant currency of payment) beyond any period of grace
provided with respect thereto, or (ii) the Company or any Restricted Subsidiary
is in default in the performance of or compliance with any term of any evidence
of any Indebtedness in an aggregate outstanding principal amount of at least
$5,000,000 (or its equivalent in the relevant currency of payment) or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition, such Indebtedness has
become or has been declared due and payable before its stated maturity or before
its regularly scheduled dates of payment; or
(g)    the Company or any Restricted Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h)    a court or other Governmental Authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its Restricted
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any of its
Restricted Subsidiaries, or any such petition shall be filed against the Company
or any of its Restricted Subsidiaries and such petition shall not be dismissed
within sixty (60) days; or
(i)    any event occurs with respect to the Company or any Restricted Subsidiary
which under the laws of any jurisdiction is analogous to any of the events
described in

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Section 11(g) or Section 11(h); provided that the applicable grace period, if
any, which shall apply shall be the one applicable to the relevant proceeding
which most closely corresponds to the proceeding described in Section 11(g) or
Section 11(h); or
(j)    one or more final judgments for the payment of money aggregating in
excess of $5,000,000 (or its equivalent in the relevant currency of payment),
including any such final judgment enforcing a binding arbitration decision, are
rendered against one or more of the Company and its Restricted Subsidiaries and
which judgments are not, within 60 days after entry thereof, bonded, discharged
or stayed pending appeal, or are not discharged within 60 days after the
expiration of such stay; or
(k)    if (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under
section 412 of the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan or the PBGC shall have notified the Company or
any ERISA Affiliate that a Plan may become a subject of any such proceedings,
(iii) there is any “amount of unfunded benefit liabilities” (within the meaning
of section 4001(a)(18) of ERISA) under one or more Plans, determined in
accordance with Title IV of ERISA, (iv) the aggregate present value of accrued
benefit liabilities under all funded Non-U.S. Plans exceeds the aggregate
current value of the assets of such Non-U.S. Plans allocable to such
liabilities, (v) the Company or any ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans, (vi) the Company or any ERISA Affiliate withdraws from any Multiemployer
Plan, (vii) the Company or any Subsidiary establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a manner
that would increase the liability of the Company or any Subsidiary thereunder,
(viii) the Company or any Subsidiary fails to administer or maintain a Non-U.S.
Plan in compliance with the requirements of any and all applicable laws,
statutes, rules, regulations or court orders or any Non-U.S. Plan is
involuntarily terminated or wound up, or (ix) the Company or any Subsidiary
becomes subject to the imposition of a financial penalty (which for this purpose
shall mean any tax, penalty or other liability, whether by way of indemnity or
otherwise) with respect to one or more Non-U.S. Plans; and any such event or
events described in clauses (i) through (ix) above, either individually or
together with any other such event or events, would reasonably be expected to
have a Material Adverse Effect. As used in this Section 11(k), the terms
“employee benefit plan” and “employee welfare benefit plan” shall have the
respective meanings assigned to such terms in section 3 of ERISA; or
(l)    any Subsidiary Guaranty shall cease to be in full force and effect, any
Subsidiary Guarantor or any Person acting on behalf of any Subsidiary Guarantor
shall contest in any manner the validity, binding nature or enforceability of
any Subsidiary Guaranty, or the obligations of any Subsidiary Guarantor under
any Subsidiary Guaranty are not or cease to be legal, valid, binding and
enforceable in accordance with the terms of such Subsidiary Guaranty.

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SECTION 12.
REMEDIES ON DEFAULT, ETC.

Section 12.1.    Acceleration. (a) If an Event of Default described in
Section 11(g), (h) or (i) (other than an Event of Default described in clause
(i) of Section 11(g) or described in clause (vi) of Section 11(g) by virtue of
the fact that such clause encompasses clause (i) of Section 11(g)) has occurred,
all the Notes then outstanding shall automatically become immediately due and
payable.
(b)    If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at its or their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.
(c)    If any Event of Default described in Section 11(a) or (b) has occurred
and is continuing, any holder or holders of Notes at the time outstanding
affected by such Event of Default may at any time, at its or their option, by
notice or notices to the Company, declare all the Notes held by it or them to be
immediately due and payable.
Upon any Note becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon (including interest accrued thereon at the Default Rate) and (y) the
Make-Whole Amount determined in respect of such principal amount, shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided) and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
Section 12.2.    Other Remedies. If any Default or Event of Default has occurred
and is continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, the holder of any
Note at the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note or any Subsidiary Guaranty, or for an injunction against a violation of any
of the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.
Section 12.3.    Rescission. At any time after any Notes have been declared due
and payable pursuant to Section 12.1(b) or (c), the Required Holders (in the
case of Section 12.1(b)) or the holder or holders of the Notes who have made
such declaration (in the case of Section 12.1(c)), by written notice to the
Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default

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Rate, (b) neither the Company nor any other Person shall have paid any amounts
which have become due solely by reason of such declaration (unless such amounts
have been returned to the Company or such other Person), (c) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (d) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
Section 12.4.    No Waivers or Election of Remedies, Expenses, Etc. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder’s rights, powers or remedies. No right, power or remedy conferred by
this Agreement, any Subsidiary Guaranty or any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15, the
Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including reasonable
attorneys’ fees, expenses and disbursements.
SECTION 13.
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

Section 13.1.    Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. If any holder of one or more Notes
is a nominee, then (a) the name and address of the beneficial owner of such Note
or Notes shall also be registered in such register as an owner and holder
thereof and (b) at any such beneficial owner’s option, either such beneficial
owner or its nominee may execute any amendment, waiver or consent pursuant to
this Agreement. Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and the Company shall not
be affected by any notice or knowledge to the contrary. The Company shall give
to any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
Section 13.2.    Transfer and Exchange of Notes. Upon surrender of any Note to
the Company at the address and to the attention of the designated officer (all
as specified in Section 18(iii)), for registration of transfer or exchange (and
in the case of a surrender for registration of transfer accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
such holder’s attorney duly authorized in writing and accompanied by the address
for notices, payment instruction in the form set out in Schedule 13.2 hereto and
an IRS Form W-9 of each transferee of such Note or part thereof), within ten
(10) Business Days thereafter, the Company shall execute and deliver, at the
Company’s expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the

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surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Schedule 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000; provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations set forth in Section 6.2.
Notwithstanding the foregoing provisions of this Section 13.2, the Company shall
have the right to prevent any transfer otherwise permitted by this Section 13.2
if it reasonably determines that the transfer would result in a prohibited
transaction under ERISA or Section 4975 of the Code for which no exemption is
available.
Section 13.3.    Replacement of Notes. Upon receipt by the Company at the
address and to the attention of the designated officer (all as specified in
Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of
and the loss, theft, destruction or mutilation of any Note (which evidence shall
be, in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and
(a)    in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or any other Institutional Investor, such Person’s
own unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b)    in the case of mutilation, upon surrender and cancellation thereof,
within ten (10) Business Days thereafter, the Company at its own expense shall
execute and deliver, in lieu thereof, a new Note, dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
SECTION 14.
PAYMENTS ON NOTES.

Section 14.1.    Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in San Jose, California at the principal office of the
Company in such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
Section 14.2.    Payment by Wire Transfer. So long as any Purchaser or its
nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, interest and
all other amounts becoming due hereunder by wire transfer at the address
specified for such purpose below such Purchaser’s name in the Purchaser
Schedule, or

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by such other method or at such other address as such Purchaser shall have from
time to time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, such
Purchaser shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office or at the
place of payment most recently designated by the Company pursuant to Section
14.1. Prior to any sale or other disposition of any Note held by a Purchaser or
its nominee, such Purchaser will, at its election, either endorse thereon the
amount of principal paid thereon and the last date to which interest has been
paid thereon or surrender such Note to the Company in exchange for a new Note or
Notes pursuant to Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by a Purchaser under this Agreement and that
has made the same agreement relating to such Note as the Purchasers have made in
this Section 14.2.
Section 14.3.        FATCA Information. By acceptance of any Note, the holder of
such Note agrees that such holder will with reasonable promptness duly complete
and deliver to the Company, or to such other Person as may be reasonably
requested by the Company, from time to time (a) in the case of any such holder
that is a United States Person, such holder’s United States tax identification
number or other Forms reasonably requested by the Company necessary to establish
such holder’s status as a United States Person under FATCA and as may otherwise
be necessary for the Company to comply with its obligations under FATCA and (b)
in the case of any such holder that is not a United States Person, such
documentation prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Code) and such additional documentation as may be
necessary for the Company to comply with its obligations under FATCA and to
determine that such holder has complied with such holder’s obligations under
FATCA or to determine the amount (if any) to deduct and withhold from any such
payment made to such holder. Nothing in this Section 14.3 shall require any
holder to provide information that is confidential or proprietary to such holder
unless the Company is required to obtain such information under FATCA and, in
such event, the Company shall treat any such information it receives as
confidential.
SECTION 15.
EXPENSES, ETC.

Section 15.1.    Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay (x) the reasonable
fees, charges and disbursements of Pillsbury Winthrop Shaw Pittman, LLP, special
counsel to the Purchasers, to the extent reflected in a statement of such
counsel rendered to the Company as soon as practicable after the Closing and (y)
all costs and expenses (including reasonable attorneys’ fees of a single special
counsel to all of the Purchasers and, if reasonably required by the Required
Holders, single local counsel in any relevant jurisdiction hired for all of the
Purchasers) incurred by the Purchasers and each other holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement, any Subsidiary Guaranty or
the Notes (whether or not such amendment, waiver or consent becomes effective),
including: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena

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or other legal process or informal investigative demand issued in connection
with this Agreement, any Subsidiary Guaranty or the Notes, or by reason of being
a holder of any Note, (b) the costs and expenses, including financial advisors’
fees, incurred in connection with the insolvency or bankruptcy of the Company or
any Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes and any Subsidiary Guaranty
and (c) the cost of obtaining Private Placement Numbers issued by S&P Global
Market Intelligence’s CUSIP Global Services.
The Company will pay, and will save each Purchaser and each other holder of a
Note harmless from, (i) all claims in respect of any fees, costs or expenses, if
any, of brokers and finders (other than those, if any, retained by a Purchaser
or other holder in connection with its purchase of the Notes), (ii) any and all
wire transfer fees that any bank or other financial institution deducts from any
payment under such Note to such holder or otherwise charges to a holder of a
Note with respect to a payment under such Note and (iii) any judgment,
liability, claim, order, decree, fine, penalty, cost, fee, expense (including
reasonable attorneys’ fees and expenses) or obligation resulting from the
consummation of the transactions contemplated hereby, including the use of the
proceeds of the Notes by the Company.
Section 15.2.    Certain Taxes. The Company agrees to pay all stamp, documentary
or similar taxes or fees which may be payable in respect of the execution and
delivery or the enforcement of this Agreement or any Subsidiary Guaranty or the
execution and delivery (but not the transfer) or the enforcement of any of the
Notes in the United States or any other jurisdiction where the Company or any
Subsidiary Guarantor has assets or of any amendment of, or waiver or consent
under or with respect to, this Agreement or any Subsidiary Guaranty or of any of
the Notes, and to pay any value added tax due and payable in respect of
reimbursement of costs and expenses by the Company pursuant to this Section 15,
and will save each holder of a Note to the extent permitted by applicable law
harmless against any loss or liability resulting from nonpayment or delay in
payment of any such tax or fee required to be paid by the Company hereunder.    
Section 15.3.    Survival    . The obligations of the Company under this Section
15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement, any Subsidiary Guaranty or the
Notes, and the termination of this Agreement.
SECTION 16.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any subsequent holder of a Note, regardless
of any investigation made at any time by or on behalf of such Purchaser or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement, the Notes and any
Subsidiary Guaranty embody the entire agreement and understanding between each
Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.

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SECTION 17.
AMENDMENT AND WAIVER.

Section 17.1.    Requirements. This Agreement and the Notes may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), only with the written consent of the Company
and the Required Holders, except that:
(a)    no amendment or waiver of any of Sections 1, 2, 3, 4, 5, 6 or 21 hereof,
or any defined term (as it is used therein), will be effective as to any
Purchaser unless consented to by such Purchaser in writing; and
(b)     no amendment or waiver may, without the written consent of the holder of
each Note at the time outstanding, (i) subject to Section 12 relating to
acceleration or rescission, change the amount or time of any prepayment or
payment of principal of, or reduce the rate or change the time of payment or
method of computation of (x) interest on the Notes or (y) the Make-Whole Amount,
(ii) change the percentage of the principal amount of the Notes the holders of
which are required to consent to any amendment or waiver, or the principal
amount of the Notes that the Purchasers are to purchase pursuant to Section 2
upon the satisfaction of the conditions to Closing that appear in Section 4, or
(iii) amend any of Sections 8 (except as set forth in the third sentence of
Section 8.2, the second sentence of Section 8.3(a), the second sentence of
Section 8.3(b) and Section 17.2(c)), 11(a), 11(b), 12, 17 or 20.
Section 17.2.    Solicitation of Holders of Notes.
(a)    Solicitation. The Company will provide each holder of a Note
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes or any Subsidiary Guaranty. The Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to this Section 17 or any Subsidiary Guaranty to each holder
of a Note promptly following the date on which it is executed and delivered by,
or receives the consent or approval of, the requisite percentage of holders of
the Notes.
(b)    Payment. The Company will not directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any Security or provide other credit support, to any
holder of a Note as consideration for or as an inducement to such holder’s
consideration of or entering into of any waiver or amendment of any of the terms
and provisions hereof or of any Subsidiary Guaranty or any Note unless such
remuneration is concurrently paid, or Security is concurrently granted or other
credit support concurrently provided, on the same terms, ratably to each holder
of a Note then outstanding even if such holder did not consent to such waiver or
amendment.
(c)    Consent in Contemplation of Transfer. Any consent given pursuant to this
Section 17 or any Subsidiary Guaranty by a holder of a Note that has transferred
or has agreed to transfer its Note to (i) the Company, (ii) any Subsidiary or
any other Affiliate or (iii) any other Person in

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connection with, or in anticipation of, such other Person acquiring, making a
tender offer for or merging with the Company and/or any of its Affiliates, in
each case in connection with such consent, shall be void and of no force or
effect except solely as to such holder, and any amendments effected or waivers
granted or to be effected or granted that would not have been or would not be so
effected or granted but for such consent (and the consents of all other holders
of Notes that were acquired under the same or similar conditions) shall be void
and of no force or effect except solely as to such holder.
Section 17.3.    Binding Effect, Etc. Any amendment or waiver consented to as
provided in this Section 17 or any Subsidiary Guaranty applies equally to all
holders of Notes and is binding upon them and upon each future holder of any
Note and upon the Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between the Company and any holder of any Note and no delay in
exercising any rights hereunder or under any Note or any Subsidiary Guaranty
shall operate as a waiver of any rights of any holder of such Note.
Section 17.4.    Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement, any Subsidiary
Guaranty or the Notes, or have directed the taking of any action provided herein
or in any Subsidiary Guaranty or the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Affiliates shall be deemed not to be outstanding.
SECTION 18.
NOTICES.

Except to the extent otherwise provided in Section 7.4, all notices and
communications provided for hereunder shall be in writing and sent (a) by
telefacsimile or other electronic means if such telefacsimile or other
electronic means produces evidence of successful transmission or if the sender
on the same day sends a confirming copy of such notice by an internationally
recognized overnight delivery service (charges prepaid), or (b) by registered or
certified mail with return receipt requested (postage prepaid), or (c) by an
internationally recognized overnight delivery service (charges prepaid). Any
such notice must be sent:
(i)    if to any Purchaser or its nominee, to such Purchaser or nominee at the
address specified for such communications in the Purchaser Schedule, or at such
other address as such Purchaser or nominee shall have specified to the Company
in writing,
(ii)    if to any other holder of any Note, to such holder at such address as
such other holder shall have specified to the Company in writing, or

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(iii)    if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of a Senior Financial Officer, or at such
other address as the Company shall have specified to the holder of each Note in
writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19.
REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating thereto, including (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by any Purchaser at the Closing (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to such Purchaser or any holder of a Note, may be reproduced by such Purchaser
or holder by any photographic, photostatic, electronic, digital, or other
similar process and such Purchaser or holder may destroy any original document
so reproduced. The Company agrees and stipulates that, to the extent permitted
by applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
Purchaser or holder in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 19 shall not prohibit the Company or any
other Purchaser or holder of Notes from contesting any such reproduction to the
same extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
SECTION 20.
CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified (including in any cover
correspondence or transmittal) when received by such Purchaser as being
confidential information of the Company or such Subsidiary; provided that such
term does not include information that (a) was publicly known or otherwise known
to such Purchaser prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such Purchaser or any Person acting
on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other
than through disclosure by the Company or any Subsidiary or (d) constitutes
financial statements delivered to such Purchaser under Section 7.1 that are
otherwise publicly available. Each Purchaser will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties
delivered to such Purchaser; provided that such Purchaser may deliver or
disclose Confidential Information to (i) its directors, officers, employees,
agents, attorneys, trustees and affiliates who agree to hold confidential the
Confidential Information substantially in accordance with this Section 20 (to
the extent such disclosure reasonably relates to the administration of the
investment represented by its Notes), (ii) its auditors, financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which it sells or offers
to sell such Note or any part thereof or any

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participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by this Section 20), (v) any
federal or state regulatory authority having jurisdiction over such Purchaser,
(vi) the NAIC or the SVO or, in each case, any similar organization, or any
nationally recognized rating agency that requires access to information about
such Purchaser’s investment portfolio, or (vii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser’s Notes, this Agreement or any Subsidiary Guaranty. Each holder of a
Note, by its acceptance of a Note, will be deemed to have agreed to be bound by
and to be entitled to the benefits of this Section 20 as though it were a party
to this Agreement. On reasonable request by the Company in connection with the
delivery to any holder of a Note of information required to be delivered to such
holder under this Agreement or requested by such holder (other than a holder
that is a party to this Agreement or its nominee), such holder will enter into
an agreement with the Company embodying the provisions of this Section 20.
In the event that as a condition to receiving access to information relating to
the Company or its Subsidiaries in connection with the transactions contemplated
by or otherwise pursuant to this Agreement, any Purchaser or holder of a Note is
required to agree to a confidentiality undertaking (whether through IntraLinks,
another secure website, a secure virtual workspace or otherwise) which is
different from this Section 20, this Section 20 shall not be amended thereby
and, as between such Purchaser or such holder and the Company, this Section 20
shall supersede any such other confidentiality undertaking.
SECTION 21.
SUBSTITUTION OF PURCHASER.

Each Purchaser shall have the right to substitute any one of its Affiliates or
another Purchaser or any one of such other Purchaser’s Affiliates (a “Substitute
Purchaser”) as the purchaser of the Notes that it has agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both such Purchaser and such Substitute Purchaser, shall contain such Substitute
Purchaser’s agreement to be bound by this Agreement and shall contain a
confirmation by such Substitute Purchaser of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such notice, any
reference to such Purchaser in this Agreement (other than in this Section 21),
shall be deemed to refer to such Substitute Purchaser in lieu of such original
Purchaser. In the event that such Substitute Purchaser is so substituted as a
Purchaser hereunder and such Substitute Purchaser thereafter transfers to such
original Purchaser all of the Notes then held by such Substitute Purchaser, upon
receipt by the Company of notice of such transfer, any reference to such
Substitute Purchaser as a “Purchaser” in this Agreement (other than in this
Section 21), shall no longer be deemed to refer to such Substitute Purchaser,
but shall refer to such original Purchaser, and such original Purchaser shall
again have all the rights of an original holder of the Notes under this
Agreement. Notwithstanding the foregoing provisions of this Section 21, the
Company shall have the right to prevent any substitution otherwise permitted by
this Section 21 if it reasonably determines that the substitution would result
in a prohibited transaction under ERISA or Section 4975 of the Code for which no
exemption is available.

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SECTION 22.
MISCELLANEOUS.

Section 22.1.    Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including
any subsequent holder of a Note) whether so expressed or not, except that,
subject to Section 10.1, the Company may not assign or otherwise transfer any of
its rights or obligations hereunder or under the Notes without the prior written
consent of each holder. Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto and their
respective successors and assigns permitted hereby) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
Section 22.2.    Accounting Terms; Change in GAAP. (a) All accounting terms used
herein which are not expressly defined in this Agreement have the meanings
respectively given to them in accordance with GAAP. Except as otherwise
specifically provided herein, (i) all computations made pursuant to this
Agreement shall be made in accordance with GAAP, and (ii) all financial
statements shall be prepared in accordance with GAAP. For purposes of
determining compliance with this Agreement (including Section 9, Section 10 and
the definition of “Indebtedness”), any election by the Company to measure any
financial liability using fair value (as permitted by Financial Accounting
Standards Board Accounting Standards Codification Topic No. 825-10-25 – Fair
Value Option, International Accounting Standard 39 – Financial Instruments:
Recognition and Measurement or any similar accounting standard) shall be
disregarded and such determination shall be made as if such election had not
been made.
(b)    If after the date of this Agreement (i) any change shall occur in
generally accepted accounting principles in effect on the date of this Agreement
(a “GAAP Change”) which results in a change in any computation or definition
used in calculating compliance by the Company with any covenant in Section 10
and which, in the good faith judgment of the chief financial officer of the
Company has had or may have a material effect on the ability of the Company to
comply with one or more such covenants (the “Affected Covenants”) and (ii) the
holders of the Notes shall receive within 90 days after the effective date of
such GAAP Change (the “Effective Date”) a written notice from the Company (A)
describing the GAAP Change and (B) setting forth in reasonable detail (including
detailed calculations) why the GAAP Change has had or may have a material effect
on the ability of the Company to comply with the Affected Covenants and
confirming the good faith judgment of the chief financial officer of the Company
with respect thereto, the holders of the Notes agree upon receipt of such notice
to enter into good faith negotiations with the Company for an amendment to this
Agreement of the Affected Covenants so as to place the parties, insofar as
possible, in the same relative position as if the GAAP Change had not occurred.
If notice of a GAAP Change has been given, then, during the period from the
Effective Date of the GAAP Change until the effective date of an amendment to
this Agreement with respect thereto, the Company shall calculate compliance with
the Affected Covenants as though such GAAP Change had not occurred and if no
such amendment to this Agreement shall become effective within one year from the
Effective Date of such GAAP Change, the Company shall continue to calculate
compliance with the Affected Covenants as though such GAAP Change had not
occurred.

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Section 22.3.    Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.4.    Construction, Etc. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Defined terms herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and
effect as the word “shall.” Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein)
and, for purposes of the Notes, shall mean all notes originally delivered
pursuant to this Agreement and shall also include any such notes issued in
substitution therefor pursuant to Section 13, (b) subject to Section 22.1, any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein
to Sections and Schedules shall be construed to refer to Sections of, and
Schedules to, this Agreement, and (e) any reference to any law or regulation
herein shall, unless otherwise specified, refer to such law or regulation as
amended, modified or supplemented from time to time.
Section 22.5.    Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
Section 22.6.    Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York excluding choice‑of‑law principles of the law of such
State that would permit the application of the laws of a jurisdiction other than
such State.
Section 22.7.    Jurisdiction and Process; Waiver of Jury Trial. (a) The Company
irrevocably submits to the non-exclusive jurisdiction of any New York State or
federal court sitting in the Borough of Manhattan, The City of New York, over
any suit, action or proceeding arising out of or relating to this Agreement or
the Notes. To the fullest extent permitted by applicable law, the Company
irrevocably waives and agrees not to assert, by way of motion, as a defense or

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otherwise, any claim that it is not subject to the jurisdiction of any such
court, any objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
(b)    The Company agrees, to the fullest extent permitted by applicable law,
that a final judgment in any suit, action or proceeding of the nature referred
to in Section 22.7(a) brought in any such court shall be conclusive and binding
upon it subject to rights of appeal, as the case may be, and may be enforced in
the courts of the United States of America or the State of New York (or any
other courts to the jurisdiction of which it or any of its assets is or may be
subject) by a suit upon such judgment.
(c)    The Company consents to process being served by or on behalf of any
holder of Notes in any suit, action or proceeding of the nature referred to in
Section 22.7(a) by mailing a copy thereof by registered, certified priority or
express mail (or any substantially similar form of mail), postage prepaid,
return receipt or delivery confirmation requested, to it at its address
specified in Section 18 or at such other address of which such holder shall then
have been notified pursuant to said Section. The Company agrees that such
service upon receipt (i) shall be deemed in every respect effective service of
process upon it in any such suit, action or proceeding and (ii) shall, to the
fullest extent permitted by applicable law, be taken and held to be valid
personal service upon and personal delivery to it. Notices hereunder shall be
conclusively presumed received as evidenced by a delivery receipt furnished by
the United States Postal Service or any reputable commercial delivery service.
(d)    Nothing in this Section 22.7 shall affect the right of any holder of a
Note to serve process in any manner permitted by law, or limit any right that
the holders of any of the Notes may have to bring proceedings against the
Company in the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
(e)    THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.

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If each Purchaser is in agreement with the foregoing, please sign the form of
agreement on a counterpart of this Agreement and return it to the Company,
whereupon this Agreement shall become a binding agreement between each such
Purchaser and the Company.

Very truly yours,

SAN JOSE WATER COMPANY

By /s/ James P. Lynch    
Name: James P. Lynch
Title: Chief Financial Officer and
Treasurer

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This Agreement is hereby accepted and agreed to as of the date hereof.

Metropolitan Life Insurance Company
by MetLife Investment Advisors, LLC, Its Investment Manager
Metropolitan Tower Life Insurance Company
by MetLife Investment Advisors, LLC, Its Investment Manager
MetLife Insurance K.K.
by MetLife Investment Advisors, LLC, Its Investment Manager

By:__/s/ John A. Wills                
Name:    John A. Wills
Title: Managing Director

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This Agreement is hereby accepted and agreed to as of the date hereof.

Brighthouse Life Insurance Company
by MetLife Investment Advisors, LLC, Its Investment Manager

By:_ /s/ Judith A. Gulotta                
Name:    Judith A. Gulotta
Title:      Managing Director

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This Agreement is hereby accepted and agreed to as of the date hereof.

NEW YORK LIFE INSURANCE COMPANY

By: ______/s/ Loyd T. Henderson        
Name: Loyd T. Henderson
Title: Vice President

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This Agreement is hereby accepted and agreed to as of the date hereof.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By:    NYL Investors LLC, its Investment Manager

By: ______/s/ Loyd T. Henderson        
Name: Loyd T. Henderson
Title: Managing Director

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This Agreement is hereby accepted and agreed to as of the date hereof.

NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION INSTITUTIONALLY
OWNED LIFE INSURANCE SEPARATE ACCOUNT
(BOLI 30C)
By:    NYL Investors LLC, its Investment Manager

By: ______/s/ Loyd T. Henderson        
Name: Loyd T. Henderson
Title: Managing Director

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This Agreement is hereby accepted and agreed to as of the date hereof.

NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
INSTITUTIONALLY OWNED LIFE INSURANCE
SEPARATE ACCOUNT (BOLI 3-2)
By:    NYL Investors LLC, its Investment Manager

By: ______/s/ Loyd T. Henderson        
Name: Loyd T. Henderson
Title: Managing Director

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This Agreement is hereby accepted and agreed to as of the date hereof.

NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
INSTITUTIONALLY OWNED LIFE INSURANCE
SEPARATE ACCOUNT (BOLI 3)
By:    NYL Investors LLC, its Investment Manager

By: ______/s/ Loyd T. Henderson        
Name: Loyd T. Henderson
Title: Managing Director

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This Agreement is hereby accepted and agreed to as of the date hereof.

NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION INSTITUTIONALLY
OWNED LIFE INSURANCE SEPARATE ACCOUNT
(BOLI 30E)
By:    NYL Investors LLC, its Investment Manager

By: ______/s/ Loyd T. Henderson        
Name: Loyd T. Henderson
Title: Managing Director

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DEFINED TERMS
As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:
“Acquiring Corporation” is defined in Section 10.5(f).
“Additional Funded Debt” means, with respect to the Company, as of the date of
any determination thereof, the greater of (a) the amount, if any, by which the
aggregate amount of all unsecured Current Debt of the Company then outstanding
to the Corporation or its subsidiaries exceeds 15% of Consolidated Net Worth, or
(b) the amount, if any, by which the aggregate amount of all unsecured Current
Debt of the Company then outstanding under a bank credit facility or to the
Corporation or its subsidiaries exceeds 30% of Consolidated Net Worth.
“Affected Covenants” is defined in Section 22.2 (b).
“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person, and, with respect to the Company, shall include any Person beneficially
owning or holding, directly or indirectly, 5% or more of any class of Voting
Stock of the Company or any Subsidiary or any Person of which the Company and
its Subsidiaries beneficially own or hold, in the aggregate, directly or
indirectly, 5% or more of any class of Voting Stock. Unless the context
otherwise clearly requires, any reference to an “Affiliate” is a reference to an
Affiliate of the Company.
“Agreement” means this Note Purchase Agreement, including all Schedules attached
to this Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time.
“Anti-Corruption Laws” means any law or regulation in a U.S. or any non-U.S.
jurisdiction regarding bribery or any other corrupt activity, including the U.S.
Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.
“Anti-Money Laundering Laws” means any law or regulation in a U.S. or any
non-U.S. jurisdiction regarding money laundering, drug trafficking,
terrorist-related activities or other money laundering predicate crimes,
including the Currency and Foreign Transactions Reporting Act of 1970 (otherwise
known as the Bank Secrecy Act) and the USA PATRIOT Act.
“Approval” is defined in Section 4.13.
“Blocked Person” means (a) a Person whose name appears on the list of Specially
Designated Nationals and Blocked Persons published by OFAC, (b) a Person,
entity, organization, country or regime that is blocked or a target of sanctions
that have been imposed under U.S. Economic Sanctions Laws or (c) a Person that
is an agent, department or instrumentality of, or is

SCHEDULE A
(to Note Purchase Agreement)

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otherwise beneficially owned by, controlled by or acting on behalf of, directly
or indirectly, any Person, entity, organization, country or regime described in
clause (a) or (b).
“Business Day” means (a) for the purposes of Section 8.7 only, any day other
than a Saturday, a Sunday or a day on which commercial banks in New York City
are required or authorized to be closed, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York or San Jose, California are
required or authorized to be closed.
“Closing” is defined in Section 3.
“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.
“Company” is defined in the first paragraph of this Agreement.
“Confidential Information” is defined in Section 20.
“Consolidated Debt” means all Debt of the Company and its Restricted
Subsidiaries, determined on a consolidated basis eliminating intercompany items.
“Consolidated Funded Debt” means all Funded Debt of the Company and its
Restricted Subsidiaries, determined on a consolidated basis eliminating
intercompany items.
“Consolidated Indebtedness” means all Indebtedness of the Company and its
Restricted Subsidiaries, determined on a consolidated basis eliminating
intercompany items.
“Consolidated Net Income” means, for any period, the gross revenues of the
Company and its Restricted Subsidiaries for such period less all expenses and
other proper charges (including taxes on income), determined on a consolidated
basis after eliminating earnings or losses attributable to outstanding Minority
Interests, but excluding in any event:
(a)    any gains or losses on the sale or other disposition of Investments or
fixed or capital assets, and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b)     the proceeds of any life insurance policy;
(c)    net earnings and losses of any Restricted Subsidiary accrued prior to the
date it became a Restricted Subsidiary;
(d)    net earnings and losses of any corporation (other than a Restricted
Subsidiary), substantially all the assets of which have been acquired in any
manner by the Company or any Restricted Subsidiary, realized by such corporation
prior to the date of such acquisition;

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(e)    net earnings and losses of any corporation (other than a Restricted
Subsidiary) with which the Company or a Restricted Subsidiary shall have
consolidated or which shall have merged into or with the Company or a Restricted
Subsidiary prior to the date of such consolidation or merger;
(f)    net earnings of any business entity (other than a Restricted Subsidiary)
in which the Company or any Restricted Subsidiary has an ownership interest
unless such net earnings shall have actually been received by the Company or
such Restricted Subsidiary in the form of cash distributions;
(g)    any portion of the net earnings of any Restricted Subsidiary which for
any reason is unavailable for payment of dividends to the Company or any other
Restricted Subsidiary;
(h)    earnings resulting from any reappraisal, revaluation or write-up or
write-down of assets;
(i)    any deferred or other credit representing any excess of the equity in any
Subsidiary at the date of acquisition thereof over the amount invested in such
Subsidiary;
(j)    any gain arising from the re-acquisition of any Securities of the Company
or any Restricted Subsidiary; and
(k)    any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from income arising
during such period.
“Consolidated Net Income Available for Interest Charges” means, for any period:
(a)    Consolidated Net Income, plus
(b)    the sum of (i) state, federal or local taxes measured by income and
excess profits taxes paid or accrued by the Company and its Restricted
Subsidiaries on account of such Consolidated Net Income during said period plus
(ii) all Interest Charges of the Company and its Restricted Subsidiaries for
said period (but only to the extent deducted in computing Consolidated Net
Income for said period.)
“Consolidated Net Worth” means as of any date the aggregate amount of the
capital stock accounts (less treasury stock), retained earnings and surplus of
the Company and its Restricted Subsidiaries after deducting Minority Interests
to the extent included in the capital stock accounts of the Company, all as
determined on a consolidated basis for the Company and its Restricted
Subsidiaries.
“Consolidated Total Assets” means, as of any date as of which the amount thereof
is to be determined, the sum total of all of the assets, both real and personal,
of the Company and its Restricted Subsidiaries on a consolidated basis, after
eliminating all offsetting debits and credits among the Company and all of its
Restricted Subsidiaries and deducting reserves for obsolescence,

A-3

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depletion and/or depreciation and all other proper reserves which should be set
aside in connection with the business conducted by the pertinent corporation
(other than reserves which are, in effect, mere appropriations of retained
earnings).
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting Securities, by contract or otherwise; and the
terms “Controlled” and “Controlling” shall have meanings correlative to the
foregoing.
“Controlled Affiliate” means an Affiliate of a Person that is under the Control
of such Person or which Affiliate and such Person are both under the Control of
another Person.
“Controlled Entity” means any of the Subsidiaries of the Company and any of
their or the Company’s respective Controlled Affiliates.
“corporation” means a corporation, association, company (including, without
limitation, limited liability company) or business trust, and references to
“corporate” and other derivations of “corporation” herein shall be deemed to
include appropriate derivations of such entities.
“Corporation” means SJW Group, a Delaware corporation and the parent company of
the Company, and any person who succeeds to all or substantially all of the
assets and business of SJW Group.
“Current Debt” means, with respect to any Person, (a) all Indebtedness of such
Person for borrowed money payable on demand or in less than one year and (b) all
Guaranties by such Person of Current Debt of others; provided, that in the
determination of Current Debt of the Company or any Restricted Subsidiary there
shall be excluded any Indebtedness for Ordinary Course Deposits.
“Debt” of any Person shall mean, without duplication, all Current Debt and all
Funded Debt of such Person.
“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
“Default Rate” means that rate of interest per annum that is 2% above the rate
of interest stated in clause (a) of the first paragraph of the Notes.
“Disclosure Documents” is defined in Section 5.3.
“EDGAR” means the SEC’s Electronic Data Gathering, Analysis and Retrieval System
or any successor SEC electronic filing system for such purposes.
“Effective Date” is defined in Section 22.2(b).

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“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
Hazardous Materials.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.
“Event of Default” is defined in Section 11.
“Exchange Act” mean the Securities Exchange Act of 1934, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time in
effect.
“FATCA” means (a) Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), together with any current or
future regulations or official interpretations thereof, (b) any treaty, law or
regulation of any other jurisdiction, or relating to an intergovernmental
agreement between the United States of America and any other jurisdiction, which
(in either case) facilitates the implementation of the foregoing clause (a), and
(c) any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“Finance Lease” means, a lease agreement (including any lease intended as
security) for which the obligations are required to be recognized as lease
liabilities on the Company’s consolidated balance sheet, where such lease
agreement is of a character that, under GAAP, is required to be classified as a
finance lease (or similar classification), but not as an operating lease (or
similar classification).
“Finance Lease Rentals” means (a) all liabilities appearing on its balance sheet
in accordance with GAAP in respect of Finance Leases and (b) all liabilities
which would appear on its balance sheet in accordance with GAAP in respect of
Synthetic Leases assuming such Synthetic Leases were accounted for as Finance
Leases.
“Form 10‑K” is defined in Section 7.1(b).
“Form 10‑Q” is defined in Section 7.1(a).
“Funded Debt” of any Person shall mean (a) all Indebtedness of such Person for
borrowed money or which has been incurred in connection with the acquisition of
assets in each case having a final maturity of one or more than one year from
the date of origin thereof (or which is renewable or extendible at the option of
the obligor for a period or periods more than one year from the date of origin),
including all payments in respect thereof that are required to be made within
one year from the date of any determination of Funded Debt, whether or not the
obligation to make such

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payments shall constitute a current liability of the obligor under generally
accepted accounting principles, (b) all Finance Lease Rentals of such Person,
(c) all Guaranties by such Person of Funded Debt of others and (d) for purposes
of calculating compliance with the provisions of Section 10.5(a)(4) and the
definitions contained therein, Funded Debt of the Company shall include all
Additional Funded Debt of the Company; provided, that in the determination of
Funded Debt of the Company or any Restricted Subsidiary, there shall be excluded
any Indebtedness for Ordinary Course Deposits.
“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America.
“GAAP Change” is defined in Section 22.2(b).
“Governmental Authority” means
(a)    the government of
(i)    the United States of America or any state or other political subdivision
thereof, or
(ii)    any other jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or which asserts jurisdiction over any
properties of the Company or any Subsidiary, or
(b)    any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
“Governmental Official” means any governmental official or employee, employee of
any government-owned or government-controlled entity, political party, any
official of a political party, candidate for political office, official of any
public international organization or anyone else acting in an official capacity.
“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including obligations incurred through an
agreement, contingent or otherwise, by such Person:
(a)    to purchase such indebtedness or obligation or any property constituting
security therefor;
(b)    to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;

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(c)    to lease properties or to purchase properties or services primarily for
the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or
(d)    otherwise to assure the owner of such indebtedness or obligation against
loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
“Hazardous Materials” means any and all pollutants, toxic or hazardous wastes or
other substances that might pose a hazard to health and safety, the removal of
which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law, including
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.
“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1,
provided, however, that if such Person is a nominee, then for the purposes of
Sections 7, 12, 17.2 and 18 and any related definitions in this Schedule A,
“holder” shall mean the beneficial owner of such Note whose name and address
appears in such register.
“INHAM Exemption” is defined in Section 6.2(e).
“Indebtedness” means, with respect to any Person, all obligations of such Person
which in accordance with GAAP shall be classified upon a balance sheet of such
Person as liabilities of such Person, and in any event shall include all
(a) obligations of such Person for borrowed money or which has been incurred in
connection with the acquisition of property or assets,
(b) obligations secured by any Lien upon property or assets owned by such
Person, even though such Person has not assumed or become liable for the payment
of such obligations,
(c) obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of property,
(d) Finance Lease Rentals, and
(e) Guaranties of obligations of others of the character referred to in this
definition.

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For the purpose of computing the “Indebtedness” of any Person, there shall be
excluded any particular Indebtedness to the extent that, upon or prior to the
maturity thereof, there shall have been deposited with the proper depositary in
trust the necessary funds (or evidences of such Indebtedness, if permitted by
the instrument creating such Indebtedness) for the payment, redemption or
satisfaction of such Indebtedness; and thereafter such funds and evidences of
Indebtedness so deposited shall not be included in any computation of the
liabilities of such Person.
“Institutional Investor” means (a) any Purchaser of a Note (or, if the Purchaser
is a nominee, the beneficial owner of such Note), (b) any holder of a Note
holding (together with one or more of its Affiliates) more than 2% of the
aggregate principal amount of the Notes then outstanding, (c) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form, and (d) any Related Fund of any holder of any Note.
“Interest Charges” means, with respect to any Indebtedness of a Person for any
period shall mean all interest charges (including amortization of debt discount
or amounts imputed as interest of any Indebtedness in accordance with sound
accounting practice) paid, payable or accruing in respect of such Indebtedness
for such period; provided that if the interest charges on such Indebtedness are
to be determined for any period commencing after the date of computation, then
in the case of any Indebtedness evidenced by an obligation bearing interest at a
variable rate or at different fixed rates, or any obligation on which interest
does not begin to accrue at the date of computation of Interest Charges, or any
obligation on which interest does not become payable until a specified date more
than one year after the date of computation, the interest charges attributable
to such obligation shall be calculated on the basis of the greater of (a) the
rate payable on such obligation on the date of computation and (b) the average
interest rate payable on all Funded Debt of such Person during the three-month
period immediately preceding the date of computation.
“Investments” means all investments, in cash or by delivery of property made,
directly or indirectly in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or Securities or by loan,
advance, capital contribution or otherwise; provided, however, that
“Investments” shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business.
“Lien” means, with respect to any Person any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes, but, excluding in the case of the
Company or any Restricted Subsidiary, rights, reserved to or vested in any
municipality or public authority as an incident of any franchise, grant, license
or permit of the Company or any Restricted Subsidiary, as the case may be,
whether by the terms of any franchise, grant, license or permit or provision of
law or otherwise. The term “Lien” shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements,

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buyback agreements and all similar arrangements) affecting property. For the
purposes of this Agreement, the Company or a Restricted Subsidiary shall be
deemed to be the owner of any property which it has acquired or holds subject to
a conditional sale agreement, Finance Lease or other arrangement pursuant to
which title to the property has been retained by or vested in some other Person
for security purposes and such retention or vesting shall constitute a Lien. .
“Make-Whole Amount” is defined in Section 8.7.
“Material” means material in relation to the business, operations, affairs,
financial condition, assets or properties of the Company and its Subsidiaries
taken as a whole.
“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, (b) the ability of the Company to perform
its obligations under this Agreement and the Notes, (c) the ability of any
Subsidiary Guarantor to perform its obligations under its Subsidiary Guaranty,
or (d) the validity or enforceability of this Agreement, the Notes or any
Subsidiary Guaranty.
“Material Credit Facility” means,
(a)    the Credit Agreement dated as of June 1, 2016 between the Company and
JPMorgan Chase Bank, N.A., including any renewals, extensions, amendments,
supplements, restatements, replacements or refinancing thereof; and
(b)    any other agreement(s) creating or evidencing indebtedness for borrowed
money entered into on or after the date of the Closing by the Company, or in
respect of which the Company is an obligor or otherwise provides a guarantee or
other credit support (“Credit Facility”), in a principal amount outstanding or
available for borrowing equal to or greater than $10,000,000 (or the equivalent
of such amount in the relevant currency of payment, determined as of the date of
the closing of such facility based on the exchange rate of such other currency);
and if no Credit Facility or Credit Facilities equal or exceed such amount, then
the largest Credit Facility shall be deemed to be a Material Credit Facility.
“Maturity Date” is defined in the first paragraph of each Note.
“Minority Interests” means any shares of stock of any class of a Subsidiary
(other than directors' qualifying shares as required by law) that are not owned
by the Company and/or one or more of its Subsidiaries. Minority Interests shall
be valued by valuing Minority Interests constituting preferred stock at the
voluntary or involuntary liquidating value of such preferred stock, whichever is
greater, and by valuing Minority Interests constituting common stock at the book
value of capital and surplus applicable thereto adjusted, if necessary, to
reflect any changes from the book value of such common stock required by the
foregoing method of valuing Minority Interests in preferred stock.
“Moody’s” means Moody’s Investors Service, Inc.

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“Multiemployer Plan” means any plan that is a “multiemployer plan” (as such term
is defined in Section 4001(a)(3) of ERISA).
“NAIC” means the National Association of Insurance Commissioners.
“Non-U.S. Plan” means any plan, fund or other similar program that (a) is
established or maintained outside the United States of America by the Company or
any Subsidiary primarily for the benefit of employees of the Company or one or
more Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and (b) is not subject to ERISA or the Code.
“Notes” is defined in Section 1.
“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury or any successor thereto.
“OFAC Sanctions Program” means any economic or trade sanction that OFAC is
responsible for administering and enforcing. A list of OFAC Sanctions Programs
may be found at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.
“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.
“Ordinary Course Deposits” means, in the case of the Company or any Restricted
Subsidiary, any deposits or advances received by the Company or such Restricted
Subsidiary, as the case may be (whether shown on the Company’s balance sheet as
advances for construction, contributions in aid of construction, or otherwise),
in the ordinary course of its business from customers, consumers, property
developers or other Persons if, in each case, such deposits or advances were
made in accordance with customary practices of the utility industry in existence
at such time or pursuant to regulatory authority.
“Par Call Date” is defined in Section 8.3(a).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.
“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.
“Plan” means an “employee benefit plan” (as defined in Section 3(3) of ERISA)
subject to Title I of ERISA that is or, within the preceding five years, has
been established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the Company or
any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate
has or is reasonably expected to have any liability, other than a Multiemployer
Plan.

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“Preferred Stock” means any class of capital stock of a Person that is preferred
over any other class of capital stock (or similar equity interests) of such
Person as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.
“Pro Forma Interest Charges” means, as of the date of any determination thereof,
the sum of Interest Charges with respect to all Funded Debt of the Company and
its Restricted Subsidiaries (other than Funded Debt to be retired concurrently
with the issuance of the Funded Debt then to be issued) for the twelve full
consecutive calendar months immediately following such date of determination,
determined on a pro forma basis, including, Interest Charges on all Funded Debt
then to be issued; provided, that if Funded Debt of the Company includes
Additional Funded Debt of the Company, the Interest Charges for such Additional
Funded Debt shall be based upon the rate then payable under the bank credit
facility, provided, further that if the unsecured debt of the Company to the
Corporation or its subsidiaries exceeds the Company’s unsecured debt under the
bank credit facility at the time of reference, the Interest Charges shall be
based upon the rate then payable on such unsecured debt to the Corporation or
its subsidiaries.
“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.
“PTE” is defined in Section 6.2(a).
“Purchaser” or “Purchasers” means each of the purchasers that has executed and
delivered this Agreement to the Company and such Purchaser’s successors and
assigns (so long as any such assignment complies with Section 13.2), provided,
however, that any Purchaser of a Note that ceases to be the registered holder or
a beneficial owner (through a nominee) of such Note as the result of a transfer
thereof pursuant to Section 13.2 shall cease to be included within the meaning
of “Purchaser” of such Note for the purposes of this Agreement upon such
transfer.
“Purchaser Schedule” means the Purchaser Schedule to this Agreement listing the
Purchasers of the Notes and including their notice and payment information.
“QPAM Exemption” is defined in Section 6.2(d).
“Redemption Date” is defined in Section 10.1(e)(i).
“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (a) invests in Securities or bank loans, and (b) is advised or managed by
such holder, the same investment advisor as such holder or by an affiliate of
such holder or such investment advisor.
“Required Holders” means at any time on or after the Closing, the holders of at
least 66 2/3 % in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).
“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.

A-11

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“Restricted Payments” is defined in Section 10.8.
“Restricted Subsidiary” means any Subsidiary (i) which is organized under the
laws of the United States or any State thereof; (ii) which conducts
substantially all of its business and has substantially all of its assets within
the United States; and (iii) of which more than 80% (by number of votes) of the
Voting Stock is beneficially owned by the Company and/or one or more Restricted
Subsidiaries.
“Sale Date” is defined in Section 10.1(e).
“S&P” means S&P Global Ratings, a division of S&P Global Inc.
“SEC” means the Securities and Exchange Commission of the United States of
America.
“Securities” or “Security” shall have the meaning specified in section 2(1) of
the Securities Act.
“Securities Act” means the Securities Act of 1933 and the rules and regulations
promulgated thereunder from time to time in effect.
“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
“Source” is defined in Section 6.2.
“State Sanctions List” means a list that is adopted by any state Governmental
Authority within the United States of America pertaining to Persons that engage
in investment or other commercial activities in Iran or any other country that
is a target of economic sanctions imposed under U.S. Economic Sanctions Laws.
“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of the Company.
“Subsidiary Guarantor” means each Subsidiary that has executed and delivered a
Subsidiary Guaranty.
“Subsidiary Guaranty” is defined in Section 9.7(a).

A-12

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“substantial part” is defined in Section 10.1(d).
“Substitute Purchaser” is defined in Section 21.
“SVO” means the Securities Valuation Office of the NAIC.
“Swap Contract” means (a) any and all interest rate swap transactions, basis
swap transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward foreign exchange transactions, cap transactions, floor
transactions, currency options, spot contracts or any other similar transactions
or any of the foregoing (including any options to enter into any of the
foregoing), and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc. or any International Foreign Exchange Master
Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amounts(s) determined as the
mark-to-market values(s) for such Swap Contracts, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts.
“Synthetic Lease” means, at any time, any lease (including leases that may be
terminated by the lessee at any time) of any property (a) that is accounted for
as an operating lease under GAAP and (b) in respect of which the lessee retains
or obtains ownership of the property so leased for U.S. federal income tax
purposes, other than any such lease under which such Person is the lessor.
“Total Capitalization” means, as of any date, the sum of (i) Consolidated Net
Worth plus (ii) Consolidated Funded Debt.
“United States Person” has the meaning set forth in Section 7701(a)(30) of the
Code.
“USA PATRIOT Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 and the rules and regulations
promulgated thereunder from time to time in effect.
“U.S. Economic Sanctions Laws” means those laws, executive orders, enabling
legislation or regulations administered and enforced by the United States
pursuant to which economic sanctions have been imposed on any Person, entity,
organization, country or regime, including the Trading with the Enemy Act, the
International Emergency Economic Powers Act, the Iran Sanctions Act, the Sudan
Accountability and Divestment Act and any other OFAC Sanctions Program.

A-13

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“Voting Stock” means Securities of any class or classes, the holders of which
are ordinarily, in the absence of contingencies, entitled to elect a majority of
the corporate directors (or Persons performing similar functions).
“Wholly-Owned Restricted Subsidiary” means, at any time, any Restricted
Subsidiary all of the equity interests (except directors’ qualifying shares) and
voting interests of which are owned by any one or more of the Company and the
Company’s other Wholly-Owned Restricted Subsidiaries at such time.

A-14

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[FORM OF NOTE]
SAN JOSE WATER COMPANY
4.29% SENIOR NOTES, SERIES M, DUE 2049
No. RM-__    [Date]
$________    PPN: 798237 L@0

FOR VALUE RECEIVED, the undersigned, San Jose Water Company (herein called the
“Company”), a corporation organized and existing under the laws of the State of
California, hereby promises to pay to ____________, or registered assigns, the
principal sum of _____________________ DOLLARS (or so much thereof as shall not
have been prepaid) on April 1, 2049 (the “Maturity Date”), with interest
(computed on the basis of a 360-day year of twelve 30‑day months) (a) on the
unpaid balance hereof at the rate of 4.29% per annum from the date hereof,
payable semiannually, on the 1st day of April and October in each year,
commencing October 1, 2019, and on the Maturity Date, until the principal hereof
shall have become due and payable, and (b) to the extent permitted by law, (x)
on any overdue payment of interest and (y) during the continuance of an Event of
Default, on such unpaid balance and on any overdue payment of any Make-Whole
Amount, at a rate per annum from time to time equal to 6.29%, payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand).
Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of the Company in San Jose, California or at such other place
as the Company shall have designated by written notice to the holder of this
Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated March 28, 2019 (as from time to
time amended, the “Note Purchase Agreement”), between the Company and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, to have
(i) agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreement and (ii) made the representation set forth in Section 6.2 of
the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used
in this Note shall have the respective meanings ascribed to such terms in the
Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or
such holder’s attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the Person

SCHEDULE 1
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

in whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

SAN JOSE WATER COMPANY

By _______________________________    
Name:
Title:

Sch. 1–2

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[FORM OF FUNDS DELIVERY INSTRUCTION]

SAN JOSE WATER COMPANY
_________, 2019
To the Several Purchasers Party to the Note Purchase Agreement referred to
below:
Re:    Funds Delivery Instruction
______________________
Ladies and Gentlemen:
As contemplated by Section 3 of the Note Purchase Agreement dated March 28, 2019
between us, the undersigned hereby instructs you to deliver, on the date of the
closing thereunder, the purchase price of the Notes to be purchased by you in
the manner required by said Section 3 to the undersigned’s account identified
below:
Account Name: San Jose Water Company
Account No.:
Bank:
Bank
Bank ABA No.:
Account Representative (name and tel. no.):
This instruction has been executed and delivered by an authorized representative
of the undersigned.
Very truly yours,
SAN JOSE WATER COMPANY
By _______________________________    
Name:
Title:

SCHEDULE 3
(to Note Purchase Agreement)

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FORM OF OPINION OF COUNSEL
FOR THE COMPANY

March 28, 2019
Purchasers Identified on the Purchaser Schedule of the Note Purchase Agreement,
dated March 28, 2019

Re:    Note Purchase Agreement, dated March 28, 2019 of San Jose Water Company
Ladies and Gentlemen:
We have acted as counsel for San Jose Water Company, a California corporation
(the “Company”), in connection with the Note Purchase Agreement, dated March 28,
2019 (the “Note Agreement”), among the Company and the purchasers set forth in
the Purchaser Schedule thereto (the “Purchasers”), pursuant to which the
Purchasers will purchase $80,000,000 aggregate principal amount of the Company’s
4.29% Senior Notes, Series M, due 2049 (the “Notes”). Capitalized terms defined
in the Note Agreement are used herein as therein defined, unless otherwise
defined herein. This opinion letter is being delivered to you pursuant to
Section 4.4(a) of the Note Agreement.
In connection with this opinion letter, we have examined originals or copies
certified or otherwise identified to our satisfaction of the following
documents:
A.    the Note Agreement;
B.    the Notes issued by the Company pursuant to the Note Agreement;
C.    the Articles of Incorporation of the Company (the “Articles of
Incorporation”), certified by officers of the Company as of the date hereof as
being true, complete and correct and in full force and effect;
D.    the Bylaws of the Company (the “Bylaws”), certified by officers of the
Company as of the date hereof as being true, complete and correct and in full
force and effect;
F.     a letter from J.P. Morgan Securities LLC dated March 28, 2019 confirming
the matters contained in Section 5.13 of the Note Agreement (the “Offeree
Letter”); and
G.     such other agreements, documents, records, certificates and materials as
we have considered relevant or necessary for purposes of this opinion letter,
including the Approval.
The documents specified in items (A) and (B) above are referred to herein,
collectively, as the “Note Documents.” This opinion is based entirely on our
review of the documents listed in the

SCHEDULE 4.4(a)
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

preceding paragraph, and we have made no other documentary review or
investigation of any kind whatsoever for purposes of this opinion.
We have assumed the genuineness of all signatures, 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.
As to all matters of fact, we have relied, with your permission, entirely upon
the representations of the Company and the Purchasers contained in the Note
Agreement, certificates of officers of the Company and of public officials and
the Offeree Letter.
In rendering the opinions set forth herein, whenever a statement or opinion 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
Company in the subject transaction, no information has come to the attention of
Scott D. Karchmer, Kimberly Reisler, Albert Lung or Jessie Li 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 Company.
Based upon and subject to the foregoing, and to the limitations and
qualifications described above and below, we are of the opinion that:
1.The Company is a corporation validly existing and in good standing under the
laws of the State of California and has the corporate power and authority to
conduct its business as currently conducted and proposed to be conducted and to
execute and deliver the Note Documents and perform its obligations thereunder
(including the issuance and sale of the Notes).
2.The Note Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
3.The Notes have been duly authorized, executed and delivered by the Company and
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms.
4.No consent, approval or authorization of, or registration, filing or
declaration with, any governmental authority or court of the United States, the
State of New York or the State of California (other than the Approval, which
Approval has been obtained by the Company and is in full force and effect) by
the Company is required in connection with the execution, delivery or
performance by the Company of the Note Documents (including the issuance and
sale of the Notes).
5.It is not necessary in connection with the offer, sale and delivery of the
Notes to register the Notes under the Securities Act of 1933, as amended, or to
qualify an indenture in respect of the Notes under the Trust Indenture Act of
1939, as amended.

Sch. 4.4(a) –2

--------------------------------------------------------------------------------

6.The execution and delivery by the Company of the Note Documents do not, and
the performance by the Company of its obligations thereunder (including the
issuance and sale of the Notes) will not, (i) result in a violation of the
Articles of Incorporation or the Bylaws, (ii) result in a breach or a default
under any agreement or instrument listed on Exhibit A hereto, (iii) result in
the creation or imposition of a lien on any assets of the Company under any
agreement or instrument listed on Exhibit A hereto, or (iv) violate or be in
conflict with any United States Federal, New York or California laws, rules or
regulations applicable to the Company.
7.The Company is not, and immediately after giving effect to the offering and
sale of the Notes and the application of the proceeds thereof in accordance with
the provisions of the Note Agreement, will not be, an “investment company”, or,
to our knowledge, a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended.
8.The issuance of the Notes under the Note Agreement and the use of proceeds
from the sale of such Notes in accordance with the provisions of the Note
Agreement does not violate or conflict with Regulation T, U or X of the Board of
Governors of the United States Federal Reserve System, 12 CFR, Part 220, Part
221 and Part 224, respectively.
We confirm that we do not have knowledge of any pending lawsuits or other
proceedings against the Company or any property of the Company before any court,
arbitrator or governmental agency or authority that challenges the validity or
enforceability of the Note Documents.
The opinions expressed above are subject to the limitations, exceptions,
qualifications and assumptions stated above and below:
A.The opinions expressed herein are subject to bankruptcy, insolvency,
fraudulent transfer and other laws and rules of law affecting the enforcement
generally of creditors’ rights and remedies against the Company or any other
Persons, and general principles of equity, including, without limitation,
concepts of materiality and reasonableness (regardless of whether such
enforceability is considered in a proceeding at law or in equity), an implied
duty of good faith and fair dealing, and limitations on the availability of
specific performance.
B.The opinions expressed in this opinion letter are limited to the laws of the
States of California, the laws of the State of New York 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.
C.For purposes of the opinions in paragraphs 4 and 6, we have considered such
laws and regulations that in our experience are typically applicable to a
transaction of the nature contemplated by the Note Documents.
D.For purposes of our opinion in paragraph 5 above, (a) we have assumed that the
representation, warranty and agreement in the Offeree Letter and the
representations, warranties and agreements in Section 6 of the Note Agreement
are accurate and the obligations thereunder have been performed and (b) we do
not express any opinion with respect to any sale of the Notes subsequent to the
initial purchases thereof.

Sch. 4.4(a) –3

--------------------------------------------------------------------------------

E.For purposes of our opinions in paragraph 1 as to the valid existence and good
standing of the Company, we have relied solely upon the certificates of public
officials.
F. We note that the Note Documents contain provisions stating that they are to
be governed by the laws of the State of New York (each, a “Chosen‑Law
Provision”). Except to the extent that such a Chosen‑Law Provision is made
enforceable by New York General Obligations Law Section 5‑1401, as applied by a
New York state court or a Federal court sitting in New York and applying New
York choice of law principles, no opinion is given herein as to any Chosen‑Law
Provision, or otherwise as to the choice of law or internal substantive rules of
law that any court or other tribunal may apply to the transactions contemplated
by the Note Documents. Enforceability is subject to principles of comity and
constitutionality. We note that New York General Obligations Law Section 5-1401
refers to former Section 1-105 of the New York UCC. The New York UCC has been
amended, effective December 17, 2014, and the substance of former Section 1-105
now appears in Section 1-301.
G.Certain waivers by the parties to the Notes Documents may relate to matters
that cannot, as a matter of law, be effectively waived.
H.The enforceability of the Note Documents may be limited by the
unenforceability under certain circumstances of provisions imposing penalties,
forfeitures, late payment charges, the imposition or collection of interest on
interest, an increase in interest rate upon delinquency in payment or an
occurrence of default, or the payment of any premium, liquidated damages, or
other amount that may under applicable law be considered a penalty or
forfeiture.
I.We have not reviewed covenants in the agreements set forth in Exhibit A that
contain financial ratios, other provisions requiring financial calculations or
determinations, or similar financial restrictions, and no opinion is provided
with respect thereto.
J.No opinion is given herein as to the usury laws, or other laws regulating the
maximum rate of interest which may be charged, taken or received, of any
jurisdiction other than the State of New York.
K.We express no opinion as to:
(i)Any tax laws, environmental laws, pension and employee benefit laws,
antitrust laws, or any municipal laws (including without limitation, any
subdivision laws and regulations) or terms of any local agencies within the
State of California.
(ii)The enforceability of any provision of the Note Documents permitting
modification thereof only by means of an agreement in writing signed by the
parties thereto.
(iii)The enforceability of any provision of the Note Documents purporting to
waive the right to trial by jury.
(iv)The enforceability of provisions to the effect that rights or remedies are
not exclusive, that every right or remedy is cumulative, may be exercised
without notice, and may

Sch. 4.4(a) –4

--------------------------------------------------------------------------------

be exercised in addition to or with any other right or remedy, or that the
election of some particular remedy or remedies does not preclude recourse to one
or another remedy.
L.For purposes of opinion paragraph 8 above, we assume none of the assets of the
Company consists of “margin stock” for purposes of Regulation of Regulations T,
U or X of the Board of Governors of the Federal Reserve System (the “Fed
Board”), that none of the Purchasers is a “Creditor” as such term is used in
Regulation T of the Fed Board, and that the proceeds of the extensions of credit
made under the Note Documents are used in accordance with the provisions
thereof.
M.We have assumed without any independent investigation that (i) each party to
the Note Agreement, other than the Company, at all times relevant thereto, is
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated or organized, and is qualified to do business and in
good standing under the laws of each jurisdiction where such qualification is
required generally or necessary in order for such party to enforce its rights
under such Note Documents, (ii) each party to the Note Agreement, other than the
Company, at all times relevant thereto, had and has the full power, authority
and legal rights under its certificate of incorporation, articles of
organization, certificate of formation, partnership agreement, bylaws, operating
agreement and other governing organizational documents, as the case may be, and
the applicable corporate, partnership, limited liability company or other
enterprise legislation and other applicable laws, as the case may be, to
execute, deliver, and perform its obligations under, the Note Documents to which
it is a party, and (iii) each party to the Note Agreement, other than the
Company, has duly authorized, executed and delivered the Note Agreement
N.We have assumed without any independent investigation that (i) the Company has
received the agreed to and stated consideration for the incurrence of the
obligations applicable to it under the terms of the Note Documents, (ii) the
Note Agreement is a valid and binding obligation of each party thereto other
than the Company, and (iii) each of the Note Documents is a valid and binding
obligation of the Company to the extent that laws other than the laws of the
State of New York, the laws of the State of California and the Federal law of
the United States of America are applicable thereto.
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 Purchasers
and their respective successors and permitted assigns pursuant to the Note
Agreement, 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.
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, without our express
written consent, except that the Purchasers may furnish a copy of this opinion
letter to any state or federal authority or independent banking or insurance
board or body having regulatory jurisdiction over the Purchasers.

Sch. 4.4(a) –5

--------------------------------------------------------------------------------

Very truly yours,
MORGAN, LEWIS & BOCKIUS LLP

Sch. 4.4(a) –6

--------------------------------------------------------------------------------

FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS

March 28, 2019
To each entity named in Schedule A hereto (collectively, the “Purchasers”)
Ladies and Gentlemen:
We have acted as special counsel to the Purchasers in connection with the
several purchases by the Purchasers from San Jose Water Company, a California
corporation (the “Company”), pursuant to the Note Purchase Agreement dated the
date hereof between the Purchasers and the Company (the “Agreement”) of
$80,000,000 aggregate principal amount of the Company’s 4.29% Senior Notes,
Series M, due 2049 (the “Securities”). This letter is delivered to the
Purchasers pursuant to Section 4.4(b) of the Agreement.
We have reviewed (a) the Agreement, (b) the Securities, (c) a letter from J.P.
Morgan Securities LLC dated the date hereof confirming the matters contained in
Section 5.13 of the Agreement (the “Offeree Letter”) and (d) such other
agreements, documents, records, certificates and materials, and have satisfied
ourselves as to such other matters, as we have considered relevant or necessary
for purposes of this letter. We have also reviewed the opinion of Morgan, Lewis
& Bockius LLP dated the date hereof and delivered to the Purchasers pursuant to
Section 4.4(a) of the Agreement and, while we have made no independent
investigation as to the legal matters covered in such opinion, we believe that
such opinion is consistent in scope and form with the requirements of the
Agreement and that the Purchasers are justified in relying thereon.
In such review, we have assumed the accuracy and completeness of all agreements,
documents, records, certificates and other materials submitted to us, the
conformity with the originals of all such materials submitted to us as copies
(whether or not certified and including facsimiles), the authenticity of the
originals of such materials and all materials submitted to us as originals, the
genuineness of all signatures and the legal capacity of all natural persons. In
delivering this letter, we have relied, without independent verification, as to
factual matters, on certificates and other written or oral notices or statements
of governmental and other public officials and of officers and other
representatives of the Company and on representations made by the Company in the
Agreement and on representations of J.P. Morgan Securities LLC acting as
placement agent of the Company with respect to the Securities, including the
statements contained in the Offeree Letter.
On the basis of the assumptions and subject to the qualifications and
limitations set forth herein, we are of the opinion that:

SCHEDULE 4.4(b)
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

1.
The Agreement constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms.

2.
The Securities, upon execution and delivery thereof in accordance with the
Agreement and payment therefor pursuant to the Agreement, will constitute the
valid and legally binding obligations of the Company, enforceable against the
Company in accordance with their terms.

3.
It is not necessary in connection with the offer, sale and delivery of the
Securities to the Purchasers under the Agreement to register the offer or sale
of the Securities under the Securities Act of 1933 or to qualify an indenture of
the Company under the Trust Indenture Act of 1939.

Our opinions set forth in paragraphs 1 and 2 above are subject to and limited by
the effect of (a) applicable bankruptcy, insolvency, fraudulent conveyance and
transfer, receivership, conservatorship, arrangement, moratorium and other
similar laws affecting or relating to the rights of creditors generally, (b)
general equitable principles (whether considered in a proceeding in equity or at
law), (c) requirements of reasonableness, good faith, materiality and fair
dealing and the discretion of the court before which any matter may be brought,
(d) generally applicable rules of law that may permit a party who has materially
failed to render or offer performance required by the Agreement or the
Securities to cure that failure unless (i) permitting a cure would unreasonably
hinder the aggrieved party from making substitute arrangements for performance
or (ii) it was important in the circumstances to the aggrieved party that
performance occur by the date stated in the Agreement or the Securities, (e)
laws limiting the enforceability of provisions imposing penalties, (f) Article 9
of the New York Uniform Commercial Code regarding restrictions on assignment or
transfer of rights, (g) in the case of (i) waivers, Sections 9-602 and 9-603 of
the New York Uniform Commercial Code and (ii) waivers and exculpatory
provisions, public policy, (h) generally applicable rules of law that may, where
less than all of either the Agreement or the Securities may be unenforceable,
limit the enforceability of the balance of the Agreement or the Securities to
circumstances in which the unenforceable portion is not an essential part of the
agreed exchange and (i) certain remedial provisions of either the Agreement or
the Securities that may be (i) unenforceable in whole or in part (although the
inclusion of such provisions does not affect the validity of the balance of the
Agreement or the Securities, and the practical realization of the benefits
created by the Agreement or the Securities taken as a whole will not be
materially impaired by the unenforceability of those particular provisions) or
(ii) subject to procedural requirements not set forth therein.
With respect to our opinions set forth in paragraphs 1 and 2 above, we have
assumed that (a) the Company (i) is duly incorporated, validly existing and in
good standing under the law of the State of California and (ii) has the
corporate power, and has taken all necessary action to authorize it, to execute
and deliver, and to perform its obligations under, and has executed and
delivered, the Agreement and the Securities, (b) the Securities will be valid
under the law of the State of California, (c) the execution and delivery of, and
the performance of the Company’s obligations under, the Agreement and the
Securities by the Company do not and will not (i) violate the Certificate of
Incorporation of the Company, as amended, or the Amended and Restated Bylaws of
the Company, as amended, (ii) require any Governmental Approval (as

Sch. 4.4(b) –2

--------------------------------------------------------------------------------

defined below), other than Decision 15-12-028 dated December 17, 2015 of the
Public Utilities Commission of the State of California, which is the subject of
Morgan, Lewis & Bockius LLP’s opinion, and which we assume to have been duly
granted and to remain in full force and effect, or (iii) violate or conflict
with, result in a breach of, or constitute a default under, (A) any agreement or
instrument to which the Company or any Affiliate (as defined below) is a party
or by which the Company or any Affiliate or any of its properties may be bound,
(B) any Governmental Approval, (C) any order, decision, judgment, injunction or
decree that may be applicable to the Company or any Affiliate or any of its
properties or (D) any law (other than the law of the State of New York), (d) the
Agreement has been duly authorized, executed and delivered by the Purchasers and
is the valid and legally binding agreement of and enforceable against the
Purchasers under all applicable law, (e) there are no agreements, understandings
or negotiations between the parties not set forth in the Agreement or the
Securities that would modify the terms thereof or the rights and obligations of
the parties thereunder, (f) all parties to the transaction contemplated by the
Agreement and the Securities will act in accordance with, and will refrain from
taking any action that is forbidden by, the terms and conditions of the
Agreement and the Securities and (g) for so much of our opinion set forth in
paragraph 1 above as relates to Section 22.6 of the Agreement, the choice of the
law of the State of New York as the governing law of the Agreement and the
Securities would not result in a violation of an important public policy of
another state or country having greater contacts with the transaction
contemplated by the Agreement and the Securities than the State of New York.
As used in this letter, (i) “Governmental Approval” means any authorization,
consent, approval or license (or the like) of, or exemption (or the like) from,
or registration or filing (or the like) with, or report or notice (or the like)
to, any governmental unit, agency, commission, department or other authority
that may be applicable to the Company or any Affiliate or any of its properties
and (ii) “Affiliate” means any person or entity that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Company.
With respect to our opinion set forth in paragraph 3 above, (a) we have assumed
that the representations, warranties and agreements in the Offeree Letter, the
representations, warranties and agreements in Section 5.13 of the Agreement and
the representations and warranties in Section 6 of the Agreement are accurate
and the obligations thereunder have been performed and (b) we do not express any
opinion with respect to any sale of the Securities subsequent to the initial
purchases thereof pursuant to the Agreement.
We express no opinion with respect to (a) laws and regulations relating to
Federal Reserve Board margin regulations, (b) any provisions in the Agreement or
the Securities (i) that purport to waive an inconvenient forum, (ii) that
specify the currency in which any judgment shall be given under the Agreement or
the Securities, (iii) that purport to waive immunity acquired after the date of
the execution and delivery of either the Agreement or the Securities, (iv) that
purport to prevent oral modification or waivers or (v) pursuant to which the
Company purports to waive the right to a jury trial insofar as such provision is
sought to be enforced in a federal court, (c) Section 22.7(a) of the Agreement,
insofar as it relates to federal courts (except as to the personal jurisdiction
thereof), (d) the enforceability of the forum selection clause contained in the
Agreement in a federal court, (e) the consequences to the Purchasers of the
purchase, ownership and disposition of the Securities under tax laws or the
Employee Retirement Income Security

Sch. 4.4(b) –3

--------------------------------------------------------------------------------

Act of 1974, (f) whether acceleration of the Securities may affect the
collectability of that portion of the stated principal amount thereof that might
be determined to constitute unearned interest thereon, (g) compliance with
covenants in either the Agreement or the Securities incorporating calculations
of a financial or accounting nature, (h) the anti-trust and unfair competition
laws of the United States or any state, (i) federal and state laws, regulations
and policies concerning national and local emergency, (j) federal and state
environmental laws and regulations, (k) federal and state laws, regulations and
policies concerning employee benefits, (l) laws and regulations relating to
labor and employment, (m) laws and regulations relating to health and safety,
(n) any federal patent, copyright and trademark, state trademark and other
federal and state intellectual property laws and regulations, (o) the antifraud
laws of any jurisdiction, (p) unless otherwise expressly stated in this letter,
federal and state securities or “blue sky” laws and regulations and laws and
regulations relating to commodity (and other) futures and indices and other
similar instruments, (q) laws and regulations relating to land use and
subdivision, (r) laws and regulations relating to the tax laws of the United
States or any state, (s) federal and state racketeering laws and regulations,
(t) federal and state statutes of general application to the extent they provide
for criminal prosecution (e.g., mail fraud and wire fraud statutes), (u)
charters, ordinances, bylaws and other laws enacted by political subdivisions of
the State of New York or (v) the statutes and ordinances, the administrative
decisions, and the rules and regulations of counties, towns, municipalities and
special political subdivisions, and judicial decisions to the extent that they
deal with any of the foregoing.
Our opinions above involving the law of the State of New York are based on
consideration only of those laws, rules and regulations of the law of the State
of New York that New York lawyers exercising customary professional diligence
would reasonably be expected to recognize as being applicable to general
business entities and do not include any law that is part of or imposes a
regulatory regime applicable to specific assets or the business of any party to
either the Agreement or the Securities.
Our opinions set forth in this letter are limited to, in the case of our
opinions set forth in paragraphs 1 and 2 above, the law of the State of New York
and, in the case of our opinion set forth in paragraph 3 above, the federal
securities law of the United States of America, in each case as in effect on the
date hereof, and we express no opinion as to any other law. We have no
responsibility or obligation to update this letter or to take into account
changes in law, facts or any other developments of which we may later become
aware.
This letter is delivered only to the Purchasers by us as special counsel to the
Purchasers solely for the benefit of the Purchasers in connection with the
transaction contemplated by the Agreement and may not be used, circulated,
furnished, quoted or otherwise referred to or relied upon for any other purpose
or by any other person or entity (including by any person or entity that
purchases any of the Securities from any of the Purchasers) for any purpose
without our prior written consent, except that (a) the Purchasers may furnish a
copy of this letter to any state or federal authority or independent banking or
insurance board or body having regulatory jurisdiction over the Purchasers (but
no such person or entity shall be entitled to rely thereon) and (b) at the
request of any Purchaser, we hereby consent to reliance hereon by any person or
entity that in the future becomes an assignee of Securities held by such
Purchaser under the Agreement on the condition and with the understanding that
(i) any such reliance by such a

Sch. 4.4(b) –4

--------------------------------------------------------------------------------

person or entity must be actual and reasonable under the circumstances existing
at the time of such assignment, including any changes in law, facts or any other
developments known to or reasonably knowable by such a person or entity at such
time, (ii) we have no responsibility or obligation to consider the applicability
or correctness of our opinions set forth in this letter to any person or entity
other than the Purchasers as its original addressees and (iii) any such person
or entity may rely on our opinions set forth in this letter only to the extent,
but to no greater extent than, this letter permits the Purchasers to do so.
Very truly yours,
PILLSBURY WINTHROP SHAW PITTMAN LLP

Sch. 4.4(b) –5

--------------------------------------------------------------------------------

SCHEDULE 5.3
DISCLOSURE MATERIALS

•
This Agreement

•
Investor Presentation dated March 4, 2019

•
The Corporation’s Annual Report on Form 10-K for the year ended December 31,
2018 (to the extent such Annual Report relates to the Company)

SCHEDULE 5.3
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

SCHEDULE 5.5
FINANCIAL STATEMENTS

•
The Company’s annual reports as of and for the years ended December 31, 2018,
2017, 2016, 2015, 2014 and 2013

SCHEDULE 5.5
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

SCHEDULE 5.14
USE OF PROCEEDS

The proceeds from the sale of the Notes will be applied as follows: (i) to repay
outstanding borrowings under the Company’s credit facility and inter-company
borrowings, (ii) to fund capital expenditures, and/or (iii) for other general
corporate purposes. Pending such use, the Company may invest the net proceeds
temporarily in investment-grade securities, money-market funds, bank deposit
accounts or similar short-term investments.

SCHEDULE 5.14
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

SCHEDULE 5.15
EXISTING INDEBTEDNESS AS OF DECEMBER 31, 2018
(a)

San Jose Water Company Senior Notes:
 
 
Series A 8.58% due 2022 (held by Allstate Investments, LLC)
 

$20,000,000

Series B 7.37% due 2024 (held by Genworth Financial and AIG Asset Management)
 

$30,000,000

Series C 9.45% due 2020 (held by GE Asset Management and AIG Asset Management)
 

$10,000,000

Series D 7.15% due 2026 (held by New York Life Insurance Company)
 

$15,000,000

Series E 6.81% due 2028 (held by New York Life Insurance Company)
 

$15,000,000

Series F 7.20% due 2031 (held by Pacific Life Insurance Company)
 

$20,000,000

Series G 5.93% due 2033 (held by The Prudential Insurance Company of America)
 

$20,000,000

Series H 5.71% due 2037 (held by Pacific Life Insurance Company)
 

$20,000,000

Series I 5.93% due 2037 (held by Metlife Insurance Company of Connecticut)
 

$20,000,000

Series J 6.54% due 2024 (held by Metropolitan Life Insurance Company)
 

$10,000,000

Series K 6.75% due 2039 (held by The Prudential Insurance Company of America)
 

$20,000,000

Series L 5.14% due 2044 (held by John Hancock Life Insurance Company (U.S.A.))
 

$50,000,000

California Pollution Control Financing Authority Revenue Bonds 5.10%, San Jose
Water Company due 2040 (Loan Agreement between the California Pollution Control
Financing Authority and San Jose Water Company dated as of June 1, 2010)
 

$50,000,000

California Pollution Control Financing Authority Revenue Bonds 4.75%, San Jose
Water Company due 2046 (Loan Agreement between the California Pollution Control
Financing Authority and San Jose Water Company dated as of December 1, 2016)
 

$70,000,000

Credit Agreement, dated June 1, 2016, between San Jose Water Company and
JPMorgan Chase Bank, N.A. ($125,000,000 facility, with a letter of credit
sublimit of $10,000,000; $16,000,000 is drawn and no LCs outstanding as of March
26, 2019), as amended by the First Amendment to Credit Agreement, dated January
12, 2018, by and between San Jose Water Company and JPMorgan Chase Bank, N.A.
(the “San Jose Water Company Credit Agreement”)
 
 

SCHEDULE 5.15
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

(b)
The Company’s senior note agreements generally restrict the Company from
incurring Indebtedness other than Indebtedness that satisfies the terms and
conditions of certain exceptions to the restriction.

The Guaranty Agreement, dated November 2, 2006, of SJW Group, pursuant to which
SJW Group is a guarantor of the SJWTX, Inc. Senior Notes, Series A 6.27% due
2036, requires SJW Group to maintain: (1) the consolidated Indebtedness of SJW
Group and its subsidiaries (including the Company) at equal to or less than
66-2/3% of total capitalization of SJW Group and its subsidiaries (including the
Company), and (2) the net worth of SJW Group and its subsidiaries (including the
Company) at equal to or greater than $125,000 plus 30% of the Company and its
subsidiaries (including the Company) cumulative net income, since December 31,
2006.

The Note Agreement, dated as of June 30, 2011, of SJW Group for the SJW Group
Senior Notes, Series A 4.35% due 2021, requires SJW Group to maintain: (1) the
consolidated Indebtedness of SJW Group and its subsidiaries (including the
Company) at equal to or less than 66-2/3% of total capitalization of SJW Group
and its subsidiaries, and (2) the net worth of SJW Group and its subsidiaries at
equal to or greater than $175,000 plus 30% of the Company and its subsidiaries’
(including the Company) cumulative net income, since June 30, 2011.

The San Jose Water Company Credit Agreement generally restricts the Company from
incurring Indebtedness other than Indebtedness that satisfies the terms and
conditions of certain exceptions. In addition, the San Jose Water Company Credit
Agreement requires the Company to maintain (1) the ratio of the funded debt of
the Company and its subsidiaries to capitalization of the Company and its
subsidiaries at equal to or less than 66-2/3% and (2) the ratio of net income
before interest and taxes of the Company and its subsidiaries to interest
expenses of the Company and its subsidiaries for their outstanding Indebtedness
for the prior four consecutive quarters equal to or greater than 175% of
interest charges.

The Credit Agreement, dated as of June 1, 2016, among SJW Group, SJW Land
Company and JPMorgan Chase Bank, N.A. (the “SJW Group/SJW Land Credit
Agreement”) generally restricts SJW Group and SJW Land Company from, and
requires them to prevent their subsidiaries (including the Company) from,
incurring Indebtedness, other than Indebtedness that satisfies the terms and
conditions of certain exceptions. In addition, the SJW Group/SJW Land Credit
Agreement requires that (1) the funded debt of SJW Group and its subsidiaries
(including the Company) not exceed 66-2/3% of total capitalization of SJW Group
and its subsidiaries (including the Company) and (2) the ratio of net income
before interest and taxes of SJW Group and its subsidiaries (including the
Company) to interest expenses of SJW Group and its subsidiaries (including the
Company) for their outstanding Indebtedness for the prior four consecutive
quarters be equal to or greater than 175% of interest charges.

The Credit Agreement, dated as of June 1, 2016, between SJWTX, Inc., as
Borrower, SJW Group, as Guarantor, and JPMorgan Chase Bank, N.A. (the “SJWTX/SJW
Group Credit Agreement”) requires that (1) the funded debt of SJW Group and its
subsidiaries (including the Company) not exceed 66-2/3% of total capitalization,
and (2) the ratio of net income before interest and taxes of

Sch. 5-15-2

--------------------------------------------------------------------------------

SJW Group and its subsidiaries (including the Company) to interest expenses of
SJW Group and its subsidiaries (including the Company) for their outstanding
Indebtedness for the prior four consecutive quarters be equal to or greater than
175% of interest charges.

Sch. 5-15-3

--------------------------------------------------------------------------------

SCHEDULE 10.4
EXISTING LIENS

None

SCHEDULE 10.4
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

SCHEDULE 13.2

[FORM OF TRANSFEREE WIRE INSTRUCTION]

_________, 20__

Bank Name:
ABA/Routing #:
Beneficiary Account #:
Beneficiary Name:
Further Credit to Account#:
Further Credit to Name:
Ref: (Complete as applicable)

SCHEDULE 13.2
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
METROPOLITAN LIFE INSURANCE COMPANY

$8,800,000

PURCHASER SCHEDULE
(to Note Purchase Agreement)

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
METLIFE INSURANCE K.K.
$14,400,000

Purchaser Sch.-2

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
METROPOLITAN TOWER LIFE INSURANCE COMPANY

$3,500,000

Purchaser Sch.-3

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
BRIGHTHOUSE LIFE INSURANCE COMPANY
$13,300,000

Purchaser Sch.-4

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
New York Life Insurance Company
$26,400,000

Purchaser Sch.-5

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
New York Life Insurance and Annuity
Corporation
$11,200,000

Purchaser Sch.-6

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
New York Life Insurance and Annuity Corporation Institutionally Owned Life
Insurance Separate Account (BOLI30C)

$1,200,000

Purchaser Sch.-7

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
New York Life Insurance and Annuity Corporation Institutionally Owned Life
Insurance Separate Account (BOLI3-2) 

$400,000

Purchaser Sch.-8

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
New York Life Insurance and Annuity Corporation Institutionally Owned Life
Insurance Separate Account (BOLI3) 

$400,000

Purchaser Sch.-9

--------------------------------------------------------------------------------

San Jose Water Company
110 West Taylor Street
San Jose, California 95110
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER
PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
 
 
New York Life Insurance and Annuity Corporation Institutionally Owned Life
Insurance Separate Account (BOLI30E)  
$400,000

Purchaser Sch.-10